Category: Banking Industry

With Trabuco As Chairman, Will Bradesco Become A Banking Monopoly?

Throughout the history of Latin America, the monopoly has played a central, in not entirely wholesome, role. But while even the most ruthless robber baron monopolists of the 19th century could make plausible arguments as to why their businesses were a public good as constituted, the truth is that many monopolies of Latin America have demonstrably made the lives of the average citizen better. Companies like International Telephone and Telegraph, the United Fruit Company and Telmex, while having a stranglehold on their respective markets, brought first-world infrastructure to otherwise backwards and hopelessly primitive societies. Whereas there is little question that the railroads of North America would have eventually stretched from coast to coast and perfused much of the interior, with or without the likes of Stephen J Gould or the Vanderbilt clan, there is a serious case to be made that, without the likes of Telmex, there would simply be no telecommunications at all in the rural parts of Mexico, areas that are often still under the control of Amerindian warlords, such as Comandante Marcos.

Brazil may get a banking monopoly

This leads us directly to the case of Grupo Bradesco, the largest banking conglomerate in Brazil. Its leader for the last decade has been a man named Luiz Carlos Trabuco. Trabuco is an inveterate and sophisticated banker, holding advanced degrees from one of the top schools in Brazil. He has also made it abundantly clear, through deeds, if not words, that his vision for Bradesco is to have it become the undisputed hegemon in the Brazilian banking space. In short, everything Trabuco has ever done in his career indicates that he has every intention of crushing all competition into oblivion and establishing a Brazilian banking monopoly.

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Whether or not this would ultimately be good for Brazil is a matter of debate, with both sides being able to make reasonable points. What is not in dispute is that Trabuco is well on his way to establishing Bradesco as the unquestioned dominant player in Brazilian banking. With the acquisition of HSBC Brazil in 2015, the $5.2 billion cash deal rocketed Bradesco back to the number-one spot in the Brazilian banking sector, a spot that the bank had not held since 2009. Since 2015, the bank’s stock price, long in decline, has soared, indicating that investors are extremely pleased with the strategy that Trabuco has followed. The bank has continued to attack its competition, especially arch rival Itau Unibanco, in all its markets. It is now in a position where it can easily leverage its economies of scale to crush its competitors, pricing them out of the market and undercutting them at every turn.

Although some may argue that a Bradesco that utterly annihilates its competitors, leaving it as the last bank standing, would be a net negative for the country, it is worth remembering that Brazil is still a quintessentially Latin American country. One feature of this Latin American-ness is the fact that the country still has a large number of citizens who are not able to connect online or even operate a computer.

In Bradesco’s own internal studies, it was revealed that approximately 13 million of the bank’s 27 million customers had no access, whatsoever, to internet banking facilities. The bank itself has undergone a campaign to bring both financial and technological literacy to its customers. There has even been talk of the bank providing all of its underprivileged customers with mobile devices, such as Androids or iPhones, in order to allow them to access the much more efficient internet banking options that the bank has on offer.

Learn more about Luiz Carlos Trabuco: https://www.terra.com.br/economia/trabuco-assumira-presidencia-do-conselho-do-bradesco-banco-nomeara-novo-chefe-executivo-em-marco,9fb1d7fe927d7f26678a7543f82f02edw3u6oihm.html