I don't know much about it but would like to learn more. Basically will do due diligence and be a part of the underwriting process for companies looking for $$ assuming I got the basics down. Can I get an idea of what this type of work ranks in finance? Dead end career? Highly marketable skills? Exit opps? Hours? Compensation? Would love to hear any thoughts on this!
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Interested to know exit ops for a corp banking credit analyst also...
Very dependent on where you are. My friend does this for a regional bank with about $2b aum. He makes $35k a year halfway through his second year, and he says the work is rigorous. He basically just spreads comps all day and analyzes the credit worthiness of his clients / counterparties, but has long days that don't pay well. His bank sends lots of credit analysts to middle market and boutique investment banks in the Colorado / midwest area, but I have no idea if this is commonplace in larger markets.
It would seem to me his skills are highly comparable to those of an investment banking analyst. Spreading comps, modeling transaction values, and mastering Cap IQ comprise the bulk of his daily routine, which are valuable skills to have in almost any area of finance. From there, I think your network and gusto will determine where you end up after a stint in credit.
Just realized you're referring to JP, thus rendering my post completely irrelevant. Sorry
I'm sure the work is the same at JP--you'd be doing a bunch of modeling and comp spreads. I'm just not sure what the exit opps are. If you're looking to move from there to lev fin or into some other IB analyst group, I'm sure it's possible within MMs, I'm just not sure how easy it would be to lateral into the IBD of your current bank. In other words, moving from credit analyst to investment banking analyst at JPM probably wouldn't happen, but you could probably leverage your experience into a gig with a smaller bank.
Good friend of mine worked a couple of years as a credit analyst at a MM bank before moving to leveraged finance. He seems pretty happy with it so I havent heard him discuss exit opps. From what I understand salary is competitive with bonuses between 0-70%
although not the typical path to say a position like IBD but I think that it's being spoken about as if it's somewhat possible, says a lot about the credit analyst role. The bonus range is insane. Is that a range for seniority levels or certain type of credit roles?
If I'm understanding this correctly, this is a commercial banking credit analyst right? Assuming that's what you're talking about, there's a lot of misinformation on this thread...
You won't be spreading comps or doing extensive modeling in CB. Why would you spread comps? You're not concerned with relative value, you just want to know if the company can pay you back. The modeling is cash flow based, so you're not doing valuation modeling. Most of the work in CB is researching the company and writing a credit memo to document the loan.
Salary will be competitive, but bonus will be nowhere near 70% at the junior level. I have no idea where td12 got that number. You should expect 5-10% year end bonus. Corporate banking will have a higher bonus, but still not higher than 30% at most banks.
As for exits, I've heard BDCs/Mezz funds are possible, but you need to know your shit. You could move to IB, but it's less likely unless you go early.
Sorry for my ignorance, can I get your take on difference between CA duties for commercial and corporate banking? From my understanding, I'll be a CA at JP working on underwriting for large corporations and financial institutions. Commercial banking CA work work less with corporations and more with individuals right?
From my understanding, the duties of an analyst in commercial and corporate banking are pretty much the same. The main difference is the size of the companies that they work with. It depends on the bank, but generally corporate banking will work with companies that have over $500MM-2B in revenues, whereas commercial will work with companies in the middle market (above $20MM revenues).
The deals will naturally be more complex with the larger corporations, but generally speaking you'll work on term loans/revolvers, neither of which are very complex anyway. In corporate you might do some valuation modeling, but again, you're not as concerned with that unless the loan is secured (which is less common with large investment grade companies).
As above posters said, there is a large research aspect to the job. You'll spend most of your time evaluating qualitative factors, and the quantitative aspect will be almost entirely financial statement analysis.
Hope that helps.
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CA is a client facing role at his firm whereas traditionally its MO. So yes, to parctribe's point if your responsibilities are MO then bonus is probably around 10% base, maybe a little more.
I think parctribe is the most accurate here. In lending, there is not much valuation. Sometimes a quick DCF or comp valuation (ev/ebitda) will be ran just to get a sense of collateral valuation. Most modeling is relatively simple and you're just modeling financing need/surplus. It's a good start as it's very transaction based and you will almost act like a research analyst sometimes when you're putting together credit memos. Many people stay in for the long haul, and as soon as you hit director level you can make some real good money. You'll lose out on most of the lucrative bonuses those analysts associates and vp's enjoy in investment banking though.
I'm doing commercial banking for a BB, also in my internship last year. You will never run comps or any sort of valuation techniques. There is some in other groups, that handle unsecured or leveraged lending for MM clients. For a traditional CB group, you will be only concerned with cash flow, working capital needs, collateral, and covenant compliance on financial and operational parts of the business. It was previously mentioned about a similarity to research, this is true. Heavy emphasis on management, relationship, industry, and business specific information.
The bonus part of 70% has been debated already, rightfully so. Its very standard for 1st years in CB to get 5k/60k/5k-10k at BBs. I have friends at regional banks, 2.5k/50k/2.5k-5k...tiny banks (less than $10B in assets) pay tiny sign ons / could be as little as 35k / and maybe a $1k-5k bonus. My first internship was at a bank with $2B in assets, and at that level its small companies (what we call business banking at a BB). I don't see how anyone could call that job rigorous. Cause its just not...
I like CB personally, the hours are not on the same planet as IB. I work 40 - 55 hours per week, I actually do average it...and its 46. My biggest recommendation is to go through an analyst program with formal credit training, I've seen this open many doors for my peers. Even if those programs are at the regional banks I mentioned earlier. Hope this helps.
Echoing the above, I was talking about leveraged lending when mentioning valuation. Leveraged loans are secured though, thus the need for valuation on the entity in place of actual physical assets. Investment-grade loans are the usually unsecured.
What relevant experience/skillset should one emphasize when trying to lateral to IB? I'm currently in corp banking but looking to get to IB.
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