Hedge fund counterparty risk role?

I came across this job posting for hedge fund counterparty risk function working at a BB bank and wanted to hear any input or thoughts on it. What are the prospects of doing something in this function? Would it pigeon hole you or open up doors to move into an actual HF and etc. What about skills learned, how useful

ASSISTANT VICE PRESIDENT - CREDIT RISK ANALYST (HEDGE FUNDS) (JOB NUMBER: RIS001531) Business Overview: RISK’s main responsibilities are: • Credit and counterparty risk, market risk, funding and liquidity risk, as well as interest rate and FX risk of the Banking book, insurance risk and operational risk. • RISK covers all Group’s activities and geographies. • Provide a holistic view of the risk profile to the Bank’s Management and Board, by coordinating with the relevant Functions to ensure relevant risk assessment, aggregation, and reporting. RISK I2S, which is part of RISK CIB, is responsible of the credit risk profile for all institutional clients, intragroup entities, and market infrastructure entities, as well as their related credit approval processes. Candidate Success Factors: Candidates will be measured on the following four performance drivers that will dictate how individual impact is considered on the Americas platform: • Results and Impact • Leadership and Collaboration • Client, Customer and Stakeholder Focus • Compliance Culture and Conduct Responsibilities: Credit risk management for Hedge Funds: • Perform credit analyses on hedge fund counterparties identifying major strengths and weaknesses via a review of investment strategy and leverage, liquidity sources and uses, performance history, portfolio exposures and risk management practices. • Evaluate derivatives and financing transactions across client base, working closely with Relationship Managers, Global Markets business lines, Market Risk, Legal and Operations personnel to structure transactions to mitigate diverse forms of risk. • Present credit reviews to appropriate credit committees including senior management. • Monitor creditworthiness of assigned counterparties on an ongoing basis, proactively identifying any deterioration in credit quality. • Maintain good and open relationships with customers via due diligence meetings and other periodic communications. • Work with other support areas within the bank (e.g. legal, credit risk control, collateral management, etc.) to ensure that the provisions of legal documents protect the bank and reflect the terms of the credit approval. • Effectively handle multiple tasks through prioritization of requests. Work on other special projects and initiatives as needed Minimum Required Qualifications • BA/BS required - concentration in finance or business preferred • 5+ years of relevant credit work experience, including exposure to the Hedge Fund industry • Good understanding of financing and Capital Markets trading products • Strong analytical skills with a focus on detail • Excellent verbal and written communication skills to firmly and confidently express credit decisions & opinions • Proactive, with the ability to multi-task and influence change Preferred Qualifications: • MBA, CFA or CPA designation a plus

 

I've never known anyone who's done this role before, but have know ppl who looked into these roles in the past. 

You're essentially making sure HFs don't blow up, i.e. avoid an Archegos situation, for the bank. It would be difficult to move into an investing role at a HF as the skillset is very different. 

That being said, monitoring the credit risk of a HF may set you up for a fund of funds (FoF) role or potentially to work in risk or BD at a platform. Either exit is not a sure thing as the skillset is not completely transferable, but it seems these would be potential exits. 

Best of luck in your search process! 
 

 

Thank you for your insightful response. How do you think this role compares to say, doing commercial lending at a mid-sized bank (analyzing risks of corporate loans) Is one opportunity better than the other?

 
Most Helpful

The two roles are very different. 

In theory corporate lending is all about analyzing the borrower's ability to repay the loan, the credit skillset that's the building block for any future fixed income analyst.

However, the role depends on the firm and the type of corporate loans. Working at 1) a BMO or RBC type firm analyzing middle market corporate loans to single B type counterparties or larger differs greatly from working at a 2) Dime Community Bank analyzing loans to Joe's carwash. In the former you'll probably get credit trained (a plus) and if you couple this w/ a CFA, you have a potential argument to move into a middle market credit fund, a group like CIT's distressed lending group (or whatever entity that sits today), a CLO, or other credit vehicles. Exit ops from the other loan role would be vastly harder.  

The other caveat I'd mention is some of these corporate loan roles are notoriously bureaucratic. There are cases where you are basically doing compliance tasks, pushing paper and rubber stamping loans. I'd make sure to flush that out during your interview process. You do not want to take a job where you don't learn anything to help propel your career forward, those are the worst roles. 

Between the two, the BB fund credit risk and mid-sized corporate loan role, it's hard to say what's better. It really depends where you want to take your career, risk management or credit analysis.

Best of luck in your search process. 

 

Voluptatem modi debitis nihil. Qui sit aut consequatur expedita non. Exercitationem sunt labore aut est repellat totam explicabo.

Ut enim ea voluptatem debitis ea. Fugiat autem quis et maxime doloribus. Et aut occaecati fugit vel. Qui numquam delectus ut qui. Ab animi nulla doloribus voluptas nam.

Illo quod veritatis fugiat et. Soluta provident optio at reiciendis labore et atque. Aut nulla sunt voluptatem cumque qui eum dignissimos.

Career Advancement Opportunities

March 2024 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • Magnetar Capital 96.8%
  • Citadel Investment Group 95.8%
  • AQR Capital Management 94.7%

Overall Employee Satisfaction

March 2024 Hedge Fund

  • Magnetar Capital 98.9%
  • D.E. Shaw 97.8%
  • Blackstone Group 96.8%
  • Two Sigma Investments 95.7%
  • Citadel Investment Group 94.6%

Professional Growth Opportunities

March 2024 Hedge Fund

  • AQR Capital Management 99.0%
  • Point72 97.9%
  • D.E. Shaw 96.9%
  • Citadel Investment Group 95.8%
  • Magnetar Capital 94.8%

Total Avg Compensation

March 2024 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (23) $474
  • Director/MD (12) $423
  • NA (6) $322
  • 3rd+ Year Associate (24) $287
  • Manager (4) $282
  • Engineer/Quant (71) $274
  • 2nd Year Associate (30) $251
  • 1st Year Associate (73) $190
  • Analysts (225) $179
  • Intern/Summer Associate (22) $131
  • Junior Trader (5) $102
  • Intern/Summer Analyst (249) $85
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”