Two Deals Bring Attention to Banking’s Safra Family
On a single day last fall, two deals were coming together that would draw unusual attention to a banking family that prefers to remain in the shadows.
In London, 30 St. Mary Axe — a pickle-shaped office tower known as the Gherkin that was designed by Norman Foster — was on the brink of changing hands for $1.1 billion. And in New York, shareholders of Chiquita Brands International, the banana producer, were finally leaning toward selling the company, for $1.3 billion.
The buyer for both of these assets was the Safra Group, the investment arm of a storied financial family that strives for secrecy.
Today run by Joseph Safra, the last surviving son of the patriarch who built the family’s initial fortune, the Safra Group manages billions of the family’s personal money. Worth an estimated $14.5 billion according to Forbes, Mr. Safra, 76, is the world’s richest banker.
In addition to the family’s vast and growing real estate holdings, its fortune is bolstered by a network of international banks, including Banco Safra in Brazil, J. Safra Sarasin Holding in Switzerland and Safra National Bank of New York. In total, the family and its banks have more than $200 billion under management, and stockholder equity of more than $15 billion.
With the latest deals, the Gherkin became the face of a Safra real estate portfolio, which includes over 100 properties around the globe, including the 660 Madison Avenue office complex in Midtown Manhattan, and several prime locations in SoHo in Lower Manhattan.
“Their real estate philosophy is very similar to their banking philosophy,” said a person who has worked with the Safra family on property deals and spoke on the condition that he not be named because he did not want to jeopardize his relationship with the family. “It’s really about the preservation of wealth. They look to buy to hold, rather than to sell.”
Indeed, the family has not sold any major real estate assets in decades.
In Chiquita, the Safra Group saw the opportunity to diversify its revenues with a similarly long-term, and public, bet. Demand for bananas, a popular fruit worldwide, is unlikely to subside. And by joining with the Cutrale Group, owned by a Brazilian family with expertise in agriculture that it knew well, Safra was able to branch out without taking on too much risk.
His penchant for privacy aside, Mr. Safra has emerged as a powerful philanthropist in Brazil. Both São Paulo’s Jewish hospital, Albert Einstein, and the hospital founded by the city’s large Arab community, Sírio-Libanês, list Mr. Safra among their largest donors.
Among close associates, Mr. Safra is known to be kind and humble, cooking meals for family and calling on confidants regularly.
“He thinks about his business 24 hours a day, but he found time to call me every day when I was in the hospital after heart surgery,” said Jack Terpins, president of the Latin American Jewish Congress.Others, who spoke only if they were not identified by name because of Mr. Safra’s power in São Paulo’s financial community, describe an impatient side and a quick temper.
“He likes problems to be solved immediately. You don’t want to disappoint or cross him,” a former employee said.
Yet for his private nature, Mr. Safra has maintained and added to a family fortune that is poised to survive for another 100 years, or more.
“They have a multigenerational time horizon,” said a senior banker who has worked closely with the family. “Not many people have that.”
The Safra family’s standing at the heart of the world’s elite private banking industry is a world away from its roots as traders with the camel caravans that passed through Aleppo, Syria.
It was there, more than 100 years ago, that the Safra family discovered its business acumen, first as merchants and then as amateur bankers. Mr. Safra’s father, Jacob, moved to Beirut and opened a formal bank after World War I, capitalizing on Lebanon’s emergence as a cosmopolitan hub of the Middle East.
After World War II the elder Mr. Safra moved his family to Brazil, and in 1957 established Banco Safra with seven employees. Today, Banco Safra is the eighth-largest bank in the country, with more than $56 billion in assets.
Despite the family’s prominence, Mr. Safra and his relatives are resolutely private. He does not appear in gossip columns and his name has not been associated with politicians or celebrities. In contrast to Brazil’s casual customs, he always wears a suit. Observant of his Sephardic Jewish roots, he keeps a strict kosher diet.
