After 7 years, André Esteves officially returns to the command of BTG

A meeting scheduled for April 29 should confirm the return of banker André Esteves to the command of BTG Pactual.

The expectation is that Esteves, who was one of the executives closest to Planalto during PT administrations and was imprisoned for a month in 2015 within the scope of Lava Jato, will once again be —officially— the main figure at the head of the financial institution, in position of chairman of the board of directors.

In the last seven years, while important partners left the company, the 53-year-old banker, who has never stopped having a strong influence on the direction of the operation, has been preparing the ground for his return. The acquittal for lack of evidence in July 2018 removed legal obstacles to that ambition.

Coming from a middle-class family in the Tijuca neighborhood of Rio de Janeiro, the carioca started his career in the late 1980s, when he joined Pactual as a systems analyst, an investment bank of which Minister Paulo Guedes was one of the founders.

Revealing an aggressive style of business management, in 1993 he had already become a partner. In 1998, he was part of the group that removed the founding partner and controller of Pactual, Luiz César Fernandes.

A few years later, in 2006, the investment bank was sold to Swiss UBS AG for around US$ 3.1 billion, with Esteves elevated to the position of global head of fixed income.

At the time, there were reports that the banker would have tried to climb more positions within the financial institution, but ended up having his plans frustrated by the boss.

Back to Game

In 2008, he chose to leave UBS to found the investment bank BTG.

The official meaning of the acronym is Banking and Trading Group (group of banking and commercial activities), but alternative versions circulate on the market, such as “Back to The Game” (back to the game) or “Better Than Goldman” (better than Goldman). , referring to the American bank Goldman Sachs).

A year later, taking advantage of the global financial crisis that weakened a number of international banks, BTG acquired control of UBS Pactual for US$ 2.5 billion, creating BTG Pactual.

The buyback for less than what Pactual had been sold just three years earlier has helped build Esteves’ reputation with market peers ever since.

“André Esteves is aggressive in business and has a personality that adheres to the people around him. He is very intelligent and has a differential in relation to other bankers for being direct, simple and speaking a more colloquial language”, says João Frota Salles, financial sector analyst at Senso Investimentos.

Having as one of the main references in the market the trajectory of Jorge Paulo Lemann, Esteves led the bank through investments in diverse areas, from fuel chains to pharmacies, through parking lots, vehicle assembly plants and hospitals.

business with the government

Unlike Lemann, however, who made his career in large companies in the private sector, Esteves became very involved with the public sector.

At the beginning of the last decade, BTG Pactual invested in Banco Pan, owned by presenter Sílvio Santos, becoming a partner of Caixa Econômica Federal in the business. In April 2021, the bank bought the state-owned company’s stake and now holds 100% control of Pan.

“Investment bank should invest”, stated Esteves in an interview with Sheet at the end of 2012, the year in which BTG Pactual went public (IPO) on the Stock Exchange, raising around R$3.7 billion.

With the discovery of the pre-salt layer, important investments were also made in the oil and gas sector, in the company Sete Brasil, structured to supply oil exploration rigs to Petrobras, as well as in state-owned assets in Africa.

The purchase of assets on the African continent led to an investigation by the CGU (Comptroller General of the Union) on the suspicion that the sale had been closed at values ​​well below what the operations were actually worth.

Because of business with PT governments, Esteves was arrested by the PF (Federal Police) in November 2015, for allegedly attempting to obstruct investigations into Operation Lava Jato concerning Petrobras.

At the time, the then senator Delcídio do Amaral, leader of the government of former president Dilma Rousseff in the Senate, was also arrested. The suspicion was that the owner of BTG Pactual would have sought the senator to try to interfere in the testimonies of the former director of the state-owned company, Nestor Cerveró.

Suspicions were also raised at the time of alleged favoring the bank through bribery by then deputy Eduardo Cunha, about tax measures that would favor BTG Pactual’s investment in the bankrupt estate of Bamerindus.

liquidity crisis

The Senso analyst recalls that the banker’s arrest caused a serious liquidity crisis at the bank, of which Esteves was the executive president and also of the board of directors.

“BTG Pactual was very thirsty for the pot when making investments in the oil area together with the government”, says Salles.

In the hours and days following the arrest, investors withdrew a few billion reais in investments from the bank, which even raised questions about the sustainability of the operation.

