I’m a VP in corporate banking within the healthcare sector, happy to answer any questions regarding credit facilities, treasury, relationship management, developing relationships with traditional m&a or ecm investment bankers, etc.
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Career Resources
How long have you worked in CB? Discuss exit opps at the end of corporate banking?
I have been in corporate banking for about six years.
When I have seen people exit (which is at a much lower frequency than traditional IB due to a difference in culture), it has primarily been to alternative credit funds, private equity, traditional IB, and treasury positions at a corporate. The talent model in corporate banking is less "churn'n'burn" and is much more about keeping people long term. Hours are significantly better and there are many fewer "kiss-the-ring" types.
What is the exact difference between corporate and investment banking? My understanding is that both do debt issuance for companies, but investment banking also advises on M&A etc.
The big difference is corporate banking takes the lead on "traditional banking products." That includes the actual underwriting of credit exposure, deposits, treasury management, etc. Investment banking, on the other hand, takes the lead in securities and advisory.
Let's use buyside M&A as an example. While the investment banker is the guy that is advising the client on who to buy, how to value them, etc., the corporate banker is the guy that will actually be underwriting the financing of the acquisition. For instance. When Microsoft acquired LinkedIn, the advising banks got advisory fees but also provided a very hefty loan to Microsoft to complete the acquisition. The corporate banker is the one that actually runs the internal process for the bank to write that check.
If we go down the path of a more traditional loan, say $1B revolving line of credit to ABC Company, the corporate banker is underwriting the credit and structuring the deal, whereas the investment banker is recruiting other banks to join the syndication.
Awesome, thanks. I am still a bit confused on who actually structures the deal. I always thought it is the investment banker who structures and negotiates the deal with clients, but your last example says it is the corporate banker that does this?
just wondering does corporate banking require more of maths than IB M&A ?
Thanks for doing this. What led you down the CB route?
Honestly I kind of fell into it while looking at investment banking. My real focus was on getting into healthcare and I had networked my way into the corporate banking group at the bank. What sealed it for me at the end of the day was I had just recently married and was much more interested in a 50-60 hour week than an 80-90 hour week, with fairly similar base comp.
Corporate banking is a fantastic long-term play. I have so many colleagues who have had fabulous, decades-long, successful and enjoyable careers as RM's, etc.
Is your salaries quote for a BB in NYC?
Thanks in advance!
I'll be "that guy".
Can you offer expected comp / hours at the An1 Through VP levels? And how homogeneous they would be at other banks (BB if you're in BB, etc).
Furthermore what are the skillsets you'd most likely be looking for from someone lateraling in at the Associate / Sr. Analyst level without much CB experience in their past.
Thanks!
Analysts come in around $80k base (15-20% bonus target), associates around $125k (40% bonus), VPs around $175k (50% bonus). I think probably fairly comparable to the other BBs.
Skillset is basically identical to IB, with a heavy emphasis on modeling and quantitative analysis. That said, you will spend much more time in Microsoft Word than Microsoft Powerpoint when compared to IB, as you spend a ton of time writing credit screens, memos, etc.
Can you please comment on sign-on bonus amounts esp Assoc/VP levels (assuming NYC), if you know them? Were you automatically offered one, or had to ask?
Second year CB analyst here at a global bank in a tier one city (think BNP, MUFG, HSBC). Your bank pays junior level VP PMs ~$250K+ all in? Or is that more top bucket VPs who are more tenured?
Just curious, because your numbers at the analyst level are spot on at my bank, but it seems the salary progression is faster than what happens at my bank (110K base at the associate level). Bonus targets also dwarf ours VP PMs top bucket bonuses max out at 35%, according to senior colleague of mine. However, I'm sure this changes at the team lead / SVP level.
Hey, thanks for doing this. I'm doing a summer internship this year in a Transaction Banking role at a BB (more emphasis on Treasury Management, Payment services, stuff like that). I've got 2 questions:
I must admit I am not exactly familiar with the compensation levels of product specialists such as TM, payables, or others. I will say, though, that the RMs and PMs in corporate banking make much more than the product specialists, but also have more unpredictable hours.
I came in as an analyst and came up the ladder, becoming an associate after 2.5 years and VP after 5. Analyst work is a lot of spreading financials into Excel, making charts, writing quantitative and qualitative analysis, booking the loans, helping run compliance, etc.
Do you know if there's an "up or out culture"? For example, do you know around what percentage of analysts/associates don't get promoted to the next level and what happens if they don't?
