Banco Bradesco S.A. Business Information, Profile, and History
Apartodo Postal 8250
01046-010 Osasco, São Paulo
History of Banco Bradesco S.A.
Headquartered in a suburb of São Paulo, Brazil, Banco Bradesco S.A. is Brazil's largest private bank. The firm is a powerhouse by virtually any standard: it ranks as the largest bank employer in the world, the largest private employer in Brazil, and the third-largest banking organization in Latin America. Under the guidance of founder Amador Aguiar for most of its half-century in business, Bradesco revolutionized Brazil's banking industry through a combination of technological foresight and dedication to service. In the mid-1990s, the bank boasted over 1,800 branch offices, over 500 special banking service posts, and 1,800 automatic teller machines (ATMs). The company also managed insurance and travel services, stock brokerages, and credit card administration offices. In addition, Bradesco collects taxes and distributes tax refunds for the Brazilian government, and provides collection services to many of the country's major utilities. International offices in New York, Grand Cayman, and London handle overseas banking services.
The history of Bradesco is a "rags to riches" tale in the tradition of Horatio Alger's uniquely-American success stories, which typically feature a resourceful country boy who creates a bright future for himself in the big city. Indeed, Bradesco founder Amador Aguiar moved in similar fashion from the farmlands of Brazil's Ribeirão Preto region to the cosmopolitan city of São Paulo. Born in 1904, the third of thirteen children of farm workers, Aguiar went to work in a printer's shop at the age of 14. But after losing a finger in a printing machine six years later, the young Brazilian started work as a bank clerk at Banco Noroeste.
Brazilian banks of the early twentieth century paralleled American banks of the late nineteenth century. They restricted their services to the wealthy upper classes and therefore placed themselves in competition for a very limited clientele. Middle and lower class citizens did not use banks, and were not welcome at most financial institutions. This situation was especially pronounced in Brazil, where the gap between the classes was even wider than in the United States.
Aguiar's humble beginnings probably sensitized him to the inequity of Brazil's banking system. After nearly two decades as an employee, in 1943 the industrious Aguiar assumed control of Casa Bancária Almeida e Companhia (Almeida Banking House), a bank with six branches, headquarters in Marília, and a capital stock of ten million cruzeiros. He renamed the institution Banco Brasileiro de Descontos S.A., which was later shortened to Bradesco. (The name translates to "ten-conto bank," a self-effacing reference to an outdated form of currency. Comparable to "dime savings bank," the name emphasized the institution's appeal to small-scale savers.)
Aguiar's approach to banking has been compared to that of Amadeo Peter Giannini, who created the Bank of America (now BankAmerica Corporation) to serve the financial needs of "the little fellows" such as area coffee growers. In order to make his target clientele feel welcome, Aguiar made a number of changes in typical banking services. He expanded office hours so that coffee growers and ranchers could do their banking before their work day began. In order to reduce the "intimidation factor" common to many financial institutions, Aguiar moved his managers and loan officers from "cages" at the rear of the bank to more approachable desks near the front doors. The bank even helped its clients learn to write checks; if an incorrectly endorsed note arrived, Bradesco would call the customer in to correct the document so that the bank could honor it.
Aguiar reformed Bradesco's corporate culture as well, making piety and company loyalty fundamental requirements for hiring and promotion. The work environment was replete with religious references. The company letterhead, for example, featured Bible verses and the phrase "Nos confiamos em Deus," Portugese for "We trust in God." New hires endorsed a "declaration of principles" that described the setting aside of personal interests in favor of the good of the country and the company. A corporate publication emphasized three essential requirements for employees: "punctuality, simplicity and availability."
According to Lynda Schuster's 1985 interview with Aguiar for the Wall Street Journal, promotions in the company were made from within and based on what Aguiar described as "superior moral behavior." In the 1990s all of Bradesco's directors had started out at the company in minor office and clerical positions and all had at least 15 years of experience at the bank.
The high moral expectations instituted by Aguiar had a legitimate business function. As one top executive commented in the bank's 50th anniversary publication, "a clear ethics code, strictly enforced, neutralizes any conflict potential that the decentralization of the decision-making process might activate." In other words, the company's policies freed branch managers to make the difficult judgments about extension of loans, mortgages, and lines of business credit, while simultaneously releasing upper-level executives from having to oversee those day-to-day transactions.
