Corporate Banking 101: Create Twice the Value and Work Half the Hours?

77 Comments | Investment Banking - Product Groups

34 Flares 34 Flares ×

Corporate Banking 101Do you want to create more value? How about work less?

You probably don’t associate either one of those with investment banking, and for good reason: banking analysts spend way too many hours on a single model and run through over 77 revisions of a presentation… and that all-important meeting often gets postponed or canceled anyway.

But there is one group where you’ll get a more streamlined experience doing real, value-added work the whole time: corporate banking.

Our interviewee today comes from a corporate banking department that’s separate from the investment banking division you already know, and he’s going to give you a corporate banking crash course.

Today’s interview includes additional technical comments by Angela Choi, who spent some time covering the credit product side of finance and the economics research side of government policy.

While corporate banking may not inspire you to become the next Blake from Mitch and Murray, it also gets you better hours, less stress, and solid exit opportunities.

Here’s what you’ll get in this crash course:

  • How our interviewee got into the cash flow game of corporate banking
  • What you’ll do and why you want to do it
  • How the products you sell in corporate banking actually work
  • Transferable skills compared to the traditional investment banking skill set
  • Exit plans once you’re done giving away other people’s money

Let’s get started on “converting” this interview into a full-time offer at your next corporate banking interview:

From College to Cash Flow

Q: How did you get started with corporate banking?

A: I had interned before at a credit fund and wanted to get into something more structured where I could do real work (i.e. be busy with modeling rather than be busy with twiddling my thumbs). It’s more interesting to be in a group with deal flow than to be in a group without deal flow.

So when it came time to look at banks, I looked closely at Corporate Banking and Leveraged Finance departments. Of course, I would have been very happy to work on leveraged buyouts, but in a market with few LBOs and many credit amendments [NB: changing the terms of a loan], I’d much rather sharpen my credit analysis skills.

Many analysts and associates complain about tough markets, but I’ve made the most of my experience by staying positive and counting the things that are working out.

There are no tombstones, lucites, or closing dinners when you complete a credit amendment, but at least you’re doing something at work besides “following the markets.”

Q: Wow – not even steak dinners?  Let’s continue anyway… so you came from a credit fund, what about everyone else in your group?

A: My group has a couple of more senior staff members who came in from the various credit rating agencies.

Every now and then, someone with an M&A background comes in to interview with my group. But really, my group is after someone who is well-versed in credit analysis.

Once you’ve done it enough, people will respect you for it. Yes… the skill set from M&A is sort of/kind of/maybe transferable, but someone from a competing corporate banking department will get the preference any day of the week.

There is definitely less turnover compared to other departments – most people stay for a while or they leave for a couple of years and come back.

My department prefers people with a background in Leveraged Finance since many of our deals originate from there. MBAs are also favored in the recruiting process, as they seem teachable, approachable, and most importantly of all – personable.

In my department, hardly anyone came from M&A, though some had prior experience working in various divisions within fixed income.

Q: And now… the $745 million dollar question we’ve all been waiting for with 5 years of maturity and L+230 bps interest…  What is corporate banking?

A: Corporate banking provides financing to corporations and institutional clients through debt issuances, structured products, or other banking and investment products. These “products” include:

  • Secured Term Loans
  • Syndicated Loans with Multiple Arrangers
  • Structured Finance-type Loans

Some banks operate corporate banking separately from investment banking, while others have the two functions under the same name.

Q: So it sounds quite similar to Debt Capital Markets or Leveraged Finance if I understand this correctly… in other words, a financing oriented or capital markets-type role.

What does a corporate banker actually do?

A: Actually, that’s not quite true. Here’s how these roles are different:

  • Equity Capital Markets: You’re focused on origination, in other words selling new stock issuances to investors.
  • Debt Capital Markets: You’re also focused on origination, in this case selling investment-grade bond issues to investors.
  • Leveraged Finance: Same thing, but now you’re more focused on high-yield bond issues and building LBO models.
  • Corporate Banking: You’re focused squarely on the terms of the loans themselves – and your role differs depending on whether or not your bank is an arranger, a participant, an administrative agent, a lender, and so on.

