Interview with Alfredo Setúbal: “We have worked a lot to achieve it, so I’m glad to see the market’s growth’’

This historical edition of Amec’s Viewpoint, in celebration of the association’s 15th anniversary, brings an exclusive interview with Alfredo Setúbal, former CEO at Anbid – Brazilian Association of Investment Banks (currently, Anbima) and CEO at Itaú Unibanco’s holding Itausa. Few people could vividly remember the context in which Amec was born and carry a deep analysis of the development of the capital markets from 2006 to the present day. Mr. Setúbal is clearly one of them.

As the main sponsor of the self-regulation system developed when he was Anbid’s CEO, Mr. Setúbal witnessed the modernization of the trust fund industry. “Banks, which were reluctant in creating Amec at first, have changed their minds, also due to the advance of Anbid’s self-regulation, the market’s development, and the changes in Brazil and abroad,” he said in the interview.

He also analyzed the democratization process of the stock market, with a growing number of retail investors. And remembers the conversations and times he spent with Raymundo Magliano Neto, an enthusiast of the stock market. “We have worked a lot to achieve it, so I’m glad to see the market’s growth. And it’s happening.”

Despite being away from the fund management industry since 2015, when he became Itausa’s CEO, he still follows the sector closely as a member of Amec’s Advisory Board. See the full interview below:

Could you share with us your view of when Amec was created?

At that time, I was Anbid’s CEO. That association would later become Anbima. Independent asset management firms were gathering to create an association of their own around 2004 or 2005. This movement was led by Luís Stuhlberger and by Luiz Fernando Figueiredo. At first, I tried to convince them it wasn’t worth- to create another association, saying it would divide the sector and make no sense to authorities and the market. We have talked a lot about it, but they said they wanted to create an independent association. 

Why did they want to create a new association?

They believed Anbid could not deal with the conflicts of interest between big banks’ asset management units and their investees. Those conflicts often involved companies that were customers of those same banks. So then, we tried to talk to Animec (National Association for Capital Markets Investors), which already existed but lost credibility and strength. We have studied the possibility of revitalizing it, but then we realized it would not be a feasible endeavor. So, we decided to create a new institution that had Anbid’s support. 

Looking back, how do you see Amec’s path during all these years?

We have had great CEOs. I remember Itaú’s Walter Mendes, who was Amec’s CEO. Walter is very respected in the capital markets. He is connected to governance systems and had an important role at the beginning. Mr. Figueiredo was also a CEO. Those things take some time to gain speed, credibility, and independence.  After them, we had Mauro Cunha, who was CEO for a very long time. He invited me to become a board member. At some point, we told him it was time to begin a succession process, which we did together. Despite his defiant posture, he consolidated Amec as an independent entity.

How do you see Amec’s stance nowadays?

Today, the association is respected. It has a voice, and it has a leadership position amid debates related to market cases. And it is becoming increasingly solid. Big banks’ asset management units and independent asset management firms use it as a unifying debate forum. So, I think it is going well. Of course, there is always room for improvement, but, in general, the balance is quite positive.

What draws your attention about capital markets today? 

We have seen considerable growth in the number of investors in the stock exchange. As interest rates dropped, we have been through some stability, and the number of retail investors has multiplied. Technology helped us a lot, too, as investors now have access to more information on companies’ websites, online media outlets. All of those things, alongside the lower interest rates and companies’ growth, attracted investors. Today we are close to hitting the 4-million individual investors. I was a board member at the stock exchange before the demutualization process. I was there when Raymundo Magliano [Filho], who recently passed away, was the CEO. He wanted to make the stock exchange more popular.

Facing this new scenario, what challenges lie ahead of Amec`s future?

The challenges remain the same. Amec has to be independent of investors and companies and analyze conflict situations. Independence still is the main challenge and mission. Amec must support capital markets as a whole. But that is complex, each case is different. There are legal practices that are not legitimate from the market’s point of view. Fábio Coelho has no easy task ahead of himself. Being Amec’s CEO is a role that demands a lot of knowledge and wisdom.

Also, because conflicts still exist and, in some cases, they become more sophisticated, right?

There will always be conflicts. Amec’s ability to cope with all of that must improve. It should foster debates, discuss the most critical cases and look for the most balanced solution to safeguard investors’ interests, their customers’ and even companies’ interests. Of course, some 10% or 20% will be displeased. It’s part of the game. You’ll always face criticism, but having a positive balance is what matters most. I will not provide you with examples because I have not worked in asset management firms for the past six years, I am not following them so closely, but I think Amec’s work has been very positive.

Does the consolidation of ESG require a change in the focus of the association?

Amec must keep focusing on the G. Undoubtedly, governance is the main focus. The thing is that, in time, those points will be more connected and integrated. “E” and “S” will have an increasingly bigger influence over “G”. We will probably see them all together in deeper debates. The problem is that it is still very fluid. After all, what are the environmental and social aspects of a company? We still do not have a uniform point of view about how companies must act regarding both issues.

This is a huge challenge for associations, right?

The greatest challenge is to mobilize people around a high-level issue, one that makes them feel it is worth it. You must do it in forums, seminars, committees. If the topic is not worth it, asset managers will not send their decision-makers and then, the debate’s content becomes weak. The challenge is not about gathering people at a crisis when all the CEOs hurry and get together, but about everyday tasks. There must be an enriching agenda. I can see that Amec has been keeping a good forum for representativity and participation, and it must remain strengthening its internal debate forums at a high level.