Los Angeles has another new bank startup: the Bank of Manhattan as in the South Bay city, not the Big Apple.
The bank registered with the Securities and Exchange Commission last month and also received its state charter. It's backed by real estate investors and other financiers who chipped in an as-of-yet undisclosed amount of capital.
The next step for the bank is to close it pre-initial public offering to institutional investors on July 15 before floating shares on the Over-the-Counter Bulletin Board with thoughts of moving to the Nasdaq as the bank grows. The doors are slated to open in July on Rosecrans Avenue, where the bank will be headquartered.
Strategically, Bank of Manhattan is billing itself as the bank "by and for entrepreneurs," and is headed by Chairman Kyle Ransford and Chief Executive Jeffery Watson of Manhattan Bancorp, the bank's holding company.
"In the South Bay, there's one bank per every 191,000 people," said Watson. "This is an underbanked region, and there's a lot of opportunity for small businesses that don't want to speak to customer service reps in India but want face-to-face service with people in their back yards."
Watson and Ransford also cite the large and growing deposit base in the South Bay as reason enough to enter the fray, contending they can do a better job in the market than a Bank of America, a Wells Fargo or any other large bank. Wells just established a huge presence in the area but will likely favor high net worth clients over mom and pop businesses and "mini-moguls," Watson said.
Orange County investment bank Carpenter & Co is advising the new bank on the IPO deal and other forms of financing.
In the Cards
Los Angeles-based Innovative Card Technologies Inc. last week announced a venture with VeriSign Inc. intended to combat online fraud.
Called the DisplayCard, the product generates passwords that can be used to validate online logins or transactions offering an additional layer of security to complement the traditional login name and password authentication.
The cards feature a screen powered by an integrated battery, circuit and wireless receiver in the upper right-hand corner. The screen displays a one-time password during each online, voice transactions or data systems login that is transmitted wirelessly from an institution and captured by a receiver in the card.
The DisplayCard product comes as financial services groups find themselves pressed by regulators and trade groups such as the Federal Financial Institutions Examination Council to beef up security for cyberspace transactions and electronic access to financial data. The council had suggested to banks and other finance companies in 2005 that that they implement what the council called "multiple-factor authentication" by the end of 2006. That hasn't happened yet, but the card is one step in that direction.
American Funds, a division of L.A.-based Capital Group of Cos., has become the first mutual-fund company to manage more than $1 trillion in its investment portfolio as of March 31. This is according to estimates recently released by research firm Financial Research Corp. The fund's closest rival is Vanguard Group, which had $990 billion under management, followed by Fidelity Investments with $864 billion.
American Funds has seen strong interest in its funds from financial advisers and brokers as the firm captured almost 20 percent of the $134 billion in new money that U.S. fund companies gathered in the first three months of this year.
But despite the growth and the fact that five of the 10 largest equity funds in the country are all part of American Funds, there has been little fanfare or increased marketing activities.
"Unless you're an active mutual fund investor, you might not even know who we are," said company spokesman Chuck Friedhoff. "You won't see us on television or doing a lot of advertising and we like it that way."
In fact, actual fund managers don't even talk to the press, a culture more like a hedge fund than a mutual fund. However, as far as investment strategy, the fund is nowhere near as cowboy as hedge funds.
"We sell our products through advisers and don't tend to get too cute with our strategy as we're focused on long-term growth and consistency of returns. We're conservative in that way," Friedhoff said.
Contributing to the overall return growth were two of the better performing funds at opposite ends of the asset spectrum. The largest fund of the group, Growth Fund of America, returned 8 percent last year. And one of the smaller funds, New World Fund, delivered a 21.9 percent return in 2006.
Here's what can happen when utility privatization goes wrong.
TCW Group Inc., the LA-based asset management giant, has filed an arbitration claim on behalf of its clients against the Dominican Republic for damages totaling up to $680 million. The claim is related to the TCW's interests in privatizing part of the island nation's electricity sector.
The claim, announced last week, has been brought on behalf of EdeEste, a newly privatized energy concern and its majority shareholder, DR Energy Holdings Ltd, which is controlled by TCW.
The arbitration claim asserts that DR Energy Holdings' investment in EdeEste has been destroyed as a direct result of actions taken by the Dominican government, which failed to honor the terms of the "regulatory and legal structure that was promised," when the electricity sector was privatized more than six years ago.
R. Blair Thomas, head of TCW's Energy and Infrastucture investment arm and president of the DR Energy Holdings venture, said the Dominican government is sending mixed messages that both encourage foreign private investment in infrastructure and hinder progress.
Staff reporter Jabulani Leffall can be reached at email@example.com or (323) 549-5225, ext. 228
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