Hemisphere Acquisition From Barclays Fit Plan To Expand Services
By Paola Iuspa
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Hemisphere National Bank, with assets exceeding $166 million, has acquired an international banking service that allows the five-branch bank to compete with larger institutions for customers from Latin America and the Caribbean.
Daniel Schwartz, president and CEO, said Hemisphere recently finished transferring personnel, technology, proceedings and customer rosters from the Latin America Barclays Group in Miami.
Under the guidance of Gonzalo Valdes-Fauli, former CEO of the Latin America Barclays Group and a Hemisphere shareholder since May, the Miami-based and full service bank closed a deal in June to buy Barclays’ payable-through service division at an undisclosed price.
This service, Mr. Schwartz said, allows foreign travelers to issue checks in US dollars in the states if their banks at home are Hemisphere customers. Travelers can also cash or deposit US checks at the Hemisphere’s Doral office, Mr. Schwartz said.
After perfecting that service for over a decade and developing a thoroughly automated service, Barclays grew to be one of the leaders in the payable-through department, Mr. Schwartz said.
"When Barclays in January made the sale public," he said, "we contacted Mr. Gonzalo Valdes-Fauli. In May we reached an agreement that if we were successful acquiring this service, he would join us to help us expand the business."
Mr. Schwartz said that while Barclays officials decided it was time to sell the division, his 22-year-old bank saw offering the service as an opportunity to meet potential customers.
"It is a platform to get new customers for other services we also provide, such as letters of credit" or post-export financing, said Mr. Valdes-Fauli, who retired from Barclays early this year.
Mr. Valdes-Fauli, a Hemisphere’s board member, said he is helping shift the service.
"I will be helping with the expansion of international businesses," he said.
On the other side of the deal, Craig Stirnweis, chief administration officer of the Latin America Barclays Group, said Barclays sold the payable-through division because it changed its strategic plan. Offering the service, he said, was no longer a priority.
"We decided to focus on expanding our investment banking services," Mr. Stirnweis said. "We believe there is a significant investing banking opportunity."
He said between January and May several institutions competed with Hemisphere for the offering, but "Hemisphere was judged to be qualified and capable of providing the service."
During those four months the number users of Barclays’ payable-through service shrank 20%, as some clients uncertain about the future of that division took their businesses elsewhere, Mr. Schwartz said.
Emmanuel Roussakis, chairman of Florida International University’s Finance Department, said banks often sell services when they don’t meet a set level of profitability.
"At the same time," he said, "you have other banks that want to expand in those areas."
Mr. Roussakis said banks started trimming services and focusing on those believed to perform better 10 years ago, when contractions followed decades in which banks strove to become one-stop shops, adding all kind of services.
Banks that seem to have followed that trend included Lloyds, which this year sold part of its commercial loan service; SunTrust, which sold its credit card portfolio, and Mellon Bank, which also sold its credit card business.
"They felt those services were not making a good strategic fit with their long-term goals," Mr. Roussakis said.
Hemisphere is now one of five banks in Miami-Dade offering payable-through service, Mr. Schwartz said. He identified the others as Banco Atlantico Miami Agency, International Bank of Miami, BAC Florida Bank and AmTrade International Bank.
Mr. Schwartz said Hemisphere, which received a large injection of capital in 1997, when it had just $76 million in assets, had wanted to create a payable-through division four years ago, as the bank was being reorganized. But officials thought it would be very costly to create a product able to compete with Barclays, so they put the plan on hold until last January.
The transition has been smooth, he said as about 20 former Barclays employees moved to Hemisphere’s Doral office.
Hemisphere already has invested more than $1 million in hardware and software to start running the service. It also obtained all the software upgrades Barclays developed to provide a complete automated service, Mr. Schwartz said.
"They were very advanced in technology," he said. "They were ahead of the game, and we were able to transfer that to our bank."