Billionaires Vie for the Future of Brazilian Finance

An escalating battle between two billionaires is upending the financial community in São Paulo, Latin America’s wealthiest city.

- By Felipe Marques and Cristiane Lucchesi

In one corner is André Esteves, the 53-year-old founder and biggest shareholder of Banco BTG Pactual SA, a regional investment banking powerhouse whose name is jokingly said to stand for “Better Than Goldman.” In the other is Guilherme Benchimol, the 45-year-old founder of XP Inc., Brazil’s biggest brokerage and an unabashed copycat of U.S. giant Charles Schwab Corp.

Esteves and Benchimol, both Rio de Janeiro natives, are competing for the 10 trillion reais ($1.9 trillion) in savings that Brazilians are increasingly willing to invest in high-risk assets. By offering individuals technology and products once available only to the very rich, BTG and XP are winning customers from the nation’s five biggest banks, weakening their hold on Brazilians’ savings.

“The days of only five banks in Brazil are probably over,” says Tito Labarta, an equity-research analyst at Goldman Sachs Group Inc.

In a continent-size nation of roughly 211 million people, a huge network of brick-and-mortar branches staffed with thousands of managers used to be the only way to sell investment products to individuals. Decades of sky-high interest rates also meant Brazilians parked their money in savings accounts or overnight Treasury funds offered by the big banks.

Now that rates are lower, investors are seeking better returns, and both BTG and XP are seizing the opportunity. The Covid-19 pandemic has also pushed Brazilians to adopt digital banking, and a raft of startups are entering the market. Meanwhile, the big banks are pivoting to build their own digital offerings.