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.
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.).
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?
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.
Exits from my CB group were IB coverage, LevFin, DCM, Direct Lending
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.