How significantly does a middle office position affect future job prospects?

I did a quick search on WSO and here was the best reply I found... BTW next time you should do the search:

RiskyLVRG IB

(Monkey, 50

) on 3/8/11 at 11:47pm

Everyone,

Thanks a lot for the feedback! After working for half a year I am ready to provide some insight myself.

• I believe that the bank you work at matters a lot: Goldman or Citi Credit Risk is very different from credit risk in, say, Wells Fargo or Key Bank. The transactions I am working on are exciting and teach me a lot.

• Essentially, credit risk skills are: learning how to structure a solid covenant package for the deal, modeling skills are required - so far I have modeled LBO's for leveraged names and prepared a ton of regular DCFs when the package is secured by the assets of the obligor.

• Hours are less crazy than banking, but one can expect to stay past 7 every night - on average I leave around 9PM and have to be at work at 9. Some weekends and longer nights are usual. The bonus is about 30% less than the banking peers, but at least I have a chance to have my life - I am planning on going back to b-school and transitioning into an associate role in banking later on, not sure I would want to be an analyst.

• the analyst class is divided into industry groups - some groups have clearly more deal flow than others, others deal with sponsors more but switching groups is allowed once a year.

• back office type stuff takes about 20% of the day - that involves sending out approval e-mails, tracking stuff in the system, talking to back office to figure out system errors. The rest of the day is spent on working on live deals or doing a routine credit review.

• moving is possible - lots of my colleagues moved after second year, but once again, it depends on the personality and lifestyle. Exit opps can be the same - some people leave to distressed debt hedge funds, some join PE firms, some start working in banking. Very few analysts would want to stay in Credit risk since the upside is indeed limited and the hours for an associate or a VP are close to banking hours.

• some analysts are just superb, know modeling very well and have insight on credit in addition to business side knowledge. Powerpoint skills in banking are definitely better.

As a summary, Credit Risk in a bulge bracket bank is a great job for someone who wants better work-life balance and is not willing to work 9 hours more a day for a 30% bump in salary. Exit opps are more limited, but not scarce at all given you get involved work on live deals and learn modeling. In 6 months, I have worked on numerous deals but closed only 3:

• a 1.5 Bn revolver for a Tech company
• a 170MM Term Loan for a Media Company along with a 25MM RCF
• a Convert and bond issue for a tech company (structured the deal including covenants and covenant levels)

In addition, I worked on several LBO's and 3 M&A deals, some are still in the works. So, as I mentioned it's a good starting position, but essentially if one is ambitious - banking would be the next step. The biggest advantage of working in Credit Risk when starting out is improvement in work-life balance over business side counterparts. Let me know if it helps.

RiskyLVRG IB

(Monkey, 50

) on 3/10/11 at 1:43pm

Chipmunck/ Manbearpig and Oreos,

Thank you. It is unfortunate that some people have to make others feel bad to feel good about themselves. Now back to the questions:

• Client interaction: only on senior level (VP and up, occasionally associate) - banking invites risk to the meetings with potential clients to make the bank comfortable with our commitment
• Respect: not sure if I can speak to that being an analyst ( I work hand in hand with IBD analysts and it works well - when we work on spreading numbers, modeling or memos we always work together and have the same deadline. There are Risk groups in the bank that are more powerful than others - remedial management that sells disstressed assets is one. I wouldn't mind joining that group as an associate since you get massive valuation experience.

Overall here are my thoughts on Credit Risk:

Pros: - you work on a lot of deals that actually CLOSE ( since others (banking) will do massive pitching) - you will get your hands on different models (LBO/ M&A/DCF etc) when in banking groups model type can be limited to a certain group - the hours are lighter but not THAT lighter

Cons: - prestige- people know how hard the life of a banking analyst is - pay (bonus) in banking is 30% more as an analyst and associate- base is the same - exit opps are better in banking if you worked on deals that closed

Overall, your resume and experience is what you make out of it. I work on a lot of leveraged names where modeling and thorough analysis of the cap structure is essential. If others have different experience, I'd love to hear it.

RiskyLVRG IB

(Monkey, 50

) on 3/11/11 at 1:45pm

I completely agree with some of the points "electriclighto" has mentioned: - compensation tapers off at VP level - risk analysts realize that FO has much more appeal for their future careers - client interaction is limited to due diligence sessions

At the same time the type of work depends on the culture of the group: - my risk group has historically been a part of the Corporate Bank - part of the mundane tasks (regular reviews and systems) are outsourced to India and upstate NY, so that analysts can focus on transaction and leveraged credits - we work with both IBD and CB since transactions can include either - as far as respect goes, I have never been yelled at by either bankers or risk MD, and definitely not analysts. Risk MDs I guess get respect based on the group they work at: there is a big difference between recovery management MD (asset sales) and an MD in a regional office.

But overall, most of ambitious risk analysts leave to FO as a 3rd year (having to repeat 1 more year) or go on to B-school. I think this thread will help some people to decide on a career choice, thanks for contributing.