Brazilian Banks Increase Presence in Portugal to Meet Demand

RIO DE JANEIRO, BRAZIL – The United Kingdom’s exit from the European Union and the opportunity to attend to high-net-worth clients has led Brazilian banks to increase their presence in Portugal.

Itaú Unibanco will open a new office in the country this month, while BTG Pactual has received the backing of the local regulator. XP Investments and Bradesco are also circling the Portuguese market.

The total number of Brazilians living in Portugal has been increasing for years, but this trend intensified in 2019. The Brazilian population living in the country grew 43 percent last year, according to data from the Foreigners and Borders Service published by ‘Público’ newspaper.

The Brazilian community is 151,000 – but the real number is higher, as the data does not include Brazilians holding European passports.

In addition to following the money trail, Brazilian banks also target Portugal for the language ease and credit market, spurred by the interest rate in the euro zone. Today, the European Central Bank (ECB) deposit rate is -0.5 percent, while the refinancing rate stands at zero. Both are good for the whole eurozone. In Brazil, the basic interest rate is currently at 4.5 percent per year.

The president of the Federation of Portuguese Chambers in Brazil, Nuno Rebelo de Sousa, sees the wave of Brazilians in Portugal with optimism. “It is a trend that will not stop. Portugal offers great incentives to attract companies and individuals”. According to him, Brazilian clients going to Portugal need credit, and Brazilian banks need to be on Lusitanian soil.

Partner in charge of BTG Pactual’s high-net-worth individuals department, Rogério Pessoa says that Brexit has influenced choosing Portugal – but he recalled that other reasons also weighed in. “We chose Portugal as a wealth management hub (center) for Latins and Brazilians in Europe,” he said.

BTG’s operation in Portugal will be led by partner Ricardo Borgerth. “We already have R$3 billion (US$750 million) in client funds whom we serve in Portugal. We aim to more than triple that amount, beating the R$10 billion mark in the space of three to five years,” Pessoa says.

BTG’s plans include, at first, a representative office to explore the high-net-worth area, attracting investors with at least R$3 million and real estate deals. The main focus, however, is on clients with at least R$10 million in assets – a strategy already followed by the bank in Brazil, the US and Latin America.

Bradesco is also active in the Portuguese market. In addition to its presence in London, it operates a bank in Luxembourg. According to Bradesco’s CEO, Renato Ejnisman, the institution is considering opening a branch of the Luxembourg bank in Portugal to serve Brazilian clients who have migrated to the country. “There are two main poles of Brazilians with wealth. One is Miami, where we are already positioned. The other is Portugal and we are analyzing it,” the executive said.

XP Investimentos also announced its interest in landing in Portugal. To get its subsidiary up and running, however, it depends on permits that are in process of being approved, according to the newspaper O Estado de São Paulo/Broadcast. When contacted, XP did not comment.