SAO PAULO — JPMorgan Chase & Co. is slowing down its pace of growth in Brazil this year, preferring to absorb its recent rapid expansion and see how the market develops this year, said the bank’s chief executive in the country said.
JPMorgan Chase doesn't have immediate plans for acquisitions in Brazil, Claudio Berquo said, either because there aren't players or they are too expensive.
After the bank tripled its staff in three years, it has 900 employees in Brazil, and plans to add around 50 more this year, Berquo said.
Brazil is "overbanked," with every major global player already present in a market of well-capitalized and extremely competitive local players, the executive said. JPMorgan Chase is careful not to go up against local banking giants such as Itau Unibanco Holdings SA and Banco Bradesco SA in the areas in which they are strongest, he said.
"We want to be more local than the foreigners and more foreign than the locals," Berquo said.
Brazil's capital market has had a better start in 2012 than had been expected back in September and October, when the view appeared to be bleak, he said. "This year is the year of debt," Berquo said, adding he also expects to see a number of important share offerings. Much of the work will have to be done in the first part of the year, as the market will dry up as the U.S. election cycle gets under way later in the year, he said.
Overseas bonds issued by Brazilian companies soared in the first two months of 2012, as global markets leapt back to life after six months of worrying about European debts, according to the Brazilian Association of Capital Market Institutions, or Anbima.
Two years ago, JPMorgan Chase added a foreign-exchange team to handle flow transactions--low-margin, high-volume currency contracts that are a booming business and allow JPMorgan Chase to get a feeling for what is going on in the currency market, he said.
The Brazilian government's steps to contain the currency have had relatively little impact on companies or long-term investors, Berquo said. Most established Brazilian corporations that borrow overseas now take out 10-year loans; if companies aren't in that category, they have the option of a private placement, he said.
The steps may help develop the local corporate-bond market, which is practically nonexistent today. With interest rates coming down and companies locked out of the medium-term overseas market, local-bond sales "could start to fly," Berquo said.