There is a ton of IBD-related content on this site, I am starting this thread in an effort to meet some of the fellow WSO corporate bankers so that we can identify those in the industry for future discussions, Q&A, etc. I think it would definitely be useful to know your peer group in case you want to see what the other banks are doing, if you are being paid market, where the hiring is, etc.
Definitely curious to here who else here is in CB and what industry group / region you guys are in and at what level.
Guess you haven't read the news lately, who do you think is underwriting the bridge finance for all the m&a going on this year: AbbVie, Zimmer, Medtronic, etc. hate to break it to you buddy but that work isn't done by IBD.
I think kyc's point was more that corporate banking can be incredibly mind-numbing, which your posts only serve to underscore rather than refute. I'm sorry, but setting trade limits for a derivative trade that might yield $50k and putting together scorecards for internal CYA purposes sounds terrible. And let's be real here - yes, the corporate banking arm does the actual lending and approval for bridge loans, but it's IBD that does the actual M&A advisory and digging.
That's not to say that IBD isn't mind-numbing, because it absolutely can be. The difference is that the skill sets one builds in IBD results in broader exits to hopefully less mind-numbing roles (admittedly, not always the case)
All that being said, corporate banking is absolutely a solid career move - you make good money and have a pretty good lifestyle, especially as you move up. But it is and most likely always will be a fairly mind-numbing job with a huge focus on internal processes. Like any job, you have to weigh the pros and cons and your own personal values to figure out if it's the right role for you.
Kyc, I am sure experience varies by group. I am at a top corp. banking group focused in a certain industry, can tell you the work is anything but mind numbing.
First for the bridges I have mentioned, we do our modeling in-house rather than using model from M&A team, etc. as we are less concerned with accretion/dilution, EPS, but cash flow/leverage/debt service and build out a full model.
I see plenty of pitch books from other parts of the bank I would much rather be writing a credit approval and analyzing the company/industry/financials than cranking out models 24/7 without actually understanding the industry or how the client fits into it. Our Lev Fin. team is top notch overall and having worked on several leveraged deals with them on names that I cover, I can tell you that the analysts/associates do not know much about the industry. In fact the corporate banker (RM) and guys on corporate banking credit side have a much better understanding.
Majority of work at the analyst level is spent fully underwriting deals and doing the credit write up. For a bridge deal going to the top of the house the amount of work put into the process is far greater than the Lev. Fin write ups I have seen. In the investment grade space most common deals you will see nowadays with the exception of large multi-billion syndicated revolvers will be bridge financing in support of M&A.
To clear up any misconceptions you may have, we do op not use MRA for credit analysis, internal process is not a huge focus (underwriting/quality of our analysis is). I'd honestly much rather write a credit approval and run a model and understand the industry of my coverage universe than crank models out all day and make pitch books, having been copied on plenty of emails from our IBD groups its not a job that I would envy. With that said you obviously have better exits into PE/HF/VC whereas from CB youd go into a credit focused fund, rating agency, corporate finance, etc.
Dingdong is spot on, we work with Lev Fin quite often and I definitely respect those guys and each group has merits. It can be a tad bit annoying hearing from folks on this site who do not have work experience that xxx group thats not IBD is garbage without even having knowledge of what the group does.
Pros and cons to every job group. In an industry specific corp. banking role you will learn modeling, credit/ cash flow analysis, financial statement analysis, understand industry drivers, credit risk, etc. product IBD group you will be a subject matter expert on a certain product executing, it across different industries. All the guys talking about M&A though remember you are running with company assumptions for a lot of inputs and the analysts/associates will not know nearly as much about the company / industry as the corp banking analyst/associate covering the name nor the industry investment banker. For example , industries such as Power/Utilitis and Managed Care are quite complex and spending several years covering such names leads to solid exits as well.
Really depends on the bank. At a lot of them you cant really become an MD unless you actually manage something. The heady of our CB industry vertical is an MD, the head of the corporate bankers (relationship side is an MD). At some banks they throw titles out such as SVP/MD etc in addition to the title of what you actually do but such secondary titles are fluff and do not mean anything as far as pay goes.