Before we continue, let’s make sure we’re on the same page with respect to “roles”:

  • Lead Arranger: Similar to a book runner in equity and debt offerings, this role entails handling a larger portion of a capital raise.
  • Agent: Similar to a co-manager in equity and debt offerings, this role entails handling a much smaller portion of a capital raise.
  • Administrator: Monitors interest payments and debt principal balance.

Any bank staffed on a corporate banking mandate will aim for a lead arranger role, or will aim to have the most responsibility on the assignment (doesn’t this sound familiar to how employee staffing works?).

Typically, the more responsibility a bank receives from the client, the greater the fees the bank will receive. Beyond that, who gets what percentage of the transaction, or the economics of the deal, is contingent upon the relationship itself.

Often, the corporate banking team works with the coverage team who will, in turn, speak with the clients, and a capital markets team who will syndicate the loans in the market.

In that case, the corporate banker negotiates commitment papers and structures the terms of the loan.

Q: So how would a deal work and what would corporate bankers do?

A: In a loan origination assignment, the corporate banker maintains relationships with their corporate clients. As bankers seek to win repeat business within their coverage areas, great measures are taken to grow and enhance existing relationships.

From a business perspective, this means creating a strong understanding with new subsidiaries that clients may acquire, and on a personal level, this means building rapport through market updates and discussions on potential acquisition targets.

From there, corporate bankers negotiate the terms of the loan, draft the term sheet and credit memo, and see the process through to funding.

Depending on the bank, a risk management or portfolio management group can be responsible for reviewing credit ratings and analyzing the creditworthiness of companies. In such a setup, a team will be tasked with assembling credit memos and managing the modeling aspect.

In addition, the same group is tasked with marking to market securities and hedging the decisions of a corporate banking department. In this case, your role as a corporate banking professional would be to focus on origination.  Essentially, origination is just marketing – a term referring to how the team tries to bring in deals.

Just as capital markets assignments involve many banks, syndicated loans are a large portion of our business. Any syndicate develops in order to spread the risk among several parties, and to prevent the burden of financing the mandate fall upon just one party.

Here are the most common deal types in the corporate banking department:

  • Term Loans: You lend a fixed amount of money that requires annual principal repayments.
  • Bridge Loans: Quick financing until a more permanent funding source can be originated. In some cases, a financial sponsor might use this resource after a bond offering is launched and before the proceeds are raised.
  • Revolvers: Client pays a commitment fee for access to a credit line that can be drawn from as needed; often used to meet short-term borrowing needs if expenses or mandatory debt repayments are higher than usual. Sort of like a “credit card” for a company.
  • Letters of Credit: A written agreement in which the bank backs payment in case the borrowing company defaults.
  • Facilities – Asset-Based Loans (ABLs): Use inventories or receivables to ensure payment is made; see the previous coverage of Structured Finance on this site.

The Art of the Loan

Q: Let’s talk about money… how much do you get paid on these deals?

A: Depending on the type of transaction, deal fees range from 1.5 – 2.5% of the face value of the loan. The upfront fee and annual fees are smaller than the underwriting fees. The size of a deal can range from the tens of millions to over a billion dollars.

The fees are very low compared to other investment banking offerings because the loans act as a way to “stay in touch” with the client. The pricing also depends on:

  • Sector: Some sectors are simply more “speculative” than others… use your imagination.
  • Funded or Unfunded: This refers to how much of the loan the client will actually use. For example, Revolvers are often issued with the expectation that the client will only draw on a certain amount (often less than 10%), and the fees may be based on that. The bank itself will pay investors a portion of the syndicate loan or the Revolver to make sure the interest expense is covered. So, bottom-line: many types of credit lines are not fully funded. This treatment does not apply to Term Loans, however, since they’re always fully funded.
  • Secured or Unsecured: Whether or not the debt is backed by the borrower’s collateral. Usually, firms support debt through via revenue generation (structured finance-type loans) or with assets (normal collateral).

Q: Sector groups consider key drivers, such as government policy for clean technology, or consumer preferences for consumer retail.

What moves the market for corporate banking products?

A: The London Interbank Rate (LIBOR) sets the baseline for interest expenses in my area. As you probably guessed, basis points (1bps = .0001 = 0.01%) are added for the risk of the company, sector, and geography.

