As part of our series of executive interviews, Charlie Perer sits with Michael Scolaro, managing director and asset based group head for BMO Commercial Bank ABL, to hear his perspective on the state of the BL market, bank vs. non-bank competition, the future of ABL, executive development and competition, among other things.

Thank you for your time, Mike. To begin, can you please talk briefly about your background?
Charlie, I grew up in suburban Chicago before attending the University of Notre Dame. My father owned a small fruit and vegetable wholesaler, where my brother and I worked over the summers. The job started at 4:00 am and ended when the last case was delivered. He taught me the importance of customer relationships, the value of exceptional service and the necessity of making the workplace an enjoyable place.

What are the challenges and opportunities facing ABL leadership groups right now given all signs point to a recession?
The obvious challenge is going to be talent, retention, recruitment, and development. In terms of retention and recruitment, BMO has committed to paying competitive compensation, we have designed a workplace which fosters collaboration, we recognize the value of a diverse workforce, we foster continuous learning and we offer a hybrid office solution. Further, it is fun to be on a winning team.

In the face of a recession, we will all be faced with heightened standards and increased reporting, especially as the financial outlook deteriorates. Risk ratings may deteriorate, liquidity might tighten, lenders may become reluctant. However, the bold will understand their customers’ needs and create logical, timely solutions, thereby securing long-term clients.

How will this next economic cycle test the relationship between commercial banks and their ABL groups?
I can’t speak for other banks, but at BMO, the relationship between our commercial banking teams and the ABL group has never been stronger. Our operating model very clearly codifies the roles and responsibilities of both groups, which include both ongoing relationship management and portfolio management. As approximately two thirds of our business is originated by our commercial banking partners, we stress the importance of our internal relationships. The most important thing for both groups to remember is to overcommunicate with your partner.

These relationships will be put to test when a recession occurs in each of three scenarios: 1) for existing ABL clients covered jointly by the commercial bank and ABL 2) for existing commercial bank clients contemplating a move to ABL and 3) for prospects of both the commercial bank and ABL. Again, an operating model fostering collaboration amongst the groups will be paramount to success.

Please click here to read the full interview.