Job Responsibilities
A simple way to describe the responsibilities of a commercial
banking RM is that you are a middleman for clients/prospects and
the bank, as well as the bank and the regulators. You have
three primary responsibilities: Keep all existing clients
satisfied, meet your goals and ensure compliance with
regulations. Everything else you do is a derivative of these.
You cannot lose clients in commercial banking! Client retention
is critical because the cost to acquire new clients is so high -
- it takes years to develop the relationships and finally
convince a prospect to move. Keeping all clients satisfied can
be challenging at times, as customers will call you first if
there are problems on even the most elementary issues (checking
issues, mistakes and other customer-service type issues). You
would be amazed at how upset people get over seemingly minor
things. Additionally, you will be the bearer of good and bad
news, so you will need to be able to communicate effective.
People skills and the ability to delegate are also critical.
Much of your time is spent getting to know your client and the
bank (to solve the problems). Client meetings and entertainment
can go a long way to build the relationships. It can be
difficult to leave a friend, so your goal is to be as close as
possible to the client. Good rapport will make minor problems
minor, difficult discussions a little easier and generally allow
you the benefit of doubt. Bad rapport will be the best reason
for your client to look elsewhere.
Time spent is approximately 30-40%.
Meeting your goals is what makes the world go round in banking.
The ability to cross sell existing products (they have a loan
with you, so you sell them treasury products, etc.) and bring in
new clients separates the all-stars from the average
Joes/Janes. Generally speaking, the rain makers are the most
respected bankers. You will always have a place in banking if
you can bring in new clients or successfully increase existing
profitability.
Goal discussions, relationship plans, prospecting and product
overview meetings comprise the majority of your time in regards
to this function.
Time spent is approximately 20-40%.
Regulatory compliance is the blandest part of the job. All
banks have a commercial policy, which is derived from the
regulators. You must ensure that you follow this completely.
Underwritings, risk ratings, et al follow some procedure. This
can be fun at times (for new deals), but is usually mundane and
repetitious. All clients have a full annual review (similar to
a new deal) and most have a quarterly review. For new deals,
especially non-public mid market companies, you do have a chance
to create the wheel. This will require the ability to ask
probing questions of the client/prospect, great insights into
the business, and the ability to articulate the risks and
weaknesses of the particular transaction. For public companies
and existing clients, however, this can be a cut and paste
exercise for the company description, management, history, etc,
followed by updating the financial performance. The latter can
be very time consuming and boring, especially if no new events
occur. After you have experience in the position, much of these
requirements will seem like busy work and have no bearing on the
actual outcome of the client??s satisfaction or the bank??s
profitability.
Time spent is approximately 30-40%.
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Job Requirements
Commercial banks hire from both undergrad and MBA programs;
however, an MBA is not necessary to succeed or to get hired.
Entry level positions will focus on typical items - - school,
grades and extra curricular activities. (Note that if you are
not a business major, you generally need at least 4 accounting
courses because most analyst work revolves around financial
statements.) Experienced positions will have more weight placed
on years in the industry, success with cross-selling and ability
to prospect than they will on having a MBA. Furthermore,
commercial banking is nearly always regionally focused, so you
will get to know the players in the region and if you are good,
they will get to know you.
Once inside a commercial bank, you generally get promoted based
upon your abilities, by aligning yourself with the correct
team/person or by moving to another institution. Titles matter
in commercial banking and the ladder is usually structured as
follows:
Trainee => Entry level position usually for undergrads.
Most companies have some sort of training focused on credit and
company culture. Following training, you will either rotate
through different groups or go directly into a group (dependant
upon the bank). Job focus will be on providing analysis for
underwriting packages, ensuring for company compliance with loan
covenants, performing risk ratings?? basically anything the
account officer wants you to do. This stage generally has very
little client contact.
Bank Officer => Successful trainees are promoted to Bank
Officer usually within 1-3 years of service. The promotion is
usually based upon the person??s potential and ability to make an
impact. By this point, some client contact has started and you
are usually a secondary person on the account. You should be
managing the underwriting process internally, while the account
officer will be ultimately responsible for the activity. At
this point your focus is on learning how to manage
relationships, build rapport with customers/prospects, structure
deals and learn all bank products. In order to move up to
account officer you will need to have all of these skills down
pat!
Assistant Vice President => Successful Officers are
promoted to AVP usually within 2-4 years following promotion to
Officer. MBAs will generally start with this title as well.
AVPs are either junior account officers or full blown account
officers, dependant upon ability.
Vice President => This is where the ladder gets grey.
