BTG Pactual

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Banco BTG Pactual
Sociedade Anônima
Traded as BM&F Bovespa: BBTG11
Euronext: BTGP
Industry Financial services
Founded 1983 in the city of Rio de Janeiro
Number of locations
 30, such as: Sao Paulo, Rio de Janeiro, Brasilia, Belo Horizonte, Porto Alegre, Recife, Salvador, Ribeirao Preto, Curitiba, Cuiaba, Sorriso, Varginha, Santiago, Medellin, Bogota, Mexico City, Buenos Aires, Lima, San Jose, Naples, New York, Stamford, Houston, Johannesburg, Geneva, Kiev, London, Nairobi, Shanghai, Hong Kong
Services Investment banking
Asset management
Wealth management
Revenue Increase BR$ 6.7 billion (2014)
Number of employees
 3,200 (2015)
Website www.btgpactual.com.

BTG Pactual is a Brazilian financial company that operates in the markets of Investment Banking, Wealth Management and Asset Management. It offers advisory services in mergers and acquisitions, wealth planning, loans and financings, as well as investment solutions and market analyses.

With headquarters in São Paulo, the clients of the Bank – which started out as a brokerage firm in 1983 in Rio de Janeiro – are companies, retail and institutional investors, as well as municipal, state and federal governments. With assets of R$218,3 bn and shares traded on the BM&F Bovespa and NYSE Euronext, BTG Pactual has offices in the main Latin American cities and in the world's leading financial centers.[citation needed].

Since December 3 2015, BTG Pactual is controlled by the Top Seven Partners, composed of members Marcelo Kalim, Roberto Sallouti, Persio Arida, Antonio Carlos Canto Porto Filho, James Marcos de Oliveira, Renato Monteiro dos Santos and Guilherme da Costa Paes. The group has acted as bank executives during André dos Santos Esteves' management, a former BTG Pactual controller and CEO.

The change came after the arrest of Esteves, who is still a shareholder of the bank, but without voting power. Esteves was arrested on November 25 in the Lava-jato operation, promoted by the Brazilian Federal Police. Since then, Roberto Sallouti and Marcelo Kalim are co-CEOs of the bank. Persio Arida is chairman of the Board of Directors.

Since then, the executives promoted different measures to disassociate the image of BTG Pactual of its former CEO, especially after the reaction of the capital market (the bank's units on BM&FBOVESPA depreciated more than 50% within two weeks after Esteves arrest and continue to depreciate) and the lowering of the rating agencies Moody's and Fitch.


Business Lines

Investment Banking

As a consultant or financier, BTG Pactual helps companies, other financial institutions and governments to obtain funding via the issuance of securities, and structured and guaranteed loans. It also provides services in M&A, IPOs, FX operations, as well as trading in derivatives and commodities.

Asset management

With a focus on capital preservation for institutional clients, it offers consultancy and investment solutions in fixed income, money markets, public and private equity, as well as stock, receivables-backed, real estate, hedge and private equity funds.

Wealth management

BTG Pactual area responsible for managing customized investment portfolios for High Net Worth (HNW) individuals. It also offers financial advisory services to families that need to protect and expand their wealth, as well as succession and real estate planning.[citation needed]

Main financial indicators

BTG Pactual, considered one of the main Investment Banks in Latin America[citation needed], has the following financial results (2014):

  • Total revenues: R$6.7bn
  • Net profit: R$3.4bn
  • Net equity: R$18.6bn[citation needed]

Structure

BTG Pactual is formed by two joint controlling subgroups: Banco BTG Pactual and BTG Pactual Participations. The latter is the managing partner and controller of BTG Investments. Banco BTG Pactual is the main operating company of the group. On 15 September 2015, BTG Pactual acquired Banca della Svizzera Italiana (BSI) / Banco da Suíça Italiana). Founded in 1873 in the city of Lugano, BSI is a financial institution specialized in wealth management for private and corporate clients.

History

BTG Pactual began in 1983, in the city of Rio de Janeiro, with the foundation of the brokerage firm Pactual DTVM. Since then, the company has achieved the following milestones:

  • 1986: creation of the Asset Management and Investment Bank areas;
  • 1989: opening of office in São Paulo and internationalization of operations;
  • 1994: start of Wealth Management activities;
  • 1998: acquisition of Banco Sistema, ex-Bamerindus;
  • 2000: opening of Pactual Asset Management S.A. DTVM;
  • 2001: opening of Pactual Banking office in Cayman Islands;
  • 2002: creation of Pactual Corretora de Mercadorias LTDA
  • 2003: start of expansion in Brazil, with opening of Belo Horizonte and Recife offices;
  • 2006: UBS buys Banco Pactual and creates UBS Pactual;
  • 2008: Ex-partners of Pactual and managing directors of UBS establish BTG as a global company;
  • 2009: BTG buys out UBS share holding and creates Banco BTG Pactual;
  • 2010: US$1.8bn capital increase via sale of 18.65% of the Group to international investors;
  • 2011: acquisition of co-control of Banco PanAmericano;
  • 2012: BTG Pactual buys the brokerages Celfin Capital in Chile and Bolsa y Renta in Colombia; BTG Pactual also held its IPO, raising R$3.65bn, making it one of the 20 biggest listed companies on the BM&FBovespa;
  • 2013: Banco BTG Pactual, via the subsidiary BTG Pactual Timberland Investments Group LLC, acquires forest asset management contracts from Regions Timberland Group, a division of Regions Bank. The acquisition expands the Bank´s investment platform in forest assets. The deal establishes BTG Pactual as the biggest independent forest asset manager in Latin America and one of the biggest in the world, with assets of US$3bn and a portfolio with 716,000 hectares of land in North America, Latin America, Europe and Africa;
  • 2014: BTG Pactual acquires 100% of the shares of BSI (Banca della Svizzera Italiana).