I've been in commercial banking (at a small community bank with less than $5B in assets) and have been interested in joining a corporate bank at some point. I have 5 years underwriting experience as an analyst/sr analyst., and am wondering the likelihood of being able to transition into a corporate banking role such as an associate?
Also, are the comp levels noted above for NYC/SF area, or?
Thanks for doing this, love the Corporate Banking info content on this site.
You may be able to, I’ve seen people make the transition, but just like with everything else in finance it all depends on your ability to network. Find the right sponsor and you can go far. Yes, the salaries are for the NY/SF markets.
I’m currently interviewing for Corporate and Investment Banking at a BB (they do DCM, LevFin, and IG debt in the group) - what topics would you recommend I focus on for a 2nd round hour-long pen and paper technical interview?
it’s always knowing your way around a model, knowing your accounting, and being able to explain the levers to pull in your assumptions
Sorry do you mind just clarifying what you mean by the "being able to explain the levers to pull in your assumptions" part? Did you mean like explaining why you used a certain growth rate and discount rate in a given year?
Also, for accounting, do you think I should study the super detailed stuff like pension accounting, FX rate effects, NOLs, and DTAs?
Also - sorry for so many questions - how detailed do you think I need to go in learning debt paydown and LBOs?
Thank you in advance - I really appreciate the advice.
Can you describe full time recruiting for corporate banking? Is it more or less the same as traditional IB? I am junior at a non target with a credit analyst internship at a bank lined up this summer. The bank has about 10 billion in assets. I want to land a full time offer in corporate banking. I know that I have network hard. I understand now is when people begin to reach out for 2021 summer analyst roles. Therefore, should I start reaching out now asking about full time or wait until the summer? If you were in my shoes what else would you do?
Always be reaching out, always ask who else you can talk to, and be prepared to tell your compelling “why” story. Also, have a thorough understanding of markets and current events so you can have an intelligent conversation and ask good questions.
Thanks for the AMA! How much healthcare industry knowledge do you need? If this is an area of interest for you, what resources do you use to learn more about the technical (e.g. product pipeline) and financial aspects of healthcare companies?
Healthcare knowledge is helpful, but it is not required when you are just joining as an analyst or associate. The more important factor is your underlying passion for the industry. It may be healthcare as a whole, it may be a specific subsector, just have your story down.
As for the technical skills, as a cash flow lender your pipeline analysis is really less important - leave that to the equity researchers to try to value and figure out. What you need to understand are cash flows, regulatory guidelines, risks to those cash flows (patent cliffs, 483 letters, CMS changes, etc.)
Thanks for that! What are some of the best ways to learn cash flow modelling and risks?
Assuming you’re looking at larger credits, but I’m gonna take a stab anyway. Have a few questions as I’m interviewing with a MM Direct Lender and only have experience with BSL. Here are my questions 1. How do bankers size/structure revolvers? Do you guys use guidelines as in like a % of the total credit facility (i.e. revolver should be around 25-35% of the entire senior part of the cap structure? 2. What sort of maintenance covenant level is typical in the MM - let’s say I have Sr. TL. with closing leverage or 4.5x. How should I think about setting the maintnenance covenant level? 3. Are you guys just using standardized market terms to determine incremental facilities capacity or is there more of an art to that? 4. How much variance is there in mandatory prepayments provisions in your market? In BSL, it’s typically 100% of asset sales and 100% of debt issuance subject to leverage levels. Wondering if there’s a fundamentally better way to think about this. 5. How do you guys think about structuring restricted payments baskets?
I only have experience in the BSL market so a lot of these terms are standardized and you rarely see covenants. If you have any insight would be much appreciated!
1) The big banks have general guidelines around total leverage given by the regulators. The sizing of the revolver when compared to the term loan really depends on the needs of the company and the use of proceeds. Revolvers are really for working capital, short term needs. Term loans are for CapEx and acquisitions. Overall, the big banks prefer to keep total leverage (debt to ebitda) under 4x, but they will go above that threshold for the right companies and the right situations.
2) Typically you will have a leverage covenant and a cash flow covenant (say fixed charge ratio or something similar). every bank approaches covenants differently, but the main hope is to try to serve as an early trigger to faltering performance. As such, for a loan that closed at 4.5x, we may have a covenant at 5.0x and steps down to 4.5x or 4.0x over time as the company grows into projections.
3) Standard market terms are most prevalent for deals with investment grade companies. Once you get into junk grade or non-graded then it becomes much more of an art.
4) Mandatory prepayments, or automatic defaults, are going to be fairly standard. If there is a full ownership change, large asset sale (could be as low as 10-20% of total assets), change in management, etc. the banks will want the option to demand full repayment. Then it just comes down to the individual situations and relationships.
