BTG Pactual

Banco BTG Pactual
Sociedade Anônima
Traded as B3: BBTG11
Euronext: BTGP
Industry Financial services
Founded 1983 in Rio de Janeiro
by André Jacurski, Luiz Cezar Fernandes and Paulo Guedes[1]
Headquarters Rio de Janeiro, Brazil
São Paulo, Brazil
Number of locations
Services Investment banking
Asset management
Wealth management
Revenue Decrease US$ 1.6 billion (2017)
Decrease US$ 875.0 million (2017)
Total assets Increase US$ 38.0  billion (2017)
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 began 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$218.3bn and shares traded on the BM&F Bovespa and NYSE Euronext, BTG Pactual has offices in primary Latin American cities and in the world's leading financial centers..

Since December 3, 2015, BTG Pactual has been controlled by 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 acted as bank executives during André dos Santos Esteves' management. The change came after the arrest of Esteves, who still owned shares in the bank, but without voting power. He was arrested November 25 as part of the Brazilian Federal Police's Operation Car Wash (Portuguese: Operação Lava Jato). Since then, Roberto Sallouti and Marcelo Kalim had been co-CEOs of the bank and Persio Arida chairman of the board of directors. The executives promoted measures to disassociate BTG Pactual from its former CEO, especially after the bank's shares on the BM&FBOVESPA depreciated more than 50% within two weeks after the arrest and continued to depreciate, in addition to lower ratings from Moody's and Fitch.

Business lines

  • Investment banking - BTG Pactual helps financial institutions and governments obtain funding by issuing securities, and structured and guaranteed loans. It provides services in M&A, IPOs, FX operations, and trades in derivatives and commodities.
  • Asset management - Focused on institutional clients, it offers 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 managed customized investment portfolios for high net worth individuals and helped them protect and expand their wealth, as well as plan for succession and real estate.

Main financial indicators

BTG Pactual, one of the main investment banks in Latin America, has the following financial results (2014):

  • Total revenues: R$6.7bn
  • Net profit: R$3.4bn
  • Net equity: R$18.6bn

Structure

BTG Pactual was formed by 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 Lugano, BSI specializes in wealth management for private and corporate clients.

History

BTG Pactual began in 1983 in Rio de Janeiro as 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, formerly 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
  • 2009: BTG buys out UBS shareholders and creates Banco BTG Pactual
  • 2010: US $1.8 billion 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's initial public offering (IPO) raised R$3.65 billion, making it one of the 20 biggest companies listed on the BM&FBovespa
  • 2013: Banco BTG Pactual, through its subsidiary BTG Pactual Timberland Investments Group LLC, acquired forest asset management contracts from Regions Timberland Group, a division of Regions Bank, the acquisition expanding its investment in forest assets. The deal established 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 of 716,000 hectares of land in North America, Latin America, Europe and Africa
  • 2014: BTG Pactual acquired 100% of the shares of BSI (Banca della Svizzera Italiana)

Controversies

Insider trading

In November 2007, penalties for André Esteves' insider trading "force[d] the bank to amend its prospectus, give investors the option to reconsidering bids for BTG shares, and put a cloud over one of this year's highest-profile bank deals."[2] In "a statement, BTG Pactual said Esteves believed the allegations had no merit and was determined to appeal the decision."[3] However, Esteves did not appeal, citing cost and a loss of time as his reasons.[4]

In 2013, Charles Rosier, a partner of BTG Pactual,[5] was convicted in the largest insider trading case in the history of France.[6][7][8] 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 SNCF Geodis just before a takeover bid was announced. Rosier worked at UBS when he participated in the insider trades at the time when André Esteves, now CEO and partner and director of BTG Pactual, still worked for UBS as head of fixed income, in charge of $1.7 trillion US.[9] Esteves had also committed inside trades while at UBS only a few months earlier in November 2007.[10] Huw Jenkins, partner and director and chairman of BTG Pactual and formerly CEO of UBS Investment Bank, was a consultant to UBS at that same time.[11]

Pactual sale

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 billion SFr to UBS, where Huw Jenkins was a key decision maker, and heavily involved in that transaction.[12] Esteves later repurchased Pactual back in 2009 for 2.5 billion SFr after being allowed to leave UBS to set up BTG.[12] Jenkins was ejected from UBS in 2007 and disappeared then resurfaced as a senior partner and board member at BTG Pactual in 2010.[13]

