SANWA—Sanwa Bank Undergoing Name Change

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In handing over his business card, Sanwa Bank California Chief Executive Ryosuke Tamakoshi quips, “Here you go; this will be good for about a week.”

Though his title remains the same, as of July 2, when Sanwa Bank California and Tokai Bank of California merge, Tamakoshi’s new card will say United California Bank.

New names borne out of corporate consolidations often create identity problems, but Sanwa’s case might turn out to be different. While the bank is based in Los Angeles, it has made limited market inroads over the years, in part because it is a subsidiary of Japan’s huge Sanwa Bank Ltd. Changing its name presents the bank with an opportunity to re-establish itself in the California market.

“I think that’s a great move for them they should have done it 10 years ago,” said Lee Kovel, chief creative officer at Kovel/Fuller, an advertising agency in Los Angeles. “The image is that they’re a foreign bank. The name Sanwa meant nothing to consumers or businesses It doesn’t have any equity.”

Added Kenneth Ritz, a director of financial institutions at Fitch Inc.: “While they may have spent a lot of time building the name, they’re still viewed as the California (division) of Sanwa. They want to establish themselves as a U.S. company and a local bank.”

Dropping the Sanwa and Tokai names is the inadvertent result of a three-way merger involving their Japanese corporate parents: Sanwa Bank Ltd. and Tokai Bank Ltd., and Toyo Trust & Banking Co. That has resulted in one of the world’s largest holding companies, UFJ Holdings, which has about $780 billion in assets.

“We contacted the parent and sticking to the Sanwa name or Tokai name did not seem like a good idea,” said Tamakoshi during an interview last week in his 50th floor downtown office.

“In Japan (company executives) are very strongly determined to create a new brand to be sold globally, so we decided to give up the name in this local market. And then the next question was, ‘What would be the best name?'” he said.


Shaping new identity

Jim Smith, chairman of Ground Zero, a Marina del Rey ad agency that Sanwa hired for the makeover, said the bank looked at a full spectrum of names before deciding upon United California Bank.

If the name sounds familiar, it’s because there was a United California Bank in business during the 1970s, which ultimately was acquired by First Interstate Bank. Smith said that Sanwa considered that fact before deciding to resurrect the old name.

“It’s a name that’s known, and for the people who remember it, it’s not a bad name there is no negative image with the brand name,” he said. “When it comes to dealing with money, people tend towards the known and the familiar.”

Though expecting some confusion about the change, Tamakoshi conceded “the new name and the new bank may convey our message more clearly to our customers.”

Inside a company conference room last week, the bank’s new ad campaign was seen in storyboard fashion across the walls. The first ad bears the bank’s name above a newly adopted slogan, “Being good to you is good for us.” Subsequent ads feature that same slogan accompanied by phrases such as “Give customers good investment advice and they’ll have more money to invest.”

This week those ads will begin appearing on billboards, radio and for the first time in either institution’s history local television.

United California Bank will spend $10 million to scratch out any remnants of the Sanwa and Tokai names. That includes tons of signage on more than a hundred branches along with the bank’s headquarters in downtown Los Angeles as well as the company’s stationery and Web site.

“When you change your name, you’re relieved of the burden of baggage,” Smith said. “You can be whatever you want to be.”

Both Sanwa Bank California and Tokai Bank of California made their way into the United States through acquisitions by their parent companies in the 1970s. They are among the few domestically chartered units to survive the Asian financial crisis in 1998 in which Japanese institutions either closed down their California operations or sold them to U.S. banks. Ritz said the name change distances United California Bank from the financial turmoil in Japan.


Operational autonomy

While Tamakoshi reports directly to the newly consolidated parent in Tokyo, the bank’s day-to-day operations and corporate governance will, for the most part, continue to be independent.

“We evaluate the company based on the strength of its own financial profile,” said Ritz. But he added that the implied support of the parent company also is taken into consideration in assigning long-term ratings to the bank.

Between the two banks, only five branches will be closed as a result of the merger, bringing the total to 115. Sanwa would not reveal the location of the branches to be closed but noted that most of them would be in Southern California. The bank also has announced plans to open seven new branches in the next 18 months. Tamakoshi estimated that less than 200 employees would be laid off.

Sanwa and Tokai have had somewhat different approaches to the California market. While Sanwa has focused on small business and retail customers, Tokai has more or less dedicated itself to commercial lending. Tamakoshi holds that differences between the two banks’ strategies will complement each other. He said customers brought in by Tokai will benefit from Sanwa’s retail services and the bank’s overall profitability will increase.

From there, Tamakoshi said employees and management will have to wait and see what sort of situations arise. “We will find these differences, if any, when we start working side by side,” he said.

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