Immigrants Turn to Salvadoran Banks for Money Transfers

By Krissah Williams
Washington Post Staff Writer

Elio Hernandez, a 32-year-old maintenance worker who moved to the District from El Salvador three years ago, walked into Banagricola, a tiny storefront
money-transfer operation in Adams Morgan, and paid $10 to send $60 to his 80-year-old grandmother and his two children in San Salvador.

Hernandez said he uses Banagricola because it is a subsidiary of Banco Agricola, which is the largest bank in his home country. Its 513 branches in El Salvador
make it easy for his grandmother to get the money. "I prefer to use a Salvadoran bank," Hernandez said in Spanish. "It's more convenient for my family."

Such connections with the Salvadoran immigrant community have made Banagricola and its local competitor, Banco de Comercio -- El Salvador's fourth-largest
bank and the parent company of Bancomercio money-transfer centers -- significant players in the Washington area's money-transfer market. Both Banagricola --
whose motto is "El Salvador much closer to you" -- and Bancomercio have storefront money-transfer businesses nestled amid fast-food restaurants and
check-cashing stores in commercial strips in Hispanic enclaves.

In the past three years, the bank subsidiaries have begun to eat away at Western Union Holdings Inc. and MoneyGram's once virtual monopoly in the Salvadoran
niche, according to research by Manuel Orozco, who has studied remittances and the activities of more than 70 money-transfer companies as project director for
Central America at the Inter-American Dialogue, a policy research group.

Banagricola and Bancomercio, along with companies owned by Banco Salvadoreño and Banco Cuscatlan -- two Salvadoran banks that have money-transfer
operations in California, Texas and New York -- now transfer about 15 percent of the more than $2 billion that Salvadoran immigrants send to their families each
year, Orozco said.

"They saw immigrants were sending remittances in significant volume, and they were only operating as distribution agents," Orozco said. "They realized they could do
the same thing on their own, and they knew they would be recognized immediately."

The majority of remittance senders are immigrants with incomes below $30,000 a year, and they typically send about 10 percent of their annual income home to their
families in semimonthly transfers throughout the year, according to Orozco.

In the Washington area, Salvadorans are the largest group of remittance senders, according to Orozco. Nationwide, Salvadoran immigrants are the second-largest
group of Latin American remittance senders, behind Mexicans. An estimated 1 million Salvadorans live in the United States, with about 130,000 in the Washington
region.

"It has been a cultural thing for a long time," said Carlos Aragon, president of the Washington area Salvadoran American Chamber of Commerce and owner of
Radio Fiesta 1480 AM, a Spanish-language radio station. "Salvadorans feel attached to their families in El Salvador, and what we always want to do is to do well
for them. Most of the time we probably send more than we should because we want our families in El Salvador to have a good standard of living."

Three years ago, that ripe customer base enticed Banco de Comercio, which was founded in El Salvador 51 years ago and now has assets of $1.13 billion. It has
opened five Bancomercio money-transfer centers in the Washington area since 2000, when it opened its first U.S. operation in Arlington. The company opened a
second U.S. office months later at 18th Street and Columbia Road NW in the District. The following year it opened offices in Falls Church and Los Angeles, and
last year it opened offices in Gaithersburg and Langley Park, Md.

Banco Agricola, which has assets of $2.9 billion, followed Banco de Comercio to the market and opened its first Banagricola office in the United States a block
from Bancomercio on 18th Street in the heart of Adams Morgan last November.

Neither company has federal approval to operate a full-service bank. Such approval is difficult to obtain, because Federal Reserve rules require a foreign bank's
home country to set up an oversight agency to monitor the foreign bank's activities in the United States. What the Banagricola and Bancomercio offer, according to
their managers, is ties to the Salvadoran community.

"The need existed to deliver Latinos familiar help from their countries of origin," said Juan A. Acevedo, manager of Banagricola's Washington branch. "That's why
we are here, in order to be an additional option."

When Bancomercio opened offices here three years ago, prices for transmitting money hovered around $22 to transfer $200, according to Orozco's research.
Bancomercio gained a share of the market by undercutting those prices. It charges $11 to send up to $1,499; for $1,500 or more, the fee is 1 percent of the total
transfer. Banagricola charges $10 to send any amount. Western Union charges $27 to send $200 to El Salvador and more for higher amounts.

More recently, Wells Fargo & Co., Bank of America Corp. and other large U.S. banks have been going after the Latin American remittance market by launching
Spanish-language advertising campaigns and offering new money-transfer products. In May, Bank of America started a program called SafeSend that charges
customers $10 to transfer up to $1,000 to Mexico using automated teller machines. It is not currently available in other parts of Latin America.

"Competition in the money-transfer market is really nothing new," said Western Union spokeswoman Wendy Carver-Herbert. She said the company is in a strong
position because of its well-known brand name and its 17,000 locations.

"We are aware that there are a couple of Salvadoran banks, but they are really only the latest entrants into a competitive market," Carver-Herbert said.

Orozco expects the competition to drive prices down further. He estimated it costs Bancomercio and Banagricola about $3 per transaction, although they charge
more than triple that fee. Neither bank manager would discuss those figures.

Price is a key factor when immigrants select money-transfer companies, according to a 2002 study of Latino remittance senders conducted by the Pew Hispanic
Center.

Some Salvadorans say that familiarity can be another factor. "It's not only a matter of recognition and feeling comfortable with the name, within the community," said
Aragon of the local Salvadoran American Chamber of Commerce. "Those banks play an important role. It gets us closer to our home country."

                                               © 2003