To my understanding, both work on large-scale debt transactions. Corporate bankers issue term loans and credit revolvers whereas Lev Fin works on bonds.. is this accurate? Could someone please explain the exact differences?
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Corporate banking provides syndicated bank debt to investment grade and sub-investment grade companies (i.e. syndicated revolvers/term loans), in addition to capital markets/cash bridges for acquisition financing and a host of other ancillary credit products to aid operations (corporate/purchasing cards, letters of credit, etc.).
Typically another group within the bank will handle the syndication of bank paper to other banks (i.e. Left Lead arranger will contact other banks to invite to participate in syndicated revolver/term loan)
Leverage Finance primary products are high yield bonds and leveraged loans. In contrast to corp banking which does not deal with bonds (handled by DCM for investment-grade clients). Additionally lev. fin may also have a syndications team depending on the bank which would deal with syndication efforts (not done in house by corp banking). You will work on LBOs in addition to providing debt to re-fi existing capital structure, acquisition financing, etc. You would still work closely with corp. banking on the bank-debt piece of the transaction. Lev. fin would work on structuring/syndicating term loan Bs for a company while corp banking would do term loan As.
Hours/pay in lev. fin is going to be a good deal higher than in CB.
Other different is in corp banking you are also monitoring exposure to existing clients if you sit on the credit side (as opposed to sales/relationship management side).
The other big difference is leveraged finance is a product group where you will be executing similar transactions across different industries and pick up strong modeling/financial analysis skills. Corporate banking is split by industry verticals (in addition to a general industries team) so you will get very familiar with the industry vertical you cover much more so than an ibanker but you will only do bank debt deals in that industry and the modeling skill set you gain in lev. fin is stronger but you do lots of modeling in corp. banking as well. Depending on your bank, the LBO modeling may be done out of the financial sponsors group vs. lev fin, if thats the case the modeling you do will be very credit/cash flow focused which is the exact same thing done in corp. banking.
Do u ever see corp bankers at lets say a firm like JPMorgan or Goldman Sachs lateral into a DCM or LevFin group? If so after how many years and what skills would be needed?
At the Associate level some groups are harder to break into but the easiest ones are debt related (syndications, dcm, Lev fin). For Lev fin specifically you need to prove you have the technical skills and can handle the hours. The other two are easier transitions.
B2Banker, thanks so much for the detailed answer. Huge help.
Corp. Banking v. Lev. Fin. (Originally Posted: 07/19/2013)
What would you choose?
-BB corp. banking -80k/yr -50-60hrs/wk -love the group, culture, etc.
v.
-BB lev. fin (more similar to DCM-high yield bonds & leveraged loans) -120k/yr -70-80hrs/wk
Why does it matter what I would chose? At the end of the day, this boils down to personal preference (what you like to do, etc.). If you like the group, culture, etc. of corp. banking, then go for it! You will have more fun and it will be better for you in the long run/you will be more successful.
Just my 2 cents.
I agree, but as with any important decision, I always like to hear a few opinions to gain a better perspective.
Even if you hate the lifestyle you can always go LevFin---> Corp Banking. The other way around is not a given. The only way to know if the sacrifice is worth it is to try it yourself.
In my opinion "80k/yr vs 120k/yr" isn't really that relevant-in either career your earnings are going to grow rapidly from those levels, plus statistically you won't stay in either job for all that long-I would wager average career for lev fin analysts is less than 3 years-figure 2-3 year program, pulled up by associate promotes and pulled down by early defections, burnout, and layoffs); corporate banking is probably longer but certainly the odds are against any given 20-something staying in the same group at the same company for, say, a decade.
Point being that the comparison makes it seem like you're getting X% more pay for X% more hours and lower quality of life, but that understates the REAL benefit of [prestigious sweatshop finance job] vs [slightly less prestigious slightly less sweatshop-y finance job], which comes in the form of faster income trajectory and a higher ceiling.
How important are exit ops vs. career longevity?
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