Miami attracts banks and becomes ‘Wall Street South’

Wall Street is different. They leave the tight, dimly lit blocks amidst the skyscrapers of lower Manhattan, in New York, and enter the sunny avenues of the Brickell neighborhood, in the always hot Miami, in the south of the United States.

The diaspora of banks and financial institutions to Miami over the past two and a half years has been so large that the region has earned the nickname Wall Street South (south), in reference to the US financial heartland to the north.

The most recent move, and perhaps one of the most significant, took place in June, when billionaire Ken Griffin announced that he would remove Citadel, a multinational hedge fund and financial services multinational that manages more than $51 billion in assets, from Chicago, and lead to company for the city of Florida.

To house the 1,000 or so employees who work at headquarters, Citadel has already rented an 8,360-m² tower of a building under construction in Brickell on a block where the square meter already costs 85% more than the New York average, reported the local press.

He follows other big fund managers like Icahn Enterprises and Elliott Management, both with their portfolios in the tens of billions of dollars. Both left New York after the outbreak of the Covid-19 pandemic in 2020, heading for the “sunny state”, as Florida is known in the US.

The list of companies that have made massive investments in the city also includes Goldman Sachs and Blackstone, as well as Brazilian institutions such as Bradesco and Itaú.

A number of factors help explain this stampede.

The most cited is tax: Florida, unlike almost all American states, including New York and California, does not have a state income tax other than that levied by the federal government.

Second is the much lenient set of rules to contain the pandemic compared to other regions of the country. Republican Governor Ron DeSantis, for example, called mandatory mask wear “insanity” and “theater.”

In the first half of 2020, before deciding to move to the state for good, Citadel began scheduling meetings to close deals at the Four Seasons hotel in Palm Beach, while spaces of the type were banned from hosting events in most of the country.

And third, partly as a result of more lenient health rules, the population boom that the state has been experiencing since the beginning of the pandemic, with the possibility of living in quieter regions and with a milder climate with remote work.

Three of the fastest-growing metropolitan areas in the US in the past year are in Florida, according to Census data. The state gained 211,000 residents between July 2020 and July 2021, second only to Texas.

This boom also occurred in the operations of Brazilian companies. Bradesco, for example, doubled its activities in the city in one year, estimates the executive director and director of investor relations at the institution, Leandro de Miranda Araújo.

“The Governor of Florida and the Mayor of Miami made a move to attract two important groups in the American economy, the people of Wall Street and the people of Silicon Valley. more efficient taxation”, says Araújo.

Just this year, the Brazilian bank bought a stake in the investment portfolio platform, BCP, and a loan company for public servants, OneBlinc. In 2020, in the first year of the pandemic, it also bought a bank, BAC Florida.

With a focus on “wealth management”, that is, operations aimed at high-income investors, the idea is to facilitate access to the American market for Brazilians and Latinos in general who want to invest in the US. The plan is to expand from Florida to Boston, where the largest Brazilian community in the US is located, as well as to Texas, California and New York.

Itaú has also made significant investments in the city recently and this year bought the investment broker Avenue, based in Miami.

For Roberto Lee, CEO and founder of Avenue, Miami has consolidated itself as a capital of Latin America, especially after the loss of importance in the midst of successive economic crises in cities that used to bring together multinationals on the continent, such as São Paulo, Rio, Buenos Aires. , Mexico City or Panama City.

This whole boom has transformed life in the city, he says. “Miami gained more traffic, schools became much more crowded. But the city also enjoys a lot more diversity of people, the gastronomic scene has improved, the cultural scene as a whole has become stronger”, says Lee – also a resident of Miami.

Percy Moreira, head of Itaú USA and Itaú Private Internacional, says the company has seen an increase in interest in the region since 2015, which has intensified recently. Since 2020, 2,000 new accounts have been opened at Itaú Private, he says, a significant number in the segment, and there was a 35% increase in assets under local management in the same period.

“Florida has been increasingly recognized as a business center in the last three years, with a large flow of resources from Latin Americans interested in diversifying their investments with international exposure. Americans moving to the region in search of a better quality of life,” says Moreira.

The most updated data from the US Bureau of Labor Statistics for May show that the Miami region, which also includes the cities of Fort Lauderdale and West Palm Beach, had 201,400 people working in financial activities that month, against 187.3 thousand in the same month of 2020, an increase of 7.5%. That’s nearly double the increase in total industry employees in the US, which grew 4% over the same period.

It is not possible to make a direct comparison with New York City because the latest available data refer to July 2021, but the data for the same month of the previous year shows a 1.9% decrease in the number of employees in financial activities.

Accelerated growth also has negative impacts. Data from CoreLogic, a company that analyzes industry information, compiled by the American press, points to Miami as the city with the highest rent inflation in the US — a 40.8% increase between April 2021 and April 2022. neighboring Orlando, with 25.8% rent inflation. New York, to give you an idea, had an 8.4% increase in the same period.

Of course, the change is not unanimous. Speaking to Bloomberg, Jason Mudrick of Mudrick Capital Management said: “The main problem with moving to Florida is that you have to live in Florida.”