The country's largest bank is edging its way into L.A.'s robust middle market, and in the process it is snapping up local bankers.
Chase Bank, owned by New York financial behemoth JPMorgan Chase & Co., has poached talent from some of its top local rivals in a bid to establish a middle-market commercial banking division in Los Angeles.
Senior bankers from competitors such as Wells Fargo & Co. and Bank of America Corp., the market leader in L.A.'s middle-market commercial banking sector, recently have been hired away to build Chase's executive team.
"L.A. is a middle-market town," said Robert Lagace, Chase's president of middle-market banking in Los Angeles, who worked for Bank of America until 2006. "It's probably one of the most important markets we could possibly be in. We're building a team specifically to address that market."
The initiative to establish the middle-market division follows JPMorgan Chase's acquisition last year of failed thrift Washington Mutual, which immediately boosted the New York bank's retail branch network. However, neither Washington Mutual, which had the second largest banking operation in Los Angeles prior to its collapse, nor Chase had a middle-market commercial division in Southern California.
Headquartered in downtown Los Angeles, Chase's new middle-market operations currently consists of five senior bankers focusing on separate areas of the county. Lagace said he expects to bring in several additional bankers in the next year and said he will look both internally and externally to fill the positions.
The bank also expects to open as many as three commercial banking offices in the next couple of years. The offices will offer business loans, investment banking services and related products to businesses with annual revenues between $10 million and $500 million.
Whe middle market, a somewhat nebulous category comprising companies bigger than startups but smaller than large corporations, has historically been an important part of the L.A. economy and a lucrative target for banks. Los Angeles ranks with New York and Chicago as the largest middle-market economies in the country.
"Middle-market banking is an important part of the banking model," said Tom Kersting, an analyst at St. Louis-based Edward Jones & Co. who follows Chase. "This is a good opportunity for them; California is a big market.
When assembling his team, Lagace interviewed about 50 bankers to fill the handful of positions.
In his search, however, he said he targeted several bankers at competitors. Among his hires, Lagace snagged three senior vice presidents who worked locally: Ivy Wong, who was at Wells Fargo's West Covina office and will handle San Gabriel Valley business; Scott Lane, who worked in Bank of America's downtown L.A. office and will head the San Fernando Valley operation; and Karl Brier, who worked for G.E. Capital and will cover south Los Angeles County.
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