This site has been incredibly helpful to me over the years so I thought I'd do one of these as an attempt to give back. I'm currently a Corp Banking Associate for top 10 US commercial bank (e.g. US Bank, PNC, STRH, BBT, 5/3). I've been in Corp Banking since I graduated and have really enjoyed it. From the south and currently live in tier 2-3 city. Married with two young kids. Marriage was harder during the analyst days but nothing terrible. I'm up for VP promote this year and will likely continue down the corp Banking path. Hours at analyst level were 60-80 per week. I'm now working 40-70 depending on deal flow. Comp is roughly 2/3rds base - currently around $200k all in. Ask away.
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I have seen enough of this to be able to answer. In short, the OP is correct, and there's a reason why CB is less visible and generally lower on the hierarchy.
To be clear: CB is one of the best gigs around in terms of being well-paid with great work-life balance. You can make very decent (just below DCM-level) compensation for a 45-60 hour work week, and it's a more stable job.
The downside (the OP may disagree but I will be adamant on this point): almost no transferable skills and therefore exit ops, as the job is at best finance-lite. That is the quick answer for why the job isn't visible: low exit options means few exits, means longer stints, means less job openings, means less annual recruitment efforts, and also less need to hire top talent from prestigious target schools.
Until you are a senior banker owning the client relationship and strategically cross-selling products on the back of relationship-defining loans, 80%+ of the work is just about pushing internal processes. The corporate finance work is 20%, which is usually looking at capital structures and some documentation to go along with it.
This 20% can be more meaningful if your bank combines the credit risk analytics function with the relationship management function. This means you'll actually do some three-statement projection models (with a debt capacity focus, not an equity valuation focus). That could see you exiting to a credit fund, infrastructure fund or investment management arm of an insurer, for example. But the more likely exit is to a more "prestigious" part of the bank.
Have you seen Commercial Bankers ($25MM-$500MM in revenue) jump to Corp Banking? If so, at what levels (IE - Relationship Management, portfolio management, etc).
In example - in my area (California) Wells Fargo is strong in mid-market banking or their RCBOs (Regional Commercial Banking Offices). If you are a strong RM in that setting, do you think those skills transfer over to Corp Banking? By skills, it really is primarily sales in those roles and obviously the more finance and accounting savvy you are, it really helps in being an advisor and helping you in the sales process.
I would think there would be somewhat of a steep curve to learn the capital market products (issuing bonds as opposed to doing a loan that sits on the balance sheet) - but do you think the "good" commercial bankers can learn it and excel at it?
IMO, even at the higher levels of IB (and really across all industries) - you at some point will have to comfortable selling and winning over clients. There will always be a back office or an analyst that can do the excel grunt work. I would think if you are successful at sales at the mid-market level, you might have a shot at the Corp Banking levels (excluding any academic pedigree background, etc).
Also - the reason I ask is that I work at a Community Bank. The biggest clients we see at the upper end is $150-$200MM in revenue. The majority are in the $5-$50MM revenue range.
And you would be surprised how much I get recruited by mid-market shops who target companies $25-$500MM in revenue.
So obviously I may have a client or two that would fit into the mid-market division of a BB - but that is about it. So I guess they assume that the transition from a community bank to a mid-market bank is not that difficult, and if I have been successful at dealing with Mom and Pop shops, I should be able to figure out how to deal with regional $500MM a year businesses.
Just wondering if that would also apply from going mid-market to corporate.
Great question.
I've done lower middle market lending as well as large corporate lending and have interacted with RMs / coverage bankers on both sides. This is all anecdotal based on my experience at both the top BB level as well as the super-regional (T20 bank) level.
At the the lower level (business banking / middle market) I have found RMs to be less sophisticated when it comes to understanding capital structure, credit, and general analytical concepts. I have found individuals to be more relationship building focused (playing golf, building rapport) but not really being a strategic advisor to their clients.
While there are always product experts (credit, syndications, capital markets) a coverage banker should really know enough to be dangerous. At the BB level, a coverage banker typically knows the industry well and has a strong analytical skill set and can provide value add advice to clients. Imagine if investment bankers only played golf with clients and roped in product partners but did not have strategic dialogue with their clients....that would not go very well and they would not win many mandates.
I think it really depends on the structure of the shop you work at. At some shops corporate banking is the face of the bank and is primarily responsible for spotting opportunities and roping in the right partners. I think this is an easier transition. Also other shops that do not have a substantial investment banking platform are much more bank debt focused (i.e. Citizens or Regions) as these shops typically consider Syndicated Finance = investment banking as they do not have strong DCM/ECM/M&A capabilities.
