Category Archives: Bank Expert

Is Luiz Carlos Trabuco Cappi Secretly Pushing Bradesco To Become A Monopoly?

Over the course of Latin American history, a history that has been constantly marred by instability, revolutions, insurgencies and violent civil wars, the monopoly business model has taken hold in a way that simply has not happened elsewhere. While many Latin American countries are, today, rapidly joining the ranks of the developed world, Brazil being chief among them, the political dynamics of the region are still often markedly different than those found in more traditionally developed societies, like the United States.

This leads to the interesting conclusion that many of the monopolies that have existed throughout the recent history of Latin America have actually done far more good than harm. Companies such as International Telephone and Telegraph and the United Fruit Company, both of which held iron-grip monopolies over Central and South American territories that many would rightfully describe as being nearly fascistic, also brought tremendous growth and development to the countries in which they operated. It can hardly be argued that places where nearly no citizen had access to a telephone and where many were subject to seasonal starvation would have been better off if the companies in question did not put a swift and decisive end to those conditions of abject impoverishment.

It is in this context, then, that we turn to the reign of Luiz Carlos Trabuco Cappi, a man largely responsible for the rapid expansion of banking services within Brazil to nearly all of that country’s citizens. As the CEO of Bradesco, the largest bank in Brazil by some measures, it has been clear enough to many industry observers that Trabuco Cappi’s grand strategy involves turning Bradesco into at least a soft monopoly on Brazilian banking. This would, of course, come as no surprise, as the Brazilian banking industry has been consolidated to the point where there are really only two main competitors in the nation’s banking sector. They are Itau Unibanco and Bradesco.


A high risk, volatile strategy but with the ultimate prize

Since taking over as CEO at Brazil’s most important bank, Trabuco Cappi has made it crystal clear what his main goals are, through aggressive action, if not words. He is seeking to grow the company by any means necessary.

Trabuco Cappi inherited a firm from his predecessor, Mario Cypriano, that had experienced some of the most spectacular growth of any major Brazilian company in history. Over the decade of the 2000s, the company’s stock price had increased by more than 100 times amid rapid expansion of its market share. When Trabuco Cappi took over in 2009, it was clear that the Brazilian economy would not support anywhere near the level of organic growth previously seen. At the same time, the industry had already consolidated to the point where additional strategic acquisitions would be difficult to come by. It looked to be a tough road ahead for Trabuco Cappi, in a market where any kind of growth would be hard won.

For the first six years of his tenure, the company struggled just to maintain its market share. Within a year of Trabuco Cappi taking the firm’s highest post, archrival banks Unibanco and Banco Itau merged, creating the largest banking conglomerate in the country and setting Bradesco back to a distant second-place in the banking sector. This was viewed negatively by the market. Over the next few years, the company’s stock price would plummet, reaching less than 50 percent of the value it held when Trabuco Cappi took office.

But then in 2015, HSBC Brazil put all of its Brazilian assets in play. The global banking giant had been losing heavily on its Brazilian operations and was looking for a quick exit. Trabuco Cappi put together a deal to acquire HSBC Brazil for $5.2 billion in cash.

The deal instantly rocketed Bradesco back to the number-one slot across a wide number of measures, putting the bank in a position to potentially run Itau Unibanco out of its markets.

Learn more about Luiz Carlos Trabuco Cappi;