Amalgamated Bank Forms New Public Finance Business

LOS ANGELES — Union-owned Amalgamated Bank, headquartered in New York, has created a public finance unit that will focus on lending to distressed municipalities.

The bank has appointed public finance veteran Robert O’Brien as senior vice president to head the new unit. He will report directly to Edward Grebow, the bank’s president and chief executive officer.

Amalgamated, which describes itself as the nation’s only union-owned bank, was established in 1923 by the Amalgamated Clothing Workers of America and is now owned by its successor organization, Workers United. The bank’s investment management division has $11.4 billion in assets under management.

The bank has some experience with distressed municipalities, having provided cash flow financing to Scranton, Pa., when the city was shut out of the debt markets in 2012. After Scranton successfully repaid its initial loan, Amalgamated and the city entered into a second financing this month.

“Bob will build upon our experience with Scranton as we look to increase our presence in the distressed municipal sector,” Grebow said. “Bob’s background combining business development, credit underwriting and transaction execution is a great fit for this role, particularly in identifying, analyzing and structuring transactions for these municipalities.”

O’Brien has 14 years of public finance experience in the commercial banking, bond insurance and rating agency sectors. Before joining Amalgamated, he started and headed the public finance group at LBBW, Germany’s fifth-largest bank. He also led the municipal finance credit underwriting efforts of BluePoint Re, a start-up bond reinsurer located in Bermuda and owned by Wachovia. Before that, he worked as an analyst at Fitch Ratings.

“Given the difficulties facing many local governments, we believe that working with distressed municipalities and helping them continue to provide essential services to their communities is an important role for Amalgamated,” O’Brien said.

He said that in addition to tax anticipation and revenue anticipation financing, Amalgamated plans to provide lines of credit and term financing to municipalities.

“We would also consider other creative solutions, such as collateralized lending or even deficit financing if these are properly authorized and are part of a comprehensive solution for a municipality,” he said.

Although the bank will focus on distressed municipalities, it will consider opportunities in most public finance sub-sectors, including non-rated issuers and higher-rated issuers. Amalgamated will be offering a floating-rate direct purchase product to investment-grade public finance entities.

Drawing on the bank’s union ties, O’Brien said that Amalgamated intends to also work with municipalities that have a public sector union presence.

“Our union ownership is definitely a singular aspect of our bank, which we believe can potentially differentiate us in the local banking arena,” he said.

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