Bradesco's mass appeal helped it grow quickly. By 1946 it had expanded sufficiently to warrant the relocation of its headquarters to São Paulo, Brazil's economic capital. The country--and Bradesco&mdash-joyed a period of brisk economic expansion based in large part on burgeoning coffee exports during the 1950s. Bradesco's confidence in its clientele paid off in a big way during this period, as deposits at the bank doubled every month. Less than a decade after its reformation by Aguiar, Bradesco had become Brazil's largest private financial institution.
The bank also diversified into trading during this period, using its growing number of branch offices to distribute products from the more industrialized areas of the country to more isolated regions. This strategy not only endeared Bradesco to the recipients of medicine, fuel, and other benefits of modernization, but also to the industrialists and manufacturers whose sales were boosted by these efforts. The bank also began processing utility payments at this time.
When Aguiar moved the bank's corporate headquarters to the outskirts of São Paulo in 1953, he named the new location "Cidade de Deus," or "City of God," after a book by the evangelist Saint Augustine. The complex not only featured the standard office buildings, but housing, recreation facilities, hospitals, and schools for the 9,000 employees who worked there. Construction of the compound and support of its inhabitants fostered the growth of a thriving suburb around Cidade de Deus.
Aguiar extended his magnanimity beyond the needs of his employees as well. In 1956 he established The Fundação Bradesco (Bradesco Foundation) to combat illiteracy. Boosted by profits from Bradesco's insurance operations, the program was later expanded to include social services, vocational training, computer equipment, and educational materials. By the early 1990s, the Foundation included 39 schools, 85,000 enrollees, and an annual budget of US$30 million. Aguiar's philanthropy earned him the oft-used title "seu," a rural contraction of the honorific "Señor."
In 1962 Bradesco became the first bank in Brazil to make computer automation part of its daily operations, ignoring the Brazilian banking industry's well-established prejudice against new technologies. Notwithstanding the conventional wisdom, automation proved invaluable in the tumultuous Brazilian economy, which endured triple-digit inflation, rapid currency devaluation, and stagnant gross domestic product growth in the early 1960s. Like other Brazilian banks, Bradesco adapted to this "hyperinflationary" environment, adopting indexing (characterized by Robert M. Bleiberg of Barron's as "the widespread use of escalator clauses in financial transactions to minimize the impact of inflation") and issuing daily bank statements so that clients could track their holdings. As one executive reflected in the company history, the daily statement was "an extravagance that impressed people. Some clients considered it an excess but even so understood that the daily statement represented superior service."
A military coup d'etat in Brazil in the mid-1960s ushered in a period of government-led economic planning that brought about "the Brazilian miracle" of the late 1960s and early 1970s. The country enjoyed an unprecedented period of prosperity, low inflation, and economic expansion. Bradesco more than doubled its 326-branch system through acquisitions during this period. The two largest of Bradesco's 17 purchases were INCO-Banco Indústria e Comércio de Santa Catarina's 105-branch system in 1967 and Banco da Bahia's 200 branches in 1973. The bank also launched its first credit card, the Cartão Bradesco, during this period. By 1978, the institution claimed over 1,000 branches.
Aguiar stepped down from Bradesco's executive chairmanship in 1981. He remained true to the Spartan work ethic he imposed on his employees, however, and maintained a daily work schedule. The venerable leader retired in 1990 at the age of 86 and died less than a year later.
Aguiar was succeeded as chief executive by Lázaro de Mello Brandão, who had started his career with Bradesco in 1942 at the age of 15, when the institution was still the Almeida Banking House. Brandão was as hard-working as his predecessor: he put in 12-hour days and was on call "Dia e Noite" (Day and Night, also a slogan for Bradesco's ATM system). He had been a driving force behind the bank's computerization in the 1960s and its internationalization in the early 1980s.
Triple-digit annual inflation once again raged in Brazil in the early 1980s. Banking customers tried to adapt to the situation with daily transfers of funds to accounts with ever-higher yields. Bradesco and other Brazilian banks branches increased their services to accommodate this activity. Bradesco's branch system, for example, increased from 1,400 in 1983 to over 1,900 in 1986. In 1985 alone, the bank opened more than one new branch per day. In order to keep its clients informed of events in the fast-moving Brazilian economy, the bank launched "Alô Bradesco," a free, 24-hour consumer complaint, suggestion, and information line, in 1985. As of 1993, the system had logged 475,000 calls. The bank proudly pointed out that less than ten percent of those calls were complaints.
