Brazilian Banks Expand in Miami to Keep Up With Wealthy Clients

Wealthy Brazilians looking to escape recession, corruption scandals and political upheaval have long made Miami their destination of choice. Now some of the nation’s biggest banks are seeing the allure as well.

Itau Unibanco Holding SA, the Sao Paulo-based firm that’s the top sponsor of the Miami Open tennis tournament, is targeting $12 billion in assets under management there by December, a 9 percent increase. Grupo BTG Pactual, also based in Sao Paulo, is opening an asset-management unit in the South Florida city, and Rio de Janeiro’s XP Investimentos CCTVM SA, the broker dealer that created a Miami office last year, is adding employees.

“Every week I get a call from a Brazilian trying to find a way to live in Miami,” Carlos Gribel, head of Latin American fixed income at Andbanc Brokerage, said in an interview in Sao Paulo last month. “In Brazil, wealthy people need bullet-proof cars and security guards. In Miami, they can live and spend their vacations freely, showing off their boats, fancy cars and houses.”

They’ll need money managers nearby, the thinking goes.

Itau, which has expanded its broker-dealer and wealth-management team in Miami about 15 percent during the past three years, to 160 people, is hiring five more in 2015, according to Frances Sevilla-Sacasa, head of the unit. XP has about 20 employees there and plans to add an additional five this year, according to Bernardo Amaral, a partner at the firm. BTG declined to comment on its Miami operations.

Brazilian banks expanding in Florida are finding the pathway cleared by international competitors scaling back.

RBC, Barclays

Royal Bank of Canada decided to close its Latin America private bank, including the business in Miami, starting in 2013 because low interest rates and rising costs kept it from meeting performance targets, said Claire Holland, a spokeswoman for the Toronto-based bank. Barclays Plc, based in London, shut its Miami private bank as part of its strategy to focus on 70 other markets, Kerrie Cohen, a spokeswoman, said in an e-mailed statement. BNP Paribas SA, France’s largest bank, said last year it would sell its private-banking unit in Miami.

“Banks with sub-scale operations in Miami find it more difficult to have sustainable long-term businesses,” Sevilla-Sacasa said in an interview. Itau’s assets under management have tripled since she started there three years ago, she said.

XP Hiring

XP, whose wealth-management clients have at least $200,000 to invest with the firm, has capitalized on the departures by grabbing customers and bankers from competitors leaving the city, Amaral said. Earlier this month, XP hired Tulio Gargantini and Gabriel Jafet, both former RBC and Barclays executives, as directors for wealth management in Miami.

Itau, whose wealth-management clients in Miami typically have more than $1 million in liquid assets, expanded its operations in the city in 2006 with the purchase of Bank of America Corp.’s BankBoston business and with the 2007 acquisition of ABN Amro Bank NV’s Latin American private-banking assets serviced in Miami.

More recently, Itau consolidated its Luxembourg private-banking operation to Switzerland and Miami. It has about $20 billion in assets under management outside Brazil.

“Brazilians discovered Miami is a very interesting place to live, to have vacations, to have second homes,” Sevilla-Sacasa said. “Some are doing business here and bringing their families to become residents.”

U.S. Residents

Itau can’t work with U.S. residents because of its regulatory structure, though that could change if the firm decides to make adjustments in response to increasing demand.

“Many of our clients have an apartment or a house in Miami and they spend time in Florida, but not enough time to be considered U.S. residents,” Sevilla-Sacasa said. “This could change in the future.”

Brazil’s crime rate may convince more to make the move. The nation had 23.7 homicides for every 100,000 residents in 2013, according to the most recent data from the Brazilian Forum of Public Security, while in U.S. the rate was 4.5, according to the Federal Bureau of Investigation. In Sao Paulo state, the nation’s richest, robbery cases grew 21 percent in 2014, to 309,948, the highest in 14 years, while homicides fell 3.4 percent to 4,294, according to the state’s Security Secretary.

Gribel’s firm is a unit of Andorra-based Andbank, which has 22 billion euros ($24 billion) in assets under management globally.

“We have a broker dealer in Miami, an advisory company, and our focus is to expand Latin American wealth management,” said Michael A. Blank, managing director at Andbank, adding that the firm has about 18 employees in Miami and plans to build a team with about 25 or 30 people this year.

“Brazilian individuals in Miami are financing the construction of real estate projects,” Blank said. “They are buying homes for themselves and for their families and making a tremendous impact on the community.”