“For most Brazilians, he is a mystery,” said Paulo Feldmann, an economics professor at the University of São Paulo who studies Latin American business culture.
He is largely a mystery to the outside world, too. No member of the Safra family or its companies would comment for this article, following a longstanding policy of not speaking to the news media or making public appearances.
Privacy, however, has not inhibited the family’s ability to expand its reach, or increase its wealth. Several people who work closely with the Safra Group describe a family that measures success by decades and generations, not quarters and fiscal years, and possesses a single-minded focus on maximizing long-term returns for clients and family members.
“They are focused on very, very long-term investing, wherever in the world makes the most sense,” the senior banker said. “They are going to stick to extremely low volatility assets, and proven properties and companies that have meaningful long-term appreciation.”
Behind the philosophy is a maxim espoused by the patriarch, Jacob Safra, and internalized by his sons and grandsons: “If you choose to sail upon the seas of banking, build your bank as you would your boat, with the strength to sail safely through any storm.”
Mr. Safra’s older brother, Edmond, later left Banco Safra and established new banks in Europe and New York. In 1999, he sold Republic National Bank of New York to HSBC for $10 billion. Edmond died in a fire under suspicious circumstances later that year.
Joseph and his younger brother, Moise, ran Banco Safra together until 2006, when Joseph bought out Moise and became the sole owner of Banco Safra. Moise died last year, at 79.
Today, while Joseph remains at the head of the family, his three sons, Jacob, David and Alberto, are assuming more prominent roles. Jacob, the eldest, splits his time between Switzerland and New York, looking after J. Safra Sarasin and Safra National Bank of New York, and nonbank operations outside Brazil. David and Alberto, meanwhile, run Banco Safra in Brazil. Their father is often on the road, shuttling between Brazil, Switzerland and New York.
But success was not always assured. Postwar Brazil suffered first from political instability, then from hyperinflation. The economy lurched from one government plan to another that included capital and currency controls, and even a nationwide freeze of bank accounts.
In that volatile environment, fortunes were made and lost. Mr. Safra focused instead on asset management for wealthy individuals, and on loans to businesses and individuals who could offer solid collateral, such as real estate.
“He always worked on growing slowly and sustainably and keeping the bank very solid,” Mr. Feldmann said. “He looked to hire the most intelligent people, even if they had no experience in banking, trained them himself, and demanded complete loyalty.”
Mr. Feldmann said Mr. Safra was also unusual in wanting to keep his company relatively small so that he could keep a close eye on every aspect of it.
Mr. Safra soon started to buy other, smaller banks and to invest outside the financial sector. He acquired controlling stakes in major Brazilian textile and cellulose companies, and in 1998, in partnership with BellSouth, he founded a cellphone company, BCP, that became Brazil’s second largest.
Despite rapid growth, BCP turned out to be one of Mr. Safra’s few failures. The company racked up huge debts and was finally sold in 2003 at a bargain price to América Móvil, the telecommunications company of the Mexican billionaire Carlos Slim Helú. An earlier co-investment with BellSouth yielded a profit.
Mr. Safra paid $1.1 billion to buy a Swiss private bank, Sarasin, in 2011. The price was high, but Sarasin was a high-quality asset, and it permitted Mr. Safra to expand his asset management business beyond its core client base in Latin America to European and Asian investors.
What is more, it deepened the Safras’ exposure to asset management, traditionally one of the financial world’s most consistently lucrative niches: Year after year, whether markets rise or fall, clients pay a percentage of their assets in fees.
In recent months, however, Mr. Safra has branched out with back-to-back deals for well-known assets that thrust the family back into the headlines.
Mr. Safra believes the price he paid for the Gherkin was a bargain, according to people close to the family. The building was sold out of bankruptcy, and in a subtle change of tack, the Safras believe they have the opportunity to make improvements and raise rents, increasing profits from the building sooner rather than later.
Two Deals Bring Attention to Banking’s Safra Family - NYTimes.com
