The Telegraph has posted an interesting Sunday interview with two bankers, Roger Jenkins and Huw Jenkins… the duo (ex-UBS and Barclays) is now employed by Brazilian investment bank BTG Pactual and can not stop praising the “miracle” economy of Brazil. In other words, they are “milking it” in Brazil … from their offices in Malibu and London. (What? no traffic, no crime, no polution? Aahh, that’s easy…). Highlights of the full interview below (our comments in bold)…

Background
Roger, ex- Barclays, was reputed to be making upwards of £75m a year heading the bank’s tax-planning business, while Huw had just been made chief executive of Swiss bank UBS’s global investment bank (before he was fired after billions in losses).
 
Now
Six years later and they are sitting in the Mayfair offices of their new employer, a Brazilian merchant bank called BTG Pactual (previously owned by UBS). Both men are looking tanned and fit (after all, that’s why any foreigner banker would go to Brazil: to “milk it” and “samba” like there is no tomorrow). Malibu-based Roger has just stepped off the plane from Brazil, while Huw, who is in charge of the London operations of BTG, makes several trips to the country each year to discuss business with the firm’s other partners. 
Fails of the past

Neither seems particularly upset with the way things have turned out for them in the past. Roger left Barclays in 2009 having overseen a series of multi-billion pound capital injections by Gulf sovereign wealth funds. then he tried setting up Elkestone Capital just to close it a few months later. Huw’s exit from UBS, though rather less heroic – he stepped down as chief executive in September 2007 as the scale of the bank’s losses became clear and left about a year later – was none the less far from acrimonious.

How great is Brazil?
“The prices in São Paolo are twice those on Bond Street!” says Roger. “I remember as a young banker thinking I’ve got to New York, why would I ever want to go to Latin America,” he says.
“Brazil is a miracle that has taken 20 years. Under the stewardship of the FHC government you got macro-economic stability, and really what Lula did was demonstrate that the left wing was as interested in growth as the right wing, and that created political stability.” (sure, Lula helped him bailout and pocket Banco Panamericano for peanuts)

Easy to invest… really?
“It’s much easier to invest in Brazil at the moment than Italy or Spain,” says Huw. Roger seconds this. “Much more,” he says. “We’re not looking in the rearview mirror.”

Brazilian version of Goldman Sachs
This kind of big money backing has seen BTG develop a corporate culture that would not be out of place at Wall Street and London-based rivals. “The conversations going on here are not all that different to those going on at KKR [the US private equity firm] and Goldman Sachs,” says Huw.

Investing in Brazil to forget about the Western woes…

BTG’s working language – from its financial statements to its board meetings – is English.
Not that either of the men misses working for one of the global mega-banks. Roger goes first. “I spent a lot of time thinking about this. I was at the sharp end of going through that 2007 to 2009 period, which was, for anyone who went through it in the trenches, a very brutal time at all sort of levels – personal, emotional, financial, it was a brutal time. I am sure you just need to pick up the front page of any newspaper today [to see] that the banking community in the Western world are still on the back foot explaining their model. We don’t spend any time thinking about that.” Huw carries on: “You sit here [London], or in New York and look at Occupy Wall Street or the thing outside St Pauls, and you recognise that outside the banks there is a lot of resentment. You go to Brazil and we’re able to introduce Kirin [Japanese brewer] to Schincariol [Brazil’s second-largest brewer] to buy that business or take BR Pharma public and raise capital in the market, and bring international investors to invest in an IPO. “I’m not a great distressed [asset] kind of guy. I’m not going into a Western economy and saying I can buy that for 20 cents on the dollar. I’m a growth guy (with a taste for “samba” and “caipirinhas” and “beautiful women”). I’m not a bargain hunter.” 

They simply love us!

“Everybody celebrates us. The government likes it, the business sector likes it, the individuals in the companies that get share options like it. It’s a joyous thing. It’s just a completely different stage in the cycle.”
“They need us,” says Roger jokingly to Huw.
“Roger is clearly right,” replies Huw to more laughter.

But let’s be careful…
Seeing how the cycle has turned in Western markets has made Roger cautious not to get carried away with the Brazilian economic boom.
“Remember in the Eighties everyone thought America would become the farm of the world and Japan would become the leader of the world. It didn’t transpire. You have to be very careful about extrapolating trends. We spend a lot of time thinking about risk at the firm, as consumer debt in Brazil inevitably increases you have to be careful to maintain your underwriting standards as we have seen what happens when markets get carried away.
“You need to be wary of the government and regulators that the legacy of the decade we have just seen is not lost. There are a lot of lessons for bank managements,” he says.


Easy, Nancy, easy…

“Brazil is a terrific, young, growing economy and if you could start afresh today and you were a young banker you would go there. You wouldn’t go anywhere else.”

Milk it, baby, milk it…

Source: The Telegraph

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