Goldman to boost Brazil client base
SAO PAULO: Goldman Sachs Group Inc plans to increase the base of corporate clients it covers in Brazil by half this year as demand for corporate loans, structured finance and advisory services grows in Latin America’s largest economy, according to president and chief operating officer Gary Cohn.
The New York-based firm expected to serve around 300 companies by December, about 100 more than currently, Cohn said at a news conference in Sao Paulo. Over the past year, Goldman Sachs has doubled the capital base of its Brazilian unit and hired aggressively to expand in the country to take on tough local rivals, even as competition from international financial firms wanes.
To step up client coverage, Goldman Sachs could hire 50 or more bankers to work in credit and wealth management – a pair of fast-growing market segments, he said. Growth will take place despite the increased state presence in the economy because the firm’s ability to adapt to tough market conditions helps it find business opportunities as most global rivals retreat.
“We are very happy with our results in Brazil,” Cohn said. “We are more bullish on Brazil than many people out there. We have a multiyear plan top build our Brazil business.”
Cohn said that most big investment banks with the exception of Goldman and JPMorgan Chase & Co were taking “a substantial step back” from capital markets as a result of heavy losses suffered during the global financial crisis. Competition in Brazil was getting tougher by the day, he said, as it was in some Asian markets such China and Hong Kong.
Goldman Sachs is seeking fast growth in Brazil, where demand for debt and hedging instruments has swelled as interest rates have fallen to all-time lows this year. Companies and investors are stepping up demand for corporate bonds, assetbacked securities and private equity fund-related vehicles that post higher returns than equities and government debt.
The bank, which increased the capital of its Brazilian unit to US$400mil last year, has doubled its workforce there over the past two years to about 300 people. Currently, Goldman Sachs’ wealth management division in Brazil had about US$1bil in assets, he noted.
Expansion in Brazil would depend on local and global growth conditions, said Cohn, who has been a president of the investment bank since 2006.