And yes, even after the scandal(s), lenders and borrowers still use LIBOR almost universally – mostly due to tradition and the lack of a stronger standard.

The situation is quite analogous to the credit rating agencies’ mistakes on collateralized debt obligations (CDOs). Unless they really messed things up, their operations will continue to be open for business.

There’s some “circularity” in assessing how this market works. Supply is dictated by, of course, the health of the finance sector, which corresponds to the ability of borrowers to repay their borrowings.

A good example of this concept is the bankruptcy of CIT Group (FKA: Commercial Investment Trust). Upon the initial announcement, investors became concerned about the availability of loans for mid-cap industrial firms.

If mid-cap industrial firms don’t have loans to pay for capital equipment purchases, production falls, layoffs occur, and the ability to generate cash flow to repay debt weakens.

So it’s sort of a “giant loop” in this industry, where investors’ appetite for debt depends on companies’ ability to repay debt… which in turn depends on investors’ appetite for debt in the first place.

If you are running Excel for this situation, please make sure to turn on manual calculation and iterations!

Q: Who are your clients? Or more broadly speaking, what types of companies want corporate banking products?

A: It depends greatly on the year, what the market is doing, and how various sectors are performing.

But generally, capital-intensive sectors tend to see more deals (because they need to borrow to fund operations, and since they also have more collateral to pledge).

In terms of completed number of deals, expect to see consumer, industrials and communications as areas of demand when it comes to staffing assignments.

Analytically Speaking

Q: Do you have any materials on the technical side of corporate banking to share with our readers?

A: The individual borrowers have to develop materials for anyone interested in contributing to the capital raise.

Here are a few example presentations to different audiences:

You will have a hand in developing these materials, and sometimes it’s a big hand if you are the lead left arranger investment bank; other times you’ll just accept a bag of money and call yourself a right book runner (laughs).

As a corporate banking professional, however, you’ll have much more responsibility in developing the Confidential Information Memorandum (CIM) or bank book.

Any CIM describes the transaction, the company (history, situation overview with key clients, financials), and the sector itself. Here are some examples for you (notice the absence of “projections” and the presence of a pro-forma capitalization structure in each one of these):

Healthcare:

Financials:

Consumer:

Media:

  • Tribune: by JPMorgan, Merrill Lynch, Citi, and Bank of America

Natural Resources:

Business Services:

Q: Awesome! Thanks for sharing all those with us.

What can you tell us about the technical and financial modeling aspects of your role?

A: Similar to what happens in Leveraged Finance, you’ll have to present the company’s case through a credit memo to an internal review board.

It’s part of risk control – you wouldn’t want to underwrite a debt raise if the company isn’t going to be able to pay back investors.

The internal memo is pretty straightforward: i) Executive Summary, ii) Transaction Overview, iii) Company Overview, iv) Financial Information, and v) Loan Comparables.

The “comparables” don’t include multiples like Enterprise Value / EBITDA as you would find in a set of equity comparables. Instead, as a corporate banking professional you would focus on debt comparables, which include items like:

The relevant metrics might include:

  • Total Debt / EBITDA
  • Net Debt / EBITDA
  • Net Debt / Free Cash Flow
  • EBITDA / Interest Expense
  • Free Cash Flow / Interest Expense

As you may have noticed, a junior corporate banking professional focuses almost exclusively on credit analysis – and he/she cares about these metrics mostly on a historical basis.

Q: Ok, that was a pretty thorough walk-through of the key skills you would gain as a corporate banking professional, but how do you determine which companies receive loans in the first place?

A: We have proprietary software for a Portfolio Risk Management system that aggregates and averages expected yields on different types of notes.

We will usually run the loan product through to look at the market spread for a given instrument and duration. Afterward, we run a model to calculate the marginal return on capital and economic contribution.

We have certain minimum thresholds for return on capital and the net revenue we receive on deals. So, like any other deal in finance, it comes down to: “Where can we get the best return with the least amount of risk?”

The most lucrative deals, as you would expect, are the loans we underwrite ourselves.

Underwriting fees for Term Loans are significantly higher than upfront and annual fees for Revolvers, and also have the advantage of being fixed amounts.

