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Here’s a tiny little window into Brazil thanks to our friends at Itau.
Like Goldman Sachs and Bloomberg, Brazil’s largest private bank did a statistical analysis of who will win the World Cup. Unlike Goldman Sachs and Bloomberg, they refused to reveal the results of their statistical analysis, which is hilarious given that they sent it to every journalist in the country.
Why the reticence?
Is it a lack of transparency and accountability? Very possibly. The bank is notorious for treating clients poorly (as I blogged about here), going as far as making it impossible to call branches to talk to account managers or staff.
Lack of confidence in their results? Unlikely. Their partial predictions (why reveal half your results?) were hardly controversial. They boldly predicted the semi-finals will feature Spain, Germany, Brazil and Argentina.
A desire not to offend? Most likely. In bars and in foreign policy and in everything in between, Brazilians are averse to giving strong opinions with strangers lest they hurt someone’s feeling.
My prediction? Like Goldman and Bloomberg, I go for Brazil. But it’s a funny old game. Anything can happen. Roll on June 12.
Itau made a profit of 14 billion reais (around US $7 billion) last year.
Here’s one of the reasons why.
A couple of weeks ago I spotted an unfamiliar charge on my bank statement. It’s hard to know what Brazil’s banks are charging you for because they deliberately make the statement unintelligible.
For example, instead of writing: Payment for Private Health Plan – 601,94 reais, they write AG. PAG TIT 236431171236362 – 601,94.
After taking a closer look I saw they’d been taking 20 reais out my account every month since the start of the year. I knew it couldn’t be a monthly charge for running my account because I’d last year specifically asked Itau not to charge me the monthly fee and they’d removed it.
(Banks won’t tell you this but you are not obliged to pay a monthly fee. As long as you’re not using a certain number of checks or withdrawals, banking is free.)
So I went to the bank and asked about the mysterious charge. They opened an investigation and promised to call back within a week. They didn’t so I went back and complained again. A few days later I got a phone call.
After half-heartedly trying to shift the blame on me the bank eventually admitted they had illegally reinstated the monthly charge. For seven months I’d been paying them 20 reais a month even thought I had specifically asked them to remove it.
The bank apologised (in their own unapologetic way) and promised me they would reimburse me the 140 reais.
Excellent, I thought and celebrated one of life’s tiny victories.
I told a friend about this triumph and he laughed. They’re still screwing you, he said.
How’s that, I asked.
The answer is this:
When a bank or utility illegally charges you or overcharges you they are obliged not just to pay you back what they owe but pay you back DOUBLE.
I checked. He’s right. Here‘s the Defesa do Consumidor page saying exactly that.
So I went back to Itau and asked them if I was entitled to receive double. They said Yes, and promised to begin the process to pay me the extra 140 reais.
Why didn’t you tell me that under the law I was entitled to receive double, I asked.
We only pay double to those that ask, my bank manager responded.
So even though you know the law says you should pay back double, Itau doesn’t do that unless customers ask specifically for the letter of the law to be applied.
She hummed and hawed and told me that was the culture here and that all banks did it this way.
I told her Itau were nothing short of thieves.
She shrugged her shoulders and looked sheepish.
I will now wait and see if Itau pay me double as they’re supposed to. But I at least established another reason Itau’s profit last year was the second biggest in Brazilian banking history.
By deceiving their customers.
Every time I write stories about Brazil’s elevation to becoming a world player I am painfully aware of the other Brazil, the backward, bureaucratic, unchanging nation that remains stuck in the last century.
Today was one of those days and it involves HSBC, one of the world’s most modern and interconnected banks.
HSBC has been badgering me to open an account with them. So I took over the documents they require; my passport, my tax number, and some bills confirming my home address.
Photo by Steve Rhode
I was finally told today that the head office can’t authorise a new account without confirmation of my parents’ names.
The one Brazilian document containing that information is currently with the Federal Police and it will take them up to six months to give me a new one.
That information was apparently too complex for anyone at HSBC to understand. So after asking me to open an account with them, and pre-approving me, they apologised and said come back when you can prove your (late) mother is Isobel and your father is Fred.
HSBC can learn exactly nothing from having my parents’ names. (Which I gladly gave them, they just don’t trust me not to lie about it.)
No one in the UK or the US has to provide their parents’ names to open an account. So why in Brazil? Isn’t HSBC supposed to be the world’s bank, creating opportunities across the globe? (See ironic pic above.)
There are few clearer examples of the conflict between the new, forward-looking Brazil that has risen to become the world’s sixth biggest economy and a major international player, and the stunted, self-defeating nation of unthinking apparatchiks.
Sometimes I marvel at how far Brazil has come. But just as often I despair at how far it has to go.