May I ask KYC, do you work in the industry? Your description was really off. Even the guys who I know in commercial banking (loans to middle market companies) do not do that type of work. Those guys are still doing lots of analysis and you'll see young guys in the drivers seat deciding whether to extend credit to a company (up to a certain dollar threshold these guys are the final approver) which gives you the ability to make decisions that impact the bottom line, unlike a lot of industries. Considering the low spread on credit products, if you make a bad decision the bank will need to make $x you lost / ~100 bps to jsut break even so if things go wrong your ass is on the line.
What people do not realize is credit analysis is actually analyzing something vs putting lipstick on a pig for a sales process.
Also, corporate banking is a sizable profit center for a bank. Tons of cross selling and putting assets to work. Shitting on CB for being boring is laughable considering how boring almost every other area of finance is.
amen to this. plus the hours beat the shit outta IB...at least most of the time. on top of this, depending on the risk appetite of the bank, credit analysis on some companies - especially highly leveraged ones - is pretty cool imo
To those in corporate banking already I have a quick question: Is it common for someone to make the jump from a rating agency (S&P, Moody's etc.) to corporate banking? (assuming you were working on the corporate ratings side at the agency).
As well, are there other areas of finance that you have seen people get into corporate banking from?
Any help would be appreciated.
in my experience, it is more common at the junior level. there are a couple of people at my bank from Moody's at the analyst / associate level who left after 1 - 4 years of rating agency experience. from what i've seen, the more senior guys are part of the credit committee(s) that approve/reject deals. that being said, i work at a mid-market bank now so the case may be different at BBs
This is true. Experiences from Moody's/S&P/DBRS would be highly valued in corporate banking. Credit analysts from CB have subscriptions to these rating agencies so clearly if you have been to the other side, you will bring valuable experiences. If you are senior level at the rating agencies, you can move to credit approval committees, who ultimately decide if the deal can be approved or not. The previous bank I had worked had hired many senior guys from Moody's, who actually wrote up the "Rating Methodologies" reports at Moody's.
I strongly disagree with folks that are bagging on IBD as simply putting lipstick on a pig and throwing together pitchbooks. Come execution time, you're doing a LOT of in-depth analysis that corporate bankers will never touch / ever be exposed to. Fact is, when you're executing an M&A process, the level of access to management and company-specific schedules, KPI's, etc during diligence sessions is much deeper than anything you'll ever see in corporate banking. And yes, you are putting lipstick on a pig as a banker, but you still need to know where to put that lipstick, and that's where the in-depth digging, analysis and ultimately the skill sets are learned.
Also, to any college kids reading the above posts and using it as a basis for their career decisions, I'd just like to point out that some of the points raised about the merits of corporate banking vs. IBD are just flat out false, but I'm too lazy to go through them.
TLDR, there's a reason IBD analysts are so marketable to the buyside, corp dev, etc - you're doing a LOT of in-depth analysis and gain a much broader and deeper skillset than any other area of finance straight out of college.
No one is saying corporate banking is better than IB. People are simply saying the holier than thou shit is a joke.
And bankers are marketable because of modeling skills. If you can put together a solid 3 statement model and know credit you can easily leave banking and go into private debt funds where you'll be doing all the analysis and direct investing you'd want.
oh great, another thread that started out well and turned into "IB is more prestigious than _____ because blahblahblah."
wouldn't expect anything less after a long weekend away from WSO.
Lol. I can't believe you expected anything less. Fucking astronauts don't shit on people more than some of the posters on this site. I suppose that's cause working in finance is quantum physics and shit.
Did I say CB was better than IB? No I fucking didn't. IB is largely a sales process. You want to raise capital, take public or provide M&A support. An advisory role. You learn a variety of skills and play an important role. So does CB. When you're in a lending role you are making an investment decision. Not a sales decision. Hence my comment on the differences.
Also, my response was in reply to the dismissive statements pertaining to CB and the rarefied air bullshit being pushed from the IB side. So you're taking my response out of context also.
I'll shit on all of finance and single none of it out.
Whether or not you want to own up to it, your original post framed CB as the group that did "actual analysis", while IB simply was "painting lipstick on a pig". My post was intended to refute that notion. I never accused you of saying CB was better than IB, and I never said IB was better than CB (although I can see why you'd think that, given my response was focused on one area in which IB excels vs CB).
Honestly, there are pros and cons to both, which I pointed out in my original post towards the beginning of this thread. You can feel free to disagree with me and continue to shit on anything you'd like.
What's the difference between IB and PE? I'd like to see your answer to this question. My statement was factual Any group committing capital is going to be analyzing the investment metrics and worthiness of a deal.
