L.A.’s two premier Chinese-American banks are suddenly in the front of a new race for dominance of the growing sector.
Southern California’s largest Chinese-American institution, East West Bank of Pasadena, made a bold move with the acquisition of United Commercial Bank, a San Francisco institution that was shuttered earlier this month.
The deal made it not only the largest bank headquartered in Los Angeles but the largest Chinese-American bank in the country.
Not to be outdone, rival Cathay Bank of Los Angeles, believed to have made an unsuccessful bid for United Commercial, filed papers to raise $200 million through a securities offering, money that could be used to make a major acquisition.
Indeed, after the collapse of United Commercial, which had been the largest Chinese-American bank in the country, East West and Cathay are now Nos. 1 and 2, respectively, in the nation’s growing ethnic Chinese banking sector.
“In the past, it was always a three-bank race” in the Chinese-American community, said Joseph Gladue, an analyst with B. Riley & Co. who follows several of L.A.’s Asian-American banks. “Now, East West and Cathay are the two big, 800-pound gorillas in the space.”
With an estimated population of more than 400,000 Chinese-Americans, Los Angeles County is home to one of the largest Chinese-American communities in the United States. The population, which is projected to more than double over the next few decades, has attracted a number of banks to the fold.
A handful of new Chinese-American banks have cropped up recently, such as Mega Bank in San Gabriel, founded in early 2008. Royal Business Bank in downtown Los Angeles, which was started late last year, is getting ready to open its third branch next month. But none in the increasingly crowded sector is anywhere near the size of East West and Cathay.
East West, owned by East West Bancorp Inc., now has assets in excess of $19 billion after the acquisition of United Commercial. It surpassed downtown L.A.’s City National Bank, which had been the largest locally headquartered bank.
Cathay, a subsidiary of Cathay General Bancorp and Southern California’s oldest Chinese-American bank, has $11.7 billion in assets.
KT Leung, vice president of the Chinese Chamber of Commerce of Los Angeles, said it is a shame to see a reduction in competition among the Chinese-American banks, but believes business customers will not suffer for it.
“I think East West Bank has the experience to service United Commercial Bank’s customers,” he said.
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