In September 2008, the International Council of JPMorgan was scheduled to hold its annual meeting in São Paulo to familiarise members with Latin America’s largest economy ahead of a planned expansion.
But days later, Lehman Brothers imploded and the visit by the high-level advisory board, headed by former British prime minister Tony Blair and including luminaries such as former US secretary of state, Henry Kissinger, was postponed.
Then in November last year, the group finally made it to Brazil for the meeting.
The interest in the country from JPMorgan’s top ranks comes as the bank is embarking on a major expansion there, where its headcount has already grown sixfold.
The move is part of a wider strategy at the bank, which emerged from the crisis in better shape than many of its Wall Street peers, to try to grab market share in the fastest growing of the large emerging markets.
“What one saw coming out of 2009 in the first and second quarters was not just [the issue] that were we among the strongest on the block, but whether we were going to do something with that,” said Mary Callahan Erdoes, chief executive of JPMorgan Asset Management, who was in São Paulo to discuss expansion of the wealth management arm.
Cláudio Berquó, chief executive of JPMorgan in Brazil, concurred: “Our bank was well-run and we wanted to expand. Brazil was the logical choice.”
The bank’s push into Brazil comes as financial institutions, from banks to private equity groups, are seeking to take advantage of rapid economic growth in Latin America’s largest economy.
Aside from JPMorgan, Barclays Capital, Goldman Sachs, Morgan Stanley and other banks have stepped up hiring in Brazil to keep pace with record volumes over the past five years in mergers and acquisitions and equity and debt issuance.
For JPMorgan, Brazil is crucial to its strategy of reducing its dependence on the US by expanding in faster-growing economies.
After buying two US rivals – the investment bank Bear Stearns and the regional lender Washington Mutual – in cut-price deals during the crisis, JPMorgan now finds itself too closely tied to the US economy.
Last year, Jamie Dimon, the bank’s chief executive, placed Heidi Miller, one of his most senior lieutenants, into the new position of head of international operations.
Ms Miller’s task is to co-ordinate the efforts of JPMorgan’s various businesses – ranging from investment banking to asset management – in overseas markets.
Mr Berquó said one of the key challenges of this push in Brazil has been to find talent. Frenzied hiring, not only in the financial industry but across other booming sectors, such as oil and gas, is leading to a scarcity of highly qualified people.
“I think the shortage of people here is not only going to be in the financial sector, it’s going to be across the board,” said Mr Berquó.
While he did not give figures for compensation increases in investment banking, a survey by Brazilian search firm Dasein Executive in December found that senior executives in Brazil are on average earning higher salaries than those in New York and London.
One of the next frontiers for expansion for JPMorgan in Brazil will be asset management, with several key appointments expected in the coming month, Ms Erdoes said. Brazil has more than $1,000bn in government pension funds that will be looking for higher returns once the current interest rate tightening cycle reverses, said Mr Berquó.
The bank made an important acquisition in its emerging markets wealth management platform last year with the purchase of Rio de Janeiro-based Gavea Investimentos, a $6bn hedge fund whose founders include Arminio Fraga, a former Brazilian central bank chief.
Crucial to the investment was that the founders remained at the helm.
“We wanted the transaction to be orchestrated in such a way that it served the long-term advantage of the people who were there so they would stay, and not consider it something that they were selling,” said Ms Erdoes.
She added that JPMorgan needed to introduce a hedge fund strategy in its other emerging markets as part of its asset management businesses but quality acquisitions, such as Gavea, were not easy to find.
Regarding other acquisitions, she admitted: “Yes, we think about it all the time. But it would have to be another special situation, which are very hard to come by.
“Generally, we would always prefer organic growth over acquisitions.”
Source: www.ft.com
But days later, Lehman Brothers imploded and the visit by the high-level advisory board, headed by former British prime minister Tony Blair and including luminaries such as former US secretary of state, Henry Kissinger, was postponed.
Then in November last year, the group finally made it to Brazil for the meeting.
The interest in the country from JPMorgan’s top ranks comes as the bank is embarking on a major expansion there, where its headcount has already grown sixfold.
The move is part of a wider strategy at the bank, which emerged from the crisis in better shape than many of its Wall Street peers, to try to grab market share in the fastest growing of the large emerging markets.
“What one saw coming out of 2009 in the first and second quarters was not just [the issue] that were we among the strongest on the block, but whether we were going to do something with that,” said Mary Callahan Erdoes, chief executive of JPMorgan Asset Management, who was in São Paulo to discuss expansion of the wealth management arm.
Cláudio Berquó, chief executive of JPMorgan in Brazil, concurred: “Our bank was well-run and we wanted to expand. Brazil was the logical choice.”
The bank’s push into Brazil comes as financial institutions, from banks to private equity groups, are seeking to take advantage of rapid economic growth in Latin America’s largest economy.
Aside from JPMorgan, Barclays Capital, Goldman Sachs, Morgan Stanley and other banks have stepped up hiring in Brazil to keep pace with record volumes over the past five years in mergers and acquisitions and equity and debt issuance.
For JPMorgan, Brazil is crucial to its strategy of reducing its dependence on the US by expanding in faster-growing economies.
After buying two US rivals – the investment bank Bear Stearns and the regional lender Washington Mutual – in cut-price deals during the crisis, JPMorgan now finds itself too closely tied to the US economy.
Last year, Jamie Dimon, the bank’s chief executive, placed Heidi Miller, one of his most senior lieutenants, into the new position of head of international operations.
Ms Miller’s task is to co-ordinate the efforts of JPMorgan’s various businesses – ranging from investment banking to asset management – in overseas markets.
Mr Berquó said one of the key challenges of this push in Brazil has been to find talent. Frenzied hiring, not only in the financial industry but across other booming sectors, such as oil and gas, is leading to a scarcity of highly qualified people.
“I think the shortage of people here is not only going to be in the financial sector, it’s going to be across the board,” said Mr Berquó.
While he did not give figures for compensation increases in investment banking, a survey by Brazilian search firm Dasein Executive in December found that senior executives in Brazil are on average earning higher salaries than those in New York and London.
One of the next frontiers for expansion for JPMorgan in Brazil will be asset management, with several key appointments expected in the coming month, Ms Erdoes said. Brazil has more than $1,000bn in government pension funds that will be looking for higher returns once the current interest rate tightening cycle reverses, said Mr Berquó.
The bank made an important acquisition in its emerging markets wealth management platform last year with the purchase of Rio de Janeiro-based Gavea Investimentos, a $6bn hedge fund whose founders include Arminio Fraga, a former Brazilian central bank chief.
Crucial to the investment was that the founders remained at the helm.
“We wanted the transaction to be orchestrated in such a way that it served the long-term advantage of the people who were there so they would stay, and not consider it something that they were selling,” said Ms Erdoes.
She added that JPMorgan needed to introduce a hedge fund strategy in its other emerging markets as part of its asset management businesses but quality acquisitions, such as Gavea, were not easy to find.
Regarding other acquisitions, she admitted: “Yes, we think about it all the time. But it would have to be another special situation, which are very hard to come by.
“Generally, we would always prefer organic growth over acquisitions.”
Source: www.ft.com
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