Throughout the course of its tumultuous history, Latin America has had a love-hate relationship with a large number of corporate monopolies. In a region that has long suffered from unstable governments and widespread poverty, a number of companies, which anyone would have to admit are textbook, hard monopolies, have brought both stability and modernity to locales that had neither. At the same time, corporate interests have been fingered in coups and society-wide oppression from the Noriega regime to that of Anastasio Somoza and Augusto Pinochet.
No matter what one thinks of the Latin American monopoly, there is not doubt that it has played a central role in the development and industrialization of the region. Names such as International Telephone and Telegraph, The United Fruit Company and Telmex evoke strong emotions, both positive and negative, to residents across much of Latin America. The truth is that, for a variety of historical and anthropological reasons, the monopoly has proven more relevant, beneficial and enduring in Latin America than it has in more developed countries. And the stakes for those who can play the game of Latin American Monopoly are astonishingly high.
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The Rise of Bradesco
Recent, widespread consolidation in the Brazilian banking industry has led many experts to warn that the sector is ripe for the appearance of a hard monopoly. The industry is dominated by two major banks – Itau Unibanco and Bradesco. The latter has been one of the most stunning examples of growth out of seemingly nothing that Brazil has ever seen. Amounting to little more than a small local bank, as late as 1970, today, Bradesco is one of the largest financial companies in Latin America.
Its inveterate CEO, Luiz Carlos Trabuco Cappi, is largely responsible for the bank’s tremendous growth. Since joining the firm in 1969, Trabuco Cappi has done more than, perhaps, any employee in the firm’s history to transform it into a global powerhouse.
The company’s most spectacular growth came throughout the decade of the 2000s, when the stock price increased by more than 100-fold and the firm rapidly expanded its assets and its client base. This eventually resulted in Bradesco briefly snatching the number-one spot in the Brazilian banking industry. But its time as king of the hill was short lived. In 2009, shortly after Trabuco Cappi ascended to CEO, rival banks Itau and Unibanco merged, forming the largest banking conglomerate in the country and pushing Bradesco back to a distant second place.
By this point, so concentrated was the Brazilian banking industry that the third place bank was just a fraction of the size of either Bradesco or Itau Unibanco. This created an environment of intense competition, with both firms vying for the potential prize of holding a virtual banking monopoly over the country.
For the next six years, Itau Unibanco strengthened its position as Bradesco fell into decline. By 2014, Bradesco’s stock price had plummeted to less than 50 percent of its 2009 highs, marking a low point in the career of CEO Trabuco Cappi.
But then an opportunity knocked on Trabuco Cappi’s door. HSBC Brazil had long been losing money. It’s parent company was looking to offload all of its Brazilian assets. It figured that it could no longer profitably compete in such as cutthroat industry as Brazilian banking.
Luiz Carlos Trabuco Cappi was able to put together a deal, whereby Bradesco would acquire all of HSBC Brazil’s assets for $5.2 billion in cash. The deal marked the largest transaction in Brazilian business history and instantly rocketed Bradesco back to the number-one spot across many important measures. The firm was now back in the running to crush all of its opposition.
Today, Bradesco’s stock has recovered to all-time highs. Although Trabuco Cappi is coy about his intentions to continue growing the firm into an unchallengeable foe, observers say that his actions speak louder than any lack of words. If he can pull it off, Bradesco may become one of the most profitable banks in the world.
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