The great investor Warren Buffet is fond of quipping that when a star CEO takes over a bad business, the only one who leaves with their reputation intact is the business. While Bradesco is not only not a bad business but arguably a very good one, it is nonetheless competing in one of the most cutthroat banking markets in the entire world. It has been under these conditions of hyper-competition that Luiz Carlos Trabuco, widely recognized as one of the most knowledgeable and experienced bankers in Brazil, took the helm of what at that time was Brazil’s second largest banking conglomerate. The results have been mixed. But Trabuco has one major coup to his credit: the acquisition of HSBC Brazil.
From summer job to CEO
Trabuco’s story is inspirational. In an era of crony capitalism and CEOs being recruited from outside firms, it is refreshing to learn of a man who made his way all the way to the top of a firm from all the way at the bottom.
Luiz Carlos Trabuco started out his banking career in 1959. At just 18 years old, he needed a summer job to earn some extra cash. His application was accepted at the branch of a bank that was, at the time, little more than a local institution with a couple branches in the sleepy town of Marilia.
Over the next few decades, Luiz Carlos Trabuco would earn two degrees by putting himself through college and would continue rising through the ranks of Bradesco. By the late 1980s, he was a major executive vice president for the firm, managing hundreds of employees for one of the most rapidly expanding institutions in the country. It’s not a mere coincidence that Bradesco itself rose in lock step with Trabuco’s rise within it. Many insiders say that Trabuco’s talents proved to be a decisive factor in the firm’s success in each of the departments where he was given management roles.
This stellar performance record did not go unnoticed by the company’s brass. In 1992, Trabuco was given his first true executive role within the company. He was named the president of the firm’s financial planning division, at that time a minor part of the business, accounting for just a few percent of the company’s total revenues. Under Trabuco’s leadership, the financial planning business exploded. By 2003, it accounted for more than 25 percent of the firm’s profits, making it an indispensable part of Bradesco’s business.
This quickly led to Trabuco being identified as the main candidate to lead the firm’s large insurance underwriting wing. In 2003, he was appointed CEO of Bradesco Seguros. Trabuco quickly began growing the already significant business into an insurance powerhouse, eventually leading it on to become the single largest underwriter of retail insurance policies in all of Brazil. This phenomenal growth earned him the trust and admiration of the board and the executive suite. Thus, in 2009, when outgoing CEO Mario Cypriano was slated to step down, after reaching the mandatory retirement age of 65, Trabuco was the natural candidate to take his place.
But leading the firm as a whole would prove more difficult than growing any of its individual arms. Trabuco inherited a firm that had largely played out its organic growth. With the Brazilian banking industry now largely matured, the only way to generate significant organic growth would be to steal customers away from its arch rival, Itau Unibanco. But there was still one sure-fire way to achieve quick growth. Trabuco needed to find a suitable target for acquisition.
In 2015, he found it. HSBC Brazil was dissatisfied with ongoing losses in the Brazilian market. They wanted out. Trabuco jumped on the case, quickly making an attractive offer to acquire all of HSBC’s Brazilian assets. Eventually, Bradesco acquired the firm for $5.2 billion, in an all-cash deal.
Trabuco has not achieved growth. But going forward, he has positioned his firm to be the most competitive bank in Brazil.
Learn more about Luiz Carlos Trabuco: https://pt.wikipedia.org/wiki/Luiz_Carlos_Trabuco_Cappi