What is Corporate Banking?
Corporate Banking is the front-office coverage team providing traditional banking services to large institutional clients. In most cases, the primary product provided by a corporate banking is corporate lending but corporate bankers also advise on debt capital raising, risk management (FX/Interest Rates/Commodity derivatives), treasury and cash management, trade finance, and all other financial products and services.
What Institutions Have a Corporate Bank?
To have a corporate bank, you need to be a large balance sheet bank capable of lending to corporate clients. For regional banks, the cut-off for corporate banking is generally determined by the sophistication of the client and may be as small as $200mm+ in revenues. For large banks, Corporate Banking tends to be the coverage of clients with greater than $2bn+ in annual revenues. Companies that do not provide traditional banking services do not have corporate banks (e.g. GS, MS, CS, Jefferies, boutiques, etc.).
What Products do Corporate Bankers work with?
In the most basic sense, you can think of corporate bankers as responsible for coverage of all products except for ECM and M&A. Corporate bankers specialize in thinking about capital structures and liquidity. The primary product of a corporate banker is the syndicated loan market and CB is generally responsible for ensuring the approval of the extension of bank financing to a client. In addition to bank financing, corporate bankers work with their product partners in DCM, LevFin, Treasury Management, Trade Finance, Derivatives, or Agency and Trust Services to provide the broader spectrum of financial products to an institution or corporate client.
How Does Corporate Banking Compare to Investment Banking?
At a high level, you can think of investment bankers as focused on important one-time episodic transactions (IPO, M&A). Corporate bankers are responsible for the management of the ongoing client relationship. An investment banker may pitch for sellside M&A, and if won, will then sell the company and no longer be needed by the client. The corporate banker is responsible for the continuous management of the client relationship between the bank and the corporate client. Corporates always need financial services and banking financing so the relationship is indefinite rather than transactional or episodic.
Another way to describe a corporate banker is in terms of width verse depth. A corporate banker should have product knowledge a mile wide and an inch deep (meaning you know enough about all financial products and services to know when it is relevant for the client to engage a product specialist who is an expert on a particular product). IB can also be thought of as a product specialist for M&A (and ECM to an extent).
What Does a Corporate Banking Analyst do Versus an Investment Banking Analyst?
Corporate banking analysts are tasked with supporting the pitching and execution efforts of the corporate bank which means underwriting and executing credit transactions (primarily syndicated loans), working on pitches advising clients on capital structure, liquidity, capital distributions, etc, and managing the ongoing client relationship. In most cases, corporate banking analysts will work with the same client over time.
Who are the Top Corporate Banks and How Should I think about Competitive Landscape?
By a decent margin, JPMorgan, Bank of America, and Citi are the top corporate banks with Wells Fargo a solid fourth. The top corporate banks are generally based on size of a bank's balance sheet on account of credit being the primary product of a corporate banker. In addition to the top four, there are many national and regional players who have solid corporate banks including US Bank, PNC, Truist, Citizens, Key, HSBC, Barclays, Fifth Third, MUFG, Santander, and many others.
Corporate Banking Compensation
For institutions organized under a Corporate and Investment Bank structure (CIB), Corporate Banking analysts will generally make a comparable amount to their investment banking counterparts with approximately a ~20% haircut (if max IB comp is $250,000, max CP comp might be $200,000). As you go up in job title, typically the disparity will widen, though top corporate bankers will still earn up to $400k-$1mm per year at the MD level.
Corporate Banking Lifestyle Considerations
The best reason for being a corporate banker over an investment banker tends to come down to the lifestyle considerations. At a senior level, investment bankers are required to start from scratch and bring in new deals every years which comes with the stress of bringing on a new deal (for highly competitive bake-off) and also the stress of executing the deal.
In contrast, a corporate banker works with a portfolio of the bank's clients and generally has an established revenue base to meet their goals for the year. Of course, the best corporate bankers will seek out new business and seek to capture the most amount of fees as possible from their corporate clients. However, you are never starting from zero as you have an established client base.
How does CB comp stack up to other groups outside of traditional IB (equity research, S&T, levFin, etc.)?
What are the different groups within corporate banking?
Most corporate banks use an industry coverage model so groups cover a particular sector so common coverage groups would be TMT, Healthcare, Consumer & Retail, Industrial, Energy, etc. For a large group like industrials, this may further breakdown to subindustry level organization. For the largest banks, you may also have groups focused on banking sovereignties/municipalities or public sector clients. Some corporate banks may organize by geography rather than sector so coverage may be for a particular area (e.g. covering companies in the state of California, etc.).
Agree with this. There are also some corporate banking groups that specialize in a particular type of lending (e.g., ABL or project finance if it is housed within corporate banking, but PF is generally within a power & utilities group).
