Luiz Carlos Trabuco Says Growth Is Secondary, But Is He Just Being Coy?

For better or worse, Latin America has often followed a version of capitalism that has been far more friendly towards outright monopolies than anything that has been allowed in the United States or other first-world countries. While it is easy to quickly rush to judgement, citing all of the bad outcomes of such economic models, in countries that have not yet developed, there have been some real benefits to the introduction of modernity through various monopolistic enterprises.

In Mexico, Telefonos Mexicanos, Telmex for short, has been the hard-monopoly of consumer communications and internet for the better part of 30 years. While Mexicans still pay higher prices than some other countries for things like local phone calls and internet, the company has also been able to successfully spread modern communications throughout nearly the entire country, which, as late as the 1970s, had entire towns with no phone service. Similar patterns can be seen with other monopolistic enterprises over the history of Latin America, such as the United Fruit Company and ITT. In all cases, the monopolies are not ideal. But they brought modernity to areas that were oftentimes still nearly as primitive as they had been in the pre-Columbian era.

It is in this backdrop of less-than-ideal but necessary monopolies that we turn to Bradesco and its CEO and president Luiz Carlos Trabuco. Mr. Trabuco has been extremely careful, since taking the top slot of the company, not to make any statement to the effect that he is primarily concerned with creating a nation-wide banking monopoly. But it is clear from both the actions of his company and the stakes involved that Bradesco is fighting, tooth and nail, to become the uncontested leader in Brazilian banking.

According to Crunchbase, Trabuco is on record stating that he does not view growth as a primary motivator for his strategic decisions. However, he has also seemingly contradicted this, stating on numerous occasions that the right acquisitions could accomplish the same level of growth in the time it takes to sign a few documents as would be possible with five to ten years of organic growth. The fact that Trabuco has made growing the company through acquisitions a centerpiece of his strategy as CEO also lends weight to the idea that he gives the growth of his company high priority, if not primacy.


And the stakes could not be higher. The hyper-competitive Brazilian banking market has created a super-consolidated industry, now completely dominated by two players, Itau Unibanco and Bradesco. As it stands now, the two banks are roughly equal in size and influence. But this arrangement may not be stable. Both banks have enormous incentive to eliminate the other as a serious competitor on the national scene. And whoever wins will enjoy a virtual monopoly over the entire country’s banking market.

But the emergence of a monopoly in banking may not be as bad as some may at first suppose. The hyper-competitive Brazilian banking space has led to lower profits for all firms. It has also arguably led to a stagnation of development of some of the country’s disadvantaged regions, as banks have struggled to remain profitable in even the largest markets over the last decade.

The emergence of a single monopoly could finally allow a return of genuine profitability to the Brazilian banking market, freeing up lending and investment capital for development of some of the country’s struggling regions. The individual shareholders of the respective banks would also stand to benefit enormously, if either one were able to decisively lock down the entire country’s banking market.

Luiz Carlos Trabuco, for his part, seems to be doing everything he can to make Bradesco the country’s undisputed dominant bank, even if he won’t freely admit it.

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