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JOSEPH SAFRA could apparently do no wrong. He has built Banco Safra into the ninth-largest bank in Brazil. His personal investment empire has almost invariably made the correct calls for close to half a century. His conservative strategy continues to keep his bank strong and able to stay one step ahead. But things are starting to change. For the first time in his career market commentators are asking if Mr Joseph, as his colleagues fondly call him, is losing his touch.
The doubts and speculation stem from two main sources. First, Joseph and his brother, Moise Safra, had part of their personal fortunes invested in pulp and paper manufacturer Aracruz Celulose. As the financial market hit turmoil in late 2008, it emerged that Aracruz held billions of reais in unhedged currency positions, leading the group into an emergency acquisition by Votorantim Celulose e Papel (VCP) and an indirect government bailout through Brazilian development bank BNDES.
The Safras came out of this potential disaster quite well. Under the terms of the Aracruz acquisition, VCP also offered to buy a 28% stake held in Aracruz by Arainvest Participações, a holding company of the billionaire brothers, for R$2.71