Last fall, ABL Advisor spoke with Michael Murphy, Managing Director and Head of Asset-Based Lending at MUFG Union Bank as part of ABL Advisor’s Industry Leaders’ Roundtable Discussion. At that time, we learned of Murphy’s expanded role within his institution, whose parent, the Mitsubishi UFJ Financial Group, (MUFG) ranks among the world’s largest financial services companies. ABL Advisor recently and quite coincidentally caught up with Murphy one day after his 31st anniversary with MUFG Union Bank to find out more about his expanded role and to get his take on today’s ABL market.

Murphy, whose career in asset-based lending began in the late 1970s with Aetna Business Credit, has seen his share of change in the industry. He’s also seen considerable changes within his own organization. With MUFG’s full buyout of Union Bank’s remaining public shares in 2008, Murphy notes a strong mandate to grow the bank in the U.S. backed by an enormous investment in all disciplines, including ABL.

ABL Advisor:  Can you share the impetus of MUFG Union Bank’s recent expansion as a national presence as an asset-based lender?

Michael Murphy:  In March of 2010, I was given the charge to expand the ABL product nationwide. We developed a plan to open up ABL offices in the Midwest, the East and the Southwest. Today we have offices in San Francisco, Los Angeles, Chicago, Dallas and New York. Those locations worked well since we already had a presence in these cities. For example, we had an Energy Team in Dallas, a real estate and corporate team in Chicago, and a commercial branch in New York.

We began to hire people which was great timing since we were just coming out of the recession. We had a compelling story to tell and our new hires understood the strategy of assimilating our ABL business on a national level.

My increased responsibility came in July of 2014 when Union Bank’s parent, MUFG, merged its subsidiaries and affiliates in the Americas, creating MUFG Union Bank. We changed to a product and were designated as the ABL group representing North America. In the Americas, we service our corporate and investment banking customers under the MUFG brand, and we go to market with our commercial banking customers under the Union Bank brand.

ABL Advisor:  What is the structure and strategy of your business today?

Murphy:  The MUFG Asset Based Lending Group specializes in formula driven revolving lines of credit and term loans based on eligible assets including accounts receivable, inventory, equipment, and owner-occupied real estate. The ABL Product provides flexibility for rapid growth, acquisitions, and turnarounds with commercial clients with borrowing needs as low as $15 million and corporate clients with revenues greater than $2 billion.

MUFG is a full service provider with national and international capabilities with 1,100 offices in more than 40 countries. One stop financing with junior debt and non-control equity is provided by UnionBanCal Equities and access to debt and equities securities are handled by our affiliate, Mitsubishi Securities (USA), Inc. 

ABL Advisor:  Is there anything on the horizon for your group this year that you would like to share with our readers?

Murphy:  There are a couple of things in the works that will leverage our international capabilities. We recently completed a deal with a company headquartered in California that does some manufacturing with a Japanese subsidiary. We were able to arrange some inventory financing for that subsidiary with our Asset Finance Division in Japan.

As part of a bank group on another transaction, we are currently participating in a large corporate deal with a company headquartered in the USA that has a manufacturing facility in Singapore. We were able to provide financing in Singapore along with several banks based on our strength and presence in Asia. That’s an important differentiator between us and other banks.

ABL Advisor:  Are you looking to leverage any other opportunities beyond Asia?

Murphy:  Yes, we have a longer term sight on both Europe and Canada since we have offices in London and throughout Europe as well as in Toronto, Montreal, Calgary, and Vancouver.

As we continue to see ABL borrowers expanding on a global basis, we are leveraging our international capabilities with our parent to lend in foreign jurisdictions that have favorable laws in perfecting collateral and enforcing liens as well as cross-selling other services in these jurisdictions.

ABL Advisor:  Are there any cultural dynamics to consider when doing business with international players?

Murphy:  As an institution, we’ve been doing ABL for nearly 38 years in the United States and our losses are very low. That’s a very compelling story for our Japanese colleagues. They are embracing the product because of our low loss given default.

Frankly, I’m impressed with their strategy of looking at things from a mid-term and a long-term basis … I’m talking three to five years out. 

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