Commercial Banking vs Investment Banking

$31,77 per hour eh? damn...

besides money he gets a lot of free time which he can spend with his family (in fact, he spends it in pubs and nightclubs..) Or he can make additional money with own business as he has enough time for that.

Why are you only comparing entry-level positions?

We do it for post-entry-level opportunities, and because the work is more interesting than credit analysis. Not to say that excel modeling is interesting, but the determinants and expectations for your client's M&A deal certainly are more interesting than Wal-Marts new credit line with your bank.

Plus, to criticize your comparison further, past entry level, our salaries shoot way up relative to com-banking. Our exit opportunities have even higher relative salaries, and are even more interesting.

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as for senior positions: comm bank board member makes about $2mio per year + bonus of $1-2mio. $3-4mio is not enough? Moreover, you have much better health as you sleep 7-8 hours per night (not 3-4 like in IB), you have enough time to eat healthy food and so on.

So, here is the question: What is your health's price? Are you ok with getting a couple millions more at 40 and spend it for medicine?..

do you have time to spend this 110K, working 12 hours a day?

Im personally a saver more than a spender.

ok, i see. its all about money. I'm crazy about IB too, but just trying to understand the reason. That's why I'm asking you. My opinion is that IB stuf is about steady personal development. you need to study all your life, need to be perfect etc If fact, if I would be paid lower than in McDonalds I'd still work within finance But that's just my personal thoughts.

"complicated financial stuffs"

how many comm bank board members are there? 12?

there's your answer. simply put, your probability of getting to the 3-4 mn dollar range is a lot higher going into IB than it is going into commercial banking.

how many comm bank board members are there? 12?

there's your answer. simply put, your probability of getting to the 3-4 mn dollar range is a lot higher going into IB than it is going into commercial banking.

Interned at a good commercial bank & Barcap I would say both analysts/associates work equally as hard, just the commercial bankers quit at 6 like you said. I liked commercial banking because the teams where much more relaxed for the above mentioned reasons, everyone in SF with Barcap where much better educated and 10x more intense & sometimes harder to get a long with. But I learned at Barcap & at the CB bs'd all my underwriting assignments & got recognized for it. CM is EXTREMELY monotonous, it only really gets "intense' if you work on distressed loans; I think sitting through a loan committee was the most boring thing I've ever done.

the situation gets more depression when you do the analysis on an after tax basis and look at the marginal income for each additional hour work. Yes 110 > 61k, but the 50k difference is only 25k in your pocket. Divide that by 50 weeks (assuming you get 2 week vaca) and you have $500 in your pocket extra for working twice as many hours each week. On an hourly basis, tutoring or bartending pay more.

For anyone that just got cut, think about your marginal income difference if you collected unemployment insurance for the rest of the year versus working. the first 2k or so is not taxed federally, you get an extra $25 a week now (about $430 total). For me, the math worked out to be around $6.50 hour after tax difference between working and sitting on my couch.

But why doesn't everyone leave? They could really like what they do, or they are staying for hopes of better pay down the road.

Isn't 38K pretty low for commercial banking? I always thought commercial banking analysts over the past few years were getting something like 60K base and 30K bonus.

You'd be making 200k in PE after just 2 years of banking comparing to the exit opps from commercial banking (I don't even know what they would be).. IB is the way to go on a long-term basis if you wanna climb the ladder. You can also start a business while working on the buyside making more money while having more time to run your own project.

Just my perspective, but I don't think corporate credit is going to be a sustainable career especially with a wave of commercial real estate and credit/auto loan defaults emerging this year as we speak.

You are very wrong... you also may be a dumbass.

Chill out e-thug. At the very least appreciate the fact that I put a disclaimer saying that I don't know this for sure, unlike many people here who post wrong information without stating that they don't know what they're saying.

But again, it begs the question, if commercial banking pays so well (yes, IMO 90k is very good compensation for just starting out), why isn't it more popular then? Are the exit opportunities terrible? Do the salaries reach a ceiling quickly? Because, when I asked this in another thread, people said even non-targets have a shot at a good commercial banking gig, so if the compensation is so decent, why don't people pursue this career path?

You can gain a pretty good skillset at a commercial bank. Look at some of the folks at these credit / distressed debt funds, and you'll find that a lot of them got a start doing commercial banking. Not only do you extend a loan you have to monitor and restructure it. You may not develop a modeling skillset but your finance skills will be just as good.

(disclosure: didn't work at a commercial bank, but worked with some folks that have)

So I take it that it would be fairly unlikely that one could work at a commercial bank as a credit analyst to ride this recession out and then make the jump to IB?

Credit analyst would be a tough jump. If you were involved with some of the market-focused ancillary activities (ie: syndications), I think that this jump, while challenging, would be entirely possible.

"I'm not sure what the four 9's do, but the ace, I think, is pretty high."

I know this is an old thread, but I feel that I'd bump it in case more people have opinions on this.

IBD --> Commercial Banking is relatively a much easier move than Commercial Banking --> IBD. I think that sums up how the market values the skill sets and experiences developed for each.

what about us non target kids, is it a good idea to do it.

