Many of the biggest commercial banks with operations in Orange County are poised to gain from international markets as the local business landscape becomes more global in character.
Bankers here are looking to strengthen their status as service providers for companies that plan to expand their presence abroad or venture into new offshore markets with everything from aerospace components to consumer goods.
“Orange County’s proximity to ports of Long Beach and Los Angeles has made it a prime location for emerging global businesses to grow and prosper,” said Sima Hojati, a vice president in the Monarch Beach office of California Bank & Trust.
Hojati cited the latest study by California State University-Fullerton’s Center for Economic Analysis and Forecasting, which said OC exports are expected to increase by about 8% in 2015 to $28 billion.
Global Trade
The strong dynamics in import and export activities here point to OC’s wealth, said Steve Bash, a senior vice president of City National Bank who manages the bank’s international banking and trade finance group.
Bankers are also looking to serve as channels for investments from elsewhere coming into Orange County.
“We see huge opportunities as companies continue to grow in OC,” said Bash, who’s based in the bank’s Los Angeles headquarters office and oversees global business for the Southern California region.
“The pace [of international interaction] has been on constant acceleration over the past decade,” he said.
It’s a trend that’s clearly seen in Orange County, he added, though there aren’t concrete data points available to show how many local businesses have a presence abroad or are entertaining the idea.
Bash cited several factors boosting companies’ interest in global operations, including access to information via the Internet, capital that can flow more freely across borders, and the increasingly global scope of higher education.
City National provides financing, foreign accounts receivables, and other services for U.S. companies working abroad. San Clemente-based eyewear and sports gear company Rudy Project North America, for instance, hedges euros for protection against currency fluctuations—a necessity because it imports directly from Europe.
Report
Wells Fargo Bank published its first International Business Indicator report this year in an effort to better cater to clients and prospective customers interested in global banking, according to Senior Vice President Paul O’Mara, who’s based in the bank’s Irvine office and oversees commercial banking operations. Locally based Senior Vice President Lori Bell heads the global banking marketing efforts for the OC, San Diego and Inland Empire markets.
Wells Fargo’s study was based on a survey of more than 250 midsize and large businesses across the country. About 69% of respondents said they expect their international business to increase over the next year, and 54% said they view the international market as “increasingly important to their financial success.”
Orange County businesses “absolutely” share in those sentiments, O’Mara said.
“We see that every day—we see businesses looking to expand through a variety of channels, growing their existing presence, doing joint ventures and acquisitions,” he said.
O’Mara said many of the bank’s OC clients are operating in Asia and the U.K. and that the aerospace industry stands out as an active sector.
“We work with three different aerospace companies here in the range of $50 million to $500 million [in revenue], all very much middle market,” he said. “They’re selling more and more to the international airline industries.”
Wells Fargo, which is represented globally, including in London, Dubai, Seoul, Shanghai and Toronto, has groups of global-banking specialists locally in its various regions.
“They’re an integral part of our relationship team,” O’Mara said. “We can bring in foreign-exchange specialists. We can lend in foreign countries in foreign currencies, do foreign exchange, purchasing assets, and so on.”
Japan Ties
Union Bank’s status as a subsidiary of a Japanese parent anchors it as one of the largest financial services providers in Asia, said Irvine-based Executive Vice President Scott Connella, who heads its commercial banking operations in Southern California.
Mitsubishi UFJ Financial Group Inc., Union Bank’s Tokyo-based parent, is one of the largest financial groups in the world, with assets of $2.2 trillion at the end of September. Its Bank of Tokyo-Mitsubishi UFJ is the largest bank in Japan. Mitsubishi UFJ this year combined the U.S. operations of Bank of Tokyo and Union Bank, and moved Union Bank’s headquarters from San Francisco to New York City.
“We’re all over the world, but clearly one of our big strengths is in Asia,” Connella said, noting that the bank is one of the “top non-Chinese banks in China.”
Union Bank has a foreign exchange trading floor in its Los Angeles office that specializes in yen and Chinese renminbi.
“We were one of the first banks that were able to do forward contracts to hedge,” he said. “A lot of companies are doing business in China; you can protect yourself from currency fluctuations.”
Connella said Union Bank also has a global advisory group that helps guide companies going into new areas with little or no experience in the regions.
Challenges
Challenges of expanding globally and exploring new markets can mount up, “but that’s frankly where the advisory becomes valuable,” he said. “You’ve got regulations, you’ve got customs. The cultural aspect—the soft knowledge—becomes critical. Doing business in China can be very different from negotiating business in the U.S.”
Union Bank’s clients involved in global banking are in various sectors, including consumer products and manufacturing. A trend the bank recently observed is that “international needs are moving ‘down market’ more,” Connella said. “From the mid-corporate market, it’s now becoming true that smaller and smaller companies are starting global business. That’s where we’re seeing more of a change.”
Hojati of California Bank & Trust agrees that smaller businesses are more actively becoming part of the trend.
“We have seen … global presence amongst the larger companies for the most part, though the trend has continued to shift more toward small and midsized companies hoping to participate on a global stage, taking advantage of providing goods and services to a wider market,” she said. “The largest trade countries have been China, Mexico and Canada.”