Controversies

Insider Trading

In November 2007, André Esteves' insider trading "force[d] the bank to amend its prospectus, give investors the option of reconsidering bids for BTG shares, and put a cloud over one of this year's highest profile bank deals."[1] In "a statement, BTG Pactual said Esteves believed the allegations had no merit and was determined to appeal the decision."[1] However, the CEO of BTG Pactual André Esteves, did not file an appeal, citing cost and a loss of time as his reasons.[2]

In 2013, Charles Rosier, a partner of BTG Pactual,[3] was convicted in the largest insider trading case in the history of France.[4][5][6] While at UBS, at the end of March and early April 2008, he and his cousin Joseph Raad used inside information to purchase shares and options in Geodis just before the announcement of a takeover bid. Of significance, Rosier worked at UBS when he participated in the insider trades when André Esteves, now CEO and partner and director of BTG Pactual, was still employed by UBS as head of fixed income in charge of $1.7 trillion USD.[7] Esteves had also committed inside trades while at UBS only a few months earlier in November 2007.[8] Also of significance, Huw Jenkins, partner and director and chairman of BTG Pactual and formerly CEO of UBS Investment Bank, was a consultant to UBS at the same time.[9]

Pactual sale to UBS and resale to BTG

Arthur Rutishauser in Sonntagszeitung argued that the way 27% of BTG was acquired is an example of an insider case: André Esteves sold the bank in 2006 for 3.1 billion Swiss Francs to UBS, where at that time Huw Jenkins was a key decision maker, and heavily involved in that transaction.[10] Esteves later repurchased Pactual back in 2009 for 2.5 billion Swiss Francs after being allowed to leave UBS to set up BTG.[10] Huw Jenkins was ejected from UBS in 2007 and disappeared from view, to then resurface as a senior partner and Board member at BTG Pactual in 2010.[11]

BTG Pactual Purchase of BSI

On 14 July 2014, BTG Pactual purchased Banca della Svizzera Italiana (BSI), with the purchase being subject to the approval by the Swiss Financial Market Supervisory Authority (FINMA).[12] The current CEO of FINMA is Mark Branson who was previously the CEO of UBS Securities Japan Ltd.[13] Of significance, Branson reported directly to Huw Jenkins, the CEO of UBS Investment Bank and who is now a partner and director of BTG Pactual.[14][15] Branson also worked alongside André Esteves, now CEO of BTG Pactual while both worked at UBS in its management committee in November 2007 during which time Andre Esteves committed insider trades.[16] Under Mark Branson’s leadership, FINMA is in the process to now decide whether to approve BTG Pactual’s purchase of BSI, despite BTG Pactual being owned and operated by his former boss and colleague Huw Jenkins and André Esteves, although it clearly does not implicate any illegal activity whatsoever. [15]

Lawsuit in Hong Kong by Ex-Employee Zeljko Ivic

The Chief Executive Officer (CEO) of BTG Pactual André Esteves, and a member of the board of directors Huw Jenkins, reportedly "made fraudulent misrepresentations to get Zeljko Ivic to sign agreements with Banco BTG Pactual SA, according to a lawsuit filed with the Hong Kong High Court."[17][18] Robert Tibbo, Zeljko Ivic's attorney, has stated that Zeljko Ivic played a key role in Banco BTG Pactual SA's IPO.[19] Ivic states that he was the key player in fundraising with nine entities, including the China Investment Corporation, GIC Private Limited, as well as the Agnelli and Rothschild families.[20] As such, Ivic is making a case against Banco BTG Pactual SA, BTG Pactual Asia Ltd., CEO Andre Esteves and director Huw Jenkins,[21] and $20 million USD is the amount of the lawsuit, which will serve as compensation for the value of BTG Pactual's shares, promised partnership and unpaid bonuses to Zeljko Ivic.[22][23][24]

Conflict with Brazilian Regulators and Central Bank

Bloomberg L.P. reported that “In three separate cases since 1999, Brazil’s central bank and securities commission alleged Pactual had illegally transferred profits to foreign funds to disguise gains and avoid taxes.”[25] In the last case, Pactual was ordered to pay 4 million reais, in addition to the fines charged to the bank partners themselves.[25]

Involvement in Sete

On 19 June 2015, Marcelo Odebrecht, the CEO of Brazil’s largest construction company was arrested by Brazilian Federal Police. Odebrecht was arrested on allegations of fraud, corruption, money laundering and organized crime relating to contracts worth billions of dollars with the rigs company Sete and the state oil company Petrobras. While in detention, Odebrecht attempted to pass a handwritten note to his lawyers that included and mentioned André Esteves, thus potentially implicating BTG Pactual and Andre Esteves in Lava Jato (Carwash). One of Sete’s largest shareholders is BTG Pactual headed by CEO André Esteves. In the handwritten note, Odebrecht requested his lawyers to “destroy rigs’ email.”[26][27][28] On 25 November 2015, Esteves was arrested as part of a criminal investigation into Petrobras after he was investigated for his bank's dealings with the oil company.[29]

External links

References

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  25. ↑ 25.0 25.1 Lua error in package.lua at line 80: module 'strict' not found.
  26. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  27. ↑ Lua error in package.lua at line 80: module 'strict' not found.
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  29. ↑ Lua error in package.lua at line 80: module 'strict' not found.
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