A few months ago I started doing the occasional piece for an Indian blog called Mahindra Rise.
To be honest, I didn’t pay much attention to what it was. The editor was the son of a friend and I was happy to write stories for him.
The important thing was that the subject matter interested me, writing about people or products or anything else loosely related to the term Rise.
I took it as a way to write about worthy issues in Brazil that would be a hard sell elsewhere.
I’ve done three pieces for them so far. The third came out last week and is about Valdenor Freitas, a lovely little guy who has built up a nice business for himself on the outskirts of São Paulo.
Freitas (pictured, right) is a hard worker but without small loans he wouldn’t have been able to build up his café-bar business and then open a small supermarket.
I got an email this morning telling me that the Mahindra Rise just won the Best Blog of the year award at the Web Advertising and Technology Awards ceremony, which aims to “recognize and felicitate agencies and professionals who have achieved ground breaking work in the Indian digital space.”
So congratulations to them and all the RISE writers. Follow RISE on twitter at @ MahindraRise.
If you have any interesting suggestions for blog topics in Brazil, please drop me a line. Contact information is above.
I was a bit apprehensive about meeting André Esteves last week. Not because he is a billionaire or has a fearsome reputation as a ‘shark’ who devours his rivals.
More because I was writing for The New York Times on banking, which is hardly my specialised subject. It was a lot to learn in a short time.
The interview was brief but good. Esteves was friendly and there was little sign of the cut throat capitalist I had heard so much about.
We spoke in English at first and although his English was good, he obviously didn’t feel 100 % confident. When we switched to Portuguese he was a whole different guy. He was funny and charming and I even teased him a bit. He laughed easily while the photographer took his picture. Maybe it is the Carioca in him but when the microphone was turned off he didn’t take himself too seriously.
The moment he left the room, however, he was all business, refusing even to have his picture taken in the foyer in case it looked bad in front of a visiting client.
It’s been more than two years since I wrote a business story for the NYT. The paper’s financial troubles and their lack of a business editor who truly understood what is going on in Brazil meant they showed little interest in covering the business story, even though Brazil’s economy was – and is – booming.
Hopefully this piece means is the first sign they are starting to wake up to what is happening down here. And hopefully that will mean more work for me…
One of the most remarkable things about Brazil is how much leeway major companies get to screw consumers.
Regulatory agencies are so weak or so close to the big business that even when malfeasance is proven clients are rarely compensated and the firms remain impune.
“I think the regulatory agencies are protected,” the head of Procon-SP, the state’s most important consumer defence body told me earlier this year. “They are closer to the companies than consumers. Big business interferes with the regulatory agencies much more than consumers do.”
Another example of just such nefarious conduct has come to light in recent days, as I write about today in this Financial Times blog.
The federal public prosecutor’s office in Rio announced it has filed a lawsuit against three of the country’s biggest banks, Santander, Itau-Unibanco and HSBC, accusing them of imposing illegal bank charges on clients.
The illegal charges brought the banks more than R$500 million between 2008 and 2010. They were charging certain fees even after Brazil’s Central Bank told them they were illegal and that they must cease and desist.
The public prosecutor’s office is seeking R$1 billion in damages, according to this statement. Some of the money will go to the affected clients and the rest will go to the Diffused Rights Defense Fund, where it will be used to fight more consumer cases and for environmental projects.
The office decided to go ahead with the case only after the banks ignored its appeals to fully compensate consumers. Itau-Unibanco and Santander paid some of the money back but HSBC did nothing, it said. Even though the Central Bank told them they were in the wrong!
To me, what’s breathtaking about this is not just that banks are robbing us blind and then refusing to be held accountable. The average annual interest rate for repaying credit card debt is a whopping 238%!
Having lived here for so long, I’ve found banks, and especially Itau, treat customers with little more than contempt.
What is also amazing to me, and much sadder, is that there’s not more of an outrage about cases like this.
This story was buried in the back of the nation’s top dailies. Consumers are so powerless and have become so used to the abuse that they do little more than shrug their shoulders.
This case is not dissimilar to another that came to light last year when electricity companies were found to have overcharged customers to the tune of R$7 billion over eight years.
The regulatory agency, Aneel, refused to take action and demand compensation.
Consumer affairs activist Maria Ines Dolci summed up their refusal to compensate for the overcharging this way: “The allegation is so ridiculous as to be offensive; according to the agency, there is no legal framework for retroactive payments….I really don’t understand the regulatory agencies. They don’t level the playing field for governments, companies and consumers. They simply take the side with the strongest. Period.”
I couldn’t agree more. Brazilian consumers need to complain more and raise more of a stink.
So kudos to the Rio office taking on this case. I am behind them all the way.
ANDREW DOWNIE'S BRAZIL BLOG 