Bradesco Has Achieved Duopoly Under Luiz Carlos Trabuco, Can They Go Even Higher?

Although few businessmen would readily admit it, the Holy Grail of business is finding a company that’s the closest thing to a monopoly as possible while still being legal. This truism was summed up best by Warren Buffet, who said that the best business in the world is a toll bridge. It turned out, Buffet owned a literal toll bridge, the Ambassador Bridge, in Detroit.

But banking concerns are rarely involved in the toll bridge business and cannot readily construct their equivalent within the traditional banking model. Thus, most banks are relegated to a strictly commodity business model, where companies compete primarily on the quality of service they give to their customers, not on any significant differences in the product.

However, that can change if one bank gets a secure enough stronghold on a given market. And it’s even better if that market is national in scope. It is for this reason that so much is at stake in the contest between the two leading Brazilian banks, Itau Unibanco and Grupo Bradesco. In the climate of highly concentrated and centralized banking that prevails in modern Brazil, whoever can take the definitive lead and keep it stands to gain the world. It is because of this that Grupo Bradesco president Luiz Carlos Trabuco has declared his intention to take his firm to the top and become the undisputed leader in the Brazilian financial services industry.

The 65 year old is a real-life Horatio Alger story. Starting out with the firm in the late 1950s, he rose through the ranks the old fashioned way, through hard work, perseverance and promotion. Marked early on as a man with high aptitude and a good knack for leading and bringing projects to completion, Bradesco quickly began rising the ranks, first as a manager of a small branch, then on to larger, more responsible roles. He eventually became a regional manager at a time when Bradesco itself was rapidly expanding its operation throughout Brazil.

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By 1992, both Bradesco and Luiz Carlos Trabuco had grown up. The higher-ups at the rapidly growing firm tapped Trabuco for the role to lead the firm’s newly founded financial planning division. Trabuco proved to be just the man for the job. Over the next ten years, he grew the financial planning arm of Bradesco from an insignificant earner into a unit that was producing more than 25 percent of the company’s profits. With the financial planning business booming, new positions within the firm quickly opened up to Trabuco. The rising star seemingly had a limitless future.

In 2003, Trabuco was given his biggest break yet. He was offered the position of president of the firm’s large insurance underwriting business. Again, Trabuco proved to be an able administrator, growing the business into another one of the group’s most profitable lines. Just a few years into his tenure, the insurance underwriting business had already become the largest issuer of retail insurance policies in the country. It was another resounding success for the main who had started his career as an entry level teller.

By 2009, the company’s CEO, Mario Cypriano, was on his way out. He had reached the mandatory retirement age of 65. Trabuco was the obvious first choice for his replacement. But this time, things wouldn’t be so easy, even for someone as talented as Trabuco. The low-hanging fruit of organic growth in the Brazilian banking sector had largely dried up. Bradesco’s chief rival, Itau Unibanco had been following an aggressive strategy of acquisitions, eventually pulling away from Bradesco, well into first place.

It was in this tough and scarce banking environment that Trabuco carried out his first six lackluster years at the helm of Bradesco. But his 2015 acquisition of HSBC Brazil partially changed that. Suddenly, Bradesco was in the running for Brazil’s number one bank in many important categories.

Whether Trabuco will be able to lead the bank to stronger performance is anyone’s guess. But his record suggests reason for optimism.

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