Caramuru assisted Francisco Pereira Coutinho, the first captain of Bahia, in establishing the settlement of Pereira in the present neighborhood of Ladeira da Barra in 1534. This had to be abandoned after mistreatment by its settlers caused the local Tupi Indians to turn hostile. After the establishment of Salvador in 1549, the area of the former settlement at Pereira became known as Vila Velha ("Old Town").
