Privatized Mexican bank eyes Southland.

Privatized Mexican bank eyes Southland 

The proclamation by the new owner of Mexico's largest bank that he will aggressively pursue the business of Hispanic depositors and borrowers in the United States may only be the first sally in a battle for the allegiance of the state's expanding Hispanic population, banking industry experts said.

"It's a huge market and it's growing more rapidly than any other market - and yet there are almost no Hispanic-owned banks in Southern California," said Terry Utterback, president of Terry S. Utterback & Associates Inc., a Woodland Hills-based financial services marketing firm.

Last week a consortium led by Mexico's largest stock brokerage bought the country's largest bank, $22 billion (assets) Banco National de Mexico, from the Mexican government.

At a press conference following the deal's announcement, Roberto Hernandez, the chairman of the stock brokerage, Acciones y Valores, said Banco Nacional, also known as Banamex, will aggressively expand its presence in California and other markets with large Latino populations.

In particular, Hernandez said, he will boost Banco Nacional's $519 million (assets) subsidiary, California Commerce Bank, the largest Los Angeles County bank to serve a predominantly Hispanic client base.

That may pose a direct challenge to California's largest banks, which until now have had the Hispanic marketplace - nearly 30 percent of the state's population - largely to themselves.

"The U.S. commercial banks have had a captive market," said a Mexican banking consultant. "There has been no aggressive competitive campaign to cause those deposits to flow out. If these new strategies are implemented (the Mexican bank) would compete favorably."

The consultant said private ownership will make a big difference in big Mexican banks' marketing plans. "The banks have had their hands full serving the budgetary deficit of the government," he said, and have not been oriented toward aggressive marketing.

Unlike the U.S., where more than 12,000 banks compete for loans and deposits, in Mexico there are only 18 commercial banks and all are being sold off by the Mexican government after being nationalized in 1982.

In additional to Banamex, six other smaller banks have been privatized.

Mexico's other two largest banks, Mexico City-based Bancomer, with assets of $18.5 billion, and Mexico City-based Banca Serfin, with assets of $13.5 billion, are expected to be sold by the end of the year.

Like Banamex, Bancomer owns a Southern California bank, Grossmont Bank of La Mesa. Grossmont, however, does not aim services toward Hispanics, said bank President Donald Clague.

"We don't target Latino customers in particular," he said, adding that the bank has operated as an autonomous subsidiary with a standard business plan and little contact with its parent.

Banamex, Bancomer and Banca Serfin also have agencies in the state which make international trade loans and accept foreign deposits but which are not allowed to accept domestic deposits.

Still, even those banks holdings in the U.S. are relatively small. Mexican agencies have assets of only $1.1 billion in California, compared to $1.9 billion for Korean bank agencies alone. Japanese bank agencies have assets of $73 billion.

The Mexican banker said he believes many of the six smaller banks sold by the government will also seek to expand into the U.S. when they acquire more capital and recover from paying for their acquisitions, in which he said the government drove a hard bargain. Six of the 18 Mexican banks already have international offices, he said.

Banamex and California Commerce Bank have already been active in pursuing the Hispanic market.

"Banamex was the only (Mexican) bank that looked into the future with what was happening with the number of Hispanics moving to California," said Tony Hernandez, president of the Los Angeles chapter of the Hispanic Bankers Association and a branch manager at the East Los Angeles office of California Commerce Bank.

For years the bank has promoted lowcost money transfers to Mexico. In addition, Hernandez) said, California Commerce boasts a number of special Hispanic services, including considering non-traditional criteria in offering loans, employing only bilingual tellers and striving for a more personal approach tailored to the Hispanic marketplace.

California's banking giants all have made attempts to tap bigger percentages of the Hispanic market. Results have been mixed, said Hernandez, who worked for Security Pacific for 13 years, last as a branch manager.

He said the banking giants have run into problems because they have employed marketing officers who are not Hispanic and don't understand the Hispanic community and culture.

In the past several years, however, the big California banks - Security Pacific, First Interstate Bancorp, Wells Fargo Bank and Bank of America - have introduced aggressive marketing campaigns.

The banks have converted automatic teller machines to bilingual operations, introduced telephone information lines to help customers find Spanish-speaking employees in their branches, produced educational films and brochures to explain banking services and introduced money wires to Mexico.