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Banking/Financial Services
SVB Financial Group established a wholly Indian venture lending arm, SVB India Finance, to
offer debt financing for domestic, venture-backed, early stage, mid-stage, and high-growth companies
in India. It has also established a $54 million India venture fund. SVB is discussed in
greater detail in Chapter 7 of this report.
A group of Indo-American business owners and investors raised $21 million and, in October 2008,
announced plans to launch Global Trust Bank in Mountain View. An eventual Fremont branch
office is also part of the business plan. Once it wins Federal Deposit Insurance Corp. approval,
Global Trust will be the only bank in California with Indo-American owners, but it won’t be the first:
Indo-American Bank, founded in 1987 in San Francisco, was merged with Millennium Bank which,
in turn, was acquired by First Banks America in 2000.
Global Trust plans to market initially to some 700 prospective customers with a breakdown of
40% small and mid-sized businesses, 30% real estate investors and hotel operators, and 30%
professionals. The business segment breaks down into physicians, hotel/motel owners, convenience
stores and other small businesses, and technology companies. These are all underserved
segments of the community, particularly as more established banks face ongoing liquidity problems.
As a small, new bank with no exposure to subprime mortgages or other non-performing
assets and a willingness to lend, the bank expects to build a loyal local customer base.
Mission National Bank was opened in 1982 as a community bank specializing in small
business and commercial real estate lending. With two offices in San Francisco and one in
Berkeley, the $165 million bank counts Indian residential hotel owners and operators
among its major customers.
“The type of residential hotel you find in the Bay Area is different from the type of property you
might find in Los Angeles or Chicago,” explains Mission National president and CEO David
Joves. “Typically you might think of it being part of Skid Row, but in San Francisco we see it as a
low-income housing opportunity.” Where a one-bedroom apartment in the pricey San Francisco
market might rent for $1,500 or more, a downtown hotel room off Market Street might rent for
$700, attracting restaurant workers, mechanics, janitors or other workers who are low-income,
may not own a car, and need to live in the city near their jobs.
The bank has identified in its service territory “a couple of hundred” hotels in the size range of
10–80 rooms . “They’re working on very thin margins, keeping their costs low by employing
family members,” Joves says. “An average hotel has 65-70% occupancy; with these hotels it’s
90–95%. Their cash flow is stable, and we’ve never had a mortgage default or repossession.”
During the past four years, San Francisco’s city government has become a growing partner in the
residential hotel business through its Care Not Cash program, which provides housing and onsite
services for the homeless. The City enters into master leases with property owners—many of
them Indian—and brings in nonprofit agencies to manage the buildings and provide counseling,
alcohol and drug treatment, and other services to residents.
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