"If I did not believe in Brazil, I would have become a banker," the late Brazilian billionaire Antonio Ermirio de Moraes was once quoted as saying. Ermirio de Moraes, who died in August at the age of 86 and for years was the face and voice of his family's Votorantim industrial conglomerate, one of the largest in Latin America. He became a banker in 1991, after the creation of the Banco Votorantim, one of the ten largest banks in Brazil today, with total assets of $48.5 billion.
Ermirio de Moraes never got over the fact that the bank, which in its early years occupied only one floor of the historic building that served as Votorantim's headquarters in Sao Paulo and employed just a few workers, was more profitable than other traditional businesses of the group, to which he had dedicated his life.
But he managed to live with it, and possibly didn't feel any better when in 2013 Banco Votorantim posted a net loss of $213 million, its third consecutive year in the red, although some of its competitors in the industry also faced some challenges over the last two years.
After a 14% drop in profits in 2012, the largest banks operating in Brazil posted a growth in earnings last year. Together, the Top 50 banks operating in the country reported a net profit of $24 billion in 2013, a 3% increase over the previous year. It may seem like a modest number when compared to Brazil's banking industry results in recent years -- only in 2011 the largest 25 publicly-traded Brazilian banks increased their earnings by 14.48% -- but that's still higher than Brazil's GDP growth in 2013, which reached 2.3%.
In addition to that, blunders in economic policies forced the government to keep high interest rates to control inflation, resulting in a slowing down of bank credit growth for the fourth year in a row. According to Brazil's Central Bank, in 2013 the total amount borrowed by banks was $1.12 trillion, up 15% from the previous year. That's still higher than the country's GDP growth, but not long ago the supply of bank credit grew at 20% per year.
No matter who wins the presidential elections on October 5th, interest rates are expected to rise next year, which should drive to an increase on the margins earned on loans. In other words, no matter who is chosen as Brazil's next president, bankers will remain in the country's economic driver's seat and will play a key role in its development of future years.
Not surprisingly, they have become the talk of the town since the presidential campaign race officially began in July. President Dilma Rousseff, who is running for a second term, recently accused her main opponent, Marina Silva, of being supported by bankers. Rousseff was of course referring to Maria Alice Setubal, a member of one Brazil's most prominent banking dynasties, who is acting as a campaign coordinator for Silva, a former environment minister during the government of Luis Inacio Lula da Silva.
In response to Rousseff's comments, Silva said that it was the president, and not her, who supported bankers during her government through its spending with successive increases in interest rates. "Bankers never made so much money as they do now," Silva said.
Truth be told, it is strange that they chose a negative tone to address bankers since both Rousseff and Silva, as well as presidential candidate Aecio Neves of the Brazilian Social Democracy Party, have received large sums of money from banks to fund their campaigns. According to Brazil's Superior Electoral Court (TSE), Rousseff leads the pack with $6.6 million in donations from bankers to her campaign, while Neves received $4.2 million and Silva, $2.5 million.
But Silva, who wants a law granting the central bank complete independence, has a point. Out of the 67 Brazilian billionaires currently listed by FORBES, one-fifth are bankers. That number would be higher if we considered as bankers other billionaires who have set up banks in order to channel funds to their own non-bank businesses, like billionaire bishop Edir Macedo, who owns a 49% stake in privately-held bank Banco Renner, whose interest rates are among the highest in Brazil; agribusiness billionaire Blairo Maggi, who earlier this year won approval from Brazil's Central Bank to set up a bank to finance his family's group of companies; and the other five members of the Ermirio de Moraes clan, who own 50% of Banco Votorantim (the remaining 50% was acquired by state-controlled
During Brazil's economic boom of the past decade, banks have been relying on profits from interest rates from high-cost loans and credit cards, instead of trying to become more efficient and to attract a better class of customers, something that the state-controlled banks seem to be doing. Out of the total loans last year in Brazil, 51% came from government-owned banks and 49% came from private banks, while in the previous year 52% of loans were given within the private sector, pointing that, in a way or another, the government is also profiting from high interest rates.
The most profitable bank in Brazil last year was Bradesco, whose earnings topped $6.7 billion. The bank was founded in 1943 by Amador Aguiar, who died in 1991 and left the bulk of his fortune to his three adopted daughters, all billionaires. State-controlled Banco do Brasil came in second as Brazil's most profitable bank last year, with earnings of $6 billion. Itau-Unibanco, the largest private bank in Latin America, came in third, with $5.1 billion in earning. The bank is controlled by three families: the Setubals, the Villelas and the Moreira Salles. Two members of the Villela family and four members of the Moreira Salles family are billinaires.
Among the Top 10 most profitable banks in Brazil last year there are Banco Safra ($486 million), controlled by billionaire Joseph Safra, and BTG Pactual ($1 billion), controlled by billionaire Andre Esteves.
Most of the members included on the list of The 15 Richest Bankers In Brazil inherited their fortunes. Some have sold their banks to bigger international institutions, and 13 are billionaires individually.
"One of the most important issues that Brazil must face in the coming years is the issue of interest rate," Henrique Meirelles, the former president of BankBoston and Brazil's Central Bank, wrote recently in an article published by Brazilian newspaper Folha de S. Paulo.
That means dealing with bankers, instead of fighting them, will be crucial for the country’s next government.
Following is the full list with The 15 Richest Bankers In Brazil:
1. Joseph Safra (Banco Safra), $15.7 billion
2. Andre Esteves (BTG Pactual), $4 billion
3. Aloysio de Andrade Faria (Banco Alfa, former owner of Banco Real), $3.3 billion
4. Fernando Roberto Moreira Salles (Itau Unibanco), $2.8 billion
5. Joao Moreira Salles (Itau Unibanco), $2.8 billion
6. Pedro Moreira Salles (Itau Unibanco), $2.8 billion
7. Walther Moreira Salles Junior (Itau Unibanco), $2.8 billion
8. Lina Maria Aguiar (Bradesco), $1.9 billion
9. Julio Bozano (former owner of Banco Meridional), $1.7 billion
10. Lia Maria Aguiar (Bradesco), $1.6 billion
11. Alfredo Egydio Arruda Villela Filho (Itau Unibanco), $1.4 billion
12. Ana Lucia de Mattos Barretto Villela (Itau Unibanco), $1.4 billion
13. Maria Angela Aguiar Bellizia (Bradesco), $1 billion
14. Maria de Lourdes Egydio Villela (Itau Unibanco), $770 million
15. Paulo Setubal Neto (Itau Unibanco), $459 million