Beyond the origination, loans are constantly being amended and extended or refinanced with new facilities, which factors into the revenue structure as well.

Getting In and Getting Out

Q: How can readers get prepared to become corporate banking analysts?

A: The focus is very much on the debt side of the balance sheet. Leveraged Commentary & Data is used quite a bit in leveraged finance to keep track of leveraged loans and the like.

BMO Capital Markets provides a free weekly newsletter, and if you have a Bloomberg Terminal, you can use the screen LSRC <GO> to search for corporate loans. When it comes to industry overviews, LeveragedLoan.com and Standard & Poors have assembled useful primers.

Most of your learning will take place on the job.

In my department, the training materials were rudimentary at best, and the bulk of the education came from participating in deals.

The senior banker is the greatest asset in your development, and most of your knowledge will come from exposure to different loan facilities that you will write credit memos for.

Q: What are the typical hours for a corporate banker? You said “half the work” in the beginning, so I have high expectations…

A: Corporate bankers are at the mercy of their clients and luckily, this means summers are typically slow seasons.

Hours vary greatly depending on your outstanding deals and expected close dates, but on a normal day, they can be anywhere from 9:30 AM to 7:00 PM and later. When a deal is closing, late nights to overnight stays at the office are common.

Q: Um, that doesn’t sound like anything close to “half.” What’s the deal?

A: Oh, it’s not – it’s just that you won’t see constant 80-100 hour workweeks here unless you’re in the middle of closing a deal. A “normal” week might be more like 50 hours, so it’s still much better than investment banking.

The main difference is that unlike in banking, you’re not that busy all the time, which creates much better hours overall.

Q:  Let’s talk compensation…. what’s the deal here?

A: Think of it this way: the bonus pool depends on how well your group performs. And your own bonus is tied to how well you perform.

Analyst and associate salaries are comparable with those in investment banking… there’s actually a quote from Liar’s Poker that I’m quite fond of: “He hadn’t told me what I would be paid, nor had I asked, because I knew, for reasons that shall soon emerge, that investment bankers didn’t like to talk about money.

NOTE: Based on the comments below, the interviewee here was referring to BASE SALARIES, and NOT all-in compensation.

In most cases, the all-in compensation will be significantly below what entry-level bankers earn because bonuses are lower. It’s still good money for an entry-level job, but you will not make the same six-figure+ all-in compensation right out of school.

Q: That’s a thin explanation, but I we’ll run with it for now. What banks dominate this market?

A: The benefit of working at large banks is that size helps to execute larger deals. JPMorgan, Citi, and Bank of America Merrill Lynch (all commercial banks with large Balance Sheets) dominate the syndicated market and most deals will involve multiple major players.

Other firms can be quite well-known in this area as well, such as CIT Group, which focuses on sponsor-backed companies. GE Antares Capital’s Underwriting Department also competes heavily in the loan space.

Q: So what’s the evolution of a credit analysis professional? Where do you go after receiving a full-time corporate banking offer and working there for a while?

A: Corporate banking professionals target the same exit opportunities that the traditional investment banking and Leveraged Finance professionals do, but with a more credit or debt-oriented focus. So mezzanine funds and credit funds are very common.

You’ll see these professionals transfer mostly in the latter category.

Commercial banks are also interested in the credit analysis skill set, as are other corporate banking departments.

Q: Thanks so much for your time.

A: Glad to add some value to your work.

About the Author

has worked in investment banking for several years covering the industrial sector. In addition to being an avid mentor for his alma mater, he volunteers for the Association of Latino Professionals in Finance and Accounting. In his spare time, he enjoys fencing and attends networking events in New York. He graduated from Stanford with a BA in Economics.

Break Into Investment Banking

Free Access to Exclusive Content for Members Only!

Loading the player...

Sign up for The Banker Blueprint today and enjoy:

ebook
  • Free Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews,
  • Exclusive emailed bonus material,
  • Free Banker Blueprint newsletter with more in-depth advice,
  • Unlimited access to all articles, videos, and advice - and free updates whenever new content is added to the site,

 

We respect your email privacy

Read below or add a comment...

