beyondbrics

By Andrew Downie in Rio de Janeiro

There’s cash in chaos. Or that’s what Banco Santander thinks.

The Spanish banking empire recently opened its first branch in a Rio de Janeiro favela. Attracted by a general rise in living standards and the realisation that more and more Brazilians are joining the formal economy, it has just opened a small branch in the Complexo de Alemão, one of Rio’s most violent communities.

“Many people here have never had a bank account before,” said Guilherme Nycholas, the bank’s manager. “We offer them all the banking experiences they’ve never had.”

More than 100 people have opened accounts in the first month and many more are expected to follow suit, Mr Nycholas said. Since President Lula took office in 2003, some 24m Brazilians have been sprung from absolute poverty and 31m have progressed into the middle class, according to government figures.

That definition of middle class is hardly European – a family earning as little as 1,115 reais (₤420) is considered middle class – but banks such as Santander, as well as major retailers, are acutely aware these are newly empowered consumers and they are eager to engage with them.

Known for the drug-related violence that has assailed it, the Complexo de Alemão is an unlikely place to start. But Santander was clever enough to know such ventures are better when done with local partners. (And, some might say, infinitely safer, too.)

The bank is identical to their 13,000 other branches around the world and is on land owned by Afroreggae, a well known and highly respected charity that helps lure kids from gangs through music.

Above the bank, tiny kids with samba drums beat out a deafening rhythm taught by Afroreggae professors. Down below, bicycles and motorbikes bounce along the barely paved street past pedestrians and beauty salons, small grocers and stalls selling everything from fruit and vegetables to old electronics. Bits of the road have iron stakes in them to stop police cars driving in.

The locals have taken to the bank and are gratified that multinationals are at least treating them to the same services as their counterparts outside. They won’t be the last. With the economy growing fast, such experiments are destined to be repeated and expanded.

“We can’t leave these people outside the market,” said Eduardo Campos, Santander’s regional superintendent. “I won’t say we don’t have plans for other areas, but we want to learn here first before expanding into other communities. We know the size, the national potential.”

Related reading:
Brazil’s developing favelas: Searching for Eldorado, The Economist
Santander homes in on Latin America, FT
FT special report: The New Brazil