United Commercial Bank

Saturday, November 7, 2009 at 12:49 pm under Business News United Commercial Bank

United Commercial Bank “overthrown by loan losses and misrepresented financial reports, Kingdom of San Francisco, the Commercial Bank was closed by regulators late Friday and immediately sold east of Pasadena West Bancorp, creating by far the largest U.S. bank focused on the Chinese American market.
United Commercial Bank (UCB)
The combination also will be the largest bank headquartered in Southern California, surpassing National City Bancorp

East West agreed to assume all deposits commercial unit, so that depositors will lose money, the Federal Deposit Insurance Corp. said. 63 bank branches in the U.S. including Southern California 17in, will reopen Saturday as branches of East West Bank.

United Commercial, a unit of UCBH Holdings Inc., was the fourth largest bank to fail this year. That position was previously occupied by the National Bank of California, Los Angeles, which failed last week and was acquired by U.S. Bancorp of Minneapolis.

Regulators also arrested on Friday from a bank each in Georgia, Michigan, Minnesota and Missouri, bringing to 120 the number of failures this year.

United Commercial Bank United Commercial collapse may cause a greater stir than usual because a year ago the federal government invested $ 299 million in bailout funds in the bank in exchange for preferred stock that became worthless failure.

In addition, the FDIC said the collapse would cost the federal insurance fund an estimated deposit of $ 1.4 billion.

East West raised $ 500 million in new capital to support the takeover, the majority of investment funds and other existing shareholders, said Dominic Ng, chairman of the lender based in Pasadena.

The sale of shares in private placement will allow East West to proceed slowly because it integrates the two banks, then have a bunch of years later near the capital consider further expansion by adding more branches or make acquisitions.

The acquisition will greatly expand the scope of West Timor, which has been concentrated in southern California and the Bay of San Francisco. In addition to the 69 offices in California, East West has a full-service branches in Houston and Hong Kong.

Business Unit not only has dozens of branches in California, but also has locations in major areas of China from America, including New York, Boston, Seattle, Atlanta and Houston.

Moreover, because of its 2007 acquisition of a Shanghai bank, United also has a commercial banking license in China – a “rare and hard to come by” asset that makes it easier to operate and expand in that country, said Joe Morford at RBC Capital Markets. It has full service offices in Shanghai, Hong Kong and Shantou, China.

United Commercial, East West Bancorp and Cathay General of Los Angeles for years have competed to become the largest central banks in the Chinese American market.

East West, with $ 12.5 billion in assets in the last report, agreed to buy 10.2 billion U.S. dollars of the United Commercial 11.2 billion U.S. dollars in assets. That would put the merged bank, to nearly $ 23 billion in assets, ahead of LA-based National City as the largest bank basedin Southern California. In the last report, National City had $ 18.4 billion in assets.

The FDIC agreed to absorb the majority of expected losses at about 7.7 billion U.S. dollars of business assets acquired were joined by East West.

Like their Chinese rivals American, United Commercial was burned by losses on commercial loans, especially loans to developers and builders during the housing boom. But it was marred by financial scandal that resulted in a reorganization of its senior management.

Written by: Gulraiz

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