SAN MARINO, Calif. - With contacts throughout the Pacific Rim and Europe, East West Bank markets itself as an international financier to Los Angeles-area small businesses that trade overseas.
Now the $2.3 billion-asset bank is looking to broaden its customer base by selling its expertise through other community banks.
East West, which caters mainly to Asian-Americans, recently started offering letters of credit, international wire transfers, and other trade finance services to customers of banks that do not have international divisions. The bank has hired a former international banker from Chase Manhattan Corp. to head the effort and plans to target community banks throughout California and the Southwest.
"It would be a waste of our resources to just serve our clients," said Dominic Ng, chairman and chief executive officer of East West Bank and its parent, East West Bancorp. "We can do this on a much bigger scale."
East West has offered trade finance services to its customers since it converted from a thrift in 1995. Since then fee income from international banking has grown more than 1,000%, to $1.8 million in last year.
The bank is hoping to generate even more fee income by extending such services to customers of other banks. Mr. Ng, who moved to the United States from Hong Kong in the late 1970s, said the bank charges a fraction of a percentage point on wire transfers or currency exchanges, and roughly $75 for a letter of credit. Fees are to be split with the referring banks.
Community banks generally steer clear of international trade because of the complexities of doing the business. Few banks can justify hiring a trade finance expert for an occasional letter of credit or wire transfer.
But in trade-dependent California - Long Beach and Los Angeles are the two busiest ports in the United States - most banks will eventually be asked to finance an overseas transaction, Mr. Ng said. He said he aims to make East West available to those banks in such instances.
"If you're a bank that does a letter of credit every two months, it's totally inefficient" to have an international division, he said. "But for us it's just another letter of credit to process."
Of course, small banks can and often do turn to their larger correspondents when the need arises.
However, East West is betting that small banks would prefer to do business with another community bank. Also, East West can be more responsive than large banks because it is focused on trade finance, not check clearing or coin-and-currency, said Ed von Leffern, its new vice president of international banking.
"The general-purpose correspondent banker is usually not a trade person," he said. "You can't do trade if you're also going to do check processing and all those other full-service correspondent services."
Mr. von Leffern has spent much of his first two months at East West meeting with community bankers, trying to sell them services. So far, he said, East West has picked up about 10 community bank clients.
A recent endorsement by Pacific Coast Bankers Bank in San Francisco may also help. Pacific Coast, which offers most correspondent services but not trade finance, recently designated East West a "preferred international service provider" for its more than 100 community bank members in Southern California.