An interview with Plinio Pinheiro Guimarães of the 2018 Brazilian Banking and Finance "Law Firm of the Year", Pinheiro Guimarães.
To start off, can you tell me in what ways have you seen banking and finance laws change in the past year?
I don’t think there has been any major change in banking and finance law generally, or at least nothing that has affected our practice in any relevant way.
Can you tell me if you have seen any trends lately? If you have, where do you think you might see the practice area in five years?
There has been. Our banking and finance practice over the last two to three years has focused a lot on re-financings and restructurings, given economic crisis in companies facing difficulty, so there has been a lot of renegotiations and restructurings that have taken a lot of our time. That said, we also had new transactions in banking and finance for several companies. A lot of the transactions were securitization transactions and asset-backed, primarily for the real estate and agribusiness sectors. Beginning in the second semester of this year there has been a perception that the economy is going to rebound next year, and we are beginning to see more transactions related to infrastructure and project finance, which was something that was not happening over the last two and a half years, so it is shifting toward that direction.
What we are expecting to see is more resolution of the restructurings and less new cases for restructuring on one hand, and on the other hand, more new money transactions in the banking and financing sector and also in the capital markets. The cuts in interest rates are making financing more attractive for general corporations in the country. Investments that were not being made over the last years are going to be made more and more, beginning next year, so that’s our expectation—a lot of capital market activity and also banking finance, project finance, and infrastructure finance. We think they are going to be the trends for the short term and mid-term in the coming years.
I saw online that your firm offers legal assistance (advice) to Citibank Brazil? Can you tell me a little about that?
We have been with Citibank for over 80 years. Citibank is the number one banking client of the firm, and it has been like that for many years. We do a lot of work for them. One thing that we did for them over the last year and a half or so was to assist them with the sale of their consumer banking business, and that was a big high-profile transaction.
Can you tell me a little about that one?
Citibank has taken this strategic decision to shift their focus back to large corporate investment banking, with their original core focus in Brazil, and not so much on consumer banking. At a certain point they had focused on expanding consumer banking in Brazil, and now the decision has been made not to continue offering that, so they sold that unit to Banco Itaú. We acted for Citibank in connection with that sale. It was one of the most important M&A deals in the financial sector recently, together with the acquisition of HSBC’s operations by Bradesco, where we represented HSBC.
And were there any other landmark cases that your firm has taken on that impacted Brazilian law or policy?
Not really. Brazilian banking laws are very advanced laws, and the Brazilian banking and financial system is very solid. The capital adequacy rules are very stringent and banks have large amounts of reserves. So the levels of operational leverage and exposure are really very tight. The rules are very strict. And the exposure and capital adequacy levels that Brazilian banks are required to meet are beyond the standard of the Basel guidelines. The Brazilian banking system is pretty strong.
Where do you see your firm in the coming years and how it will continue to grow?
We are traditionally a banking and finance firm. We also do a lot of commercial corporate law, M&A, and capital markets. We are a business firm, so we focus a lot on transaction work—let’s say in the corporate, commercial, financial, and banking sectors. What we will be doing as a firm for the coming years is more of what we have been doing for several decades, and we are going to continue to consolidate our position in the market as a go-to firm for commercial transactions. Banking and finance is a core business, and it’s something we are known for and to which we dedicate a lot of time. We represent many banks—local and foreign in Brazil on a regular basis. We also have a strong capital markets practice due to our relationship with the banks in the market. We see our firm doing a lot of project finance and infrastructure finance. Given our strengths, we do a lot of structured finance and developing of new finance products. Combining different instruments in the local market, both in banking and capital markets in the context of sophisticated structured finance transactions is also something we will continue to do. That is where we see ourselves, and what we believe we’re good at. We also have a strong infrastructure group, and that’s a very good fit, as it matches with our financial side. The project groups are dedicated to infrastructure contracts: contracts for the construction of industrial plants, airports, energy plants, transmission lines, and so on. That combines the capability of representing clients in the industry when they contract for the construction of plants or supplies with our ability to work on the finance side. When we are negotiating all of these contracts for the projects, we have in mind what the project needs to have in order to be bankable, so that puts us in a very interesting position of knowing both sides of what’s necessary for a successful implementation project from the perspective of the infrastructure and implementation itself and also from the perspective of the financing.
Lastly, what characteristics does your firm have that may have helped contribute to your “Law Firm of the Year” recognition?
I would think that this recognition is not for anything specific that we did. Even though there were a few high-profile transactions that happened in the last 12 or 24 months, I think the consistency of our work in banking and finance over the several years we have been in the market and the recognition from the clients and from our peers that we are the leading banking and finance firm are the key factors. And I think all of that builds up, and one day you get the recognition.
Is there anything else you would like to add?
We are very happy to have won this recognition and award and to be recognized as leaders in this field, because we take this very seriously. It’s important not only to have the clients and to work on interesting deals and collect fees, but also to be recognized in the market—and to position the firm, so we can continue to expand the practice. This is very reassuring, and we are very thankful for this recognition.