77 Comments to “Corporate Banking 101: Create Twice the Value and Work Half the Hours?”

Comments

  1. ANT says

    Sounds like a syndicate loan banker to me; corporate bankers dont only sell loans or capital structure but also liquidity management, supply chain financing and risk management.

    • says

      Ok. Feel free to contribute an interview if you’ve worked in corporate banking and would like to share your experiences. This one was from Luis, so I’m not sure of the specifics of the interviewee’s background.

  2. Dre says

    Great article! This came at a perfect time.

    The article stated that several people have transitioned from working at credit rating agencies to corporate banking….”My group has a couple of more senior staff members who came in from the various credit rating agencies.”

    I’ve been taking credit training classes at a top credit rating agency (i.e. Moody’s), however I’ve been unable to get any corporate banking interviews or offers.

    What is your suggestion on using this experience to get into Corporate Banking?

    • says

      What have you been doing to win interviews so far?

      I think it might just be an issue of lack of work experience – my understanding is that they want people with at least 1-2 years of experience at credit rating agencies so that you’re well-versed in credit analysis. Classes help, but it’s really experience + extensive networking that will make the difference.

      • Dre says

        However, I see a lot of job descriptions that ask for training (i.e. Formal Credit training)….

        I’m going to complete a training class, titled: Credit risk modeling which covers credit scoring, credit bureaus, credit ratings, rating agencies, Basel, etc. Will this course be sufficient enough for getting into Risk Management or Portfolio Management?…….”Depending on the bank, a risk management or portfolio management group can be responsible for reviewing credit ratings and analyzing the creditworthiness of companies. In such a setup, a team will be tasked with assembling credit memos and managing the modeling aspect.”

        • says

          Yes, they might ask for that training but ultimately they still want to see solid work experience. I can’t speak to risk management or portfolio management, but maybe ask on bionicturtle.com as they have a knowledgeable community there.

        • Vp says

          Your background sounds like bang on with what corporate bankers do..and credit rating agency background is highly favorable.
          Try to get some experience..assuming if its all training, add a spin to this training classes on ur resume..Finally, this will get you an just interview. What will get you the job is very similiar to what Brian tells you for IB interviews-
          -Do i like you/will you fit in..
          – can i present you infront of my clients..

  3. says

    comp is not similar to ibankers. i know this because i worked at citi with we all sat together (corp banking and ibanking). can you be more specific with comp?

    • says

      See the comment below from Russ.

      I am assuming that the interviewee was referring to salaries as opposed to all-in compensation.

      I can understand how you might be angry or accuse us of lying, but it is literally impossible to fact-check every single statement that every interviewee makes and verify all numbers.

      Well, we could do that but then there would be 5-10 articles published per year as opposed to 100+.

      We go with what they say based on their experiences, and some groups, even within something as specific as corporate banking, are compensated better or worse than others.

  4. Russ says

    This is the salary scale I’ve seen from my experience, friends and declined job offers.
    iBanking: 60-80
    Corp Banking: 50-70
    Back Office: 40-60
    The real differece comes out in the bonuses…
    iBanking: 30-60
    Corp Banking: 5-20
    Back Office: 2-10

    IB and Back Office #s are for perspective.

    *Disclaimer – I work in a non-finance hub so I adjusted salary #s up for cost of living. (Bonuses change based on deal flow, not much due to location)

  5. KL says

    So what are the typical entrance requirements(school, GPA, major), as well as other potential stepping stone careers (ie. public accounting) to enter corporate banking?

    • DonDiego says

      I work in CB in a non-financial hub. My analyst class was split about 50/50 of those fresh out of school and those with real experience. Many analysts were currently in the process of obtaining graduate degrees (almost all MBA’s) and a few with post-grad accounting degrees. GPA’s from what I have seen/heard need to be about 3.2 from a reputable (but not ivy school)though some were with most being finance/econ/accounting. I actually attended a small, not so great state school, but made up for it with some ok experience (2.5 years), “seasoned” interview techniques, and I am in the process of completing a MBA at a mid-tier school. However, being in school (part-time) was not looked well upon by some MD’s as our training was approx 60-70 hours a week for a few months. But I showed them by scoring at or close to the top of our analyst class.

