Corporate Banking vs IB
What's the difference between Corporate Banking and IB specifically in BofA? They seem to be paired together under Global Corporate & Investment Banking but how do they differ?
What's the difference between Corporate Banking and IB specifically in BofA? They seem to be paired together under Global Corporate & Investment Banking but how do they differ?
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Corporate banking is lending money to corporates (revolving credit facilities, term loans, etc). It's not the same as investment banking. They are under the same umbrella because IB uses corporate banking to get deals.
Hey- currently a Corporate Banking intern at a CIB bank. Here is what I understand:
Corporate Banking mainly involves the credit side and lending to clients. They are the key relationship holders in CIB banks and the majority of banking relations stem from the lending relationship. After the bank lends to a client and builds up a relation, the client seeks this same bank for its other ancilary business which may be more profitable such as M&A/advisory (Investment Banking). Usually, depending on the client ofc, the banks will offer credit/loans at fairly cheap rates to establish these relationships. This loss leading strategy is what banks typically use to build up a clientele.The Corporate Banker is has to have knowledge about all products the bank offers so that it can talk to and liase with the client about any ancilary business. Also, CIB Corporate Bankers get involved in credit modelling/analysis to justify whether to lend to a client or not and work closely with the risk teams. This modelling is not as intensive as the modelling done in IB but can get complex depending on the deal type. IB on the other hand, focuses soley on advisory services which is usually the most profitable area(s) for a Bank, and is not as involved in the relationship aspect as above. They pitch to potenital clients to win mandates through creating presentation decks and once one is appointed, this is where the heavy hours come in as the modelling work begins and you have to be at the client's call at all times pretty much. Corp bankers and Inv Bankers usually work very close together to idenify cross sell opportunities within the bank. For eg. if a client is undertaking a merger and would like to borrow acquision finance, then the IB team and CB teams work together to put together the deal.
Hope this helps :)
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