Banco Popular retreats toward its home base
Banco Popular is based in Puerto Rico, but it has operations in mainland U.S. cities like New York and Miami. A recent news report says the bank is looking to sell its branches in Chicago and Los Angeles.
Just four years ago, Banco Popular rebranded itself in those cities as Popular Community Bank, hoping to broaden its customer base. Now it’s moving in the opposite direction.
“At some point it makes sense for the company to exit the market,” says Mark Palmer, managing director of BTIG, “and focus on its operations in Puerto Rico, where it’s gaining market share, gaining deposits.” And, making better profits.
At home in Puerto Rico, Banco Popular gets a better spread between the interest it pays depositors and the interest it gets paid on loans. Banco Popular is the island’s biggest bank, and even in a weak economy, it’s been growing.
Analyst Brian Klock watches Popular for the investment bank Keefe, Bruyette and Woods. He thinks that this move to streamline could be partly intended to please bank regulators.
Popular wants to pay back TARP bailout funds, so it can start paying dividends to shareholders again. Before regulators accept that payment, they require proof that the bank is in good shape, and well-run.
“That’s because the regulators are focused on making sure we don’t go through this again,” he says, referring to the 2008 financial crisis.
Klock thinks that’s good news for the rest of us. “The regulator is doing his job,” he says, “to try to make sure this is a safe and sound banking system.”
*CORRECTION: An earlier version of this story included a photograph of the incorrect bank. The photo has been corrected.
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