REUTERS: A new breed of digital brokers is taking on the handful of Brazilian lenders such as Itau Unibanco Holding SA and Banco Bradesco SA that long had a lock on retail investors seeking a one-stop shop for banking and investments.
Market leader XP Investimentos, partially backed by Itau and General Atlantic, aims to quadruple its assets under custody to 1 trillion reais by December 2020, almost four times its current size, with others setting similarly lofty goals. Two years ago, Itau tried to secure a deal to eventually acquire control of XP, but Brazil's central bank partially blocked the transaction, capping Itau's stake at 49per cent.
Banco BTG Pactual, long known as an investment bank, also plans to build a full-service online retail bank in a pivot similar to U.S. rival Goldman Sachs Group Inc's shift to a more consumer-oriented business model. "Fee income in Brazil used to grow more or less in line with loans," said UBS analyst Finch of the Brazilian lenders, which report quarterly earnings in the next three weeks."This year, banks are recognizing competitive pressure and have set more modest targets."
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