      As for comp, the salaries noted about are about right. Adjusted for cost of living and working in NYC,we would be in about the middle of what Russ stated for CB. Bonus structure has yet to be seen…reasons could be discussed later if M&I is interested.

      As for work hours, I personally, work longer than most other analysts here. I’m usually in around 630-7 and work until 5. The norm is 830-5.

      • Dub says

        I concur with above. I have worked in corporate banking (often called Relationship Management) in Asia, Asia Pacific and Australia. You are the touch point for the clients and are like a spoke in a wheel where you get other areas of the bank (ie, markets, treasury, trade, transactional, DCM) to assist with deal execution. The corporate banker is usually the one that goes out and finds the deals (along with the syndication team). At the corporate/commerical/business level (as per below) the Relationship Manager is almost solely responsible for getting business through the door (ie, lunches, business groups, referrals, networking)

        Relationship managers operate in several levels of deal and client size. It can broken into several divisions:as below (Australia/Asia)

        i) Institutional (+US$500m turnover)
        ii) Corporate (+$100m turnover)
        iii) Commercial (turnover up to $100m, lending maxed at $20m)
        iii) Business (Lending below $1m)

        Bonuses where I worked were maxed at 80% of base if performance was 200% of target (KPIs usually: revenue earned, net promotor score (NPS), +anything specific the bank wants to focus on ie: assets (debt) or liabilities (deposits).

        The bonus are not nearly as good as per IB, Leverage Finance, Project Finance or Markets (FX, IRS, Commodities) where I found bonuses were relatively uncapped.

  6. Nick says

    Excellent post. I am glad to finally see an article about CB as I have decided to pursue that role out of undergrad instead of IB as you are still developing modeling/financial statement analysis skills but without having to work IBD hours and spending half your time doing pitch book revisions.

    I was wondering what are the best ways to break in out of undergrad? I attend a top20 school with a top5 undergraduate business program but have not seen any CB postings from JPM, Citi, WF. There were some posting for BAML but it was for commercial banking and not corporate.

    • says

      Thanks! Out of undergrad, your best option is to get an internship in a DCM or LevFin or related group at a bank and/or at a credit rating agency so you get the skill set they’re looking for… or just get an internship directly in corporate banking. I think many of the large banks will focus on lateral hiring here, so you might need full-time experience in a related field first, which is why they don’t openly advertise positions.

    • LTCM says

      Let me guess… Emory?

      As Brian said, credit internships help, but I found any general finance internship gets your foot in the door.

    • Jim says

      Hi. This is probably outdated, but I recently read these comments. Wanted to advise that BAML’s commercial banking division is pretty much what most banks would consider corporate banking ($50MM-5B, mostly in the mid-hundred $MMs). The corporate banking division’s credit is run out of risk management, where analysts/associates are far less involved in calls, prospecting, etc than the commercial bank.

  7. Z says

    Excellent post and I’m delighted that corporate banking is given recognition here in M&I.

    I’ll like to share my experience on corporate banking; more specifically, coming from someone working for a multinational bank in Singapore. Corporate bankers (a.k.a relationship managers or coverage bankers), are the first point of contact for our corporate clients. Clients that we deal with are normally broken down into three categories:
    i) Top-tier local corporations – These refer to government-linked entities or local conglomerates.
    ii) Multinationals – Fortune 500 companies with subsidiaries operating outside of their home countries.
    iii) Financial institutions – Banks, insurance companies and mutual/hedge funds.

    Corporate bankers deal with all things credit, as our interviewee has shared in the article. But more than that, they are also always involved in cross-selling the other products/services of the bank. Their performance is determined by how much their portfolio of clients has grown by, normally in terms of absolute revenue and risk-adjusted relationship return (Basel concept), on a year-on-year basis.

    Hence, a corporate banker works very closely with almost every single department in the bank, from operations to trade finance, cash management, IBD teams, etc. It’s imperative that a corporate banker has excellent credit analysis skills and working knowledge on every product/service offered by the bank.

    What I’ve shared on corporate banking is commonly found in large, multinational banks. Smaller banks might have a different set-up. I do believe such a set-up is found in other Southeast Asian countries and in Hong Kong, but do correct me if I’m wrong.

