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Accent on trust: Latino banks stress culture, communication



06:48 PM CDT on Saturday, July 2, 2005

By DIANNE SOLÃ?S / The Dallas Morning News


Money is money. Interest rates are interest rates. So why would anyone tailor a bank to one ethnic group?

It's an important consideration for Latinos, a heavily immigrant group that tends to be distrustful of banks.

That's why so many banks are cropping up in Texas and elsewhere that look more like taquerÃÂ*as than finance houses, that sport murals rather than pastel landscapes, and that greet customers with, "En que lo puedo ayudar," Spanish for "How can I help you?"

Laredo National Bank, a unit of the Spanish financial house BBVA SA, has banks that resemble haciendas, with Mexican tilework, bright interiors and Bienvenidos painted over entrances.

Customers walking into Banco Independiente in McKinney, a branch of that city's Independent Bank, will find marigold-colored walls, bowls of Mexican candies and a children's play corner.

But more needs to be done, says one market expert.

Some banks think it's enough to say, "Here I am. Now open an account," says Dallas Mexican Consul Carlos GarcÃÂ*a de Alba, who has advised dozens of bank executives. But with Latinos, he points out, "it's a matter of trust."

The Latino population numbers 41 million in the United States, and the Lone Star State has the second-largest concentration. In Texas, Latinos number 7.6 million and make up 35 percent of the population, according to 2003 census data.

Targeting this market isn't as simple as choosing a strategy for the fully assimilated vs. the freshly arrived.

The influx of people from Mexico alone is now so great and the homeland so near that it's creating a new class of consumer: the transnational.

U.S. immigrants are sending escalating sums of money back to the homeland and, increasingly, buying properties on both sides of the border.

Finance houses as diverse as North Carolina-based Bank of America Corp., Puerto Rico's Popular Inc., Spain's BBVA and Mexico's Hipotecaria Su Casita SA are trying different strategies to reach the Latino market.

Bank of America uses enticements that include reduced fees on sending money, or remittances, back to Mexico. Products range from checking accounts to mortgages to pension plans.

The courtship has included touting services at night meetings of Mexican state associations in cities such as Fort Worth, and sponsoring "financial fitness" events with the Mexican soccer team Chivas in Los Angeles, home to the largest concentration of Mexicans in the U.S.

In 2004, the efforts paid off with the sale of products to 1 million new Hispanic customers.

"Bank of America has been servicing immigrants for hundreds of years," says Marcos Rosenberg, senior vice president and multicultural marketing executive at Bank of America. First, it was Italians, then the Irish, and now it's Mexicans and other Hispanic immigrants, he says.

New York-based J.P. Morgan Chase & Co. has set up a mobile bank unit in front of the Mexican consulate in Chicago. In Dallas, Chase spreads its brand name by sponsoring such community groups as the local ballet folklorico.


Extra effort

Not to be outdone in the grassroots department, McKinney's Banco Independiente has even sent its staff to laundromats to court clients.

"Our biggest advertising is word-of-mouth," says Tres Garza, the bank's president. "You treat one right, and the rest of the family comes in and then the compadres."

The extra effort can be as simple as explaining a bank account's fees in Spanish, Mr. Garza says.

One customer switched to Banco Independiente simply because she didn't understand the charges she received each time her previous bank account fell below the $300 minimum, he says.

Many consumers in the banks' bull's-eye, commercially speaking, are like Martin Bravo, a 39-year-old bakery worker.

Inside the lobby of the Mexican Consulate in Dallas, Mr. Bravo braves lines of people snaking in several directions to receive an identification card now accepted by more and more banks and some government agencies.

Weekly, the Dallas consulate churns out up to 1,500 of the identification cards, known as a matricula consula, that have more tamper-proof features than ever. That's triple the amount of two years ago.

"I really need a better identification card," Mr. Bravo says, before he plunks down $27 for the ID application. "To get my checks paid, I need to have this identification."

Eventually, he plans to open a bank account, too. Payday robberies of immigrants have just become too common, he says.

Some immigrants distrust banks because of the history of currency devaluations in their homelands. Others simply dislike an officious manner that smacks too much of the U.S. government, or worse, a U.S. immigration agent.

Too many Mexican consumers think that if they go to the bank and suggest or disclose that they are in the U.S. illegally, they will be reported to immigration authorities, says Mr. GarcÃÂ*a, the Dallas Mexican Consul.

"The people don't understand what happens behind the window," he says. "They think that if the employees discover they are undocumented, they will be taken and deported."


Offering comfort

Big banks may be able to price their products to get the business, but smaller operators may score more points on comfort, says Scott Alaniz, equity research analyst for Sandler, O'Neill & Partners LP.

"You're probably not going to be able to beat Bank of America on pricing, but that is fine," Mr. Alaniz says. "What they want is a bank they can trust."

U.S. banks are discovering they're going mano a mano with their Mexican competitors for one of the premium products: home mortgages.

Hipotecaria Su Casita, or Your Little House Mortgage Company, opened a Dallas office two months ago.

To get the word out, it bombarded laundromats, beauty salons and check-cashing outlets in neighborhoods with high immigrant populations with fliers that teased: "Su Pedacito de México, Your Little Piece of Mexico."

Says Francisco Cardiel, manager of the Dallas office: "It's a phrase that many Mexicans can identify with. They come here for the American dream. But in their mind, they still think of having their little pedacito de México."

Two of the first clients were Paulo Muñoz, a 32-year-old forklift operator with dual U.S. and Mexican nationality, and his 32-year-old, Mexican-born wife, Adriana.

The couple purchased their first home, a previously owned, two-bedroom house in Santa Catarina, just outside Monterrey. Mrs. Muñoz's parents are living there.

"You just want to have something over there where you come from," Mrs. Muñoz says. "And my parents didn't have a house."


More productive

Mr. Cardiel, the mortgage manager, notes that about $20 billion will be sent back to Mexico this year by immigrants in remittances, citing recent estimates by Mexico's central bank. And that money can be productively channeled into homeownership, he says.

"This is a way to create a patrimony for the family," Mr. Cardiel says.

Mexican interest rates are around 12 percent – about double the U.S. rate. The average loan is $15,000 to $85,000. Thus far, with 300 loans outstanding, Su Casita has had no delinquencies, Mr. Cardiel says.

"It is more than money at stake: It is a moral commitment to the family," Mr. Cardiel says.

To bolster a client's credit history, Mr. Cardiel tutors prospects on building a six-month history of their U.S. earnings.

First, they must open a bank account and deposit all funds in there, even if they are withdrawn quickly, he says.

The Muñozes, who live in an apartment in Mesquite, say they're very happy with their home purchase. And they're considering buying a second house.

"Allá," Mr. Muñoz says. Back there in Mexico.