The last eight years have been a bit disappointing for Grupo Bradesco, the second-largest financial services firm in Brazil. After experiencing phenomenal growth throughout the 2000s, the firm had largely burned through all its sources of organic growth and was looking at a stagnant future, both in its stock price and in its ability to grow its revenues, unless something radical was done to jar it off the course it was one.
Despite having one of the most stellar careers in Brazilian finance and being widely acknowledged as one of the country’s leading banking experts, Luiz Carlos Trabuco had not been able to make significant headway in growing the company. But in 2015, Trabuco did manage to pull of a major coup for the firm. The acquisition of HSBC Brazil for $5.2 billion in cash instantly rocketed Bradesco back on top of the Brazilian financial sector in many categories, putting them back in contention to become the country’s undisputed leading bank.
But even though the stock price is, again, clearly trending upward, it is still no where near its 2008 highs. But the upward momentum does indicate that the markets have given a vote of confidence to Trabuco’s strategy of pursuing growth right up to the number one spot in the banking market, no matter whether its organic or through acquisitions.
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Even the biggest stars have limits
Part of the reason that many industry participants have felt disappointed with Trabuco’s performance thus far may have far more to do with their own unrealistic expectations than the CEOs abilities. Trabuco had gained a well-earned reputation as someone who could work magic on any department he was given control of. Coming from a different background than many of his peers in financial management, Trabuco, with a masters degree in social psychology, was able to approach the banking business from the perspective of an expert marketer. While this approach may not be the best one in industries where the end product is all that counts, in a commodity business like banking, where differentiating the end product can be all but impossible, the ability to understand customer’s needs and approach the business from a marketing standpoint proved to be a highly successful means of growing the business.
Trabuco understood better than perhaps anyone else in the finance sector at the time that Bradesco would not be competing primarily on the merits of its products. Instead, the firm would compete on its ability to provide excellent customer service and meet the expectations of clients, even in areas where such things would apparently have no relationship to banking.
One example of this transformation of the product-focused model to the service-focused model was Trabuco’s development of high-net-worth client services in Bradesco’s financial planning division. Prior to Trabuco’s reign as the division’s president, it had been thought that all customers should be treated equally, no matter their value to the bank. Taking a page from highly successful North American firms like J.P Morgan and Charles Schwab, Trabuco rejected the old model. Instead, he created a high-net-worth banking service, complete with separate, luxuriously appointed office suites and personal bankers assigned to be on-call to handle all of the clients’ needs.
This proved to be a tremendous success. In the 6 years he ran the financial planning division, Trabuco grew it from a largely irrelevant business line into a division accounting for more than 25 percent of the firm’s total profits. Trabuco had similar results leading other divisions. By the time that outgoing CEO Mario Cypriano was slated to retire, in 2009, Trabuco’s vision of competing on service had become widely accepted at the firm, and he was the obvious choice to become the company’s next president.
However, his tenure has been largely marked by stagnation. But Trabuco did have one major victory. In 2015, he completed the purchase of HSBC Brazil. Whether he will be able to continue to grow the firm is anyone’s guess. But Trabuco’s track record of success gives cause for optimism.
Find more about Luiz Carlos Trabuco: http://www.consultasocio.com/q/sa/luiz-carlos-trabuco-cappi