Banks are coming into the new year feeling frisky about their prospects in 2017, and many L.A. institutions are already hiring staff to handle the expected boom thanks to increased business and consumer confidence in economic conditions.
City National Bank, which was purchased by Royal Bank of Canada in 2015, is one of the players that is already building up its L.A. operations.
The bank announced last month that it leased 300,000 square feet on 11 floors at 2 California Plaza downtown – part of a plan to bring on several hundred employees, including commercial and business bankers as well as private wealth managers, according to Chief Executive Russell Goldsmith.
“When City National merged with RBC a year ago, we promised both continuity and growth, and we have made good on that commitment,” Goldsmith, who also acts as chairman of RBC’s U.S. wealth management operations, said in a statement.
The expansion space is an addition to City National’s existing downtown headquarters at 555 S. Flower St., which it has leased through 2031. The bank has 1,800 employees at its headquarters.
While last month’s interest rate hike by the Federal Reserve will increase the cost of capital incrementally, most believe the bump will be offset by continued growth.
Banking prospects could receive an even bigger boost if lawmakers in Washington relax regulatory rules that have curtailed some financial industry investment practices in recent years.
While bank executives are cautious to avoid explicitly talking about the new administration and efforts to roll back regulatory measures put in place during the Obama years, reports out of Washington have pegged reforming those laws as an industry priority. Reuters reported last week that bank lobbyists are focusing on the controversial Volcker rule, part of the Dodd-Frank financial reforms that prevent banks from using federally insured depositors’ funds for certain speculative investments – such as the now-infamous mortgaged-backed securities that triggered the Great Recession. While a full-scale repeal of the rule is unlikely, it could be whittled down, allowing banks more wiggle room to expand operations.
However, not all industry experts are as bullish on 2017.
Wade Francis, president of bank consulting firm Unicon Financial Services Inc. in Long Beach, said that while the industry is generally on solid ground, he cautioned against committing too many resources to expansion.
“I don’t see where 2017 is going to be much different that 2016,” Francis said. “Even if you do get some rollback of financial regulations, it will take some time for those changes to go into effect.”
Big players, market
City National and other L.A.-based banks aren’t the only ones gearing up to take advantage of a potentially loosened regulatory environment. Brand-name national outlets are also looking to penetrate deeper into the regional market in a variety of ways.
Raul Anaya, president of Bank of America Corp.’s L.A. operations, said he is leading a push to expand the institution’s presence in Southern California across a variety of business segments and add a large number of bankers this year.
“We continue to have really strong performance in Los Angeles and continue to grow our footprint here,” Anaya said. “We’re focused on hiring in multiple areas, including bringing on more business bankers, investment bankers, and financial advisers. Considering the amount of wealth that exists in L.A., it’s really a huge opportunity for us.”
Anaya said the hiring of financial professionals would also be supported by additions in other departments, including a deeper focus on marketing in the L.A. office, adding that outreach to the millennial demographic is a particular focus.
Executives at several different L.A. units of JPMorgan Chase & Co. said they are looking to continue the bank’s expansion and build out the West Coast operations inherited from Washington Mutual after JPMorgan’s purchase of the bank in 2008.
Brennon Crist, head of JPMorgan’s middle market and special industries commercial banking unit in Los Angeles, said his outfit opened two middle-market banking offices last year – one in Long Beach and one in West Covina, along with hiring 11 special-industry bankers. The institution is also looking to add more employees this year.
“We view Los Angeles as an enormous opportunity,” Crist said. “It’s a massive economy with thousands of middle-market companies.”
Deidra Porche, JPMorgan’s L.A. business banking market manager, said her unit, which didn’t exist as part of Washington Mutual’s operations, has expanded from effectively zero accounts in 2008 to serve some 220,000 small-business customers in the market.
“There’s so much density and innovation in the small-business market in Los Angeles, it’s incredible,” Porche said. “2016 was a really big year for us – we brought on a lot of new clients – and we expect that to continue.”
Even the typical complaints about California’s rising minimum wage, onerous tax laws, and overbearing regulatory system don’t faze banking execs.
“There are always the usual arguments that go back years,” Crist said. “But California’s population keeps growing.”