  8. Romini says

    Brian, Since i also belong to Investment Banking (M & A) with a year of experience like the interviewee, can you suggest me some good points to mention when a question arises in Corporate Banking interview as to why would i want to switch from IB to CB?
    1)what transferable skills should i mention?
    2) Why now?

    Also are the technical questions in the Interview guide relevant for preparing for CB interviews? what areas should be concentrated on keeping CB in mind?

    • says

      1) Analysis, modeling, valuation.

      2) Say that you’re more interested in the credit / lending side and want to work across a variety of different industries and company/deal types.

      The LBO and debt-related questions will be most relevant for CB interviews.

  9. Lloyd says

    Great Article Brian, just a couple follow-up questions:

    1) Do most of the corporate bankers move to Leveraged Finance after a few years? Since Leveraged Finance is more modeling-intensive than CB, how can they prepare for it?

    2) What are the comps like for senior corporate bankers? (VP/Executive Directors) Is that based on base salary + bonus just like IB?

    Thanks

      • anl says

        Am a corporate banker at a bb.
        Salaries:
        Analyst 70/80/90
        Associate 95/125/150/175
        Bonus ~50%-100%

        As you can see, salary does not differ. Depending on firm performance, bonus won’t either. This is an annoying misconception that corporate banking and classic banking pay differs. In my bank they both fall under ibd.

        • M&I - Nicole says

          Thanks for clarifying, though I still think IB bonus/perks may be slightly different (I may be wrong).

          • Darryl says

            In my experience (especially someone who does NOT have an MBA but seems to always take jobs marketed for Sr. Execs or fresh MBA grads)….pay varies from firm to firm, big and small, etc. Its all how you market yourself. There is no industry norm, high producers and goal achievers will make money while those who are still learning or are comfortable in their positions without growth vision will get paid less. Its like any other sector but with a lot more money involved. Pay for performance; but in a lot of cases experience combined with young age goes a long way if you can show your about business. Someone who works at a large firm can make a ton of money but at the same time a small firm with 20 years less experience can make the same salary as long as they have experience and prove themselves. Its much easier to get the big titles in a smaller firm than a large firm especially for folks who come from big banks. Just get title and go back into the large bank arena. Its a game we all must master if we want to become successful. Corporate and IB divisions can be on the same compensation level. It depends on individual. And a lot of times at the end of the day…banking is banking, especially in the syndicated loan market. If you cant make it past a certain point, no matter what type of bank you work for…consider a career change or accept the fact people MUCH younger and less experienced than you will be your boss and have a larger bank account :)

  10. Darryl says

    Amazing post. Sometimes it’s so hard to describe the structure and nature of my work to someone who is not in the field. This sums it up even for someone who might not know anything about banking.

  11. HarlemShake says

    Hello,

    I just wanted to gain some more clarity around “exit” opps. Luis has mentioned CB analysts typical go for the same opportunities as those from M&A, or LevFin. Ceteris paribus, are CB candidates at a disadvantage when it comes to equity research, Long/Short, Activist HF?

    Also, I’d imagine it’s a tough sales pitch to lateral to a more traditional IB analyst position, are there any particular skills IB (M&A or coverage group) value from CB candidates?

    Thanks a lot for the response in advance!

    • M&I - Nicole says

      Yes, credit analysis, any transactional models, possibly some valuation skills you learn, and just the entire process of marketing a deal to investors.

  12. The_Sideline_Story says

    What keywords should I use when looking for this role on a job search board? Especially at an entry level? “Corporate Banking” seems to bring up all things in the corporate bank from an AVP of wealth management to a data scientist.

    • vp says

      Fundamental skills are pretty much the same, most obvious difference is of size, (say 50MM in commercial vs. $500MM in corporate), and arguably corporate banking is more closely tied with Investment Banking and capital markets.
      Remember while you’re lending to a company/client, you really dont expect to make millions alone just on loans (infact a lot of times banks effectively lose money or have low returns), but when the same company hire you for a ECM/M&A mandate or anything like that they would factor your lending relationship with them in giving a piece of that business. Thats when you a bank looks at client and calculate overall profitably from a client and hence corporate banking seems to more closely tied with IB.