Hey thanks for doing the AMA! Currently looking to get into the Healthcare sector for a full-time position and had a few questions:
• Were you specifically focusing on Healthcare when recruiting and did this ever come up when interviewing/networking with bankers in a different sector?
• Are analysts split into different Healthcare verticals (Pharma, Services, etc.) or is this specification built as you move up the ladder?
Yes, I was specifically focusing on healthcare. To me, I only care about advancing medicine and changing treatment paradigms, with my deepest passion centering on biotechnology. Your story and your "why healthcare" will come up in every interaction.
Analysts are healthcare generalists. You may start to gravitate to certain MDs as you become an associate, but you typically dont get assigned to a subsector until you are a VP.
I will be interning at corporate bank this summer and was curious as to what I can do to add value as a summer analyst?
Your summer internship is your best opportunity to ask any and all questions. To be frank, you will add very little value as a summer intern. What we want to see is someone that is intellectually curious, is passionate about healthcare and finance, and is willing to take on projects. Ask questions, network with your peers and with MDs. Be a fun person to interact with.
I used to work in a similar field, albeit as an analyst. In addition to extending LOCs to operating companies, do you also perform any term lending for healthcare real estate (hospitals, SNFs, MOBs, etc.) as well?
Our team works with healthcare REITs and for-profit healthcare services, but typically healthcare groups are split into for-profit and non-profit. Non-profit hospitals and other orgs would be handled by a group that works broadly with government agencies and other nonprofits.
What size bank do you work at? What’s your relationship with the investment banking team?
I work at a too-big-to-fail/bulge bracket. Our relationship with the investment bank is critical and very tight. Whether you are working with an early stage biotech or with a large corporate, or anything in between, both sides of the bank are critical to the long term success of those companies. We need to loop each other in to IPO opportunities, lending opportunities, M&A opportunities, treasury/investment opportunities, etc. It is one full toolbox, one bank, and we only win when we can effectively deliver the full breadth of services to our clients.
Replying to a direct message question: I recently read your AMA on corporate banking and was wondering if you have any experience/input on if there's an "up or out" culture in corporate banking? Do some analysts or associates not get promoted to the next position? If so do you know what percentage it is? Thank you!
In corporate banking there is much less of up or out than in investment banking, but it certainly still exists if you are not a performer. We hire with the hope and expectation of promoting someone to associate and vp and director. You are fairly assured of making it to VP standing in the corporate banking side if you are interested - the difficulty is in going from VP to Director or MD if there simply isnt room.
Would you say BB pays higher than large European Banks ( NYC)?
On the banking side, are you guys getting any action or insight on how they are asking the private healthcare sector to help markets meet demands for testing kits, supplies, antibiotics, vaccines, etc? What about additional Real Estate needs (China built multiple additional "hospitals" in days to help meet demand and they already ave a higher bed per 1000 citizen)?
No way the public healthcare sector could withstand anything along these lines in terms of supplies needed to test everyone, produce vaccines for the entire population, and do all else without the help of the private sectors resources. Curious if there is need to help plan and implement additional measures as well, especially from the capital side.
Thanks for doing AMA! I'm doing summer analyst (12weeks) gig during the summer at a BB, and I will probably have some time to kill before the job, and I'm looking to sharpen my skillset. I'm aware that it's likely that I will not add real value, and it's more about being curious, and fun to be with in the office. I'm soon finishing my Masters degree, and have previous consulting experience (internship & part-time). M&A and valuation are somewhat familiar to me (haven't done a proper model, but quite a few "quick & dirty" DCF's etc. Corporate banking on the other hand is quite unfamiliar territory to me regarding the products (credit facilities, cash management, etc).
I know this is a broad question, but to what relative importance would you place the following:
Thanks for doing this!
In your opinion, how important is it to drink the company juice? I know the question itself sounds a bit of off-colored. But to be frank, I work my tail off, and don't drink the juice, and also don't seem to get rewarded as much as other people who seem less intelligent/hard working yet drink the juice. I know that sounds arrogant, but I know it to be true. So I'm curious if that is an industry norm, or a just a one-off at a tiny community bank.
I apologize in advance for sounding like I am whining, but I am generally curious what others think about the juice drinking/hard working relationship. Anyone feel free to chime in.
My sense is, the less able you are to point to hard cash revenue driven by you alone, the more subjective everything becomes. So drinking the company juice becomes more important. Depends on your bank, team, and role within that team.
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