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Orlando Sentinel

Banco Popular Can Now Expand; A Money-Laundering Probe Had Hindered The Bank In Its Effort To Add To U.S. Operations

By Barry Flynn, Sentinel Staff Writer

January 21, 2003
Copyright © 2003 Orlando Sentinel. All rights reserved. 

Money-laundering charges against Banco Popular de Puerto Rico stunted the growth of the bank's continental U.S. affiliate for almost three years, a top company executive has disclosed.

But now, with the money-laundering case settled, Banco Popular North America plans to resume buying other banks in South Florida, if not in Central Florida, said Roberto Herencia, chief executive of the company's Chicago-based U.S. bank.

In the Orlando market, where Banco Popular has nine offices, the bank has less expectation of acquisitions because there is less likelihood of any banks being put up for sale, Herencia said.

The two banks' parent company, Puerto Rico-based Popular Inc., agreed last week to pay a $21.6 million fine and admitted that its internal controls had been inadequate.

Popular admitted that it failed to file suspicious-activity reports that might have tipped off federal law enforcement officials to large amounts of drug money being laundered through two of its San Juan branches.

"The very positive news is this allows us to pursue our expansion plans," Herencia said. "It lifts a written agreement with the Fed," in force since early 2000, that made it difficult for Banco Popular to buy other banks or even add new branches, Herencia said.

That agreement, imposed by the Federal Reserve, "made it very difficult to pursue acquisitions" and was an obstacle to new branch openings, Herencia said. "The last three years, most of the growth has been internal."

Banco Popular North America "was not part of the investigation, nor was it a party to the agreement" in which Popular admitted its shortcomings, Herencia said.

"This concludes a matter that first of all goes back to 1997, so I see it as a positive conclusion. This allows us to pursue our expansion plans."

The bank operations in Florida and five other states, though still much smaller than those of the Puerto Rico-based bank, are a crucial part of Popular Inc.'s plans.

"We see our U.S. operations clearly as the engine of growth," Herencia said.

"We like Florida; you know that," he added, but "I think the opportunities we see for whole acquisitions are more in South Florida."

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