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By Guillermo Parra-Bernal
SAO PAULO, Nov 9 (Reuters) - Itaú Unibanco Holding SA appointed Cândido Botelho Bracher to replace Chief Executive Officer Roberto Egydio Setubal when his term expires in April, wrapping up a four-year succession plan at Brazil’s largest bank by market value.
Bracher, who is currently Itau’s head of wholesale and corporate banking, is expected to be ratified for a four-year mandate at the bank’s annual shareholder meeting slated for April, Setubal told reporters at a news conference on Wednesday.
The succession plan was part of a broad management and board reshuffle at Itaú, the second major corporate reorganization in the past three years. When Bracher, 57, steps down, Setubal will join Itau Chairman Pedro Moreira Salles at the bank’s board.
Investors and analysts have closely followed the process to replace Setubal, who has led the bank since 1994. His replacement after 23 years as CEO comes as Itaú emerges from a phase of operational transformation amid Brazil’s worst recession in eight decades.
Setubal, 62, belongs to one of the three families that control Itaú Unibanco and has been credited for turning the bank into Latin America’s most profitable lender.
Over the past three years, he shunned fast growth and instead pressed Itaú to tap the least risky credit segments, ramp up fee income, curb expenses, expand overseas and tighten loan disbursement standards.
Bracher vowed to continue Setubal’s policies. He warned that Itaú’s appetite for risk will depend on how macroeconomic and banking industry challenges evolve over the coming years.
“We will be very careful with the way we allocate or add risk for the years to come, very much in line with what has been done over the past year under Roberto,” Bracher told the conference.
“It’s a vow to continue with policies that have been vastly successful.”
Bracher is a member of the family that partly owned Banco BBA Creditanstalt SA, an investment banking firm that Itaú bought in 2003 and morphed into the conglomerate’s corporate and investment banking arm, paving the way for Itaú’s expansion into wealth and asset management services.
Setubal tapped Bracher to head DGA - Itaú’s wholesale and corporate banking division - in February 2015. His duties included overseeing investment-banking and money management activities, Itaú’s operations outside Brazil and transaction banking services.
“His rise was seen as natural in this organization,” Setubal said of Bracher’s choice as Itaú’s top executive.
Setubal’s ability to steer Itaú through years of slow growth in Brazil made it an investor favorite. Fifteen of the 17 analysts covering the bank rate it a “buy” or a “hold,” with the remaining two labeling it a “sell,” according to Thomson Reuters data.
In the past seven years, Itaú posted average return on equity of 22.2 percent, above its peers, according to Thomson Reuters data.
Itaú’s preferred shares, the most heavily traded stock on the São Paulo Stock Exchange, closed 3.2 percent lower at 36.94 reais, paring this year’s gains to 57 percent.
How Itaú will deploy excess capital in coming years without putting profitability at jeopardy or adding too much balance sheet risk, and weathering new financial technologies that threaten banks’ dominance in credit markets were listed as Bracher’s main challenges.
“It’s our view on how to add risk that will help us face these challenges,” Bracher said. “It will be the behavior of return on equity, and shareholder value, what will dictate our actions.”
Chairman Moreira Salles said there are no plans to change bylaws governing retirement ages for top management and board members.
Under the succession plan, Bracher will be replaced by Eduardo Vassimon, who will in turn hand over the chief financial and chief risk officer positions to Caio David. David is currently in charge of managing Itaú’s proprietary trading desk.
Marco Bonomi, who headed Itaú’s retail banking division DGV will take a board seat and be replaced by Marcio Schettini. Currently the head of a division comprising technology, operations and efficiency, Schettini has already been a senior vice president overseeing card and other fee income businesses. (Additional reporting by Brad Haynes and Tatiana Bautzer in São Paulo; Editing by Andrea Ricci and Diane Craft)