Trading Floor to Banking Empire: BTG’s Rise Rocks Brazil Finance

(Bloomberg) -- When Roberto Sallouti says his bank, Brazil’s Banco BTG Pactual SA, is diversifying revenue, he really means it. 

Ten years ago, when Sallouti took over as chief executive officer, sales and trading made up the bulk of BTG’s revenue, with corporate lending, asset and wealth management much smaller slivers of the balance sheet. 

Now, lending alone is a 7.6 billion-real ($1.4 billion) business, which last year overtook sales and trading for the first time. The bank’s assets under management have grown more than fivefold, while wealth under management more than doubled — together, the pair make up almost a quarter of the bank’s total revenue.

“We started with trading, added sales, and went from an investment bank serving big corporations to one of the few digital universal banks in the world,” Sallouti said Aug. 18 at the bank’s headquarters on Sao Paulo’s Faria Lima Avenue, the Brazilian Wall Street.

“We are being rewarded because now we have more stable revenues,” he said.  

An acquisition spree helped the bank broaden its customer base, boosting its wealth and asset management business and reigniting global ambitions that had been put on hold. BTG has also built a syndicated loan business from scratch, and has grown a vast network of investment advisers to tap into Latin America’s growing middle class.

It’s done so against a backdrop of stubbornly high interest rates and lower economic growth in Brazil. Now the bank’s standout success has analysts wondering how long the boom can last. Shares are up about 70% this year, more than any other major bank in Latin America, and its latest return on equity hit 27% in the second quarter.

“BTG was a spectacular investment over the past years,” said Murilo Arruda, founding partner at Sao Paulo-based equity fund Morada Capital. Now, he said, it’s hard to know “which rabbit they will pull out of a hat to keep their current level of profitability.”

In July, BTG agreed to buy HSBC Holdings Plc’s operations in Uruguay for $175 million, adding to the bank’s footholds in Chile, Colombia, Mexico and Argentina. It’s also seeking a banking license in Peru, and has acquired businesses outside of Latin America: FIS Privatbank in Luxembourg; and New York-based M.Y. Safra Bank.

In Miami, it bought multifamily office Greytown Advisors Inc., adding $1 billion in assets under management and expertise with ultra-high-net-worth clients in Central America. 

BTG plans to keep investing in technology at the new banks, and to expand its presence in Mexico and Argentina, Sallouti said. He was keen to note that the revenue from the most recent investments are yet to show up on BTG’s balance sheet. 

Closer to home, BTG has become known as the default buyer for many banking assets, from thriving wealth management businesses to distressed assets.

In March, it closed the purchase of Julius Baer Group’s unit in Brazil, followed a month later by a deal for the wealth management unit of Rio de Janeiro-based hedge fund JGP Asset Management. Then in May, it made headlines when it agreed to acquire about 1.5 billion reais in assets from shareholders of Banco Master SA, giving the troubled lender some much needed liquidity. 

“Our acquisitions aim to gain scale in a business that is a priority to us, or to enter new geographies in order to diversify revenue or to fill a product gap,” Sallouti said. “We do those acquisitions with the same spartan discipline we use at the bank in general, focusing on the return on equity.”

The acquisitions also mean BTG is attracting a crop of new senior partners who stay on after their firms are bought, likely wooed by the bank’s lucrative partnership model. 

The CEO of BTG Asset Management — Rubens Henriques — was a founding partner at Clave Capital, which BTG bought in 2024. Other new partners include the former CEO of Julius Baer in Brazil, Fernando Vallada, and associate partner Marcello Correa, former president of Greytown.

When BTG names a partner, it lends them funds to buy BTG’s shares at book value, with an annual interest rate tied to Brazil’s benchmark — currently at 15%. The partners gain the difference between the benchmark rate and BTG’s return on equity, which was 27.1% annualized in the second quarter. Partners pay their loan back with bonuses and dividends. 

The partnership — which owns two-thirds of BTG — helps the bank stay nimble, Sallouti said. 

“We can make decisions very quickly; we don’t need to go through a lot of committees to decide where we will deploy our capital,” he said.

