Chinese, Korean Banks Each Have Distinctive Styles.

THE ultimate in community banking.

Both Chinese and Korean banks in L.A. are devoted to and dependent upon their respective ethnic bases, and both emphasize personal relationships when it comes to their customers.

The roots of each ethnic bank lie in the difficulties that local Asian-American entrepreneurs had in borrowing money from mainstream financial institutions. That historic lack of access to capital helps define how Korean and Chinese banks have viewed their role in facilitating the economic well being and growth of their communities.

"The most important thing to realize is these (banks) emerged out of need, because of discrimination against these groups up to the '70s," said Wei Li, assistant professor of geography and Asian-American studies at the University of Connecticut, who has studied the Los Angeles' ethnic banking environment, interviewing executives at virtually all the Korean and Chinese banks in the area. "Second, the corporate mindset is that they clearly have a mission to help their own ethnic groups, while also boosting profitability. (Their corporate culture) is all relationship based."

These banks go out of their way to wine and dine customers who borrow sums that large financial institutions would barely notice. For example, it is the policy of General Bank that every customer who borrows $1 million or more gets a personal meeting with the bank's president. Those who borrow between $500,000 and $1 million will at least be feted by corporate executives.

"They clearly spend more time nurturing their customers in terms of service," Li said.

This practice makes good business sense, because it enhances the banks' ability to keep non-performing loans to the bare minimum. Korean and Chinese bankers alike stress that their customers almost always pay back what they borrow. That's all the more important since the banks are often willing to go the extra mile to make a loan that might not pass muster elsewhere.

Close to the vest

It might not even be that the Asian loan applicant wouldn't qualify, it's just that in some cases they wouldn't be willing to disclose the amount of information that mainstream U.S. banks require.

"Koreans tend to be very restricted; they don't tend to be open," said Min J. Kim, executive vice president and chief credit officer at Nara Bank. "They don't want to disclose information, there's always some information hidden behind. For Bank of America or Wells (Fargo), it's very hard to meet their financial needs. In our community, we know who's who, know their personal history, maybe back to the home country."

There are other differences between Korean and Chinese banks. While both cultures are fairly traditional, Korean banks tend to be more conservative than their Chinese counterparts. Kim is the first, and so far only, woman among the top executive ranks at Korean banks in Los Angeles, while Chinese banks have several women executives. She is well aware of her pioneer role and says that others won't be far behind.

"The trend is changing," she said. "(Korean banks) now tend to hire females because they're stable and detail-oriented. More women executives are coming. There are a lot of middle managers who will (move up) in the next five years."

Another difference is that Korean banks, while reaching out to other ethnic minorities to expand their base of business, are sticking largely to making small-business loans. Chinese banks, on the other hand, have expanded into real estate, international trade and even high-tech lending, with General Bank and East West Bank going so far as to accept warrants in nascent companies they're doing business with.

'Taking warrants isn't conservative, is it?" said Peter Wu, General Bank's president. "In Silicon Valley, 30 to 40 percent of the companies are doing business with foreign companies in Taiwan, Hong Kong, Japan, China and Singapore. We can help them."

That is, of course, another difference; namely, the potential market for each ethnic banking community. The size of the worldwide Chinese market dwarfs that of the Korean market, limiting the influence of the Korean banks.

"Chinese banks are a lot more international," University of Connecticut's Li said. "They think more about the Pacific Rim than the Korean banks, just because of the difference in capital flow."

Similar problems

On the other hand, some issues are universal, like tending to the bottom line. Both banking communities had real problems in the early and mid-1990s, as the local economy took a dive.

"Numbers tend to be numbers," said Joel Ziskind, who has a unique perspective on the situation as a non-Korean executive vice president at Wilshire State Bank. "I came here in '93, and one thing all banks tended to have in common was problems."

Ziskind admits that it is sometimes confusing when meetings are held in Korean, a language he doesn't speak. But he always has a translator nearby, and downplays any cultural barriers.

"I don't know that the corporate culture is all that much different from a non-ethnic bank," he said.

While he concedes that personal relationships drive much of the business, he points out that such practices are not historically unique.

"I've been around long enough to remember when mainstream banks were like that, too," he said.