- MUFG said it had attracted eight bankers to its Wells Fargo restaurant fundraising team last week.
- Former Wells banker Nick Cole will lead the team and target popular locations from Chipotle to Olive Garden.
- The hires are the latest in a frenzy for MUFG, as Wells faces a series of regulatory hurdles.
- See more stories on the Insider business page.
Wells Fargo lost what was in fact its entire restaurant finance team – threatening its position as one of the restaurant chain’s strongest lenders.
Eight bankers, including Nick Cole, who heads Wells’s catering group, join MUFG in June, as the Japanese lender doubles its opportunities in the restaurant space.
Loans to fast and casual food companies like Burger King and Chipotle have become lucrative opportunities for banks as they flourished throughout the pandemic as consumers opted for quick fixes that avoid the crowds.
Wells was the # 1 lender to U.S. restaurants in 2020 and has been # 1 or # 2 in the rankings since at least 2016, according to data from Refinitiv.
However, he remains crippled by a fake accounts scandal overdraft in 2016 that forced him to overhaul risk management and pay billions of dollars in penalties.
In February, Wells’ proposal to improve its governance and risk management processes was accepted by the United States.
, indicating that it is making progress towards lifting its $ 2 trillion asset cap. But the bank has yet to implement the plan, which is under independent review.
The talent drain, meanwhile, follows Insider’s investigation into the departure of more than 20 bankers from Wells’ mortgage business, who lamented a heavy surveillance environment within the bank.
Strengthening internal compliance measures, along with scrutiny from the Office of the Comptroller of the Currency and the Office of Consumer Financial Protection have limited Wells’ ability to grow its loan portfolio, adding additional hurdles for bankers who wish to enter into agreements.
“These employees decided to seize opportunities outside of the company,” a Wells Fargo spokesperson told Insider. “As always, our goal is to serve our customers.”
The bank is not expected to quit the restaurant finance business, but it is unclear how Wells intends to revamp the team, according to banking sources who spoke on condition of anonymity. Currently, the team is part of the Wells Agribusiness, Food & Hospitality Group.
The MUFG originally recruited nine bankers from Wells’ restaurant finance team, but one of them, managing director Jon Rinaldi, opted to stay with the San Francisco-based lender, have sources said.
Former Wells bankers will start with MUFG on June 1 and report to Cole, who will lead the group that will double in size with new hires.
Quin Hall, also Managing Director, will lead loan underwriting and portfolio management. Eric Schnyder will also join as managing director, while Emily Sutton, Matt Kochan and Zac Kalemba will start as directors. Luis Victorio will join as vice president and Mike Le will be an associate, MUFG said in a press release.
Last August, MUFG also added Christopher Addison and Shawn Janko of Bank of America – another leader in restaurant loans – to its team and Jake Nash of the Restaurants team at Regions Bank.
Brian Geraghty, a managing director who has been with MUFG for about eight years, is responsible for loan initiations and will also report to Cole.
Cole will report to Scott Hagel, MUFG Head of US General Industries.
When contacted by Insider, former Wells bankers declined to comment or did not respond to messages seeking comment.
The loss of Wells is the gain of MUFG
Wells and MUFG compete for a significant portion of the restaurant business in the United States.
Last June, the couple were a lender on a $ 900 million line of credit for Brinker International, which operates Chili’s, a filing with the U.S. Securities and Exchange Commission showed. Wells is a syndication agent on Starbucks’ billion-dollar credit deal, which the cafe extended last September, according to an SEC filing.
And MUFG was a lender on a $ 600 million loan to Chipotle in May of last year, an SEC filing from the Mexican-inspired food chain showed.
MUFG is targeting a variety of loan options, from quick-service restaurants to casual chains and expanding loans to casual dining experiences, Geraghty told Insider.
“Fast service and fast, relaxed chains have found their way through Covid by providing safe options for consumers, such as drive-thru, take-out and delivery,” Geraghty told Insider.
Many restaurants have moved from the restaurant experience to a delivery model and have invested in the infrastructure to fulfill online orders through digital apps.
“Banks realized that these companies had passed a stress test in successfully exiting Covid by adopting new business models,” added.
Quick service chains like McDonald’s and the occasional chains like Chipotle were performing while customers were confined indoors, but casual dining like Applebee’s or Chili’s should benefit as vaccinated customers become increasingly more over-the-top. comfortable with meals indoors.
The team of former Wells bankers is a boon to MUFG, as they bring the Japanese bank a list of restaurant customers.
The Americas are a priority for MUFG as it brings together different parts of its corporate and investment banking.
Historically, MUFG has stuck with trading in premium markets, but a series of new hires over the past year has allowed it to expand its presence in the US leveraged financial markets, an area of credit in which many small restaurant chains do business.
Senior bankers Michael Klein, Keith Murray and John Timoney recently joined MUFG to boost its private equity coverage and direct corporate lending, Insider reported in March.