UBS to open in Goiania to reach new millionaires

To locate and serve the latest millionaires produced by the agricultural and tech sectors’ explosive expansion, UBS Group AG is expanding into rural Brazil.

The Brazilian state of Goiania, also known as Brazilian Texas due to its resemblance to the agriculturally abundant US state, will host a wealth management office that will be established by the Swiss bank. In Recife, a seaside city in the Northeast that is evolving into a technological hub, another will open this month.

“Most banks never explore the interior much. Agribusiness has grown significantly in Brazil even when GDP shrank, and most of the sector’s entrepreneurs are exporters, hedged in dollars, who are benefiting from an increase in commodities prices” Sylvia B. Coutinho, president of UBS in Brazil noted in an interview in Sao Paulo.

Improving financial outlook in the country’s private banking sector demonstrate why UBS is focusing on the rural. Private banking in the Midwest alone increased 22%, to 54.6 billion reais, according to Anbima, the capital-markets association, while the total market rose 5.2% to 1.87 trillion reais ($370 billion) under management this year through September.

While the largest banks in Brazil are increasing their private banking operations, others, notably JPMorgan Chase & Co. and BNP Paribas SA, have completely given up on the Brazilian market because they feel they lack the requisite scale to effectively compete.

A joint venture it formed with state-owned Banco do Brasil SA for investment banking in South America and brokerage activity in Brazil gives UBS another edge in the competition for wealthy clients. The country’s leading lender to agricultural businesses is Banco do Brasil which has built strong ties with the entrepreneurs in this industry.

50,000 Latin American private banking clients are served by the 1,300 staff of UBS, including 570 wealth advisers. Currently, it has offices in Sao Paulo, Rio de Janeiro, and the southern city of Curitiba for its wealth management division.

Cepea, a centre for economic studies at the University of Sao Paulo’s agricultural school, found in its research that Brazil’s agribusiness sector’s gross domestic product increased by 24% in 2020 and by 8.4% last year. As input prices rose, the economy shrank by 2.5% in the first half of this year. A quarter of the country’s GDP is made up of the agricultural sector.

According to Ronaldo Patah, chief investment officer for UBS asset management in Brazil, Brazil will produce more than 300 million tonnes (272 million metric tonnes) of grains this year, setting a record. According to Patah, that figure will increase by an additional 8% the following year.

Coutinho also notes that land prices are rising alongside grain output, and wealthy investors are eagerly buying acreage — primarily pastures — and converting it into agricultural farms.

The Russian invasion of Ukraine, which destroyed farmland, equipment, and harvests while restricting the nation’s access to ports for exports, is partly responsible for some of the most recent improvements. But fertiliser price hikes around the world affected Brazilian farmers. Aiming to lessen its reliance on US output and in response to its strengthening currency, China has also begun purchasing more Brazilian grain. 

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