UPDATE 1-BR Partners calls Moelis's hiring of its Brazil bankers 'unethical'

Wed Mar 12, 2014 3:31pm EDT

By Guillermo Parra-Bernal

SAO PAULO, March 12 (Reuters) - The hiring of three top bankers of BR Partners Banco do Investimento SA by New York-based Moelis & Co LLC was "improper and unethical," Ricardo Lacerda, chief executive officer of the Brazilian investment bank, said on Wednesday, adding that BR Partners is considering possible action.

The response came a day after Moelis hired Otávio Guazzelli, Jório Salgado-Gama and Erick Alberti from BR Partners to open its first office in Brazil. According to Lacerda, the executives were approached improperly, especially because 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.

"The bad faith and misconduct of Moelis is well documented and we are evaluating which actions to take," Lacerda said in a phone interview. He 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, he said, adding that Moelis 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.

According to Moelis, Guazzelli and Salgado will co-manage the office in Brazil, which will be based in São Paulo.

At BR Partners, which Lacerda and other bankers founded in 2009, Guazzelli led investment banking, while Salgado-Gama was head of mergers and acquisitions.

Alberti worked as an investment banker covering the education, as well as technology, media and telecommunications sectors for BR Partners, Moelis said on Tuesday. None of the three bankers could be reached for comment.

Recently, BR Partners hired bankers Diego Rauter from Credit Suisse and Fernanda González from Goldman Sachs Group Inc to bolster its investment banking force of 25 dealmakers.

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 Moelis filed for an initial public offering in the United States. Merger and acquisition activity has had its strongest start since at least 2007, and preliminary numbers are showing a jump in cross-border transactions originated in Brazil in the first two months of the year, Thomson Reuters data showed.

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's 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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