BTG is also starting new businesses from scratch. In 2022 it recruited veteran Ernesto Meyer to build a syndicated loan unit serving companies. Earlier this year the bank led its biggest deal so far: a $2 billion syndicated bridge loan to Colombia’s Grupo Nutresa SA. 

Overall, loans to small and medium-sized firms reached 28.7 billion reais in June 2025, a 22% increase over the same period last year, helping to boost the bank’s loan book — including guarantees and other financial instruments — to about 267.6 billion reais. 

BTG is also holding more loans to individuals on its balance sheet, and lends to lower income customers through Banco Pan SA, in which it acquired a controlling stake in 2021. 

At least one analyst sees potential risks in the expanding loan book.

“There is tons of money to earn with middle-sized firms in Brazil, which pay higher spreads to banks, but there is more risk and delinquency rates,” said Malek Zein, an analyst at Eleven Financial Research.

At the moment, with Brazilian interest rates at multiyear highs, the bank is being cautious, Sallouti said, and focusing more on supply-chain financing using collateral from big companies to lend to their smaller suppliers. 

Another lucrative venture has been longer in the making. In 2016, BTG launched a digital retail platform to offer products such as bonds, stocks, derivatives and even sophisticated funds to individuals. 

Using the same model as competitor XP Inc., BTG created a network of third-party independent investment advisers; in some cases spending millions to buy  independent firms that previously worked with XP.

That business has grown to 20 dedicated offices in Brazil for investment advisers, and 170 from third-party firms that work with the bank. BTG has more than 2 trillion reais under management and administration at its wealth and asset management businesses, roughly on par with XP’s numbers, which also include assets under custody. While the two firms had a similar market value in 2021, BTG is now almost four times the size of XP. 

The bank also offers credit cards, insurance and payment services to individuals and firms. 

For a long time, BTG’s billionaire founder and biggest shareholder, Andre Esteves, used to joke that BTG stood for ‘Better Than Goldman.’ (It actually stands for ‘Banking and Trading Group.’) Several years ago, he changed his tune: the new ambition was to be ‘Bigger Than Itau’ — the Brazilian giant that sits atop the Latin American banking world with almost 3 trillion reais in assets. 

BTG still has some way to go to meet his goals, but earlier this year it took a big step in the right direction, leapfrogging Banco Bradesco SA and Banco do Brasil SA to become the second-biggest Latin American bank by market value. 

“BTG went through an important and surprising transformation over the last three, four years,” said Thiago Batista, head of equity research at UBS BB Investment Bank. “It is amazing to see how nimbly they have been able to adapt to new macroeconomic realities, making BTG a more secure and stable investment,” he said.

Back in 2015, the transformation was hard to imagine. That November, Esteves was arrested as part of a corruption probe that engulfed corporations across Brazil.

When he returned five months later, BTG was a shadow of the bank he’d left behind: asset sales and job cuts had been rushed through to shore up the bank after client redemptions; and shares had lost more than a third of their value. Esteves was later cleared of any wrongdoing, and reclaimed the role of chairman in 2022.

Despite its recent run of success, BTG’s financial statements have frustrated some observers, who are concerned that the bank’s lack of transparency around certain metrics doesn’t quite align with its global ambitions. 

“You don’t know exactly what is inside the sales and trading business,” said Morada Capital’s Arruda, who thinks that BTG could attract even more investors if it disclosed more granular detail about its operations. 

Analysts at Goldman Sachs Group Inc., meanwhile, have flagged potential corporate governance concerns due to BTG’s “complex shareholding structure.” They maintain a “buy” rating on the shares — like 11 of the 15 analysts who cover the stock — but cite decelerating Brazilian GDP and limited capital markets activity as potential threats to continued revenue growth.

For now, Sallouti’s confidence that BTG can deliver a return on equity of at least 24% this year and next is likely to keep the wolves from the door, even in the face of US President Donald Trump’s 50% tariff on some Brazilian imports. 

“The geopolitical situation and the tariffs are generating a lot of market volatility, and that is a reality that will continue for the next three years,” said Sallouti. “It’s not going to change, right? So, work with it!” 

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