July 30, 2014

International Banking

Shifting Gears

Florida's international bankers are turning their attention to the legions of foreign investors drooling over Florida real estate.

David Villano | 3/1/2005
Trade finance remains the bread and butter of Florida's international bankers, but some industry professionals are shifting their attention to wealthy overseas clients eager to invest in Florida real estate.

"That's where the business is," says Mary Diaz Rodriguez, vice president of Colonial Bank's international private banking division in Miami. Alabama-based Colonial, a newcomer to south Florida's international banking scene, is targeting clients in Mexico, Brazil and Venezuela. Some banks are catering strictly to Central Americans; others to Europeans. With the dollar falling, some Florida banks are offering mortgages permanently tied to the euro.

A recent survey by the Association of Foreign Investors in Real Estate ranked south Florida the fifth most attractive U.S. metropolitan area for foreign investment, trailing Washington, New York, Los Angeles and San Francisco. With foreign demand soaring and interest rates low, high-end condo construction is booming throughout south Florida. Foreign investors also are eyeing commercial real estate in Florida to stash their assets.

Bankers couldn't be happier: More fee-income driven than ever before, they're eager to sell a range of financial products and services. They say the rash of investment activity won't last forever, but relationships may. "What begins as a simple real estate transaction may grow into much more," says Diaz Rodriguez. "This is a great opportunity for bringing in new clients to show them what we have to offer."

Inside International Banking
What's on Their Mind

Ramon Usategui
International Private
Banking Manager
BankUnited
Miami

"The Patriot Act and other new laws are really hurting our industry's ability to do business. The law is the law, I know, but the application of those laws is making things very difficult."

Seno A. Bril
General Manager and
Chairman of Investor Services
BNP Paribas
Miami

"The heightened regulatory environment will definitely increase mergers and acquisitions. Some smaller institutions may not want to go through the expense and exercise required. Some larger ones, like ours, may see that as an opportunity to expand their presence."

Agustin Abalo
Vice President
Banco Santander
Miami

President
Florida International
Bankers Association

"Everything we do, everything we think about, everything we offer as a product or service is directed toward meeting the regulatory compliance. The challenges are huge."

Street Talk: The costs and complexities of the new Bank Secrecy Act and Patriot Act are enormous, sending bankers scrambling to tighten controls and add staff to assure compliance. Nevertheless, Florida's international banks are finding themselves under intense scrutiny. Last year, the Federal Reserve slapped two Miami area banks, BAC Florida Bank and Riggs International Banking Corp., with cease-and-desist orders following non-compliance allegations. BAC is headed by Thomas Noonan, a respected industry veteran and the past-president of the Florida International Bankers Association. Riggs never fully recovered. It agreed to be acquired by PNC Financial Services Group, but the deal fell apart in February. "There's a mentality that if you're an international banker you must be involved in money laundering," says Ken Thomas, a banking industry analyst and Wharton professor. In response, bankers are protecting themselves with a flood of so-called Suspicious Activities Reports that alert regulators to dubious deposits and other questionable transactions. "On one hand, bankers are expected to cultivate new relationships and bring in new clients," says Thomas. "And on the other, they're expected to act like a fully deputized sheriff questioning the legitimacy of deposits."

Job Market: The Bank Secrecy Act and other anti-money laundering laws have made it very difficult for clients to transfer their accounts when their bankers jump from one bank to another. As a result, many of the industry's big players are staying put. "Clients are not as mobile as they once were, so banks cannot take quantum leaps forward by simply luring the big, proven producers," says Dennis Nason, an executive recruiter who specializes in international financial services. This has created a high demand for the emerging stars within the small circle of international bankers who can build up their own client base of heavy hitters if given support and resources. Competition for these up-and-comers is intense, says Nason. Other recruiters say demand has skyrocketed for former DEA agents and financial regulators who can help make sense of the Byzantine bank secrecy laws.

Inside Word: Some international bankers are dropping the term "private banking" in favor of "wealth management" to describe their services to high-end clients. Is there a difference? No. Bankers say the new moniker is less snooty and may attract a broader base of the moneyed class. Says one banker: "We're not looking to sell our services just to multimillionaires; the plain old millionaire is fine, too."

Deals: Florida's international banking sector continues to consolidate. Later this year, Switzerland's UBS will add to its Miami operations when it closes on the purchase of Dresdner Bank's Miami-based Latin American wealth management business. In another deal, French banking giant BNP Paribas acquired Banque Sudameris, the Miami subsidiary of Italy's Banca Intesa. Most bankers expect the trend to continue as smaller banks and bank offices feel the pinch of the tough new banking laws. Insiders say the consolidation may benefit consumers. "Competition in the market is reduced, but you also have an increase in the sophistication of the products being offered," says Bowman Brown, a Miami attorney who specializes in international finance. "The larger players are getting larger, but that may not be a bad thing."

New Players: Puerto Rico's two largest banks, Banco Popular and First BanCorp., have announced plans to go head-to-head in Florida. Banco Popular, which has one branch in Miami and nine in central Florida, has recently acquired Miami Lakes' Kislak National Bank. First BanCorp., with a bank agency in Coral Gables, has announced it will acquire Miami-based S&L UniBank and Delaware's Ponce General Corp., which has bank holdings in Florida. UniBank operates nine branches in Miami-Dade, Broward, Orange and Osceola counties. Meanwhile, R-G Crown Bank, a Florida-based thrift owned by Puerto Rico's R&G Financial Corp., has received regulatory approval to acquire 18 branches in Jacksonville, Lakeland, DeLand and Augusta, Ga., from SouthTrust Bank.

Outlook: Analysts say the continued economic rebound in Latin America, especially in Mexico and Brazil, will fuel growth in Florida's international banking sector this year. Wealthy buyers in Latin America, as well as Europeans eager to cash in on a weak dollar, will look to park their money in Florida real estate, bringing new clients to Florida's bankers. Meanwhile, trade finance will remain strong with the possible ratification of U.S. trade pacts with Central America, Chile, Panama and the Andean countries. Movement on the stalled FTAA negotiations will stimulate industry confidence. "If they can get a handle on the secrecy laws and other compliance issues, it should be a very favorable year for international bankers," says banking analyst Ken Thomas.

Tags: Miami-Dade, Southeast, Around Florida, Banking & Finance

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