Pursuit of investors spurs fierce competition for wealth managers
In order to poach a group of private bankers from XP Inc., BTG Pactual offered as much as five years' worth of salaries as a bonus. XP countered by outsmarting BTG in its negotiations with a team that had just left Credit Suisse and committing to invest at least R$100 million with them - all that after hiring a department head from Santander. Not to be outdone, BTG is expected to handicap a transaction by Crédit Agricole: while the French bank launched a process to sell its portfolio, BTG formed a partnership with its leading executives. Bradesco, meanwhile, made an agreement with J.P. Morgan and is trying to get the American bank's clients and staff in Brazil - although Credit Suisse already signed up some big J.P. Morgan names to build its team back up.
These banks declined to comment on the matter, but such moves make clear that the fight for investors' money amid negative real interest rates stopped being limited to the retail market and has reached the big fortunes. In the private banking segment, the fight is happening through the poaching of professionals handling these portfolios, in the expectation that clients - and money - will follow.
Prior to 2019, the biggest moves were by foreign banks buying independent wealth managers in Brazil. However, just as in investment banking, Brazilian firms have now taken a more active role.
At stake is the private-banking market, with R$1.3 trillion under management. "The ones who were generating more aggressiveness and inflation in the value of bankers were BTG and XP, which had already waged this fight in retail," one banker says. To finalize agreements, banks paid bonuses to the professionals and also lump sums for them to cover the costs of setting up a new business and consolidate the partnership. In some cases, they opt for creating a new venture and attract the executive with the title of entrepreneur.
When it signed up a group of 19 people from XP, seven of them bankers, BTG set up a venture and paid a bonus to cover the risk of the business and gave it time to get off the drawing board. Using another strategy, BTG evaluated Crédit Agricole's private-banking portfolio, of about R$7 billion, but decided to negotiate directly with the executives. Six of them will set up a wealth management firm and BTG will pay a lump sum to have an exclusive ten-year contract, sources say.
When XP negotiated with a group that left Credit Suisse in July, it did not offer a job contract. The bankers' group...
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