San Antonio: The new financial center of the SW?

**AeroD** · 26 June 2006, 01:38 PM

I don't like San Antonio that much (one too many trips to Sea World as a kid), and I don't like the idea that they may become a bigger financial center than Dallas. What can we do? Or are things okay, and perhaps I am blowing this out of proportion.

David Hendricks: Financial industry controls its own destiny

Web Posted: 06/07/2006 12:00 AM CDT

San Antonio Express-News

San Antonio's financial industry has been measured. It has been studied. The focus groups have been held. The $85,000 consultant report has been delivered.

But Finance San Antonio, as a movement to promote and advance the regional industry, is up in the air.

Doubt is cropping up whether the industry can or should organize a supportive organization along the lines of the city Convention & Visitors Bureau for the hospitality industry or BioMed SA for the health care industry.

After Washington Mutual last year announced it would bring thousands of jobs to San Antonio, a study of the city's financial community produced the unexpected finding that, by some measures, the financial industry was the largest one in San Antonio.

The percentage of San Antonio workers in the financial industry ranks second-highest in the nation after New York City. That's thanks to huge companies and operations including USAA, Citicorp, JP Morgan Chase, World Savings, Washington Mutual, Cullen/Frost Bankers and a plethora of credit unions.

That sparked the idea that the regional industry should band into an organization to advance its capabilities and accelerate the momentum of investment already pouring into the city.

The City Council last year appointed 24 people to a Finance San Antonio ad hoc committee and allocated the money for a consultant study covering the banking, investment, insurance and accounting communities.

Assisted by the city's Economic Development Department, Finance San Antonio staged 14 focus-group sessions in March and April, led by ICF Consulting, to determine what opportunities or strategies the financial industry can pursue.

The finding that the region needs venture capital to finance new technology and non-technology companies alike was not surprising. But the banking industry itself lacks lending specialization to assist the growth of San Antonio's newer industries: companies in the transportation, health care, technology and creative fields.

In effect, the banking community is still stuck in the horse-and-buggy era of ranching and oil-and-gas lending, where loans are collateralized by property and equipment, not the cash-flow lending that newer industries seek.

San Antonio possesses plenty of wealth for initial company investment. Too many of the rich families want to stick with oil-and-gas and ranching activities, though, because the profits arrive more quickly and surely than in the riskier and long-developing technology and health care fields.

Can San Antonio turn this situation around? Along the way, can the city also boost its image toward recognition as a Southwest financial leader, joining Phoenix and Dallas, and an international financial center with ties to Latin America, like Miami?

Recommendations fill the hefty report delivered to the City Council last week. Councilman Art Hall will lead an effort to add $110,000 in city funding, much as the city and Bexar County contributed last year to help start BioMed SA.

The ball now is in the hands of the industry, however. Finance San Antonio has held discussions with the Greater San Antonio Chamber of Commerce to act as a catalyst as it did last year for BioMed SA. Chamber President Joe Krier, however, is not yet convinced the industry wants to help fund a new institution.

"We'll pull together some financial institutions to see about a follow-up," Krier said. "We'll say to them, 'How would you like us to proceed?' Some may say there is no need for an organization. We can do this in other ways.

"The larger question is: Is this realistic that San Antonio can strive to be a global financial center? I don't know if that is feasible. We'll need to know more."

If New York City started from scratch today, it probably could not become a global financial center itself because of the way the Internet decentralizes financial services, he added.

Another question is how many industries deserve supporting, collaborative organizations. "Where do we put our assets?" he asked. "We need to be thoughtful about priorities."

Councilman Hall won't stop, though, if the Greater San Antonio chamber declines to take a leading role. Another existing organization can be found for a catalyst, said Ramiro Cavazos, city economic development director.

The bottom line comes to this: The financial industry itself must display the leadership and vision to make the investment so far pay off. It has to decide whether the effort is justified or whether the new report just gathers dust.

**slfunk** · 26 June 2006, 02:26 PM

I wouldn't worry too much about this. Dallas for a long long time has been the financial leader for Texas and this region. Case in point the Federal Reserve built its bank here and there is a subsidary branch of the Dallas Fed Reserve in Houston. San Antonio has been getting a lot of press lately about the relocations to its area which should be applauded and recognized. When comparing to the metro areas DFW topping 6 mil and San Antonio reaching 2 mil, I would think Dallas would still have the upper hand, but I am no expert by any means in this field. I just see San Antonio currently being a cheaper alternative to Dallas and Houston for getting business, plus San Antonio's chamber of commerce has a larger budget then Dallas's to get the news out about what's going on in its city.

**rantanamo** · 26 June 2006, 03:13 PM

Let's say 8% of SA metro workers are in the financial sector and 5% of DFW metro workers are in the financial sector. Who has more?

