Advertisement
 
YOU ARE HERE: LAT HomeCollectionsLos Angeles

Latino-Owned Banks Seek to Fill Void in L.A.

Start-ups, including one backed by Oscar De La Hoya, say they will offer businesses the flexibility and familiarity that major institutions lack.

July 23, 2006|E. Scott Reckard | Times Staff Writer

Transforming himself from boxer to businessman, Oscar De La Hoya has promoted fights, invested in Spanish-language newspapers and even bought and sold the Madison Avenue building in Manhattan that houses Barneys New York. He and the deep-pocketed backers of his Golden Boy Enterprises are considering a tequila-bottling project as well.

But first, the son of Mexican immigrants plans to take another stride into the economic mainstream by opening a business bank for Latinos in Greater Los Angeles.

Dozens of Asian American banks have sprung up in Southern California, and 14 Latino-owned banks serve Florida's large ethnic Cuban population. But for decades the Los Angeles area has had only one bank owned by local Latino investors.

"It's mind-boggling that there is just one bank," said De La Hoya, who defeated Ricardo Mayorga in May to win the World Boxing Council super-welterweight title. "The fact is that there are over 80,000 Hispanic-owned businesses in Los Angeles. We feel it is a tremendous opportunity."

Others share the sentiment, including three groups that recently asked for the Federal Deposit Insurance Corp.'s blessing to open Latino-owned banks in the region -- Fortis Business Bank in Santa Ana, Americas United Bank in Glendale and Promerica Bank in downtown Los Angeles. Several other Latino banking ventures also are in the works, industry consultants say.

The flurry of start-ups underlines the fact that for generations, Latinos in Southern California have had few homegrown financial institutions. Industry analysts and Latino entrepreneurs cite several reasons, including the small size of many Latino businesses, their wide dispersal, and widespread distrust of banks by immigrants from Mexico and Central America.

Organizers of the Latino banks say that they intend to be more flexible than large banks in making loans, and that a shared culture will help them better understand customers. They say misunderstandings, rigid lending policies and plain intimidation at big banks have resulted at times in Latinos being denied credit unfairly. Some turned to higher-cost finance companies for loans because they seem friendlier and more personalized.

"The big banks do scare Latinos," said Carmen Saenz Murray, who owns a City of Commerce-based company that manufactures custom carpets, mostly for corporate offices. The attitude of the large banks "is almost degrading -- they're wearing their suits and you're almost intimidated about going in and asking for a loan or a line of credit."

Saenz Murray, whose mother was a Mexican citizen, said her sales slumped after the Sept. 11, 2001, attacks because corporations reined in spending. The American banks she dealt with, she said, weren't sympathetic to her plight.

Now, however, big U.S. banks are wooing Latino customers like never before. Bank of America Corp. offers free money transfers to Mexico for immigrants who open accounts. It also provides live music and free refreshments at its Fiesta Fridays in L.A.'s MacArthur Park, the center of a heavily Latino neighborhood.

The Charlotte, N.C.-based bank also has loosened some small-business lending rules, including a requirement that companies must have been in business for two years to get a loan.

"The dynamics of small business are changing rapidly," said Brad Dinsmore, Bank of America's consumer banking executive for the West. "It's not uncommon for a Latino to start a business, then sell it, then convert to doing something else -- all in the space of 18 months."

Wells Fargo & Co. of San Francisco has opened more than 750,000 accounts for Latin American immigrants over the last five years using identification cards issued by their countries' U.S. consulates. Branches in heavily Latino areas have been decorated in bright reds, yellows and earth tones to reflect the local culture, with murals of labor leader Cesar Chavez and other Latino heroes, bank spokeswoman Dolores L. Arredondo said.

There also is a smattering of banks and finance companies based in Latin America that target Spanish-speaking customers here. Puerto Rico's Banco Popular, for example, has 48 branches in Southern California. And BBVA Bancomer, a giant Mexican bank, is converting Bancomer money-transfer shops into bank branches after acquiring Valley Bank in Moreno Valley in 2004.

Citigroup Inc. of New York shouldered its way into the sector in 2001 by buying Banco Nacional de Mexico, or Banamex, which had a California subsidiary bank.

All that competition has made it tough for locally owned start-ups to get in the game. But cultural and economic factors also have held back the formation of Latino banks, bankers and consultants say.

Latinos, including small-business owners who are community banks' main customers, have long been dispersed throughout Southern California, making it hard for smaller institutions to reach them.

Advertisement
Los Angeles Times Articles
|
|
|