Brazil private banking debate: Brazil’s problems prompt safety-first approach

September 17, 2014

Private banking clients in Brazil face challenging times, bankers concede. The economy is under pressure and the country could yet suffer stagflation. Furthermore, an unpredictable presidential race leaves markets in limbo. However, bankers are confident their well-educated client base will not over-react, and instead maintain their long-term strategies

Executive summary

• Brazil’s economy is struggling and could face stagflation
• Close presidential race adds to uncertainty
• Private bankers advocate a safety first investment strategy
• However, Brazilian clients are better educated than ever and maintain their risk profiles
• Use of credit is rising

Euromoney As we sit here in São Paulo in early August, with an election a few months away, how are clients responding to Brazil’s current, complex situation?

JW, Bradesco It is a very challenging moment for clients. Last year we discussed how clients were looking longer-term, how they were more accepting of investments with six-to-eight year terms, but, at least at Bradesco, because of the uncertainty and volatility clients are going back into short-term, liquid assets. Local interest rates are quite high, at 11%, and with so much uncertainty we really don’t know where the stock exchange will go: it could be 50,000 or it could be 70,000.

So it isn’t wrong to consider short-term, liquid assets for the time being – I don’t think you can gamble too much with the money that should pass to the next generation.

Brazil private banking debate: Brazil’s problems prompt safety-first approach

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