Superstars can become VPs within two years of being promoted to
AVP, while others (and even some superstars) can wait years for
the promotion. The majority of commercial bankers are at this
level and most will remain at this level for the duration of
their career in some form (VP 1, VP 2, etc.). VPs are full
blown account officers. The reason I stated that titles matter
is that since most bankers are VPs, larger clients generally
want a VP managing the account. Prospects will also want this
and not having a VP could put you at a competitive
disadvantage. (Though on both accounts, being the better banker
matters most and if you are good, you can overcome these
factors.)
Senior Vice President => Senior RMs / Team Leaders /
Group Heads generally carry this title. SVPs are in their mid-
to-late 30's at a minimum. Most are in their 40's.
Responsibilities depend on the positions mentioned above. You
are generally considered a 'junior executive'. Successful SVPs
will move on to become an EVP, while most SVPs usually retire at
this level.
Executive Vice President => Group Heads / Division Heads
et al. Carry this title.
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Uppers
The quality of life is the best upper. See below.
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Downers
Pay, cyclicality, autocratic nature and regulatory oversight are
the biggest downers.
Pay - - Bonuses are usually not clear and the majority of
compensation is in the form of salary. Though bases can be
substantial, total compensation is generally no where near other
financial industries (Investment Banking, Investment Management,
etc.). Therefore, if you are ambitious and want to be paid on
performance, you will be frustrated at times, especially if you
live in larger cities and have friends in the other industries.
Cyclicality - - Credit cycles drive demand and it is not fun to
be at a commercial bank in a down cycle. Pay is usually less,
layoffs are usually more and lending is usually cut off to a
trickle at best. Very boring times for someone who wants to
learn more.
Politics - - Unfortunately, performance does not always matter
in banking. Many times your friends matter most. Commercial
banking can be clicky and after a year or so, you can generally
notice the teams. It is not uncommon for whole teams to take
over groups. And even if it is just an individual change at the
top, usually (s)he gets their people involved quickly. If you
are on the winning team, you can do well. If you are not, well,
you will either be put in a position you may not like (if you
are good) or laid off (if you are average or less).
Regulation - - This can at times be the biggest downer. Banks
are highly regulated and much of your time is spent doing
seemingly unproductive things simply to comply with the
regulators. If the deal flow is high, this can be overwhelming
at times.
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Lifestyle
Seek employment in this industry if:
you want to have a finance career that does require an
MBA to advance.
you want good experience prior to entering BSchool.
enjoy managing relationships, entertaining and people
you live in a region (and want to stay in the region)
that does not have a strong. investment banking presence.
you want a relatively stable/consistent finance career.
Do not seek employment if:
you want to advance rapidly.
You want your pay to be based largely on your
performance.
I think that the general outlook for commercial banking is
positive. Though it is not as glamorous as others in the
financial sector, it is a good career path for those that can
tolerate the downers. The pay is good and the quality of life
is excellent. While many banks continue to downsize, there will
always be a need for commercial lenders, especially on the mid-
market and large corporate transactions. This combined with the
fact that there are not many young bankers in the industry (=
down the road you should have more leverage and be more
desirable to other institutions), should be positive indicators
for the occupation.
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Compensation
Compensation is usually middle-of-the-road. The pay is just
enough to make grad school a difficult choice for the younger
bankers. Base can range from $50-90K for AVPs and from $90-125K
for VPs, dependant upon ability and responsibilities. Bonuses
can be very grey and are usually driven by how well the
commercial bank does; generally 0-10% in down years, 10-20% in
average years and 20-30% in excellent years. The latter is not
common. Stock options are offered the higher you are on the
ladder or to the better employees during down years (instead of
a bonus). Benefits vary greatly among banks, but larger banks
offer decent dental health, a 50-100% 401K match up to 4 or 6%
of pay, stock purchase plans, etc.
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Advice to Jobseekers
Seek employment in this industry if:
?? you want to have a finance career that does require an
MBA to advance.
?? you want good experience prior to entering BSchool.
?? enjoy managing relationships, entertaining and people
contact.
?? you live in a region (and want to stay in the region)
that does not have a strong. investment banking presence.
?? you want a relatively stable/consistent finance career.
Do not seek employment if:
?? you want to advance rapidly.
?? You want your pay to be based largely on your
performance.
I think that the general outlook for commercial banking is
positive. Though it is not as glamorous as others in the
financial sector, it is a good career path for those that can
tolerate the downers. The pay is good and the quality of life
is excellent. While many banks continue to downsize, there will
always be a need for commercial lenders, especially on the mid-
market and large corporate transactions. This combined with the
fact that there are not many young bankers in the industry (=
down the road you should have more leverage and be more
desirable to other institutions), should be positive indicators
for the occupation.
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