Q&A: Big 4 to Commercial Banking

Slow day at work today, studying for CFA, but taking some breaks here and there. I don't think there is a lot of information on this board as it relates to commercial banking, at least from the perspective of more junior employees with under 5 years experience. Not sure if there will be a lot of interest in this, but just trying to give back a little. I went to a non-target public school, left a Big 4 role after obtaining CPA license, and joined a regional in their middle market banking group. I am by no means an expert on commercial banking, but I am happy to answer any questions that people have about anything related to my experiences/transition to CB and maybe it will get some other more experienced bankers to chime in as well. edit: happy to move this to a different, more appropriate forum if anyone has suggestions

 

These posts are always good resources for younger guys looking to go a slightly different route.

Your background is pretty interesting, did accounting just not end up being what you thought it would be? Did you have to take much of a pay cut to make the switch?

Credit or RM role?

Industry agnostic or specific?

What are you looking to do once you get your CFA?

 
Best Response

My group covers all industries, but there are a couple of groups that cover specific industries and we would defer to them unless the deal is smaller and/or there is a good reason to keep it on my team. Lots of industrial's here, but that's a product of our region I think, and my team actually does a lot of the credit work for our public finance-type clients as well.

 

1) TL:DR - CPA and accounting experience, client facing experience, analytical procedures, industry specialty

2) Honestly the most important thing is to make sure your story makes sense and be dangerous enough to hold an intelligent conversation about the deal process.

3) I would be looking for credit analyst roles in corporate or commercial banking

Networking a lot should go without being said. Read CNBC/SeekingAlpha/WSJ/Bloomberg

 

hi thanks a lot for doing this. I had a few questions

1) how is commercial banking divided up at the bank you work at? i.e what teams there are at the bank

2) what are the typical career paths in Commercial Banking? From my understanding you work in a credit analyst type role for a couple years and from there can either transfer to RM or continue up the path of the credit team. Please correct me if I am wrong on that assumption, and please provide insight on what most people do and why you are choosing your path.

3) you mentioned in a previous answer you can progress to PM or RM, can you please explain what PM is in commercial banking and how it differs from RM

4) What are the size of deals you work on? And how are these deals structured, I'm more familiar with corporate banking deals i.e bridge loan, revolvers, term loans, how does commercial banking deal structure compare?

5) finally, knowing what you know now about finance, if you had the chance to go back and do it over again would you still choose Commercial Banking? I've always considered Commercial Banking to be Corporate Banking's little brother and assume most people in Commercial Banking are there because they couldn't make Corporate Banking or are just very concerned with work life balance, is this assumption a little naive?

Sorry for so many questions, I appreciate any help

 

Hi finbrah, thanks for adding some commercial banking color to the forum.

How structured is your credit analysis process? Is it everything fairly standardized? At my small community bank, lenders don't ever like to see negative cash flows/negative working capital/etc. so they like to try and re-run cash flows in ways that make the true cash flow look more positive. This gets to be fairly frustrating because their is always a little tension between the way I want to represent the cash flow, and the way they want to portray scenarios. Does anyone else deal with similar situations?

 

A banana from an ex-commercial banker to another commercial banker.

Would definitely recommend keeping an eye out for direct lending opportunities too. Lots of capital flowing into that space, and potentially better career mobility than mezz.

"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
 

Mezz is more junior debt. Usually 10%+ rates. Will come in on top of senior and unsecured debt.

Direct lending is generally senior, high-leverage debt that traditional capital providers can't touch for whatever reason (regulatory mostly).

"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
 

I did something like this recently, it's reassuring to see others do it too to gain more exposure. Before you started applying for external opportunities, did you consider trying to transfer internally into a different line of service that's more finance-oriented, some kind of transaction advisory?

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.
 

I had brought it up to my career coach who was a senior manager, but to be completely honest he told me flat out that I was probably better off looking externally. He did say that if I stuck it out for another busy season then he would do everything he could to help make it happen (which I’m sure he would have, but this is the typical line when anyone in Big 4 looks to transfer internally).

 
finbrah:
Keep in mind I'm in a small market. I think you would expect to be mid 50's to low 60's starting as a senior analyst. Portfolio managers I believe make around 80k in my group when they first start out, up to 100-120k when they are more senior. This is before incentive pay.

Good deal. I am up for promotion this year, and am moving from the middle of nowhere to a tier III city, so am trying to get a feel for the compensation there. Thanks for the input

 

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