When Hanmi Bank announced last week that it had ended its tentative agreement to sell a majority stake to a South Korean financial conglomerate, the move threw its future – and that of the local Korean-American banking industry – into uncertain territory.
Analysts say the subsidiary of Koreatown’s Hanmi Financial Corp. will likely need to raise additional capital in the near future to be able to resolve lingering problems in its loan portfolio.
“They’re not in urgent need of capital, but their capital cushion is not very large either,” said Joseph Gladue, an analyst with West L.A. investment bank B. Riley & Co. “It would probably be a good course for them to add more.”
Hanmi had a total risk-based capital ratio of 13 percent at the end of the first quarter, above the 10 percent level required by regulators to be considered “well-capitalized.” Still, problem loans make up as much as 7 percent of its total loan portfolio.
Hanmi had been set to complete a $240 million stock sale to Woori Finance Holdings Co. Ltd., but had failed to receive regulatory approval since it was first announced in May 2010. The transaction required approval from U.S. and South Korean regulators.
Hanmi, which had been required to boost its capital levels, raised more than $120 million after the announcement, which brought it back into “well-capitalized” territory.
After the dissolution of the securities purchase agreement with Woori, the two companies agreed to a “business alliance” through which they will cooperate on business matters, including expanding trade finance activities.
“The business alliance between Hanmi and Woori, which is one of Korea’s largest financial institutions, should benefit both parties in our mutual efforts to expand our ongoing business relationship,” said Hanmi Chief Executive Jay S. Yoo in a statement.
Executives did not respond to requests for additional comment.
The other large Korean-American banks are in a state of flux, but Gladue said they could be interested in merging with Hanmi once things settle down. Koreatown’s Nara Bancorp Inc. and Center Financial Corp. are in the process of merging, which will create the nation’s largest Korean-American bank, while Wilshire Bancorp Inc. is contending with unexpected challenges in its loan portfolio.
“If (Hanmi is) still having capital issues a year from now … I would suspect either one of the two remaining main Korean-American banks would be interested in looking at it,” he said.
Brokerage Buy
Wedbush Inc., the financial services firm in downtown Los Angeles, last week acquired Lime Brokerage LLC, which specializes in high-frequency trading and brokerage services.
Wedbush, co-founded by Edward Wedbush in 1955, is the top liquidity provider for Nasdaq stock exchange trades. The firm said it will keep Lime employees at Lime’s Waltham, Mass.; New York; and Jersey City, N.J., offices, and it plans to expand the company’s operations.
The acquisition will give Wedbush technology including automated risk filters, which are designed to ensure that securities trades meet applicable regulations and will be required under new rules going into effect next month.
“Lime has long been viewed as a technology leader by the high-frequency trading community and is a perfect complement to our market-leading, high-volume clearing operations,” said Wedbush President Eric Wedbush in a statement. “We are especially excited about the enhanced technology capabilities Lime’s outstanding engineering team will bring to our entire firm.”
Wedbush has been on a growth spurt over the last few years as it has tried to take advantage of market dislocation. It has hired a number of people away from larger investment banks and completed several acquisitions, including the 2009 purchase of Pacific Growth Equities LLC.
C-Suite News
Professional Business Bank, a business lender headquartered in Pasadena, has named James Jones chairman. … David Misch, chief executive of L.A.’s Private Bank of California, has been elected to the board of the California Bankers Association. … B. Riley & Co. has hired Richard Eckert as a senior research analyst.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