BTG Pactual was fined R$ 6.5 million by the CVM (Securities Commission) on suspicion of stock manipulation, in an attempt to contain the strong devaluation of the securities, which fell by more than 20% on the day of the announcement of the prison.

Efforts to put out the fire also involved the sale of good quality credit portfolios and a stake in Rede D’Or, in addition to the dismissal of employees.

Esteves was removed from the controlling group of BTG Pactual in the wake of the investigations and the economist and founding partner Pérsio Arida assumed the presidency of the board of directors —​one of the creators of Plano Real, Arida left the bank in 2017.

Despite the initial shock, BTG Pactual managed to overcome the crisis relatively well in the opinion of analysts.

“André Esteves’ departure at that moment was necessary, even because the bank’s image was badly damaged. Which does not mean that the people inside stopped having him as a beacon and the main leader of the business”, says Luis Miguel Santacreu, financial sector analyst at Austin Rating.

Since leaving prison in December 2015, the former CEO began a gradual resumption of routine at the institution, a process facilitated by his acquittal in July 2018.

In December of last year, the last legal and bureaucratic procedures in Brazil and in the countries where the bank operates abroad were completed, paving the way for its return as one of the main partners.

At the April 29 meeting, the executive must be formally reappointed to the position of chairman of the board of directors. He will replace former Lula government minister and former Federal Supreme Court (STF) president Nelson Jobim, who joined in July 2016 to help with governance work and will continue to sit on the board.

Revenue diversification

Governance aside, business for the bank has been generous. In 2021, the financial institution achieved a record net profit of BRL 6.3 billion, which represents a nominal increase of almost 60% compared to 2020, encouraging analysts regarding the prospects for the performance of the shares. BTG Pactual’s shares have appreciated by approximately 20% year-to-date through April 22.

According to Austin’s Santacreu, with the purchase of the entirety of Pan and the BTG Digital platform, the bank has sought to increase the diversification of revenue sources. With a growing presence among the retail public, it began to rival former partners such as XP, says the analyst.

“We believe that BTG Pactual can deliver resilient results despite the risks of the macro scenario, given the growth in the areas of asset and wealth management and in corporate lending”, say analysts at the American bank Goldman. Sachs.

Wanted to comment on his return to the board, Esteves preferred not to give an interview.

In an event at the end of February, the banker stated that there are positive aspects to be considered in relation to the two main candidates ahead in the polls of voting intentions for the elections.

“We should not vote for those who do not understand the institutional evolution of Brazil and for those who do not love Brazil and do not understand what went right and wrong from an economic point of view,” he said.

Group of 7 today has 5 members

Seven partners took control of BTG Pactual with the departure of André Esteves, a group that became known as the G7.

In it were Roberto Sallouti, at the bank since 1994, and Marcelo Kalim, who took on a joint term in the executive leadership at the end of 2015, in addition to economist Pérsio Arida, who had assumed the presidency of the board of directors at the height of the crisis.

Today the G7 is made up of four remaining members —Sallouti, Antonio Porto, Guilherme Paes and Renato Santos— and André Esteves.

Kalim left the bank to set up C6 Bank with other former BTG partners in 2018, a year after Arida left. In 2016, James Oliveira left to set up the manager Vinland Capital.

“The image risk weighed a little, but I believe it was not enough to motivate the departure of the partners. I think it was more because of opportunities to create new businesses. In banks with the characteristic of ‘partnerships’ [sociedade]the turnover is immense and not surprising”, says Salles, from Senso.

“Anyway, it’s not just that all the more experienced partners left and only junior staff remained. Very important executives remain, like Roberto Sallouti himself, who led the bank shortly after Esteves was arrested”, says Santacreu, from Austin .

Timeline

1983 Foundation of Pactual DTVM

1989 André Esteves joins the bank as a systems analyst

1998 Founding partner Luiz César Fernandes is removed by group of Esteves

2006 Pactual sale to UBS AG for $3.1 billion

2008 Esteves leaves the bank and founds BTG

2009 Sale of UBS Pactual to BTG for $2.5 billion

2011 BTG Pactual buys stake in Banco Pan

2012 Going public (IPO) on the Stock Exchange

2015 André Esteves is arrested on suspicion of obstruction of Lava Jato

2018 Executive acquitted of charges

2022 Banker should be led to the presidency of the board of BTG Pactual