**AeroD** · 26 June 2006, 03:30 PM

I don't want to be an alarmist, but I am somewhat concerned. Dallas used to be home to several energy companies (Halliburton comes to mind), and they have left to Houston, with the exception of ExxonMobil and probably a few others. I just don't want that to happen to our financial industry. But as the previous post pointed out we are home to the Fed 11th District Bank.

Granted, Houston has long be an energy center, but still the fact that we couldn't keep the ones based here seems like Dallas is losing its edge.

Dallas has always been diverse, which is what makes it strong. Call me bitter, but I don't like the fact businesses (particularly financial companies) are choosing (Washington Mutual's expansion in SA) San Antonio.

But maybe SA is the cheaper alternative.

But then again, maybe Dallas should focus are creating and attracting an entreprenuerial class (e.g. your Mark, Cubans, Tom Wagners, Herb Kellehers etc), and focus less on corporate relocations.

**The Great Hizzy!** · 26 June 2006, 05:31 PM

Well, in the case of the US energy sector, a lot of regional, national and international companies are moving their offices to Houston for strategic purposes so it's not an indictment of Dallas at all.

As for banking, it shouldn't be a surprise that as San Antonio's population grows, it's ability to staff various forms of commerce grows as well. What you're probably seeing is greater visibility of the workforce in San Antonio. The article speaks more to the growth in banking-related jobs more so than growth in "San Antonio-based" financial institutions.

There is a difference.

**mjblazin** · 26 June 2006, 05:36 PM

What does being a financial center mean? The city with the most sales associates (tellers), back office processors (being spread around the country connected via the net), relationship managers, call centers, or merchant bankers? Increasingly, the only real financial center in the U.S. is New York and the rest of the cities are simply branch offices. Concentrations of wealth exist, but those players have no access limitations or benefits based on geography.

Eventually even New York will lose a substantial portion of the lower and middle level jobs to technology (they won't disappear - they just don't need to be there) and will be fighting with London and Beijing for the upper level slots. In a few decades it'll be a quaint idea that the bank or insurance company had the most massive building in the city, the destination of all those employees. While players from Dallas (and Jackson Hole and Odessa) will always have a role, the idea of cities like Dallas and San Antonio having a role will disappear even more quickly.

**dalatl** · 26 June 2006, 05:53 PM

As was said above. Don't be alarmed. I believe that I am safe in saying that Dallas is the financial nexus of the Southwest, Houston not withstanding.

Dallas is still the dominant regional hub for the regional offices of commercial banks, and of course, the Dallas Fed. The major investment banks have their largest regional presence here and there are numerous regional investment banking outfits.

Also, beyond finance, Dallas is the regional center for business consulatancies (McKinsey, Bain, BCG, Accenture, etc.), advertising, PR, media outlets, trade, logistics etc.

Overall, Dallas is one of the major regional "capital's" that control the flow of money and ideas through the US. Such others are NY, Boston, Chicago, LA, SF, Atlanta and Miami.

I don't mean to dis' Houston. I will give it its full (huge) due in medicine, energy, international (very impressive..3rd largest # of consulates), port, and it's cultural institutions that should make Dallas jealous.

However (and most people in the corporate/financial world would concur, I believe) Dallas is clearly the regional capital in terms of overall business activity.

San Antonio is a nice city (I always enjoy going there) with some big corporate players (ATT, Valero, Tesoro, USAA, etc.) However, it's economy is driven by the tourism industry which tends to be a lower wage economy. Also, SA has become popular for years with call centers and service centers for financial institutions, which covet its lower wage workers (and lower cost of living) as well as its heavily bilingual population.

All in all, we in Texas have a series of great and very complimentary cities, with Austin to keep it all a little "weird" to counterbalance all of the corporate "stuffed shirts."

Now let's get back to hammering away at making Dallas a more interesting place to live to go along with our economic prowess.

**AeroD** · 26 June 2006, 06:03 PM

Originally Posted by mjblazin

While players from Dallas (and Jackson Hole and Odessa) will always have a role, the idea of cities like Dallas and San Antonio having a role will disappear even more quickly.

So then, what does Dallas compete for? Are there any particular industries or sectors Dallas should attract?

**mjblazin** · 26 June 2006, 07:12 PM

As the previous message said, strive to be interesting. Increasingly, the only geographic driver will be those jobs that need to be near your clients. Those clients, unless they themselves are in one of those jobs, will gradually increasingly live in the better locations. It won't just be the Mark Cubans, but the Josephine Sixpacks too. I don't know exactly what "better" means, but some kind of pecking order will come to be. You don't want to be the city full of people that could not get anywhere else. Forget about better or best areas of lousy cities. People simply won't be satisfied.

**grantboston** · 26 June 2006, 08:29 PM

I don't know if this is true everywhere, but it seems like there is plenty of growth in the mortgage industry in the DFW area. Countrywide and others can't seem to add jobs fast enough.

