10/20/2008 14h16
Morgan Stanley bets on operations in Brazil
Valor Econômico - 10/20/2008
American Morgan Stanley Bank, which obtained US$ 19 billion in capital last week, is keeping its bet on Brazil. It survives as an independent investment bank, now with two new shareholders: the American government and Japanese Mitsubishi bank. Vice-chairman of the bank's board Christopher Harland, responsible for Latin America, says that there will be no change in the bank's commitment to the country. Mitsubishi, the second biggest bank in the world, will have a seat in Morgan Stanley's board, but Harland remembers that the Japanese institution has been working in Brazil and the evaluation that it is necessary to increase the participation here is shared. The American government does not intend to play a bigger role in Morgan's daily management and faces the investment as a "financial" one, according to Harland. Besides, soon Morgan Stanley may also receive up to US$ 1 billion from the agreement of a lawsuit of its credit card subsidiary Discover against Visa and Mastercard. The institution doubled its team in Brazil in the last 18 months: it currently has 200 people based in São Paulo - some of whom were transferred from London or New York. The bank of investment's incomes in the country should close the year with a 40% high. In September, amidst the volatility in the markets, it was the leader in the volume of shares traded in Bovespa, and it has been trying to catch up with Credit Suisse in the leadership of the trading of shares for some months. "We want the bank to be recognized by its growing performance in the country", says Harland. Even during the crisis, Harland believes that there are good opportunities for investment banks in the country. "I think that we are going to see more fusions and acquisitions taking place. Those will not necessarily be purchases paid in cash, the most common model will be share swaps, which is normally used in times of difficult markets", mentioning as an example deals in the home construction sector. Share swaps also reduce conflicts by the loss of market value of the companies, since generally both companies had similar value losses. Morgan Stanley has helped Cosan negotiate its capital increase through a ‘private placement', said Harland, mentioning the success of Daniel Goldberg, who is the head of the fusions and acquisitions are. The credit shortage should also create market for consulting companies specialized in restructuring of corporate debts. One of the areas in which Morgan Stanley sees competitive advantage is stocks analysis. Today the bank has 14 analysts in São Paulo, the double of the team it had one year ago. Another area that should grow in Brazil is the commodities division. The group has recently announced the intention of investing in an alcohol plant and, since it started working in the exportation of ethanol, it already responds for 10% to 15% of the shipped total.
