* Chinese banks may buy stakes in Chinese American banks
* Minsheng Banking to lead investment: analysts
* Consolidation to continue among Asian American banks
BANGALORE, Dec 10 - As Chinese banks try to take advantage of an easier regulatory regime to enter the U.S. market, Asian American banks could become natural targets for these big players, analysts say.
Chinese bankers have complained that it has been difficult for them to set up branches or invest in banks in the world's leading economy, due partly to U.S. regulators' tough supervision and strict approval process for financial deals. [ID:nHKG208835]
Chinese and U.S. regulators are now working on a memorandum of understanding (MoU) to encourage Chinese financial institutions to buy into small and medium-sized banks in the United States by relaxing investment rules.
Asian American banks that cater to ethnic Asian communities in the United States would be high on the list of the Chinese players once the MoU is finalized.
I think the Chinese owners would probably gravitate toward the California and New York markets because that is where the highest concentration of ethnic Chinese or Chinese Americans are located, analyst Chris Stulpin of DA Davidson & Co said.
China's Minsheng Banking Corp (600016.SS) previously owned a stake in United Commercial Bank (UCB) -- the biggest lender serving the Chinese community in the United States -- before it was taken over by the U.S. Federal Deposit Insurance Corp (FDIC) and bought by its California-based rival East West Bancorp (EWBC.O) in November.
Analysts say that Minsheng, China's first listed non-state lender, is looking at reinvesting in the U.S. and other big Chinese lenders will follow its lead.
They would be most interested in East West and Cathay General Bancorp (CATY.O), analyst Joe Gladue of B.Riley & Co said.
He added that since East West now has all the operations of UCB, it would be the first bank Minsheng would try and establish a relationship with.
Analyst Lana Chan of BMO Capital Markets said the MoU would be a positive for East West and Cathay General in the longer term, given that there are very few players in this niche segment and their franchises would give the large Chinese banks economies of scale in the United States.
However, in the near term, she views the entry of Chinese investors as a negative as it would create more bidders for any future FDIC transactions, and also potentially lead to more competition from a loan and deposit standpoint.
CONSOLIDATION TO CONTINUE
Analysts say the Asian American banking sector could see further consolidation with stronger players like Cathay General, and Korean American banks Nara Bancorp Inc (NARA.O), Wilshire Bancorp Inc (WIBC.O) and Center Financial Corp (CLFC.O) looking like potential acquirers following their recent capital raises.
Three Korean American banks -- Hanmi Financial Corp (HAFC.O), Uniti Financial Corp (UIFC.OB) and First Standard Bank (FSTA.OB) -- are currently under regulatory orders and appear to be struggling, according to analysts.
If anything as large as Hanmi does become an FDIC-assisted transaction, it would be transformational and very accretive for any one of the other larger Korean-American banks, Chan said.
Wilshire Bancorp Chief Financial Officer Alex Ko told Reuters that the bank is on the lookout for FDIC-assisted deals.
Cathay General declined to comment on whether it may be interested in acquiring another bank, while Nara Bancorp and Center Financial did not respond to queries seeking comment.
The Asian American banking space has witnessed some consolidation through FDIC-assisted deals, with East West's acquisition of UCB and Wilshire buying Mirae Bank in June.
Hanmi, which received an investment of $6.9 million from Korean firm Leading Investment & Securities Co Ltd in September, is preparing an agreement with IWL Partners LLC, an affiliate of Leading, for a larger equity capital infusion.
Another potential acquirer could be Woori America Bank, a wholly owned subsidiary of Korea-based Woori Bank, a unit of Woori Finance Holdings (053000.KS) (WF.N), analysts say. (Reporting by Brenton Cordeiro; Editing by Unnikrishnan Nair)