This past Fall, MUFG announced leadership changes within its Asset-Based Finance team designed to align the team to better support its overall ABF growth strategy in the Americas. Leadership team members are based in three key markets – New York, Boston, and Los Angeles. John Eissele, who has been with the bank for 11 years, was appointed as MUFG’s new head of ABF. Here, Eissele discusses his goals, strategic priorities, challenges and opportunities.

TSL: Can you provide our readers with some background on your career?

John Eissele: Sure. I’ll start off with our group, MUFG’s ABL group, which is a full service ABL shop with originations, underwriting, portfolio management, field examinations and collateral monitoring.  I’m responsible for all these functions as of several months ago, when our previous leader, Ed Gately, who had been the head of Asset-Based Finance at MUFG Union Bank, N.A., retired.  I joined MUFG in 2012 as the portfolio manager of the ABL group.  I then became the underwriting manager in 2016. 

Prior to joining MUFG, I worked at Bank of America for 17 years, and spent the entire time within the ABL group, primarily in underwriting.  So, I’m ABL through and through.

How did your previous roles in your career prepare you for your new role at MUFG?

Having had responsibility for both portfolio management and underwriting, it really provides a great opportunity to see how different resources and skillsets can be utilized effectively.  We underwrite and manage tough credits through the cycle, and we don’t pass off our deals or the responsibility of managing our deals to special assets or any group like that.  We must know how to manage these problem loans and workouts in order to underwrite them from the beginning. 

We’re a relatively small ABL shop.  So, making sure that knowledge base is transferable back and forth between underwriting and portfolio management is really key to creating a solid workforce.

From a personal perspective, I would say that sitting in different seats and being responsible for different goals makes you a better banker.  There’s no doubt in my mind about that.  You may prefer one seat over the other, and I do, but having that perspective and knowing what’s important to different groups, that’s invaluable in making sure that everyone on your team who has different roles and different functions are actually happy doing what they’re doing every day. 

What are some of your priorities and goals for the first year as head of ABF at MUFG?

Ed Gateley built a great team.  Our ABL team is amazing, and so one of my top priorities is to maintain the quality of our team.  And then, secondarily, to continue to build our bench for future growth.  We typically hire junior bankers that start out as analysts and promote them up the ranks, and that is just a great way to continue building strong ABL bankers. 

MUFG has bold ambitions.  We’re a huge global bank, but we still have a lot of room to grow in the Americas.  So, the priorities will include a few things:  to grow efficiently, focus on client selection, deploy our capital wisely, and earn additional business from clients because we add value to the relationship. 

What are some key strategic priorities for MUFG in the current financial landscape?

The ABL group at MUFG is a product within MUFG’s Global Corporate and Investment Bank.  So, we serve sponsor coverage, capital markets, and the relationship / industry verticals, and we all share the same priorities.  With respect to the current financial landscape, it’s an interesting market right now because there are a lot of companies that are performing well despite inflationary pressures and increased debt service costs, but there are also many that are struggling because of this. 

So, one of the priorities that we have is that we’re prepared to take on additional risk in this environment. This is where ABL comes into play.  But you have to earn the proper return to do so, and that’s what we’re focused on.  In the past, you could argue there was hardly a perfect correlation between risk and return, and large syndicated deals were all priced the same which did not reflect the risk, but probably more so the supply of capital.  But that doesn’t mean there wasn’t risk in some of those deals.  So, we’re hoping that the ABL market will continue, and I think we’re on this path, but we’ll continue to acknowledge that there’s a cost of capital and that pricing will better correlate to the risks in a transaction. 

I keep hearing we’re in a soft recession.  What are your thoughts about that right now?

It’s interesting because I think it depends on what kind of ABL shop you have been with over the last few years. I would say that if you have a customer base of smaller middle-market customers that aren’t as well capitalized as others, there’s probably more stress in that portfolio.  It might feel more like a recession.  If you have focused, like I think MUFG has, on strong client selection and you’ve tried to be selective in where you placed your capital, it’s a little better.  Our ABL portfolio is strong.  We have some bankruptcies and some troubled loans like we should, but it’s relatively strong.

The global economy has experienced significant turbulence in recent years. How does MUFG navigate economic uncertainties and manage risk effectively?

Historically, MUFG was really focused on more of a high-grade customer base.  That has changed, and we have weathered turbulence extremely well, but I think it has more to do with the fact that we have a strong focus on client selection.  As we grow and increasingly focus on sponsor coverage and the mid-corporate space, we expect there to be some credit challenges out there, but we have strong underwriting standards, and a diverse set of businesses within MUFG in the Americas to be able to continue to support our customers.

In addition to Asset-Based Finance, our group has Project Finance, Power and Utilities, Fund Finance, Entertainment Finance, Intrepid investment banking advisors, Commodity Finance, Supply Chain and others.  So, we have a very diverse set of businesses that help you weather through these challenges.

With respect to ABL, we have a very experienced group of ABL bankers.  We work out of three offices, Los Angeles, New York, and Boston, but we operate as one team. 

What do you see as the biggest challenges and opportunities for the banking industry?

The challenge in the ABL space right now for banks is the breadth of options out there for credit solutions.  There are many non-bank ABL shops now, and increasingly more private credit funds that can provide credit solutions.  But truthfully, and this is no change from the past, the opportunity that banks have in the ABL space is to be an advisor to your client and be able to provide more than just capital. 

The other advantage ABL has over alternative providers is that ABL has a tried-and-true product that offers stability to their clients in uncertain times. If ABL deals are structured and managed well over time, losses should be at acceptable levels and credit should be available to clients when they need it.

MUFG is a large corporate and investment banking partner for our clients, and for those that want ABL facilities, we can offer additional solutions.  We don’t just come in with an ABL loan.  We can offer supply chain products, securitization facilities, leasing facilities, treasury solutions, Foreign Currency (FX), swaps and capital markets.  Then we have industry vertical specialization that will help to advise as well. 

While there’s a lot of competition in the ABL space with different kinds of providers, I still think banks have a lot of opportunity to do what they’ve always done.

When you’re not busy at MUFG what can you be found doing?

Family, friends, food, and college basketball. That’s what I do; that’s what I know.