Hey guys,
First post here. I have an interview with a bb for credit risk summer internship coming up. I don’t know what to expect from the technical part of the interview however, since I stated no preference for either credit risk or market risk. Should I expect more IBD related questions(comps, dfc’s and what not) or macro fundamentals and what’s going on in the markets at the moment.
Thanks in advance
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I recently underwent a first-round technical interview for credit risk at a BB. Topics included what sort of ratios you would use for credit analysis, analyzing scenarios in terms of where credit risk arises, when to look at levered or unlevered free cash flow, etc. I was also asked some basic stuff about Basel II and Basel III, so you might want to look into that. For market risk my thoughts would be to also get some familiarity with VAR modelling. Search youtube for Bionic Turtle, they have some videos on risk management which are pretty good. Best of luck with the interview!
Thanks man that was a very useful answer! Just looked at bionic turtle and def looks like they have some great tutorials. So just to clarify, know current changes in regulations(Basel and ring fencing, TARP probably as well), knowing the typical IBD questions but more focused on liquidity ratios, leverage and cashflows(rather than P/E's) and than for market risk studying the bionic turtle tutorials, as I currently don't know much about these?
GL to you as well!
Basically yeah, those would be my thoughts. Also, remembered there's an Elansguides CFA 2013 video on youtube dealing with credit analysis. You might consider giving that a watch (pretty long though), as it goes through some basic theory and ratios that you should know. As for IBD style questions, my initial thought would be to be selective. Financial statement analysis stuff (knowing how the statements integrate, and how different line items affect each other) would be useful, but I doubt you will get asked about valuation methodologies too much (rudimentary DCF knowledge should suffice).
The fit component will be similar to banking. Tell me about yourself, why credit risk, which industries are you interested in, etc. The technical part will be focused on accounting, 3 statements, and credit analysis. In financial terms, the main items are EBITDA, cash flows, leverage, debt, liquidity, maturities, covenants, capital structure. Let me know if you have more questions, good luck.
Credit Risk Interview Advice (Originally Posted: 11/29/2015)
Hi Guys. I have an interview for Credit Risk coming up and was wondering if anyone had any advice on what I should know specifically for the interview. I have ratios and loan types down, as well as basic accounting principals and DCF etc. One question that I need help with is which financial statement is more important for which industry and why? Any help would be appreciated.
SA or FT? I would recommend that you know the industries on your resume well (say you interned at an AM firm or in a more technical industry, they could ask you to walk them through the risks involved). Be able to think on your feet, ask good questions about what info you would want to research before investing in each opportunity. Interviews mostly qualitative/reasoning based, at least for the SA positions I interviewed at.
Can we all take a moment and appreciate OP's username. When your love for Chief Keef crosses over to your love for credit risk...
Credit Risk Interview at BB (Originally Posted: 10/27/2013)
Hi Guys,
I have an upcoming interview for an entry level position in the Credit Risk Department at a BB. I don't know much about credit risk and therefore would appreciate all of the inputs in how to prepare for this. What types of questions should I be expecting: behavioral, technical? For technical, what should I focus on?
Thanks alot,
When are you having it? Is this FT or SA?
I worked in credit risk at a BB this summer. If I recall correctly, the interviews were mostly fit but they also asked how to assess the credit worthiness of a company, what things to look for on the balance sheet etc. - nothing too technical, though. Good luck!
I had the interview yesterday and it was all behavioral. So pissed cuz i spent so much preparing for technical and how to evaluate the risk blah blah blah..... When would be typically hear back?
Credit Risk Interview (Originally Posted: 06/17/2010)
I have a interview coming up for a Credit Risk analyst position. There wasn't much I found when I did a search. For those who are in credit risk or those who have interviewed for similiar positions, what kind of techinicals could I expect?
"What are some metrics you can look at to assess the credit quality of a company?"
^Yes, broadly. To get you started, understand the important line items on the three financial statements that apply to credit assessment. A few important ones: Leverage Ratio (Interest-Bearing Debt/EBITDA), Cash Flow from Operations, EBITDA/Interest, volatility of Gross Profit, EBITDA, Operating Income (=EBIT), Net Income. It's important to know that there is no universal range these ratios should fall between for any given company; it's dependent on the industry that company is in. For example, financials will have a much higher acceptable amount of leverage than many other industries (might be the most leveraged).
Credit Risk interview --PM help (Originally Posted: 03/22/2010)
I have a second round Commercial Credit Risk interview, but do not know much about credit risk. I know my resume and general stories, so aside from fit related to those, what questions should I expect?
Also if someone is willing to accept PMs who has either interviewed for C-risk or works in it would be very helpful.
Thanks
also interested
sooooo anyone with credit risk experience want to help?
I may be able to shed some light, gimme a PM.
got offered the position w/ BAML credit risk in Dallas as 1st yr. PM if you want my experience w/ the process.
I would know how the 3 financial statements link together and the basic accounting/finance technicals. Not so much on the valuation/ibanking type question.
Also know how to evaluate a company for credit worthiness. On the balance sheet focus on liquidity (cash,short term securities, net-fixed assets). On the income statement focus on free cash flow. You are looking to see if company is generating enough FCF to cover fixed expenses plus service its debt. Also consider ratios such as DEBT/EBITDA, EBIT/Interest Expense, Net Debt/EBITDA, etc.
Good point n1cktm, another part I would add is to really understand revenue, gross margin, and opex drivers, with a fairly low focus on any part of the income statement below interest expense. Also, it always helps to understand scenario based modelling, as in credit risk, you'll often be involved in looking at how the base case is created and to create a risk management case to assess the potential capital you could lose from an investment.
Mr_IB,
a lot of the stuff the people said above me is very relevant. Almost verbatim to the questions I got asked. Understand how the financial statements link together. Know short-term liquidity ratios, long-term solvency ratios. Basically, the qualitative & quantitative aspects of providing credit. Have a good understanding of each industry group, world econonmy/news. They want someone that has an understanding of world events and how it pertains to the industry vertical. A large portion is talking about your experiences and how it can help the bank succeed.
Hope i helped!
Obviously know the underlying factors responsible for sub prime crisis as well as the European debt crisis and be able to take a position on it. I would also understand the challenges/opportunities in the corporate lending industry. Obviously regulation is the elephant in the room here. The other is competition is very fierce in corporate/commercial banking, everyone wants the fast growing and prosperous companies to call their own and for top banks like BAML, JPM, Citi, WF its hard to take business from each other. The other thing is the demand for credit is not very strong as firms are keeping a lot of liquidity on hand (I believe it was about ~2trillion cash). Part of the reason is due to uncertainty regarding the election year as well as to have a stronger balance sheet for greater flexibility and operating in an uncertain environment.
Hope that helps.
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