BTG Pactual is to double its London staff by the end of next year, as the Brazilian investment bank embarks on a global hiring spree to build its fledgling commodities business.
The bank, run by Brazilian billionaire André Esteves, plans to add an extra 100 personnel, people close to the situation said.
It will also rent another floor at its Mayfair offices, which will become the headquarters for its worldwide commodities unit.
BTG has established credit lines for the business – and is also setting up commodities hubs in São Paulo, Stamford in the US, Singapore and Geneva.
This international expansion forms part of rapid foray into commodities trading for BTG, just as several large US and European banks are retrenching from an activity that has burdened them with increasing regulatory and capital costs.
BTG is planning to turn trading of oil, wheat, cotton, coffee and other commodities into the third pillar of its international business besides its principal trading unit and its asset management arm.
Its move comes as it has been suffering from a sharp slowdown in its previously buoyant home market. Revenues from its sales and trading unit fell 44 per cent in the third quarter, compared with the previous three months, to R$258m ($111m), as investors stayed away from Latin American markets – and Brazil in particular.
Investment banking revenues fell 25 per cent over the quarter following a drop in equity underwriting.
Brazil’s economy has slowed sharply and is expected to grow little more than 2 per cent this year and next, while the country’s Bovespa stock market index is down more than 17 per cent this year.
London is already the headquarters for BTG’s asset management unit, which mostly consists of a hedge fund business with $9bn in assets under management and almost six dozen traders across the City, New York and Hong Kong.
BTG’s international arm is led by former UBS investment bank head Huw Jenkins, who recently brought in Ricardo Leiman, formerly chief executive at Noble Group, to spearhead the expansion into commodities.
The bank – which, during Brazil’s economic heyday, went by the moniker “Better Than Goldman”, sees the commodities business as a natural fit to its strategy given Brazil’s position as an exporter of resources.
“Brazil is a powerhouse in commodities so there should be a strong Brazilian house in this market,” Mr Jenkins said.
BTG does not operate a commercial bank in the US so it is not subject to the Federal Reserve investigation into whether banks’ ownership of physical commodities should be restricted – the move that prompted some large US banks to seek an exit from this business.
The Latin American lender’s strategy is to expand the commodities business organically but it may be interested in specific parts of commodities arms that are being sold by banks, including JPMorgan’s physical commodities business.