First Hawaiian Bank buys branches in Guam, Saipan

By Frank Cho
Advertiser Staff Writer

First Hawaiian Bank, a subsidiary of BancWest Corp., has agreed to buy Union Bank of California's branch network in Guam and Saipan, further expanding the Hawai'i bank's marketshare in the Western Pacific islands.

The deal, expected to close by the end of the year, will make First Hawaiian a strong No. 3 in the region in terms of marketshare, just behind No. 2 Bank of Hawaii and No. 1 Bank of Guam. It will also free up capital for the San Francisco-based Union Bank, which has been hurt recently by bad loans and losses in some of its operations.

First Hawaiian said it plans to close the two Union Bank branches on Guam because of local banking laws, and move the deposit and loan accounts to a nearby First Hawaiian branch. On Saipan, it will keep both its branches and the only Union Bank branch there.

The transaction is another signal that $19 billion BancWest continues to pursue its aggressive growth strategy. The Honolulu-based bank holding company said it plans to double its size to more than $40 billion over the next several years to become one of the 25-biggest U.S. banks.

"This is a wonderful opportunity to expand our commitment to Guam and Saipan, a region that we already know well from long experience," said Don Horner, First Hawaiian vice chairman.

The Union Bank deal includes about $200 million in new deposits for First Hawaiian and various loan accounts. Once the deal closes, First Hawaiian will also provide merchant card processing for Union Bank's business customers on Guam and Saipan.

Terms of the deal were not disclosed.

"Union Bank of California's presence in Guam and Saipan is deeply rooted in history. We've been a part of the landscape since 1974, and it is difficult to leave," said Richard Hartnack, vice chairman of Union Bank.

The deal comes just two days after the bank's parent company, UnionBanCal Corp. named Vice Chairman Norimichi Kanari the bank's new chief executive officer, replacing Takahiro Moriguchi. UnionBanCal, which is two-thirds owned by Mitsubishi Tokyo Financial Group Inc., Japan's fourth-biggest bank, replaced the 56-year-old Moriguchi after four year's as chief executive.

Union Bank, like many other U.S. banks, has struggled with rising bad loans. Earlier this year it sold its auto-leasing operation after the business lost $19 million in the first quarter. In the fourth quarter, rising bad loans nearly wiped out most of the company's profits during that period.

First Hawaiian said it plans to expand its automatic teller network in Guam and Saipan, which will be offered to Union Bank customers.

The deal is subject to regulatory approvals, but both banks said they expect a smooth transition.

Horner said First Hawaiian plans to offer jobs to most of Union Bank's 88 employees on Guam and Saipan and has imposed a hiring freeze at its own branches to retain as many Union employees as possible.

Frank Cho can be reached by phone at 525-8088, or by e-mail at fcho@honoluluadvertiser.com