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).[14] The current CEO of FINMA Mark Branson was previously the CEO of UBS Securities Japan Ltd.[15] and reported directly to Huw Jenkins, CEO of UBS Investment Bank who is now a partner and director of BTG Pactual.[16][17] Branson also worked with André Esteves, now CEO of BTG Pactual, when both worked at UBS on its management committee in November 2007, the time André Esteves committed insider trades.[18] Under Mark Branson, FINMA decided whether to approve BTG Pactual’s purchase of BSI, although BTG Pactual wA being owned and operated by former superiors and colleagues Jenkins and Esteves, although it clearly does not implicate any illegal activity whatsoever.[17]

Misrepresentation allegation

An ex-employee of Hong Kong subsidiary BGT Pactual Asia Ltd, Zeljko Ivic, filed a claim in late 2013 alleging Banco BTG Pactual SA board member Huw Jenkins and CEO André Esteves made fraudulent misrepresentations to Zeljko Ivic to induce him to sign agreements with Banco BTG Pactual SA.[19][20] Ivic said he had played a key role in Banco BTG Pactual SA's initial public offering (IPO), which raised funds from nine entities, including the China Investment Corporation, GIC Private Limited, and the Agnelli and Rothschild families, for which Jenkins had promised him a partnership and shares.[21][22] Ivic, who valued his claim at some US$20 million, started proceedings after being dismissed in October 2013.[23][24][25] Jenkins was reported to have been served a writ in the case during a Hong Kong visit.[26]

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 revenues and avoid taxes.”[27] Pactual was ordered to pay four million reais, in addition to fines charged to the bank partners themselves.[27]

Involvement in Sete

On 19 June 2015, Marcelo Odebrecht, the CEO of Brazil’s largest construction company was arrested by Brazilian Federal Police on allegations of fraud, corruption, money laundering and organized crime relating to contracts worth billions of dollars with the oil rig company Sete Brazil and the state-owned oil company Petrobras. While in detention, Odebrecht attempted to pass a handwritten note to his lawyers that mentioned André Esteves, thus potentially implicating BTG Pactual and Esteves in Operation Carwash. One of Sete’s largest shareholders is BTG Pactual, headed by CEO André Esteves. In the handwritten note, Odebrecht askeded his lawyers to “destroy rigs’ email.”[28][29][30] 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.[31]

