BR Partners says Moelis' hiring of its Brazil bankers 'unethical'

SAO PAULO, March 12 Wed Mar 12, 2014 2:33pm EDT

SAO PAULO, March 12 (Reuters) - The chief executive officer of independent Brazilian investment bank BR Partners Banco do Investimento SA on Wednesday called Moelis & Co LLC's hiring of three of its top bankers "unethical" and are evaluating a potential response.

On Tuesday, Moelis hired Otávio Guazzelli, Jório Salgado-Gama and Erick Alberti from BR Partners to open the New York-based bank's first office in Brazil.

According to BR Partners CEO Ricardo Lacerda, the executives were approached improperly, especially since the two banks had worked together for over two years.

The relationship, developed during a series of transactions the two banks handled together, gave Moelis access to confidential information about BR Partners, Lacerda said. A Moelis spokeswoman denied any wrongdoing.

In a phone interview, Lacerda said, "the bad faith and misconduct of Moelis is well documented and we are evaluating which actions to take." He called Moelis' move "unethical and improper," but did not say what actions, legal or otherwise, BR Partners was considering.

The feud underscores the fierce battle for top executives in many areas of Brazil's financial markets.

Though local capital markets are facing the weakest year in more than a decade, the demand for banking talent continues, especially as some global banks pull back because of a sluggish economy. Fabio Okumura, the head of Itaú Unibanco Holding SA's proprietary trading desk, has quit and taken eight members of his team with him, sources said on Tuesday.

Lacerda said Moelis first approached BR Partners in 2011 to explore a potential cooperation agreement but nothing was ever finalized. The two banks worked together on several deals and Moelis, he added, has abused the relationship by luring away the executives.

Moelis, through a spokeswoman in New York, said the executives had already left BR Partners when they were hired. "Moelis & Co started conversations with these bankers in January after they had all announced their decision to leave their previous employment," she said.

Guazzelli and Salgado, two of the former BR Partners executives, will co-manage Moelis' unit in Brazil, which will be based in São Paulo, the nation's financial hub. None of the three bankers could be reached for comment.

At BR Partners, which Lacerda and other bankers founded in 2009, Guazzelli led investment banking, while Salgado-Gama was head of mergers and acquisitions. Recently, BR Partners hired Diego Rauter from Credit Suisse and Fernanda González from Goldman Sachs Group Inc to bolster a team of 25 investment bankers.

GAINING A FOOTHOLD

BR Partners also operates a bank and a broker-dealer in Brazil. Lacerda himself was head of Brazilian investment-banking for Goldman and Citigroup Inc for most of the past decade.

The announcement came about a week after New York-based Moelis filed for an initial public offering in the United States. M&A activity has had its strongest start since at least 2007, according to Thomson Reuters data.

By establishing a foothold in Brazil, Moelis will try to take advantage of global interest for cross-border deals in a market with about 200 million consumers. The firm was founded by former UBS AG dealmaker Ken Moelis in July 2007.

Moelis' bet on Brazil comes as independent investment banks such as New York-based Greenhill & Co ramp up their presence in Brazil, Latin America's largest economy, and take advantage of a retreat by some of the world's largest investment banks. Four years of soft economic growth has led the pace of deals to slow.

Goldman cut its roster of investment bankers in Brazil to about 20 from 45 a year ago, while Barclays Plc and Deutsche Bank AG reduced their research, sales and trading staff as competition mounted and business faltered.

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