That would be a much easier transition than going to a shop where corporate banking is responsible for generating capital markets revenue since that is more of an apprenticeship model. You need to really be supporting the bankers from a junior level (analyst or associate) and running deals before you can step into a role like that. Almost no-one comes in at the VP+ level without having prior experience as such a person would not really be effective in an environment like that.
Thanks for your thoughts on that and I tend to agree with what you are saying.
I will say that most bankers dealing in the smaller or lower middle market space are not value add bankers or have the analytical ability to be more consultants to their clients. They are more like used car salesman peddling whatever product the Banks asks them to without understanding financial implications.
However I have also found a lot of people who are technically very sound and know the ins-and-outs of accounting and finance. It sounds counter intuitive but when you are dealing with smaller clients who aren't very sophisticated themselves, you have to take on a lot of the burden for the financial analysis work, projections, etc to get through internally because the client cant produce it themselves. I have seen Bankers come from Big Banks who barely even know that A=L+E. Have also seen bankers come from very sound community or regional banks who can model the 3 fins and have great credit chops - but they just didnt feel like moving to a bigger market or going into the bureaucracy of a BB,
Thanks for your input.
I'm in a product group in CB (Commercial) and my group does a TON of three statement models. We also work on DCF's. I deal with mostly Corporate clients ($750MM+ revenues). The coverage group handles the ancillary stuff and my group does the modeling. From a risk standpoint.
An example transaction for me is, let's say my bank has been mandated on a new Senior Secured Term Loan transaction. Coverage/DCM, etc. will handle putting the materials together and what not. Because my group maintains the primary credit facility, we'll put together a projection model, determine debt repayment statistics and run a DCF model. We'll also put together a credit memo summarizing the transaction. We'll run pretty detailed analysis on mergers and acquisitions, moreso if the company is utilizing the revolver to fund the acquisition. I work on a little bit of everything.
We'll work with LevFin and partner with them to put together some of the slides that will ultimately go into the pitchbook that the coverage team puts together.
Hours are about 50 a week. I'd say it's 40% internal processes and 60% transactional work. Again, we are responsible for most of the modeling work (and that includes DCF's and EV) because we maintain the primary credit facility with the client.
I've seen plenty of exits to random credit funds, lower MM PE groups, DCM, and other non-bank credit groups.
EDIT: Don't get me wrong, I also work on cookie cutter $1B syndicated revolving credit facilities.
A more personal question, so feel free to decline to answer if you'd like.
How is your lifestyle on a 200k all-in comp package in a Tier 2/3 city? Do you own house? Vacations? Does your wife work?
What does salary progression look like for you? Is there room to get from 200k to 400k?
Own a large house in the most prestigious gated golf course community. Wife stays at home with the kids and drives a new SUV. We take vacations whenever and wherever we want without worry. The city we live in has about 300,000 people so it is not like it is some po-dunk 2,000 people cow-town.
And yes - plenty of runway for salary progressions although need to get to Executive level which is highly likely to happen given the age of our EVPs and not a whole lot of internal competition/bench to replace them. Our EVPS have all-in comp packages ranging from $600-$1MM depending on experience and tenure. Newly minted EVPs are pulling in cash of $350-$400M. Our most tenured EVPs are pulling in $600M cash with about $400M in stock awards.
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Great post, thanks for doing this. I'm also in corporate banking but on the underwriting / credit side. Was at the associate level but made a move into a commercial bank structure at the VP/PM level, work-life has improved but career trajectory has slowed down.
Does your group roll up into the "corporate & investment banking" arm of your bank? Your comp level for corporate banking is industry leading for a non-NYC BB or international bank. Typically JPM/Citi pay the highest in addition to a few banks such as RBC and everyone else pays much lower base / bonus at the junior levels. Based on comp I'm actually 95% sure I know where you are but won't mention publicly.
What have you seen and heard as far as cost cutting initiatives and how has that impacted your group and those that you work with?
Lots of cost cutting in the industry right now, particularly on the credit side in terms of limiting headcount, salary compression, flat bonuses, and not replacing headcount or replacing departing teammates at more junior levels. My opinion is the direct revenue generating side of the business is spared the worse of this but would be curious to hear your perspective.
How does comp work at the associate level, what are annual increases?
From a workflow perspective, I assume you are pitching various capital structure alternatives and doing modeling around that and dropping it into pitch books and directing traffic as far as analyst workflow and internal processes go. Once you are mandated on a transaction I assume you step off and let portfolio management, IBD, capital markets run with it depending on the nature of the deal.