Interview with Credit Risk Associate (Part 1/2)

Pirho's picture
Rank: Orangutan | 278

The following is an interview with Credit Risk Associate Pirho (he is also available to answer your questions).

Are you a professional and want to do an interview? View our interview template here and then email me your responses to [email protected]

  1. What is your current job title and a one sentence description of your primary job responsibility?
  2. I'm a credit risk associate in the financial institutions group at a major US bank. My job is primarily analyzing the creditworthiness of banks in various countries and determining whether or not we want to lend, engage in derivatives transactions, or do other activities with them at entail taking on credit risk.

  3. What are previous positions you have held and how many years of experience do you have?
  4. I worked in an operations role for about 2 years before transferring to my current job, which I've been in for almost 2 years. I was brought on at associate level despite not having an MBA or other analyst background because I absolutely crushed my interview. I spent a ton of time on my own developing my accounting knowledge, financial/economic analysis abilities, knowledge of my company, and knowledge of financial markets.

    Undergrad

  5. Did you go to a "target", "semi target" or "non target".
    I went to a semi-target.

  6. What was the most useful thing you learned in ugrad that you apply in your current position?

    I think being able to have an open mind about working with people with different backgrounds is really important. I went to a very diverse school and think that's helped me a lot working with colleagues of different age or in different countries.

  7. What was the most useful thing you learned in ugrad that helped you get where you are now?

    Following what you're passionate about will usually lead to better results than doing something that you're "good at" but don't care much about. I started as a math major, and while I was always good at math, I didn't see much of an application for what I was doing and got pretty bad grades until I transferred to economics, which I really enjoy.

  8. What was your most useful class and why?

    Analyzing banks in different countries requires you to get a good handle on what is going on in their economy, so I would say just general macroeconomics classes were the most useful.

  9. GPA?

    I got a 3.1. Had a 2.4 in math until I switched to economics after 3 semesters and recovered quite a bit from there.

  10. During recruiting, how were you able to set yourself apart from other competitive candidates at your school?

    I graduated in 2008 without a full-time offer. As the financial crisis picked up, it became apparent that if I wanted to get into banking, I was going to have to take what I could get and build some connections from there.

  11. What kind of internships did you have during ugrad?

    None. After my junior year, I had the chance at an unpaid internship at a hedge fund, but declined because I couldn't afford it.

  12. Graduate

  13. Did you get an mba (or msf or equiv) or are you considering it?

    No MBA. Considering attending in 2014, but I've been doing very well in my current role and have been given hints that I might get VP at some point soon, so we'll see.


  14. Do you have any professional certifications (CFA / CAIA / etc.)? If so, how has that certification helped you in your career?

    No. I've considered doing the CFA, but don't really see the need for it in my current position.

  15. On the job

  16. How did you initially "break-in" to the industry?

    After graduating without anything in 2008, I set my sights lower than I had been looking and started applying via standard online applications for operations roles at top banks. I did this with the hopes of building connections in the company, learning as much as I possibly could, and transferring to something more interesting in time. Luckily, I managed to pull it off.

  17. What were some of the main factors in getting the job position you have now?

    From my operations role, I developed an excellent understanding of some of the internal systems and processes, which definitely helped. I also got a great recommendation from my previous manager, who knew my current boss. Beyond that, I had basically studied so much about accounting, financial analysis, economics, and the like, by the time I interviewed for this job, it was pretty clear to the guys interviewing me that it would be insane for them not to hire me.

  18. What are some of the specific things you do in your current position?

    I'm mainly writing credit opinions on various banks and working with our sales guys regarding justifications for new credit. I also deal with our treasury department a good bit regarding our deposits at other banks. I'm also involved in the country risk process, and write opinions on various countries, in order to make recommendations for our overall credit appetite in that country.

  19. What is a day in your life like during the workweek? Can you give us an hour by hour run down of your typical day?

    I usually get in around 8, grab the WSJ/FT and read through them to see if anything looks relevant. I'll also some other places for news to see if anything happened in Asia overnight and to see what's going on in Europe so far that day. After that, I'll usually continue writing up whatever bank or country I happen to be working on, or I'll read the annual/interim statements, some rating reports, and start pulling together the financial data I want if I'm starting something new. Usually, I'll have a few calls or meetings throughout the day regarding special projects, new sales opportunities, or what I've recently finished working on. I usually wrap things up around 6 and head home.

  20. What is your favorite part about the job? What is your least favorite?

    I like being able to see how the general economic climate affects individual institutions and how they try to manage things. I just kind of like doing analysis and having people take what I think about a borrower seriously. My least favorite part of the job is dealing with internal systems (designed terribly) and having to hand-hold operations when they screw things up (which happens pretty often).

