Private Banking In Brazil


According to the current policy recently adopted by the Central Bank of Brazil (Banco Central do Brasil – Bacen), the opening and functioning of representative offices of foreign banks1 continues to be subject to the prior approval of Bacen but now is only limited to those international financial institutions that still do not have a branch or subsidiary in Brazil and would like to know the local market more closely in order to decide whether it would be convenient or not to establish a bank in our jurisdiction in the future.

The business undertaken by a representative office is and has always been severely restricted. At no time it may act as a bank or undertake banking business. It may, however, promote the services and facilities which the foreign bank offers and thereby solicit clients for the bank. Furthermore, the representative office may obtain and supply the foreign bank with information regarding a variety of matters and act as a point of contact between the principal place of business and its clients. If the representative office exceeds these limits, its approval to function in Brazil may be cancelled by Bacen.

Therefore, private banking activities in Brazil must be exclusively performed by banks duly authorized to operate in the country and cannot be carried out by representative offices.

Although the Brazilian Banking Law (Law No. 4.595 of December 31, 1964, as amended) does not define the term "bank" or "banking activity", it does define the term "financial institutions". Article 17 of the Banking Law defines "financial institutions" as public or private corporations2 whose principal or secondary business is the collection, brokerage, or investment of financial resources belonging to themselves or to third parties, in domestic or foreign currency, and the custody of assets belonging to third parties. Furthermore, individuals who undertake any such business, either regularly or sporadically, are regarded as financial institutions for the purposes of the Brazilian Banking Law.

The term "private banking activity" is not limited to wealth management but comprises the rendering of other financial services. In this regard, the Self-Regulation Code of the Brazilian Association of Entities of the Financial and Capital Markets (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais – ANBIMA)3 contains the following definition:

"Article 6. The Private Banking Activity shall incorporate:

rendering of banking services...

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