Im pretty new to IB and got a summer internship at Barclays within the Corporate Broking team. I have tried googling what exactly is Corporate broking and what I will be doing but I cant seem to find anything of substance. Does anyone have any knowledge they could share?
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props for getting in without knowing what it does LOOL
i am not expert either but the CB team at our bank mostly just does commercial lending (e.g. various types of loans)
you will be looking at cash flows available for debt servicing and other metrics/ratios
very commoditized business so mostly relationship driven
you're thinking about corporate banking. He's asking about broking.
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"Corporate broking is an unfamiliar concept for bankers outside the UK. Companies listed on the London Stock Exchange typically engage a corporate broker on a permanent basis to provide advice on market conditions and the performance of their stock. A corporate broker might, for example, give clients an insight into why the price of their stock is rising, as well as advising on when would be best to issue new shares."
Google is your friend
Assuming you are in London with this answer. It's a very UK specific role - it's a regulatory requirement for all companies listed on the main market / AIM in London to have a Corporate Broker / Nominated Adviser. Doesn't really exist anywhere else in the world as far as I know.
Official description from the LSE - "The corporate broker acts as the main interface with the stock market, assessing market conditions, the demand for your company’s shares and actively marketing them to potential investors. You may want to appoint a broker with experience of your industry, capable of stimulating investor interest both at flotation and in the after-market, to enhance liquidity in the shares and to maintain your company’s profile."
What does this mean in reality? The corporate broker generally will:
Guarantee equity research coverage of the stock. For AIM-listed smallcaps this is a big thing post MIFID 2 (some microcaps will only be covered by the house broker). For largecaps all the BBs would usually cover them anyway but it means that if an analyst leaves suddenly the house broker stocks will be picked up by someone else within research for temporary coverage while the rest of his sector gets dropped. Sometimes the analyst at the house broker will get wall-crossed ahead of results / big announcements so they can have a note ready to go out the second the press release goes out with their take on implications. Also in practice research coverage of house broker stocks will be positively skewed (Neutral from the house broker = Sell - hooray for research independence).
Provide a general advisory / relationship management role. Will usually be the first port of call for the company if they are looking to raise capital / do M&A although this is not always guaranteed. If a company needs a rescue rights issue you can guarantee the corporate broker will be the one that has to push it. I don't believe the CB team will be involved in actually executing deals but they will play an advisory role in the run-up to one.
I think generally corporate broker services are a 'freebie' given away to companies in the expectation there will be M&A / capital markets fees coming over time although I may be wrong about this - I saw it from the ER side not IB.
It's a bit of a weird / archaic role. Not sure why it still exists in London frankly.
Just to add to your comment, a lot of UK companies have effectively outsourced much of their investor relations work to their corporate brokers, and I suspect this is largely why the institution is still kept around.
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