Banks Cash in on Pix

By Dawtrey, Adam | Variety, February 6-February 12, 2012 | Go to article overview

Banks Cash in on Pix


Dawtrey, Adam, Variety


New lenders boost indie production as vets expand business

If the vitality of film banking reflects the health of the independent production sector, then there are plenty of encouraging signs despite the ongoing turmoil in the global financial system.

After the shake-out following the credit crunch in 2008, the stalwart lenders who stuck with indie film through thick and thin, such as Union Bank of California, Comerica and City National Bank, are reaping the reward with expansion in their business.

A number of new entrants are also emerging, including National Bank of Canada, East West Bank and One West Bank.

At the same time, Wall Street's capital markets are waking up again to the opportunities offered in the more risky but also more rewarding areas of gap and mezzanine finance.

"It's an optimistic time now, and will become more optimistic in the next year," says Myles Nestel, the former banker who recently launched sales and financing venture the Solution Entertainment Group in partnership with veteran sales agent Lisa Wilson.

Union Bank, the market leader in single-picture financing, is expanding its entertainment team under senior VP Bryan LaCour after a record year in 2011, when it doubled its deal volume to $800 million from its previous average of $350 million-$400 million. With 33 transactions in 2011, against a typical annual figure of around 20, the average loan size was also significantly higher.

"We're seeing a lot of big-budget opportunities, $50 million-plus productions, which is very attractive to us," says LaCour. "It's reflective of the demand in the foreign market for bigger independent films. Independent producers are filling the void that the studios are leaving in the marketplace."

LaCour is encouraged by an unexpected degree of stability in the foreign distribution sector.

"Over the past couple of years, we've been pleasantly surprised by how well the market has held up, and how solid the payment history has been. We anticipated a large amount of defaults that haven't occurred," he says.

Nonetheless, Europe's sovereign debt crisis casts a shadow of uncertainty over the coming year. "We're all closely watching the European situation. We all don't quite know how that will affect things," LaCour notes.

National Bank of Canada has signalled its ambition to expand into Hollywood and further afield by hiring Lisa Wolofsky last year as manager of gap and international financing in its entertainment unit. She brought her specialist expertise from Quebec gap finanacer Fidic.

The bank, recently named the safest in North America by Bloomberg, already has the continent's biggest entertainment group, established in 1998, but had previously confined its activities largely to Canada, and had never previously done gap financing.

"(My) hiring is really a statement of how aggressive they want to be," Wolofsky says. "We are a Canadian business primarily backing Canadian production, where we already have a very large share of the marketplace, but the main target for expansion is the U.S., though we're not limited to that. At the moment we are financing a project being filmed entirely in Australia."

Recent U.S. projects financed by NBC include Robert Redford's "The Company You Keep" and "The Words" starring Bradley Cooper.

"What differentiates us from other banks is that I have a holistic approach to the analysis of projects," Wolofsky says. "Gap is about working with top quality companies that can provide sales estimates, and about judging the creative elements of the project We read the scripts, we look at all the creative elements. We're not just applying a financial formula, you have to do your due diligence just like an equity player."

East West, the largest bank based in Southern California, has made its move into film by hiring Tom Garry, who left Citibank last year when it withdrew from the sector. OneWest, also based in SoCaI, has tapped another veteran, Joe Woolf, to spearhead its entry. …

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