C6 Bank, the Brazilian digital lender backed by JPMorgan Chase & Co., is planning to double its loan portfolio to midsize firms as it diversifies beyond retail clients.
By the end of next year, C6 hopes to increase its loan book to such companies to more than 3.5 billion reais ($675 million) from about 1.8 billion reais now, according to founding partner Adriano Ghelman. Midsize firms are those with annual revenue of at least 30 million reais.
“To have a wholesale business is natural when you aim to create a fully fledged bank,” Ghelman said in an interview. “It’s an important segment of the economy, and I won’t shy away from having this type of assets.”
Brazilian banks including Banco Safra SA and Banco Daycoval SA also compete to offer loans to such businesses, a segment where delinquency rates are usually lower than those for smaller companies. The nation’s largest lenders, such as Itau Unibanco Holding SA and Banco Bradesco SA, also are important players, but Ghelman said C6 can gain market share because of its agility and technological skills.
“We are fast, usually more than the larger banks,” he said. “We can put products and systems to work quickly.”
JPMorgan agreed in June of 2021 to buy a 40% stake in Sao Paulo-based C6 after acquiring a minority stake in another Brazilian fintech, FitBank Pagamentos Eletronicos SA, a year earlier. The value of the transactions wasn’t disclosed. In April, the central bank approved a capital increase of 3.63 billion reais at C6, which now has 5.08 billion reais in equity.
Heavy Workload
Just like traditional banks, digital lenders such as C6 still have to visit every midsize company they’re considering as a client, Ghelman said. They must meet the firm’s chief financial officer, perform credit analysis, examine documents, understand the industry and review receivables that will be used as collateral. Given that workload, each relationship manager can only be responsible for about 20 to 40 companies, he said.
C6’s wholesale business has 46 relationship managers, and aims to reach 75 by the end of 2023. The unit has offices in eight cities besides Sao Paulo: Belo Horizonte, Goiânia, Campinas, Ribeirão Preto, Rio de Janeiro, Cuiabá, Recife and Porto Alegre. C6 has also developed a foreign-exchange desk, and is providing dollar lending and derivatives.
The bank, with total assets of 39.7 billion reais as of September, hired 2,300 people in 2022 and is ending the year with 4,143 employees. It has more than 20 million accounts for individuals and about 1 million for companies.
Ghelman co-founded C6 in 2019 along with Marcelo Kalim, who like Ghelman had been a partner at Banco BTG Pactual SA. Their strategy was to tap into Brazil’s growing banking market — one of the largest in the world. About 70% of transactions in the industry are conducted digitally, according to Febraban, the Brazilian Federation of Banks.
The wholesale business C6 is targeting provides the bank opportunities to offer more investment alternatives to clients, such as helping companies to issue bonds that can be sold on the bank’s platform. Loans to such firms can also serve as collateral on certain types of bank notes in Brazil that are tax exempt for investors, such as those backed by real estate or agricultural loans.
Ghelman said the environment for companies in Brazil next year could suffer a “qualitative worsening” because economic growth is expected to slow.
“But entrepreneurs can cut inventories and production, make corrections, and the bank can reduce loans’ maturities or ask for more collateral,” he said. “So it isn’t going to be a significant worsening.”
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Cristiane Lucchesi