References

  1. ↑ http://revistaepoca.globo.com/vida/noticia/2012/04/da-tijuca-para-o-mundo.html
  2. ↑ Silvia Aloisi, Steve Slater (16 April 2012). "Insidertrading fine casts cloud over BTG Pactual IPO". Reuters. Retrieved 10 January 2015.
  3. ↑ Silvia Aloisi, Steve Slater (16 April 2012). "Insidertrading fine casts cloud over BTG Pactual IPO". Reuters. Retrieved 10 January 2015. In a statement, BTG Pactual said Esteves believed the allegations had no merit and was determined to appeal the decision.
  4. ↑ "Annual Shareholder's Meeting". BTG Pactual. 27 March 2014. Retrieved 22 January 2015. Mr. André Santos Esvetes hereby declares, for all legal purposes, that in the last five years he has not been subject to the effects of any felony convictions, penalties applied by the CVM in administrative proceedings or final and unappealable decisions, either in legal or administrative proceedings, which would prevent him from performing any professional or business activities, except for the proceeding arising from the civil investigation by the Commissione Nazionale per Le Societá e La Borsa – CONSOB, in Europe, related to the improper secondary use of privileged information in the trading of securities issued by Cremonini S.p.A., which was then negotiating a partnership with JBS S.A., executed in 2007, in which the following decisions were taken: (i) the suspension of André Esteves as an administrator of companies regulated by CONSOB; (ii) the freezing of the supposed profits from the securities trading; and (iii) the imposition of a fine. Mr. ESTEVES filed an administrative appeal, which he subsequently withdrew despite his continuing affirmation that the accusations were unfounded, in order to avoid the expense involved in such an appeal, as well as the time lost. It is important to emphasize that the above-mentioned suspension occurred during the analysis of the subsequent appeal. It is also important to note that, due to its nature, this proceeding does not reflect any criminal consequences.
  5. ↑ Brule, Jill Van Den. "Charles Rosier To Support MPOWERD's Luci Lantern Lighting Up The City Of Lights". iReach. Retrieved 21 July 2015. Luci will be distributed throughout France in the coming months with the support of Charles Rosier, a partner with Brazilian investment bank, BTG Pactual.
  6. ↑ Stothard, Michael. "French trader is fined record €14m". Financial Times. Retrieved 21 July 2015. France’s market regulator has handed out the largest fine in its history to a trader who made €6.2m from insider trading, as the watchdog joins those in the US, UK and Japan taking a tougher line on financial crimes. High quality global journalism requires investment. Joseph Raad “an experienced financier and regular investor” had information about the imminent takeover of logistics company Geodis by SNCF, the French state railway, in 2008 by his cousin Charles Rosier, a UBS banker close to the deal, according to the Autorité des Marchés Financiers.
  7. ↑ Freehills, Herbert Smith (23 October 2013). "French AMF imposes record insider dealing fine - Lexology". Lexology. Retrieved 21 July 2015. Last Thursday, the French AMF imposed a record €14m fine on trader Joseph Raad for engaging in market abuse, alleging that he used non-public information sourced from a cousin to make €6.2m in 2008 by trading in the shares and options of logistics company Geodis. The AMF claims that Charles Rosier, a banker, tipped Raad off about an impending transaction that involved French state railway SNCF bidding for Geodis, and that Raad bought Geodis shares and options worth €8m in the fortnight leading up to the announcement of the bid.
  8. ↑ "Sanction". Autorité des marchés financiers. 24 October 2013. Retrieved 21 July 2015.
  9. ↑ Brasileiro, Adriana (25 October 2007). "Brazil Billionaire Runs $1.7 Trillion in UBS Assets". Bloomberg News. Retrieved 21 July 2015. Esteves is now in charge of about $1.7 trillion in UBS assets about 70 percent more than Brazil's current gross domestic product of $1.05 trillion.
  10. ↑ Schäfer, Daniel (16 April 2012). "BTG chief fined for insider trading". Financial Times. Retrieved 21 July 2015. The bank had mentioned “ongoing civil, non-criminal investigation in Europe” against Mr Esteves in its IPO prospectus published at the beginning of the month, without providing any detail at the time.
  11. ↑ "HL Paper 27-III/HC 175-III". Minutes of Evidence. House of Commons - Parliamentary Commission on Banking Standards. Retrieved 21 July 2015. Q2140 Mark Garnier: Mr Jenkins, I think you started at UBS at 1996 and you became head of equities for the Americas in 2000.
