* Client coverage in Brazil seen up by 50 percent this year
* COO Cohn sees signs global economy recovering "gradually"
* Lender plans to expand in Colombia, is "bullish" on Brazil
By Guillermo Parra-Bernal
SAO PAULO, April 3 Goldman Sachs Group Inc
plans to increase the base of corporate clients it covers
in Brazil by half this year as demand for corporate loans,
structured finance and advisory services grows in Latin
America's largest economy, President and Chief Operating Officer
Gary Cohn said on Wednesday.
The New York-based firm expects to serve around 300
companies by December, about 100 more than currently, Cohn said
at a news conference in São Paulo. Over the past year, Goldman
Sachs has doubled the capital base of its Brazilian unit and
hired aggressively to expand in the country to take on tough
local rivals, even as competition from international financial
To step up client coverage, Goldman Sachs could hire 50 or
more bankers to work in credit and wealth management - a pair of
fast-growing market segments, he said. Growth will take place
despite the increased state presence in the economy because the
firm's ability to adapt to tough market conditions helps it find
business opportunities as most global rivals retreat.
"We are very happy with our results in Brazil," Cohn said.
"We are more bullish on Brazil than many people out there. We
have a multi-year plan top build our Brazil business."
Cohn said that most big investment banks with the exception
of Goldman and JPMorgan Chase & Co are taking "a
substantial step back" from capital markets as a result of heavy
losses suffered during the global financial crisis. Competition
in Brazil is getting tougher by the day, he said, as it is in
some Asian markets such China and Hong Kong.
Goldman Sachs is seeking fast growth in Brazil, where demand
for debt and hedging instruments has swelled as interest rates
have fallen to all-time lows this year. Companies and investors
are stepping up demand for corporate bonds, asset-backed
securities and private equity fund-related vehicles that post
higher returns than equities and government debt.
The bank, which increased the capital of its Brazilian unit
to $400 million last year, has doubled its workforce there over
the past two years to about 300 people. Currently, Goldman
Sachs's wealth management division in Brazil has about $1
billion in assets, he noted.
Expansion in Brazil will depend on local and global growth
conditions, said Cohn, who has been a president of the
investment bank since 2006.
Global growth is accelerating gradually, which should help
business. But despite of the improving outlook, rivals,
including UBS AG, are shrinking in size and exposure
to cut risks and adapt to tougher capital rules, he added.
Cohn, speaking at the bank's São Paulo headquarters with
Stephen Scherr, the firm's chief for Latin America and global
head of the investment bank's financing group, said Goldman
Sachs's plan is to keep expanding its revenue pool in so-called
growth markets, although he declined to say by how much.
Goldman Sachs's acquisition of a license to operate as a
fully fledged bank in Mexico should be seen "as part of an
ongoing commitment to the country. Don't read it as a new
The bank is likely to keep growing in Colombia, where it
rose "from zero to hundreds of millions in revenue" over the
past two years, with a representative office there. Other
targets for expansion in Latin America include Chile and Peru.
Still, the focus remains on Brazil, he noted. Foreign
investment banks such as Goldman Sachs and Credit Suisse Group
AG have faced increased competition from local rivals
in Brazil as demand for wealth-management and advisory services
for takeovers and capital market transactions rise.
"Brazilian banks could be the strongest in the world. They
have capital, they are good, they are doing well," Cohn said,
highlighting the recent work of BTG Pactual Group,
the nation's largest independent investment bank.
Unlike their counterparts in other emerging markets such as
China, Brazilian banks have consistently bested foreign rivals
over the past two years in funding deals, forging stronger
client ties and setting up distribution networks similar to
those of global banks. In the quarter ended in March, six local
investment banks were among the Top 10 M&A advisors in Brazil
for the first time ever, according to Thomson Reuters data.
Goldman Sachs ranked fourth in mergers and acquisitions in
Brazil in the first quarter, with $704 million worth of advisory
work, the report showed.
Last month, Goldman Sachs named bankers Fabio Bicudo and
Antonio Pereira as co-heads of investment banking in Brazil
after the division's chairman, Daniel Wainstein, retired.