I think with the electronic and decentralized nature of the entire sector, the only real august, premier examples of financial sector strength would be having siginificant Venture Capital and Private Equity firms and large financial planning operations.

Texas Pacific is headquartered in Ft. Worth (I believe). Those are industries that SA seems tolack, at least for now.

**Fobulous** · 29 June 2006, 11:20 AM

DFW Metroplex is still the financial center of the Southwest for sure. In fact, my wife just told me that the entire Accounting department except their auditing dept, from Goldman Sachs are relocating to Las Colinas by next year.
Countrywide is moving in headstrong as well.

**psukhu** · 29 June 2006, 11:31 AM

Flip on CNBC. They have a national weather report every so often. Notice that Dallas is the only city on their weather map in the Southwest.

**AeroD** · 29 June 2006, 11:56 AM

Originally Posted by Fobulous

In fact, my wife just told me that the entire Accounting department except their auditing dept, from Goldman Sachs are relocating to Las Colinas by next year.

Anyway we can convince Goldman Sachs to move to downtown Dallas instead?

**hvresident** · 24 July 2006, 01:32 PM

Originally Posted by AeroD

The percentage of San Antonio workers in the financial industry ranks second-highest in the nation after New York City. That's thanks to huge companies and operations including USAA, Citicorp, JP Morgan Chase, World Savings, Washington Mutual, Cullen/Frost Bankers and a plethora of credit unions.

This article is being blown way out of proportion. The jobs that the author speaks of are merely call center type lower paying jobs. The main reason washington mutual decided to expand to San Antonio is because they knew they would not have to pay the higher salaries of workers in Las Colinas. Plus WaMu annouced they would layoff about 2,000 employee in California shortly after the San Antonio announcement. Sounds very unstable. This is nothing more than a PR campaign on behalf of the City of San Antonio resembles the talks about Austin being the silicon valley of the south. The business journal came out with an article a few weeks ago explaining how the Austin area does not have as many semiconductor type jobs as their neighbors to the north. I'll take the facts over a well polished city economic development campaign any day.

**aceplace** · 24 July 2006, 01:55 PM

Originally Posted by Fobulous

DFW Metroplex is still the financial center of the Southwest for sure. In fact, my wife just told me that the entire Accounting department except their auditing dept, from Goldman Sachs are relocating to Las Colinas by next year.
Countrywide is moving in headstrong as well.

Sounds like heaven on earth for accounting... no pesky auditors around to get into their hair...

**aceplace** · 24 July 2006, 01:58 PM

Places like San Antonio accuse Dallas of being "pretentious"... but look at what San Antonio is pretending to be...

**Tnekster** · 24 July 2006, 04:49 PM

Originally Posted by aceplace

Places like San Antonio accuse Dallas of being "pretentious"... but look at what San Antonio is pretending to be...

They say that all the while trying to figure out to get that way.

**2112** · 28 July 2006, 09:15 PM

Originally Posted by dalatl

As was said above. Don't be alarmed. I believe that I am safe in saying that Dallas is the financial nexus of the Southwest, Houston not withstanding.

Dallas is still the dominant regional hub for the regional offices of commercial banks, and of course, the Dallas Fed. The major investment banks have their largest regional presence here and there are numerous regional investment banking outfits.

Also, beyond finance, Dallas is the regional center for business consulatancies (McKinsey, Bain, BCG, Accenture, etc.), advertising, PR, media outlets, trade, logistics etc.

Overall, Dallas is one of the major regional "capital's" that control the flow of money and ideas through the US. Such others are NY, Boston, Chicago, LA, SF, Atlanta and Miami.

I don't mean to dis' Houston. I will give it its full (huge) due in medicine, energy, international (very impressive..3rd largest # of consulates), port, and it's cultural institutions that should make Dallas jealous.

However (and most people in the corporate/financial world would concur, I believe) Dallas is clearly the regional capital in terms of overall business activity.

San Antonio is a nice city (I always enjoy going there) with some big corporate players (ATT, Valero, Tesoro, USAA, etc.) However, it's economy is driven by the tourism industry which tends to be a lower wage economy. Also, SA has become popular for years with call centers and service centers for financial institutions, which covet its lower wage workers (and lower cost of living) as well as its heavily bilingual population.

All in all, we in Texas have a series of great and very complimentary cities, with Austin to keep it all a little "weird" to counterbalance all of the corporate "stuffed shirts."

Now let's get back to hammering away at making Dallas a more interesting place to live to go along with our economic prowess.

This is one of the best and most informative posts ever. It highlights strengths, and tackfully ackowledges weaknesses, for all cities involved. It is the type of I would like to strive for. Unfortuantely, sometimes, you then find posts like....