That being said, I'm over this thread. My goal was to simple inject a dose of reality into this endless high school dick measuring contest. I feel as if that has been accomplished.
Couple of things diet coke:
Regarding M&A having access to management, etc. on a deep level, agree. However, you are saying corp banking never has this type of access is wrong. Every M&A deal we have financed, we had the same access to management as IBD, shared model, had same diligence session and access to same information. This is needed for us to do our job.
The difference I can give you credit for is that in the M&A world you do this kind of work more often whereas in CB depending on the deal you will not need to have this level of detail and rely on publicly available info for analysis...there is no need for this kind of detail for a revolver re-if for an investment grade company. However for sub-investment grade deals, bridges, acquisition financing, etc, were going to have same access/exposure as banking and work with them.
Overall its different work and our models will have different outputs but at the end of the day modeling is conceptionaly the same whether your output is accretion/dilution analysis vs. cash flow/debt service model, its going to be an iterative 3-statement model.
With that said the comparison I made was in IBD you spend most of your time modeling and assisting bankers whereas in CB you do your fair share of modeling and excel work but you also get to learn an industry really well, you write quite a lot, and you execute deals. Its a well rounded skill sets in terms of company/industry/financial analysis/modeling.
Some of the IBD groups get a stronger technical skillset and do very advanced modeling which translates to different exit opportunities that CB doesnt not see as often.
End if the day both jobs are different with pros and cons to each and there are definitely overlapping skill sets. However, the two groups work together quite often. CB provides the bank's balance sheet which leads to DCM/ECM roles in addition to advisory engagements (unless you are Goldman, in that case you just get them without the lending relationship).
Where is the edit button, horrible spelling mistakes courtesy of ipad keyboard
Work in CB at a BB. Out of curiousity, how are everybody's hours?
Working as only analyst for a brand new office doing analysis as well as helping my MD with marketing/sourcing efforts and my normal hours are 8-6/7. Starting to creep later and later as our work shifts from purely marketing to actual deal work.
Average day is ~10 hours, 12-13 when busy
Hate to interrupt the argument, but does anyone know if CB/Credit Risk are part of the pay raises across Wall Street?
Yes
Super interesting discussion. To add my 2c.. spent the last 2 years working as a credit analyst in a structured asset finance team focusing mainly on natural resources in EMEA. I have done a fair bit of business travel throughout Africa and Europe mostly for mine-site inspections and deal negotiations, however most of my time is spent at my desk crunching cash flow models and credit papers, although also doing in-depth industry research, investment returns modelling, legal negotiation and deal settlement, some tax-related work too, so it can be quite variable and interesting. In the last year I've been dealing with some pretty crazy issues including Russian oligarch sanctions, Ebola risk and even a political revolution occurring mid-closing of a transaction. We have a close involvement with the IBD advisory team in our sector and they put us in front of their clients to showpiece the bank's balance sheet lending capabilities. As the lead analyst on many investment proposals that come across our desk I've had to understand the economic viability of a mine based on the project feasibility study (although I'm not the one making the ultimate decision) and in some instances our capital has been a green light issue for the projects themselves. For e.g. last year we nearly funded $100m of debt into a greenfield project in Africa but the cash flow model didn't quite work at lower commodity prices among other issues, so we refrained and as a result the project will probably never get off the ground. For me that is banking at its heart and the ultimate value add.. making a decision where capital is best deployed and managing risk, and it can actually be quite fulfilling on a personal level. I'm kind of relieved we never did that deal. As they say, live by the sword, die by the sword.
The corporate banking group I was in also did "principal investing". We bought/held TLBs off the secondary & occasionally put in for primary issue TLBs with other agent banks.
Has anyone seen this elsewhere?
The purpose was basically to add P&L to the credit/underwriting side, which had historically been a cost center.
No. We were traditional corporate bank underwriters doing revolvers, TLAs, and bridge financing (and we lost money on all of them).
TLBs are just an area where you could actually create positive P&L without relying on cross-selling bullshit.
Interested to hear what you guys are planning to do after your analyst program. Where have your CB colleagues gone to after? Been thinking about next steps, but there aren't as many data points since CB takes way fewer analysts than IB and many stay longer than 2 years. Would be interested in opportunities both in and outside of finance (corp strategy, start-up, etc).
Bump - interested in reviving this thread
Happy to discuss further
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