This past spring RBS Citizens announced the expansion of its Business Capital Group with the addition of four seasoned professionals. We talked to Christopher R. Carmosino, president of RBS Citizens Business Capital about that expansion and what it means for the company’s future. “Our overall goal is to help our clients grow; expanding our team will help us do that,” asserts Carmosino. “We are optimistic about the ABL space, our customers are demanding these products and services, and we believe it’s a good place to put our capital.”
RBS Citizens Business Capital is one of the largest providers of asset-based financing in the country. They are a strong asset-based lender targeting secured working capital and term loan opportunities of $10 million and greater for everything from buyouts, recapitalizations to financing growth for investments in capital expenditures, working capital growth or refinancing. Their client roster comprises U.S. manufacturers, wholesalers and distributors with a middle-market or mid-corporate profile. The company defines middle market as companies with revenues of $500 million or less, and mid-corporate with $500 million or more.
“We have expertise in the retail, automotive and metals industries as well as in certain business services such as staffing, outsourcing and equipment rental,” explains Carmosino. “Within those industries, our clients generally have revenues of $100 million and up. These are our areas of focus as a firm. We are not looking to expand into specific new industries, though some of these industries offer expansion opportunities through further penetration.”
RBS Citizens Business Capital is a division of RBS Citizens Financial Group, a wholly owned subsidiary of the Royal Bank of Scotland that includes a network of retail banks in 12 states stretching from New England into the Mid-Atlantic and Midwest. Business Capital is headquartered in Boston with strong presence in New York City, Chicago, Cleveland, Pittsburgh, Detroit and Stamford, CT.
Carmosino explains that RBS Citizens Business Capital goes to market through four channels: 1) calling directly on prospects and intermediaries, 2) aligning closely with its private equity group within RBS Citizens Sponsor Finance team to provide asset-based capabilities to strategically targeted private equity sponsors, 3) partnering with corporate banking teams to provide asset-based lending services to their clients and prospects, and 4) looking where RBS Citizens Business Capital can add value based on its expertise and experience in certain industries.
Experience and Teamwork
With 28 years in the banking industry, Carmosino has broad experience in asset-based lending, leveraged lending and capital market activities. “Early in my career, I had the opportunity to take on a job that required me to originate, structure, underwrite and manage a portfolio of leveraged and asset-based loans. This experience, more than any other, helped me develop a well-rounded skill set and learn to think holistically about balancing both client and risk considerations. These experiences helped improve my skills, business judgment and overall perspective.”
Carmosino was named president of RBS Citizens Business Capital in July 2009 and is responsible for all aspects of the delivery of asset-based loans to a national customer base serviced through a dedicated network of offices throughout the U.S. He joined the group in July 2006 as executive vice president leading the Northeast/Mid-Atlantic region and managing capital market activities nationally.
One of the things that Carmosino loves about asset-based lending is that it allows him to put his full set of skills to work everyday. “It is all about solving problems and being creative. I love the client interaction, and I like the people in the industry. Asset-based lending is challenging, and it calls on everything from credit to client skills. Put all that together, and I find it to be very rewarding work.”
The company operates through three critical functions: origination through its sales force, underwriting performed by a team dedicated to that function and portfolio management. They hire people with proven track records of experience in one or more of these areas, but in addition to professional success, Carmosino stresses the importance of finding the right fit. “These days the competition is keen, and the clients expect a lot from their financial services providers. We look for people with a strong work ethic who want to work in a team environment. They must have a positive attitude and an intense desire to serve clients. Having all these skills is crucial to working in our culture and being successful in this intensely competitive environment.”
RBS Citizens Business Capital competes against large universal and investment banks, regional banks and specialized finance companies. “In today’s market we must be competitive by pricing and structure — that’s a requirement — but we also try to create a value proposition for our clients and prospects,” says Carmosino. “We do that through the strength and experience of our people who can provide creative, customized financing solutions. We combine that with the unique capabilities we have as an organization, including our strong syndication capability and international presence.”
With Royal Bank of Scotland as its parent, RBS Citizens Business Capital is in a strong position to work within today’s increasingly global marketplace. “We are distinguished by our unique combination of being a leading global bank — with the services and capabilities that go with that — and a strong regional bank in the U.S. with local presence in many markets. We focus on being a solid asset-based lender to middle-market and mid-corporate customers but also have the ability to craft comprehensive cross-border solutions for companies with international operations or those that import or export products. This is an important differentiator for us and adds to our competitive advantage.”
The large amount of liquidity in the market in relation to good investment opportunities presents challenges industry-wide. The lack of new money opportunities is another challenge. “Old money is the refinancing of existing deals, and new money is credit opportunities that are formed by events such as buyouts, recapitalizations, dividends and M&A,” instructs Carmosino. “New money events are more attractive and create more opportunity for lenders than just refinancing existing deals. For the last few years and so far this year, about 80% of all financings have been old money. Prior to the recession, new money represented a much higher percentage of all opportunities.”
Carmosino is optimistic about opportunities in the asset-based lending industry, and foresees that they will stretch into the second half of this year and beyond. “We see signs throughout our portfolio that companies are beginning to reinvest. The economy is experiencing a slow recovery, but we are starting to see more demand from within our customer base for capital growth, reinvestment and other possibilities. That’s a real plus and will give us some lift.”
There are signs of increased mergers and acquisitions in RBS Citizens Business Capital’s retail and general industrial business, and improvement is starting to show in the private equity and financial sponsor groups they cover, too. “Private equity groups are sitting on enormous amounts of funding that they need and want to put to use,” comments Carmosino. “That will present more opportunities for the ABL community. We see increased activity in the financial sponsor community, and there are high levels of activity in our retail finance group. Over the last couple of years, we’ve had good success in staffing, equipment rental and outsourcing, too.”
In the short term RBS Citizens Business Capital works to provide best-in-class service and make it easier for their customers to run their businesses. As a longer-term goal, the company strives to become the preferred provider in the ABL industry by being a consistent, innovative player. “We will measure our success based on how well our clients are satisfied,” says Carmosino. “Are they growing and are we helping them grow by providing the services and service levels they expect and want from us? We survey our customers, in depth, every year to better understand how they feel and what they want.”
The company’s over-arching principal is to help its clients grow. “As they grow and become more successful, that drives our growth and success, too. We are growing across the board in our business, and we expect our portfolio to grow 10%-15% this year,” states Carmosino.
Carmosino is proud of the work environment they’ve built at RBS Citizens Business Capital. His people work cross-functionally to help each other, sharing resources and information. They also work closely with bank colleagues to educate them on asset-based lending, so bank personnel are better equipped to identify opportunities and talk to clients and prospects about the product. Carmosino finds that asset-based lending is a product bank relationship officers can get excited about, because it’s a new capability they can offer their clients.
“ABL is a great product for middle-market companies in a variety of industries and businesses. ABL structures have helped many companies survive — and in many cases thrive — through turbulent times. As long as industry leaders continue to combine good discipline with a willingness to innovate, I believe our future is bright.”
Lisa A. Miller is a regular ABF Journal contributor who has worked in the commercial finance industry for more than 15 years.