  21. How did your background (life up until graduating college) best prepare you for where you're at now?

    I worked as a caddie, waiter, valet, and bartender at various points starting at about age 13 through college. I think doing these kinds of jobs really helped develop my confidence in dealing with people, especially people that are much older than me. I think this has given me a lot of confidence doing presentations, talking with senior management, and just communicating in a business environment in general. I think a lot of people have really really underdeveloped people skills when they are just starting out from school.

  22. What is the company culture like at your firm? What is the size of your firm?

    The culture in my group and with the people I deal with in sales and on the various trading desks is professional but still pretty friendly. I enjoy working with the vast majority of my colleagues and find them to be very knowledgeable about banking and the clients they cover. My firm is one of the largest banks in the US.

  23. How do you see your type of role and your industry changing in 5 years? 20 years?

    With a lot of the new regulation impacting banks and other financial institutions, particularly regarding counterparty risk in derivatives and trading, I think within the next 5 years there is going to be greater demand for people that can analyze this kind of risk. Going out 20 years is an eternity when talking about banks.

  24. What type of person (what background / knowledge / experience / personality) is best fit to do your type of job?

    I think someone who is analytical in nature but still has good people skills is the best fit for my role. This is typically what I look for when interviewing. Due to the nature of analyzing banks and countries, I think it's very important to have a strong grasp of economics and accounting in order to get by. I wouldn't say someone needs to understand bank accounting or analysis coming in (we will teach that), but having a grasp on typical corporate accounting is an easier base to start from than from scratch when learning about banks.

  25. Did you ever have a mentor and who were some other influential people who helped you along the way?

    Not really, I've always been pretty self-reliant. Having my previous manager put in a good word for me with my current boss was probably a big help, though.

  26. Are the sacrifices you've made to date worth the benefit realized by you so far in your career?

    Yes. I spent a lot of time studying after leaving school and I think that is what got me my current job.

  27. If you weren't working in finance, what do you think you would be doing?

    Probably programming. I've always liked software and can code a bit. I think if I hadn't switched to economics in school, I probably would have switched to computer science.

  28. What keeps you motivated?

    Wanting to continue doing things I enjoy and wanting to be challenged, whether by others or myself.

  29. How much does money motivate you?

    Not much at all. I've seen so many people make themselves very miserable over money they don't really need and it just doesn't make much sense to me.

  30. How much does someone in a role like yours make per year (base + bonus)?

    I think, at most banks, people in my role make 80K-120K with bonus of 10K-30K. Obviously, this can vary a lot by bank and location.

  31. Have you ever considered leaving your job to start your own company?

    No.

See Part 2 Here (available on March 13, 1PM ET)

Comments (23)

Mar 7, 2013

Great interview. Very helpful to understand more about roles in Credit Risk.
Also, 8am-6pm sounds pretty darn good.

    • 1
Mar 7, 2013

You said that independently studying accounting, economics, and financial analysis was one of the main factors that landed you your current position. How did you go about this? Was it self study courses or CFA type material that you used or were you just nose deep in different books?

Making money is art and working is art and good business is the best art - Andy Warhol

Best Response
Mar 7, 2013
dwight schrute:

You said that independently studying accounting, economics, and financial analysis was one of the main factors that landed you your current position. How did you go about this? Was it self study courses or CFA type material that you used or were you just nose deep in different books?

Combination of some books on valuation/analysis/accounting (my background in accounting was pretty bad coming out of school), reading economic research from places like the fed, other cent bks, imf, universities, etc., and getting my hands on some equity research and credit analysis methodologies for various sectors from the ratings agencies to learn about credit analysis (the fed also publishes some stuff on bank analysis). From there I started just plowing through 10ks from various sectors to make sure I understood everything that was going on.

    • 2
Mar 7, 2013

Assuming you are in NYC/SF with that salary..

Mar 7, 2013
valuationGURU:

Assuming you are in NYC/SF with that salary..

Actually, credit risk at my BB in NYC makes substantially more than that. Base is same as IBD at analyst/associate level ($100 for first year associates, though I think they kept the stub year at $90 recently), with bonuses in the $50 - $100 range.

Mar 7, 2013
RiskyBizness:
valuationGURU:

Assuming you are in NYC/SF with that salary..

Actually, credit risk at my BB in NYC makes substantially more than that. Base is same as IBD at analyst/associate level ($100 for first year associates, though I think they kept the stub year at $90 recently), with bonuses in the $50 - $100 range.

