Every Bradesco employee knows the name Mario Cypriano. The Famous CEO, who led the firm from 1999 to 2009, was responsible from taking the bank from $5 billion to a whopping $30 billion in assets. His tenure also oversaw the price of the stock eventually increase by more than 100 times. For his successor, his would be difficult shoes to fill.
However, the man who would come to replace him, Luiz Carlos Trabuco, was, perhaps, the only man in Brazil up to the task. With more than 40 years of banking experience, all of it spent within Bradesco, Trabuco was one of the most qualified and experienced bankers in the country. But his tenure would be markedly different. While the reign of Cypriano had been during a wildcat growth phase in the company’s history, by the time Trabuco took the helm, the market and the company’s prospects had markedly shifted. The days of easy growth were long gone.
What does organic growth even mean in a duopolistic market?
While there is no doubt that some of Bradesco’s growth during the Cypriano miracle years was a result of accreting business and customers organically, much of it came from the strategic acquisitions of lesser firms. But by the time Cypriano left in 2009, there were precious few possibilities that existed for continued growth through acquisitions. As Luiz Carlos Trabuco Cappi himself noted, a single big acquisition could easily realize the same growth targets as a decade of organic growth in the current marketplace. For this reason, it was widely understood that Trabuco’s tenure would be marked by the search for a few, big acquisitions, rather than a continuation of his predecessor of snatching up every mom-and-pop shop in the country while hoping to naturally attract more customers through marketing gimmicks.
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Trabuco waited patiently. Six years passed, but in 2015, word on the street started spreading that HSBC, the second-largest non-state bank in the world, was taking a bath on its Brazilian holdings and wanted out. The international conglomerate was having difficulty keeping the key talent necessary to remain competitive in Brazil’s cutthroat banking sector and could no longer justify the costs. Trabuco quickly sprang into action.
He quickly drew up a letter of intent. By mid-2015, the deal for Bradesco to acquire all of HSBC Brazil’s assets, for an all cash purchase of $5.2 billion, was all but sealed. By late 2015, Trabuco announced that the sale was complete. With that, Bradesco was instantly catapulted back to the number-one bank in Brazil in more than six categories. This audacious deal helped earn Trabuco the 2015 Isto E Dinheiro Entrepreneur of the Year Award, giving him worldwide attention. He had fulfilled his own prophesy and realized ten years worth of organic growth in a single deal. But things were not all rose-colored.
Aside from the many managerial challenges that the acquisition has presented, Trabuco Cappi’s tenure has seen the stock price of Bradesco stagnate. Since 2009, the firm’s stock price has only barely nudged upward. This is a disappointment for stockholders, who were hugely optimistic, coming off the heels of the wild growth phase overseen by Cypriano. But this was also a new market. The vast majority of the organic growth in the industry itself was coming to a close as most Brazilians with economic means had, by 2009, already established banking services. The extreme consolidation of the industry also has continued apace, making it very difficult for the remaining firms to truly differentiate themselves or create new profitable niches.
But for Trabuco, the HSBC deal was a capstone on an extraordinary banking career.
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