  12. 1 2 Rutishauser, Arthur. "Die neuen Herren der BSI und ihre Vergangenheit" (in German). Sonntagszeitung. Retrieved 10 January 2015. Der grösste Insiderfall – allerdings kein strafbarer, sondern ein cleverer – ist, wie Esteves zu seiner Bank kam, an der er 27 Prozent be sitzt und die er beherrscht. Er verkaufte die Bank 2006 der UBS für 3,1 Milliarden Franken. Zwei Jahre später kaufte er sie für 2,5 Milliarden zurück und brachte sie 2012 für 14 Milliar den Dollar an die Börse. Verantwortlich für den Kauf der Pactual war 2006 der damaligen UBS-Investmentbanking chef Hew Jenkins. Jenkins wur de da mals kurzzeitig zum Chef von Esteves. Es war unter seiner Ägide, als die UBS einen grossen Teil der Schrott-Hypotheken kaufte, die bei der UBS zu den 60 Milliarden Franken Abschreibungen und letztlich zum Eingreifen des Staates führten.
  13. ↑ Jenkins, Patrick. "Ex-UBS man's key role in Brazil bank". Financial Times. Retrieved 17 January 2015. Like most of those who were ejected from their jobs during the financial crisis, he swiftly disappeared from view.
  14. ↑ Bray, Chad; Dan Horch (14 July 2014). "Generali Sells Swiss Private Bank to BTG Pactual for $1.7 Billion". The New York Times. Retrieved 21 July 2015. The Italian insurer Generali Group said on Monday that it had agreed to sell BSI, a Swiss private lender, to the banking unit of BTG Pactual Group of Brazil for about $1.7 billion.
  15. ↑ Shotter, James (26 March 2014). "Former UBS banker Branson to head Finma". Financial Times. Retrieved 21 July 2015. Before working for Finma, Mr Branson held a number of senior positions at UBS, including working as chief financial officer of its wealth management and Swiss bank business. He was also in charge of UBS’s Japanese securities unit between 2006 and 2008, a period during which employees at the division were involved in attempts to manipulate Libor. As a result, he faced calls to step down in 2012 after UBS reached a SFr1.4bn settlement with a number of regulators, including Finma, over allegations that it had manipulated interbank rates on an “epic” scale.
  16. ↑ "UBS announces senior management appointments". UBS. 15 September 2005. Retrieved 21 July 2015. Mark Branson, currently UBS's Chief Communication Officer, will become CEO of UBS Securities Japan Ltd, succeeding Simon Bunce, recently appointed Global Head of Fixed Income for UBS's Investment Bank. In his new role, reporting to Huw Jenkins, CEO, Investment Bank and Rory Tapner, Chairman and CEO, Asia Pacific, Mark Branson will oversee the development of UBS's Investment Bank in Japan and coordinate UBS Group activities in one of the world's largest and most important financial services markets.
  17. 1 2 Dubas, Sebastien. "Le futur patron de BSI et son passé interpellent". Le Temps SA. Retrieved 21 July 2015. Le repreneur, ou le sauveur, se nommait BTG Pactual, un groupe financier brésilien. Les 2000 employés de BSI pouvaient regarder de l’avant, Generali tourner la page, BTG Pactual se féliciter d’avoir payé un montant jugé dérisoire par nombre d’observateurs – 1,5 milliard de francs pour 89 milliards sous gestion – et la Suisse se réjouir d’attirer encore des banques étrangères. Presque un an plus tard, le rachat doit toujours être validé par la Finma. Si le délai peut sembler long, c’est que le feu vert de l’autorité de surveillance des marchés financiers est lié, en partie, au dossier fiscal américain. Or, BSI a conclu un accord à 211 millions de dollars avec la justice américaine (DoJ) fin mars. Ce qui devrait lui permettre, espère-t-elle dans son rapport annuel publié dans la foulée, d’entériner la transaction rapidement. «La clôture du dossier américain était l’une des préconditions au rachat de BTG», souligne ainsi une source proche du dossier.
  18. ↑ "Senior Marketing Changes at UBS" (PDF). Financial News. 2007. Retrieved 21 July 2015.
  19. ↑ "André Esteves é processado em Hong Kong por ex-Funcionário". Brasil Econômico (in Portuguese). 15 May 2014. Retrieved 12 December 2014. André Esteves, o bilionário fundador do BTG Pactual do Brasil, foi processado por um ex-funcionário em Hong Kong, que alega que lhe foram prometidas uma parceria e ações por conseguir investidores antes da venda inicial de ações do banco. Zeljko Ivic alegou que o Banco BTG Pactual SA, o presidente e CEO Esteves e Huw Jenkins, um sócio-gerente, fizeram deturpações fraudulentas para que ele assinasse acordos com o banco de investimentos, conforme uma ação judicial apresentada perante o Supremo Tribunal de Hong Kong.
  20. ↑ Wong, Douglas (15 May 2014). "BTG Billionaire Esteves Sued in Hong Kong by Ex-Employee - Bloomberg". Bloomberg News. Retrieved 10 January 2015. Andre Esteves, the billionaire founder of Brazil’s BTG Pactual, was sued by a former employee in Hong Kong who claims he was promised a partnership and stock for securing investors before the bank’s initial share sale. Zeljko Ivic alleged that Banco BTG Pactual SA, Chairman and Chief Executive Officer Esteves and Huw Jenkins, a managing partner, made fraudulent misrepresentations to get him to sign agreements with the investment bank, according to a lawsuit filed with the Hong Kong High Court. BTG Pactual raised as much as 3.66 billion reais ($1.66 billion) in its 2012 initial public offering. The sale followed a 2010 agreement to sell a stake to a group including China Investment Corp., GIC Pte. and the Rothschild and Agnelli families. Esteves, 45, is worth $4.2 billion according to the Bloomberg Billionaires Index, mostly due to his 22 percent stake in BTG Pactual. Jenkins and Hong Kong-based BTG Pactual Asia Ltd., have also been sued and will vigorously defend the claims, “which they believe to be baseless and without merit,” according to their lawyer Randall Arthur. BTG Pactual doesn’t comment on matters under litigation, the Sao Paulo-based bank said. Shares of the company fell 0.7% to 32.22 reais at 10:41 a.m. in Sao Paulo. Ivic sought more than $20 million in damages for the value of the shares and partnership promised, as well as unpaid bonuses, his lawyer Robert Tibbo said.