What are the largest groups? Sounds like industrial is one of them.
A lot of IB is transaction driven so there tends to be a lot of legal documentation and lawyers involved. Is this much lighter for Corporate Banking given the more continuous nature of the work?
There is still a decent amount of legal work associated with credit documentation (credit agreement, security & guarantee agreements, DACAs, etc.). There is also likely some legal work associated with certain products, such as treasury management services or hedging (FX, rates, commodities), though the corporate banker is often less involved in that documentation and likely leaning on a product expert to execute.
Corporate Bankers should be very sharp on credit agreements, especially those for syndicated loans. In my experience, this is by far the most common legal contract a corporate banker is involved in and should understand everything from the marketing terms to the in-depth credit negotiating points, including those of term loan Bs. Corporate Bankers tend also to be involved in ISDA negotiations and should understand their terms and form. Other contracts can be broad, but I would say NDAs is a common one. You have a legal team to back you up, but important to be able to drive process of legal documentation and keep things moving.
Yes, much less. RMs do communicate with clients and bring new deals. Credit Analysts underwrite credit reports for approvals. As an 2nd year CA, I can tell that we don't talk with legal and lawyers. We usually work with RM and Credit Officers for deal approvals. Sometimes, we work across different teams and departments. For example, when there was a M&A bridge loan, I work with M&A team from IB. I can learn M&A exposure from them.
Credit analyst here (going into 2nd yr). My team actively engages with internal counsel and documentation team regarding legal docs (Credit-Agreements/CC/ISDA/CSA) as well as agent counsel during nearly all transactions. Just wanted to show that it differs across teams and coverage groups.
Great content! Love to see posts like these.
What are typical exit opportunities for corporate banking? Is it possible to go into credit funds (Direct Lending, Distressed Cred, etc.)?
Exits from my CB group were IB coverage, LevFin, DCM, Direct Lending
Yes, also private credit. If a CB banker wants better pay, then you are right. Otherwise, I would say CB people stay in CB because good wlb and good pay compared to other jobs which have similar hours/week.
At analyst/associate level, common exits would be IB, any debt-related banking team (DCM, LevFin, Private Placements), debt-investing (Private Credit, CLOs), corporate finance and treasury. At the VP and up, exits tend to be more to corporate treasury; though still see transitions to many different roles.
I exited to Lev fin, then from lev fin to a distressed fund.
Bump
Interested in long term career safety/longevity of DCM/LevFin vs corporate banking? I want to stay in banking long term, but the lay offs have really spooked me
First thing you can do for career safety is be a strong performer. That said, valid question and layoffs happen for all sorts of reasons. Corporate banking tends to be a fairly non-cyclical business and it is not treated as a cost function similar to back-office. Out of the ones you listed, LevFin is generally the most cyclical. CB and IG DCM generate money in all markets. I would perhaps give a slight edge to CB as if you are a good corporate banker you are more in control of your own destiny as it is those who own the client relationship who generate revenue for the firm. Poor performers in all divisions may be laid off in a downturn including CB and IG DCM.
I recently made the switch from IB to LMM Loan Syndications at a regional bank for work life balance. Here's me experience as I am having regrets:
Since most of the deals are less than $25mm in ebitda or less than $100mm in size, volume is the business model to hit fess. We admin agent most deals, so the hours can be comparable to Lev Fin IB. However in IB, we were making more in total comp and fees as a JLA given larger deal size and underwriting fees on institutional debt without having to take on the work load of leading a deal.
If we banked the relationship to a point where the borrower would reach a meaningful size, we would lose the relationship since we could not commit to a hold level to remain the lead bank.
I do like the aspect of not having to pitch and getting more admin agent experience. However that might be by design since it's not worth our competitors time.
Curious how WLB improved and comp/ comp trajectory has changed. Congrats on the new job!
I've had a similar experience after moving to a regional bank to do syndications. In many cases we simply cannot write a big enough check to win the admin agent role when competing against JPM or BofA. Some of the borrowers that do decide to go with us are coming over because the big banks have kicked them out for being poor credits or too high-touch (i.e. pain in the ass). And our relationship managers are used to competing solely on pricing and will try to charge the borrower SOFR + 200 and then have a meltdown when it doesn't clear market (despite me explaining this to them ahead of time). Good luck trying to make them charge an arranger fee, too. A lot of people at regional banks just straight up don't do their jobs which leads to insanely long deal timelines and lots of errors to fix. Long couple of quarters in the regional bank market... looking to move up to a money center bank after bonuses this year.
How does syndication comp at a regional bank compare to a bank like JPM?
What do you have as recommendations to incoming full time analysts in corporate banking to develop successful careers? I struggle with the lack of CB resources to understand what technical and soft skills to work on before starting or to stand out in first year of career
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