  13. HB says

    Hi,
    Corporate Banking for the last few months has seemed really appealing to me and I think it is where I like to head into. I have an assessment centre lined up for LDN with a BB in Europe for a summer analyst position in the next month or so, but I don’t want to risk having only one shot at it.

    Could you possibly advise on some of the major players in CB that I should look to apply to?

    As far as I can tell, JPM don’t have the area open to undergrads in EMEA..

    • says

      I believe it is mostly the large commercial banks that have solid CB teams because you need a strong balance sheet to do it (see the pitch books and other links above). Readers may be able to better advise you on the specific firms.

  14. E says

    Hello,

    This was great and appealing; I appreciate the hard work displayed by this blog!

    I am about to graduate from my university, and am currently working at a large bank on the retail side. I have applied to a Corporate Banking position at this same bank.

    After reading this post I believe I answered my own question; however… Am I right in assuming that CorpBanking is much more of a sales and relationship based position? If so that would definitely help in telling my “story”!

      • M&I - Nicole says

        I wouldn’t say so because you’d be doing credit and debt analyses which can be relatively technical. Your hours are better so you may work less, which means you may do model a bit less given your hours.

      • Dub says

        Hi Nicole. I respectfully disagree. At the lower level of corporate banking it is more about knowing and being able to understand and risk company financials and how it sits with a particular deal. But as you go higher, it becomes more about sales and you have people below crunching the numbers. A good corporate banker (relationship manager) will need to be a numbers person, but that can be taught, you cant teach someone to be a good deal acquirier (ie, sales person) and be able to talk to C-level executives with ease. If you can source new deals then you are very valuable as a corporate banker

  15. Dubya says

    I am currently working as an analyst for a risk and portfolio management group for a large European bank in NYC – Wanted to know if there is a possibility for me to break into private equity after working here for a year or so.

    Will appreciate some input.

    Thanks.

  16. Cbankers says

    What type of questions can one expect for an analyst position? I don’t have any experience in ibanking or corp banking.

    Thanks,

  17. Paul says

    Hi Brian,

    I was just wondering: in order to secure a summer internship in IB at a BB, is it better to have a first experience in IB at a 2nd-tier bank such as HSBC or in Corporate Banking at a BB. Both being in the UK.
    Thanks a lot

  18. Enrique Flores says

    Hi. Thanks for the great article!

    How are the exit opportunities from corporate banking credit analyst to private equity and hedge funds?

    After two to four years as an analyst in corporate banking, what is a common path to continue in your professional career?

    • M&I - Nicole says

      I don’t think it is common to move from corporate banking to PE/HF

      Perhaps moving to retail banking or progressing within the firm; I’m not 100% sure

  19. James says

    I recently accepted an offer for a Summer Analyst Role at a BB for Corporate Banking, I really want to try IB. How can I leverage my current potions to land me a spot w/ the IB analyst class next Summer? Disclaimer: I am currently a Sophomore

    • M&I - Nicole says

      I’d network a lot within the BB, especially with people in IB. Make sure you do a stellar job so people remember you and your chances of securing an IB offer at the bank is higher

  20. Justin says

    Another great article – thanks for this. Quick question – do you know of any resources where I could find the models for a Term Loan or a Revolver? I am not even sure what to search for in terms of terminology to get a correct search result in google. Any help would be appreciated as I am moving into a hybrid corporate banking/syndicated finance position shortly.

    Thanks again!

  21. DP says

    Does anyone know which banks have corporate banking housed under the same umbrella as IB vs. those who keep it separate. I have a feeling it definitely plays a role in overall compensation, from what I have seen in speaking with recruiters some CB roles are paying 60/70/80 vs 65/75/85 and finally the traditional base which mirrors IB (70/80/90) for the analyst years. I am wondering if this depends on the org chart and how the CB division rolls up or more of a case of some banks underpaying.

  22. Jason says

    Hey Brian,

    Great article as usual. Corp Banking seems an interesting career so for someone applying usually they get asked why CB over IB or S&T or even consulting since I got asked. Pretty sure there are obviously many answers but I like Brian your thoughts about this considering the way you structure it. Anything you can share on how to tackle this kind of question in an interview.
    Thanks again

Leave a Reply