December 5, 2023

The partnership between UBS and BB will be maintained even after the purchase of Credit Suisse

The partnership between BB and UBS gave broad scope to the Swiss bank’s business in Brazil filming: Fernando Becerra / Agência Senado

Banco do Brasil hopes to maintain its partnership with Swiss bank UBS despite the purchase of arch-rival Credit Suisse, which it announced last Sunday. The initial reading of the hastily closed deal, to prevent the crisis from spreading to the bank, is that “there will be no impact on the partnership” in Brazil, which is entering its third year.

“The joint venture will continue to operate normally,” says a source close to the bank, who did not comment on how the final structure will look after the Credit Suisse purchase. The partnership was signed in September 2020 and has given scope to UBS’s business in Brazil. With few assets in the country, the Swiss bank had the opportunity to use the balance sheet of BB in the partnership to fund fixed income issues, a market dominated by local banks. At the same time, the Brazilian financial institution advanced in coordinating issues and overseas equities, which were UBS’ strengths.

Credit’s investment arm in Brazil is the target of selling rumours

There is still much uncertainty about how private credit investment banking operations will be accommodated in Brazil, due to the partnership between BB and UBS. Rumors of the sale of this area have been on the market since September last year, when the credit situation began to deteriorate. Prior to its acquisition, Credit had always denied intending to sell this arm of the company.

The process must benefit competitors

For Citi, there are opportunities for intense movement to hire executives in the wake of the sale of credit to UBS as the implications of the joint venture deal with BB have yet to be crystallized. If this movement does happen, it could lead to significant market share gains for competitors like BTG Pactual, XP and Itaú Unibanco.

It continues after the announcement

“Competitors may target Credit Suisse bankers in order to acquire client assets, similar to how BTG Pactual has dealt with independent XP dealers in the past,” Citi analysts say in a note to clients.

Last year, BB talked to UBS in an effort to expand its presence in the United States, to serve wealthy Brazilians and other Latin American countries who live there, according to sources. When connected, BB and UBS did not hang.

This column was published on Radio on 03/20/2023, at 6:15 PM

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