If we were inclined to give a flip answer, we would simply say, “because no-one else does”, but there is more to it than that. Without going into the arcane history of bank regulation in the 21st century, suffice it to say that international banking regulation has made it increasingly difficult for large, private banks to take illiquid assets as collateral. In fact, there is no rule that precludes their doing so; rather, the rules established under the Basel II accords have simply made it too expensive for banks to continue doing so. Under Basel II, the amount of capital required to support a loan against illiquid collateral assets increased as much as ten-fold. Ergo, the major private banking institutions have quietly withdrawn from this market.
Our parent, Emigrant Bank is among the largest privately owned banks in the United States. However, because it has less than $10 billion in assets, it enjoys certain degrees of flexibility that larger institutions lack. Furthermore, Emigrant is owned by one family, so they understand intuitively the needs of the private owners of middle market companies. They take the long-term view and therefore seek to support long-term wealth creation on the part of their clients.
The middle market is dominated by medium-sized companies controlled often by one family group with a multi-generational approach to wealth creation. Their equity ownership is private, so conventional bank loans are unavailable to them. New York Private Finance’s unique position as the subsidiary of a private, family-owned bank enables us to serve the needs of our middle market clients, whose primary equity assets would otherwise lie fallow. In so doing we enable them to grow, diversify, and retain control while building their wealth more rapidly than would otherwise be possible.
Please contact us to learn how we can help.