The salary figures are NY/SF/London, for somewhere like SLC/Pitt/Minny you're looking at a bit less. I know bonuses have gotten better in the past 2 years, but actually didn't realize they'd gone to that range at some places...

Apr 21, 2013
RiskyBizness:
valuationGURU:

Assuming you are in NYC/SF with that salary..

Actually, credit risk at my BB in NYC makes substantially more than that. Base is same as IBD at analyst/associate level ($100 for first year associates, though I think they kept the stub year at $90 recently), with bonuses in the $50 - $100 range.

this cant be correct. im a CRM analyst making 60k, no bonus

"The cheaper the crook, the gaudier the patter"

Mar 7, 2013

Congrats on making the switch, much respect for that nose-down grind to teach yourself. I gotta say, the fact that you do much more than excel has also piqued my interest in risk.

Mar 7, 2013

Great interview. I know from your writing you seem to want to stay where you are for the time being. That being said, is the idea of high-performing credit risk analysts/associates making the jump to distressed HF or Lev Fin too big of a leap, or is this something that could realistically happen?

Mar 7, 2013

Can definitely/does happen. Something I'm definitely going to consider moving forward, but I do enjoy what I'm doing now. That being said, I can definitely see myself getting bored with this at some point and wanting to move on.

Mar 8, 2013

great Q&A.

Looking at transitioning into country risk myself.

Mar 8, 2013

Nice love it!! Would it be possible to know what type of questions they will ask during the interview?

Mar 8, 2013

Really appreciate you doing this. I've been looking for a way into Credit Risk from Finance for some time now, but I'm unsure of where to start aside from my studies for CFA lv2.

Based on your experience can you comment on how your experience in Ops might have given you the skills to either a) get the interview or b) be better prepared from a technical standpoint? Also, what roles might you recommend to take on in an Ops/Finance capacity that might better prepare someone for Credit Risk?

Finally what kind of questions did you face in the interview?

Mar 9, 2013

To answer the questions about interviewing, I interviewed with about a half dozen people from various parts of credit. Questions ranged from behavioral/fit questions and discussion of my background/interests, basic accounting stuff (FCF calculation, types of adjustments you'd make to EBITDA, etc), discussion about the financial situation in Europe and the root causes, talk about housing in the US, and finally about a 2 hour case study where they gave me a 10K, asked me to go through it and pick out the major risks I saw for the company moving forward. The interviews were very much a back and forth discussion rather than me just sitting there spewing answers to questions, as most good interviews are.

Regarding my ops background preparing me, I worked in loans ops, so I was already familiar with some of the people in the risk department (not the MDs or VPs I interviewed with though) and was very very familiar with some of the systems I still use today. I had a good working relationship with the people in Risk that I did talk to, and suspect that they might have told the interviewers that I was good to work with, which could have helped get me the interview, combined with my boss from ops putting in a good word for me with one of the MDs. Beyond systems and networking, I don't really think the ops experience helped too much, but it did give me some idea of the various types of credit products we offered, along with what in our banking operations caused some of the risk to arise.

For ops/finance roles to get into, I would really recommend doing whatever you can to avoid it, though my experience worked out, I'm definitely an exception. My school being a semi-target bordering on target definitely helped a ton I suspect. I guess an accounting/controller/FA/Treasury type role would be best, if not those then maybe loan ops type position because it lets you network with Risk people, but in any case the transition is tough if you don't start there as an analyst out of college. It still maybe not quite as difficult as the shift to IBD though.

    • 2
Apr 21, 2013

Very insightful and great interview.

Apr 21, 2013

Your an associate, but how much do analyst typically make in NYC?

Apr 21, 2013
ValueInvesting:

Your an associate, but how much do analyst typically make in NYC?

Typically same as IB but lower bonus

Apr 21, 2013

You said that you studied "about accounting, financial analysis, economics, and the like", can you explain more on what material/website/books that helped you most. What are some of your study routine/habits?

Apr 21, 2013
TheTwoHacker:

You said that you studied "about accounting, financial analysis, economics, and the like", can you explain more on what material/website/books that helped you most. What are some of your study routine/habits?

Don't really remember book titles. I'm awful at that for some reason. Basically just whatever I could find on the topic at the library / online for free. I think it's better to take a look at a few things and figure out what suits your style the best. I read / still do read a ton of academic econ articles. A ton of good blogs on econ as well. There's probably a list somewhere of good econ blogs if you search a bit. I would typically study during my lunch break (1hr) and maybe another 1hr or so at work, then read for like 2-5 hrs a night at home every day. Did this for a long time.

Jan 23, 2014
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