In 1986 the Sarney administration ratified the "Cruzado Plan," a strategy that purported to halt inflation and simultaneously boost the economy in Brazil. The country adopted a new fixed-rate currency called the cruzado; instituted price and wage freezes; and even limited banking hours to just five midday hours in order to limit activity. Having reconciled themselves to hyperinflation, many Brazilian banks faced a painful readjustment. Milton Moskowitz noted in The Global Marketplace that at Bradesco, which had a bank work force of 750,000 people, "some 80,000 lost their jobs early in 1986, and hundreds of branches were closed."
In order to gradually adapt to the artificially-curbed economy, CEO Brandão focused on enhancing productivity through ever-increasing automation. The proliferation of automatic teller machines that offer the full range of traditional bank services diminished the need for employees to work as tellers. In addition, the installation in the early 1990s of a state-of-the-art satellite-based data communications network helped revolutionize the collection of daily transaction records from 200 of Bradesco's branches on the Amazonian frontier. Up to the late 1980s, this information was transmitted through a fleet of boats that traversed the region's estuaries several times each business day.
The bank also "outsourced" several peripheral businesses during this period, including operations as diverse as a cabinet-making division, corporate food service, and medical service. The company history commented that "self-sufficiency was necessary at a time when services in Brazil were incipient and lacked the means to operate on a large scale." Bradesco did, however, retain ownership of its printing operations, perhaps in homage to the founder's first profession. Through these and other measures, employment at Bradesco was halved, from 146,000 in 1986 to 81,000 in 1994, but assets climbed from US$13.6 billion to US$15.8 billion during the same period.
The late 1980s and early 1990s also brought a revolution in Bradesco's corporate culture and a deviation from some of Aguiar's strict standards. For example, the board of directors of the company had traditionally worked out in the open. As with the bank's branch managers and teller, these executives had neither private offices nor even a desk drawer to themselves. The president often personally handled many customer and employee issues. But during this period of reform, top executives at the home office and in the branches moved into new quarters with private meeting rooms for confidential consultations with clients.
Although the Brazilian economy was still in turmoil in the early 1990s, Brandão pointed to several positive portents for the economy overall and Bradesco in particular: "For the first time in the Republic's 103 years an elected president was removed from office without the least infringement of the Constitution. [In addition,] Europe and the United States, important partners for Brazil, are experiencing positive developments.... Furthermore, European unification may produce positive developments, especially if the agricultural subsidies are eliminated."
Brazil is a country of contradictions. It has Latin America's biggest--and most indebted--economy. It has enjoyed periods of exhilarating growth and equally devastating depths of recession. The country boasts some of the world's richest natural resources, but has earned a reputation for squandering those treasures. Its government has been plagued by instability and scandal, yet its citizens have registered popular approval of the "strong executive system" that has engendered abuse of power. Bradesco has thrived in this challenging, ever-changing environment, remaining profitable through both hyperinflation and economic controls. Although some analysts questioned the bank's ability to adjust to economic stabilization programs enacted in 1994, Bradesco continued to prosper. In 1993 and 1994, it was the top-rated of Brazil's banks, according to Euromoney, IBCA Limited (London), and Thomson BankWatch Inc. (New York).
Principal Subsidiaries: Bradesco Insurance Group; Bradesco Leasing S.A.; Bradesco S.A. Corretora de Títulos e Valores Mobiliários; Bradesco Turismo S.A. Administração e Serviços; Bradesplan Reflorestamento e Agropecuária Ltda.; ABSEmpreendimentos Imobiliários, Participações e Serviços S.A.; Allianz-Ultramar Companhia Brasileira de Seguros; Alphaville Factoring-Fomento Comercial Ltda.; Atlântica-Prudential Participações S.A.; Baloise-Atlântica Companhia Brasileira de Seguros; Bradescor Corretora de Seguros Ltda.; Gráfica Bradesco Ltda.; Prudential-Atlântica Companhia Brasileira de Seguros; União de Comércio e Participações Ltda.; Vibra-Formação de Vigilantes S.C. Ltda.; Vibra-Vigilância e Transportes de Valores Ltda.
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