SAO PAULO, Nov 6 (Reuters) - JPMorgan Chase & Co expects faster growth in transaction and private banking activities in Brazil following the exit of HSBC Holdings Plc, the bank’s top executive in the country said on Friday.
A challenging outlook for banks in Brazil stemming from high borrowing costs, the deepest recession in a quarter century and mounting political turmoil, could pave the way for growing market share in private banking, said José Berenguer, JPMorgan’s president in Brazil.
In August, HSBC sold its local unit to Banco Bradesco SA, which wanted to grow in segments linked to the rich like wealth management and private banking, and also international transactions. However, since the sale, many HSBC clients departed for international banks in search of a global platform for their transactions and investments.
“The biggest opportunity at this point is in private banking. Some shops and banks are retreating, which hands us good opportunities,” Berenguer said at a São Paulo event.
JPMorgan has hired around 40 people net in Brazil this year, Berenguer noted, adding that the bank’s loan book in Latin America’s largest economy is growing. HSBC’s exit is also creating opportunities in cash management as well as currency and trade activities, he said.
Demand is growing for cash management and payment processing services in Brazil, where local and multinational firms are often hobbled by burdensome red tape and taxes. Emerging market economies will account for two-thirds of growth in transaction banking in the next decade, Boston Consulting Group said recently.
When Brazil’s economy took a turn for the worse around 2013, some global banks shifted focus from equities and advisory to fixed-income investments, structured products and transactions. With demand for advisory services slumping as Brazil braces for its longest recession since the 1930s, private banking and transaction banking offer a lifeline for foreign players here that are struggling with rising operating costs.
Last month, Deutsche Bank decided to move its Brazil equity and bond trading activities to New York, leaving mainly payment processing, cash management, asset management and corporate finance units in Brazil. (Reporting by Cesar Bianconi and Guillermo Parra-Bernal; editing by G Crosse)