East West Bank and East West Insurance Agency, both of San Marino, Calif., were unrelated - until Tuesday.
That is when East West Bancorp, the bank's $2.3 billion-asset parent company, bought the agency, with an eye toward building on things in common that go beyond their monikers.
Both companies focus on the Chinese-American population of Southern California, and the bank sees the deal as a way to broaden its offerings - initially to commercial clients and eventually to its client base at large.
The deal "is an important milestone in the expansion of our noninterest income stream," said Dominic Ng, the bank's chairman and chief executive officer, in a press statement. "This acquisition offers excellent opportunities for synergies and cross-selling with our retail and commercial client base."
East West Bank has 29 branches in neighborhoods with large Asian populations. The likes of Charles Schwab & Co., Bank of America Corp. and Citigroup Inc.'s Salomon Smith Barney have targeted such groups as a growth market for investment products.
Asians are outpacing the nation in both population growth and median-income growth, according to Census Bureau figures. From 1990 to 1999 their aggregate after-tax buying power grew 102%, versus 57% for the U.S. population as a whole, according to a study by the University of Georgia's Selig Center for Economic Growth.
East West Bank has a natural leg up in that market. Each branch has employees who speak Mandarin and Cantonese, in addition to English and Spanish. And last week the bank was about to launch Chinese-language Internet banking - perhaps the first in the United States, it said.
Steven Canup, senior vice president of investor relations and strategic planning at East West Bank, said the insurance deal furthers its goal of establishing "a bridge between East and West" and providing banking and other services for Asian-Americans.
"On the retail side our target market is almost completely Chinese-Americans," he said. However, "while we are also very dedicated to our ethnic market on the commercial side, 60% of our commercial clients are mainstream, or nonethnic," he said.
Initially the bank plans to target those commercial clients - including Chinese-Americans - with the insurance products.
"I don't think we bought the insurance agency just for the ethnic focus," Mr. Canup said. "It makes sense across all of our business lines. We studied a variety of means through which to increase our fee income and maximize our relationships in terms of revenue streams. I think insurance was a natural fit."
As for retail products, "It may not be an immediate rollout in all the branches," but the deal provides "a very nice platform with which to enter the market," he said. "If we decide to, we can expand it very easily."