  21. ↑ "20-Millionen-Klage gegen André Esteves und Huw Jenkins". Fine News (in German). 15 May 2014. Retrieved 12 December 2014. Der Anwalt von Ivic sagte hingegen, die beiden hätten Ivic etwas vorgespielt. Sein Klient habe eine Schlüsselrolle beim Pactual-Börsengang gespielt.
  22. ↑ Samor, Geraldo (15 May 2014). "Zeljko Ivic vs. BTG". Veja (in Portuguese). Retrieved 10 January 2015. Zeljko Ivic, o reclamante, alega que Esteves e o BTG lhe prometeram sociedade no banco para recompensar seu trabalho, mas não lhe teriam pago. Que trabalho? Ivic alega que foi pessoa-chave na captação de recursos que o BTG fez junto a nove entidades, incluindo os fundos soberanos China Investment Corporation e GIC e as famílias uber-líquidas Rothschild e Agnelli.
  23. ↑ Wong, Douglas (15 May 2014). "Esteves, do BTG Pactual, é processado por ex-funcionário". Exame (in Portuguese). Retrieved 12 December 2014. Ivic está buscando mais de US$ 20 milhões de indenização pelo valor das ações e da parceria prometidas, bem como bônus não pagos, disse seu advogado, Robert Tibbo.
  24. ↑ Rizério, Laura (15 May 2014). "Ex-funcionário do BTG de Hong Kong processa André Esteves e pede reparação de US$ 20 mi" (in Portuguese). InfoMoney. Retrieved 12 December 2014. De acordo com o advogado Robert Tibbo, Ivic quer mais de US$ 20 milhões em danos morais, tendo como base o valor das ações e a parceria prometida.
  25. ↑ Garvey, Paul (21 May 2014). "Edward Snowden lawyer helps accused insider trader Steven Xiao exploit boats row". The Australian. Retrieved 10 January 2015. In addition to representing Mr Snowden, Mr Tibbo is part of a lawsuit against billionaire Brazilian André Esteves. Mr Tibbo is acting for Zeljko Ivic, who is suing Esteves and BTG Pactual for more than $US20 million in damages.
  26. ↑ Wong, Douglas (15 May 2014). "BTG Billionaire Esteves Sued in Hong Kong by Ex-Employee". Bloomberg News. Retrieved 22 January 2015. Jenkins, based in London, was served on a visit to Hong Kong, the court heard.
  27. 1 2 Cuadros, Alex; Cristiane Lucchesi (10 September 2012). "BTG's Esteves Drives 'Better Than Goldman' Rise in Bank's Clout - Bloomberg". Bloomberg News. Retrieved 22 January 2015. Esteves has had run-ins with regulators. In three separate cases since 1999, Brazil’s central bank and securities commission alleged Pactual had illegally transferred profits to foreign accounts to disguise revenues and avoid taxes. Esteves and his partners received warnings for the first two offences. In the third, he and another partner were ordered to pay a combined settlement of 100,000 reais ($50,000 each), with Pactual paying another 4 million reais. The case closed in 2007 without any admission of guilt.
  28. ↑ Schmidt, Blake; Sabrina Valle (19 June 2015). "Arrest of 'Big Fish' Odebrecht Ups the Stakes in Petrobras Probe - Bloomberg Business". Bloomberg News. Retrieved 21 July 2015. Police detained Odebrecht, 46 years old, and Otavio Azevedo of Andrade Gutierrez SA, Friday as part of a coordinated federal operation involving 220 police officers in four states. The raid is the culmination of months of digging by investigators who were convinced that a scheme involving Petrobras insiders and contractors to skim off vast sums from inflated construction and service bids had to have the blessings of corporate higher-ups.
  29. ↑ Schmidt, Blake; Sabrina Valle. "Odebrecht CEO Wrote Note to Destroy E-Mail, Police Say". Bloomberg News. Retrieved 21 July 2015. The head of Brazilian conglomerate Odebrecht SA wrote a note to lawyers with the phrase “destroy rigs e-mail” while he was in jail, police said Wednesday, drawing more attention to the most senior executive detained in a wide-ranging graft investigation. Marcelo Odebrecht, 46, wrote the message that was handed to lawyers and photocopied at the jail as part of a routine search, according to a police statement. The note also mentions “André Esteves,” the billionaire banker CEO of Grupo BTG Pactual SA
  30. ↑ Kiernan, Paul (20 June 2015). "Moody's Warns About Ratings of Two Brazilian Companies, After Arrest of CEOs". The Wall Street Journal. Retrieved 21 July 2015.
  31. ↑ "Senior Brazilian senator and billionaire CEO both arrested for corruption". The Guardian. Reuters. 26 November 2015. Retrieved 25 November 2015.
  • at Reuters
  • at BTG Pactual Investor Relations
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