Executive Summary
Although a wave of bank consolidation continues nationwide, the frenzy has slowed for Los Angeles-based institutions. Most of the top 10 banks this year were near the top of the list a year ago.
Analysts attribute the slowdown to the fact that nearly all of L.A.’s large banks were bought out in previous years. The merger mania also has been stymied by the Y2K scare, as acquirers have become cautious of picking up a financial institution as the millennium approaches.
But the slowdown isn’t expected to last long. Next will come a wave of consolidation among smaller community banks. Paul Bauer, president of Bauer Financial Reports, expects that mid-sized banks will have to consolidate after 2000. “The mid-sized banks will be weaned out since they do not have a niche or focus,” he said.
Nine of the top 25 banks are focused on the Asian-American community. Unlike the more mainstream financial institutions, the Asian-American banks have not seen much merger and acquisition activity. That’s because the owners of these banks, many of which are based in Asia, have been eager to hold onto their U.S. assets amid the economic upheaval seen overseas. Asset quality among some the smaller Asian-American banks has also made buyers hesitant.
Pacesetter
Sanwa Bank California continues to rank as the largest bank headquartered in Los Angeles. With nearly $9 billion in assets, it also is the third largest bank headquartered in the state.
Unlike smaller Asian-American banks, which tend to focus on the small-business client, Sanwa provides a full range of personal, business, international, investment and trust services through a network of 107 branches statewide. It is the largest subsidiary of the $406 billion-in-assets Sanwa Bank Ltd. of Japan, one of the world’s largest financial institutions.
Sanwa Bank California reported net income for the second-quarter ended June 30 was up 7 percent from the like period a year ago, due primarily to growth in core deposits, which rose 11 percent, from $4.7 billion to $5.2 billion, over the year.
In an example of how economic difficulties in Japan could affect the business community locally, Japan’s largest real estate firm agreed to sell the 52-story Sanwa Bank Plaza in downtown L.A. to a Houston developer for $215 million. Officials with the former owner said they were selling the fully leased building to whittle down debt and boost finances. The Sanwa deal marks a recent high sale price for office buildings in downtown Los Angeles.
