Managing the banking business of the kings of capitalism
Corporate banking, usually called commercial banking in the US, is the broad term applied to the various banking services offered to large and small to medium-sized (SME) companies. This may sound simple, but it’s definitely not.
For example, a single bank can arrange a loan for a company, which is relatively straightforward. On the other hand, banks could be involved in a more complicated syndicated loan, where several banks combine to provide the funds for a loan.
Corporate banking services also include cash management – collecting and managing a company’s cash to ensure its financial stability, managing changes in foreign exchange rates, or offering treasury solutions. They also provide similar services to those offered to members of the public – the issuance of cheques and bank drafts, or overdrafts, for example.
Corporate bankers target different industries, such as healthcare, public sector or retail, and therefore often carve out niche areas of expertise. Those servicing energy, mining or utilities companies, for instance, might be project finance experts, working out the business case for funding a new power plant or mine.
Roles and career paths
Junior corporate bankers often start out as credit analysts, assessing company balance sheets and deciding whether or not to issue loans. You may also accompany senior sales and relationship staff as they try to sell products to corporate customers. One banker describes this as “bagcarrying” – picking up tips without having much
influence on the deal.
Before you specialise, the training process can be a long one: “In corporate banking our graduates typically sit with our coverage teams and gain exposure to a number of different businesses and dynamic environments across a series of different placements over two years,” says Christopher Jackson, head of emerging talent at Lloyds Banking Group.
In some institutions, such as Deutsche Bank, HSBC and J.P.Morgan, the corporate banking divisions have become more aligned with the investment bank. This allows the bankers to cross-sell their products to large clients.
Senior roles in corporate banking are more client-focused. There are business development managers, who attempt to bring in new customers, or relationship managers, who look after existing clients. Both involve wining and dining chief executives and finance officers but are also quite technical.
There are also varying standards of relationship managers – those who simply respond to the ‘Request for Proposal’ (a company bidding to numerous banks for its funding needs); those who are first to receive client calls about potential opportunities; and ‘trusted advisers’ – bankers with deep client relationships.
Relationship managers have a support team, so when the company needs to raise finance, the relationship management team also provides transaction and structuring advice. If you’re not up for a client-facing role but still want to work in corporate banking, you have the option of working in risk/credit assessments or product, operations or treasury management.
You have to be personable to win business and maintain relationships in corporate banking, but you also have to be a ruthless number cruncher. After all, there’s no point in lending money to a client if they’re likely to fail to pay it back.
“A good assessment of risk – knowing what kind of support a business needs and what kind of support can be offered – is highly important,” says Marcelino Castrillo, head of SME at Santander Corporate & Commercial. “Bankers must be able to make a realistic assessment of a business’s needs so that they are not raising expectations and, more importantly, not shutting doors which should be opened.”
Not only will you be required to keep up with developments in various industries and the implications of these for your clients’ risk appetite, but you’ll also need to be aware of the regulatory hurdles and the cultural sensitivities of doing business in several countries, as many roles cover a number of geographical locations.
“In my area of private equity financing and advisory, technical skills and deal experience are needed to gain credibility, but the ability to build trusting relationships with the right individuals is the most important requirement,” says Nick Heptinstall, senior banker, financial sponsor coverage, SG CIB. “Across most of the disciplines, successful candidates tend to have curious minds and are not afraid of speaking up when a key point is being missed.”
Corporate bankers will be given a lot of responsibility relatively quickly, so employers want to see evidence of maturity and client focus, even at graduate level. “Really work on how to simplify complex information in a way that’s easy to understand - communication is a key differentiator, as is the ability to manage complex issues and think commercially,” adds Lloyds’ Jackson.