What are the exit opps in CM? Everybody here says they suck, but what are they specifically?

I've done both and let me tell you, IBD > cm by a MILE. Do not do commercial banking if u want any exit ops or even a long term career.

I did my internship in CB, they treat their employees great. After like two years, another credit analyst was getting like 36 PAID days off per year. But the starting salary for credit analyst is only 45K plus one week bonus at the end of the year. Depending on your office, you can eventually move into a Relationship Manager role making 120K plus 10K bonus ( I heard some banks do 60K base and 50-100K bonus for RMs). That can take 5-10 years to happen tho, so you must really like to read tax returns (since thats what you'll be doin for the next ten years). The job is fine but the exit ops are non-existent and the salary is so-so. The credit manager (comparable to MD in ibanking) in my office was 65ish, working in commercial banking for over 40 years, and still driving a ford. I would doubt that he ever made over 200K per year in CB. Overall, I would say CB is middle of the road between retail banking (perhaps the worst job in the world) and ibanking.

Couple thoughts. I worked for WF as a mid market commercial banker. Did their analyst program then became an associate. I made $70k plus 40% bonus after two years. I then left to go to bschool and now work for mid market PE firm. Why did I leave CB? It's boring and the pay hits a ceiling around $150k. That said I would argue the training is very applicable to IB and PE. Building accurate pro-formas, credit analysis/risk analysis, structuring/ risk mitigation. These things are all very relevant in PE.

firstly, no idea why u did 80 hours * 4 * 12, because wince u said bankers are working 70-80 hours a week, u could have just multiplied it by 52, seems like you lost 4 weeks in your year... lol

secondly, the amount of things you learn in those 2 yrs is equivalent to many many yrs in commercial banking... u have a whole new appreciation and mastery of finance, which is why so many ambitious young ppl choose banking. u learn more, make money, and have a world of opportunities after those 2 yrs.

slim,

The above comment is true. You learn a lot more in IB, make more money, and will have more opportunities compared to CB. However, to answer your question, you exit CB at the same points you exit IB (for the most part) --at the analyst level, and at the most senior levels. During my internship last summer, I did a lot of networking for full-time, and all of the MDs in MM PE said the same thing: do an analyst program. If not in IB, then CB. In CB you will still get the experience and training to model, analyze, and work with fin statements. Not his exact words, but he also mentioned being in an environment where you learn how to get your money back (which is pretty much the only thing in common with CB and PE).

They said they would consider graduated CB analysts who could showcase their interest in PE. They themselves were heads of CBs that were sold off to big dogs, and then they formed a PE together (I'm talking about ~6 firms here). I have a confident feeling that this is a regional sentiment. I don't think you'll find this in NYC. Additionally, this might be a generational thing. The route to PE now is more defined than it was for the baby boomers.

truth is, while the MDs h.e.pennypacker met said that they would consider ppl from CB, you have to understand that in PE, the work is really pretty similar to IBD, hours are roughly the same (if not worse) and u still do modeling. The training that reputable IBD firms provide are unparalleled such that even the best CB experience cannot match.

Truth is, if a PE had a choice between a BB analyst whom they know have worked 100 hour weeks, is ambitious, with modeling like 2nd nature, vs a CB analyst who worked 40 hours weeks, essentially learning only a third to half of what the IB analyst worked (after all, he only worked 1/3 to 1/2 the hours), who's he gonna choose? It goes down to becoming more "hire-able"

I agree with ZIRH fully.

Going the CB route isn't impossible, obviously, but it isn't a gamble I'd feeling comfortable taking. If I were you, I would approach opportunities in this way: any IB > the best CB. Even at smaller MM boutiques, your work will be more relevant, and more importantly, you will be working with some PEs (which simplifies the transition).

How useful is CB, if you want to transition into fixed income investment management?

CB seems good too if you want free time.

Is there any M&A analysis in CB?

What careers is CB good preparation for (in other words, what are potential exit opps)? To be clear, I'm not talking about IB and PE exit opps, since those have been pretty well discussed already. I'm asking more about investment/asset management (but feel free to offer up any other stuff as well).

On another note, what's the pay like if you start rising the corporate ladder (so, instead of getting promoted within a branch, I'm talking about someone who's moving up at the headquarters)? Somebody mentioned $150K earlier, but is that really it? I would think people who make VP or C-level execs would make some serious bank at a CB.

CB into DCM???

econ:

What are the exit opps in CB? Everybody here says they suck, but what are they specifically?

The fact that people haven't really answered this question, makes me think that you guys don't really know what the exit opps are like. It sounds like you just know they're bad for IB (and related careers), but are unsure what they're like aside from that. Does that sound about right? I realize I can't go from CB to IB very easily, but I'm wondering how easy it is to transition to other jobs within the bank? How easy is it to move up and become a VP or C-level exec? What are the exit opps like outside of high finance, like some sort of consulting, insurance, etc?

Some of my friends in CB have moved to CLO funds.