No. 1 wants more. (Cover Story).

Following record profits in 2001, Bradesco shows no sign of slowing down. Brazil's largest private bank kicked off 2002 with the purchases of Banco Mercantil, Banco do Estado do Amazonas and the local asset management area of Deutsche Bank. At the helm of the 12-million-client juggernaut, Bradesco President Marcio Cypriano talks softly but carries a big stick--more than US$48 billion in assets. At the bank's headquarters--a massive, opulent complex known as the "City of God"--in the Osasco region of metropolitan Sao Paulo, the 30-year finance veteran speaks with LATIN TRADE Portuguese-language Editor Carlos Adese about the future of the bank in an increasingly competitive Brazilian market.

With the consolidation of the financial sector, do you worry that Bradesco will lose the top spot in Brazil to an international competitor?

Never. We have a lot of respect for the competitors coming from outside of Brazil, but we always say that the Brazilian market is atypical. Banks here offer many services to the public, the traffic at branch offices is very high. Bills for public services and taxes are paid at banks. Foreign banks will take a long time to learn and understand our market. For that reason, some foreign competitors have already withdrawn from the country, like Portugal's Banco Boavista, Banco do Espirito Santo, in addition to the investment banks that have left. Bank costs are very high. A director of a foreign bank tells us that he can't understand why a Xerox [copy] costs four times as much as it does in Europe. The excessive labor lawsuits, for example, you won't find any place else. All of this makes the Brazilian financial system very expensive. Besides those issues, we have also sought to take advantage of growth opportunities through acquisitions, privatizations and our own organic growth. We cannot sit on our laurels and think that everything's fine.

Bradesco, Itau and Unibanco are the last major, locally owned institutions left in Latin America. What is the strategy for surviving the battle with the international giants?

You need economies of scale. It's very important to offer even more quality products to clients to take advantage of [our] 12 million depositors. We worked hard in insurance, private pensions, health plans--although much remains to be done in this country--and we have done a good job. It's also important to be very aggressive in loans. Helping to develop commerce and industry has always been a tonic of Bradesco.

In 2000, Bradesco officially entered the Argentine market. Unlike your competitor Itau, which opened a lot of branch offices, you set up one office focused on corporate clients. Why?

We established Banco Bradesco Argentina basically to do trade finance operations. First we wanted to get to know the market. In the future, if we find it's worth it, the idea would be to seek to acquire a bank, but that's not in our plans yet.

Does Bradesco have plans to grow abroad?

In the future, who knows? We will look at opportunities. Recently, for example, we bought Banespa de Luxemburgo, which didn't interest Santander because they already have their operations there. That might lead the bank in the future to open branches in Europe. Apart from that, we have operations in Cayman, Nassau and an active affiliate in New York. In Japan, we have operations for dekasseguis [Brazilians of Japanese descent] to transfer money to Brazil. All of this represents Bradesco's face abroad, but we're not interested in opening retail operations internationally. Brazil still has a lot of great potential. The country of more than 160 million people has only 40 million bank accounts and an economically active population of 80 million.

Of the bank's 12 million clients, almost a third use the Internet. Will Bradesco become a virtual bank in the future?

We use the Internet to reduce the bank's costs. Today we have more than a million people accessing [the bank's Web site] daily and doing Internet transactions. It's a number that's growing frighteningly fast. People don't have the time to waste going to banks.

Since you were named president of Bradesco in 1999, the number of clients has grown 50% and the bank has dramatically cut costs. How was that experience?

It was an adaptation to a market necessity and the bank's entire team has been aware enough to see that we needed to grow through changes. Bradesco adapted to what the market demanded. Today, a company that's not productive will die.

In 2001, Bradesco reported profits of $904 million, a 28% jump in dollar terms compared to a year ago. Can you maintain that margin if the global economic recession gets worse?

Bradesco has moved its base of profitability in the last year and a half to more than a 20% return on capital. Our objective is to continue raising that base to close to 23% profitability. That's why we have been working to cut administrative costs, to reduce significantly payroll by replacing expensive employees with new, more economical and productive ones. The bank has career plans and private retirement protection for employees that allows them to retire and be replaced. Another fact: Bradesco and [Bradesco-owned] BCN opened 90 branches in 2001 and that gave us the economies of scale to take employees from other areas and put them to work in the new branches. With that, we have not increased the number of employees, but we increased our points of sale with a strong synergy.