Provident, others offer bilingual tellers, easier money transfers to appeal to the country's fast-growing demographic group

Banks reaching out to Hispanic market


Jose Santos, who came to Baltimore from Honduras when he was a teenager, doesn't bank anywhere. The 22-year-old undocumented immigrant who works in construction does, however, have financial goals: To wire at least $500 a month to his family in Central America and to perhaps one day buy a home.

Santos, it turns out, may be exactly the kind of customer that a host of financial institutions from Bank of America Corp., the second-largest U.S. bank, to Baltimore-based Provident Bankshares Corp. are clamoring to serve.

Eager to appeal to the fastest-growing demographic group in the nation, banks are making it easier for clients to send money to Latin America and improving customer service by hiring bilingual tellers and financial advisers. Banks have also stirred controversy by offering mortgages to foreign nationals who might not be legal residents and accepting identification from other countries. Although some believe the industry's outreach is long overdue, critics say banks are encouraging illegal immigration.

Hispanics, including an estimated 11 million undocumented immigrants, represent a big business opportunity for banks. The market data is compelling - and often counter to stereotypes. About one-third of Hispanic households are squarely in the middle class with annual household incomes of up to $75,000, the same proportion as in the general population, and another one-sixth of Hispanic households could be considered affluent, U.S. Census data shows.

The Tower Group, a research firm, estimates that up to 70 percent of the growth for the financial services industry could come from the Hispanic market alone in the next several years.

While banks such as San Francisco-based Wells Fargo & Co. have been vying to attract Hispanic customers for several years, the trend is now expanding outside Hispanic-dominated regions such as Texas and Southern California. Hispanics make up just 2 percent of the population in the Baltimore area, but their numbers are growing, having topped 50,000 in the 2000 census, up 80 percent from a decade earlier.

"It's a good idea," Santos said, as he walked down Broadway on a recent afternoon in Fells Point, where an M&T Bank Corp. branch has translated its advertising into Spanish. "We need the services."

The banking programs that are open to undocumented immigrants have drawn some protest across the country from activist groups such as the Minuteman Project, best known for posting private citizens on the U.S.-Mexico border to stop unlawful crossings. The Minutemen staged demonstrations this summer at banks in Utah with signs accusing the institutions of "laundering" money for illegal aliens.

But Hispanic customers and advocacy groups have welcomed the initiatives, and federal regulators have promoted them.

The Federal Deposit Insurance Corp. formed a task force in Chicago to help banks tailor services to Mexican immigrants who settled in the Midwest, regardless of their legal status. Banks are required by federal law to meet the credit needs of the communities where they operate. Regulators decided this year to allow banks to get credit under the law for offering remittance services that send money to native countries.

"Banks need to take a look at their communities because there's a changing face out there," said David Barr, an FDIC spokesman. "With Chicago, for instance, everyone thinks of Eastern Europeans, particularly Polish immigrants, but today Chicago has the second-largest Hispanic population in the country."

Hispanic organizations, such as the National Association of Hispanic Real Estate Professionals, say that bringing immigrants into the banking fold cuts down on predatory lending to a vulnerable population and strengthens communities that benefit from higher homeownership rates and from residents building wealth.

Banks are following a path forged by Wal-Mart Stores Inc., Coca-Cola Co. and other retailers that began targeting the Hispanic market a decade ago. Hispanic purchasing power grew nearly 250 percent from 1990 to this year, to $736 billion from $212 billion, according to the Selig Center for Economic Growth at the University of Georgia.

A market to court

"Retailers have known for a long time that this is a market they should court, and the financial sector is really just catching up now," said Frances Martinez Myers, chairwoman of the Hispanic real estate association, based in San Diego.

Martinez Myers said Hispanics are more financially secure than ever, and banks have taken notice as affluent Hispanic households nearly tripled in the 1990s. "It's a price point issue," she said. "The ability of somebody to buy soda and food and clothing is significantly different than buying a house."

Banks are also looking for ways to grow as interest rates continue to rise, squeezing their profit margins, and as the once-booming business of refinancing mortgages has dried up.

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