Luiz Carlos Trabuco, The Purchase Of HSBC Brazil’s Assets, And What It Meant For Bradesco And Himself

Luiz Carlos Trabuco is the Chief Executive Officer of Banco Bradesco, a private financial institution larger than all other privately-owned banks than one within the borders of Brazil, its country of foundation and current operation. Although Mr. Trabuco has done innumerable great things for Bradesco’s reputation and operational welfare, the most significant transaction broadcasted in the public eye was the 2015-2016 acquisition of HSBC Holdings’ Brazilian financial institutional operations for $5.2 billion.

Mr. Trabuco more recently reported, after the deal was finalized in early 2016, that he first thought about attempting to purchase HSBC’s Brazilian assets related to banking in November of 2014. In the South American winter months of June, July, and August, Mr. Trabuco had first brought up the idea to the coworker that would have to approve the transaction prior to it getting anywhere, former CEO and current Chairman of the Board of Banco Bradesco Lazaro Brandao. He soon thereafter agreed to push it forward to HSBC Holdings’ executives for the initialization of negotiations between the two entities, which was formalized and sent to HSBC Holdings’ London-based operations in August of 2015.

After consulting and working with attorneys and fellow executives within HSBC Holdings’ ranks, the 5.2 billion United States Dollar ($ USD) deal was finalized in the first quarter of 2016. Worth approximately 16.3 Brazilian reals as of late September of 2017, the deal brought the equivalent of six strong years’ worth of organic growth to Banco Bradesco, as reported by Luiz Carlos Trabuco several months after the acquisition was finalized. As such, this made the deal highly valuable for Bradesco in terms of currency and growth, however, this reason wasn’t the only factor providing logical support for the transaction.

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Mergers and acquisitions have the potential to spur sizable growth within the ranks of involved parties, just as the merger between Brazilian banking giants Banco Itau and Unibanco that occurred in 2008. Prior to finalization, Banco Bradesco was the largest bank in the entirety of Brazil, a meaningful title the financial institution it had held for decades on end. However, immediately after the transaction was finalized, the newly-minted Itau Unibanco became the largest bank in Brazil. As such, it made sense for Bradesco to promptly hop on the proverbial board as soon as possible to prevent Itau Unibanco, or any other Brazilian financial institution, for that matter, from growing larger and providing further competition against Banco Bradesco.

At the time, it was common knowledge among banking executives that HSBC Brazil was performing poorly. Therefore, it was highly possible for other banks to attempt to purchase its assets. While the $5.2 billion purchase price paid by Bradesco was significantly more than the fair market value of its assets, meaning it paid loads of goodwill – an accounting term for any compensation paid in excess of the market value of assets included in any given transaction – to close the transaction, padding the proverbial pockets of the London, England, United Kingdom-based HSBC Holdings.

Luiz Carlos Trabuco has had a lengthy career, spending the entirety of his working life with Bradesco. He was born in Marilia, Sao Paulo, Brazil in 1951. He obtained his first postsecondary, bachelors-level degree from the University of Sao Paulo’s Faculty of Human Sciences, Philosophy, and Letters prior to most of his peers had even finished high school. Directly after earning this first degree with honors, Mr. Trabuco then earned another degree, this time a masters-level certificate, in Socio-Psychology. He was hired on to Bradesco’s Marilia branch in 1969 as a bank teller. After two years in this capacity, Mr. Trabuco was fortunate enough to join the ranks of its corporate headquarters in Sao Paulo.

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