Specialised IB Teams: Structured Finance
Structured Financing is one of the prominent financial instruments in the product team in investment banks. For those who’ve enrolled in the MT programs of CMB and other corp banks as Sales or RM but wish to make the switch to the product team, SF might be worth a try.
SF is a type of finance that works with the bundling of future receivables through Asset-Backed Securities (ABS). In other words, a bank combines the securitized asset of an enterprise as an asset pool, and then customizes the investment portfolio to fund providers. Financial institutions or companies which need SF are most often involved in export trading or large-scale infrastructural projects of developing countries, all of which require sizable funding and extended periods for return. In order to safeguard corporate operation, they will need SF to secure funding and maintain cash flow without worsening debt, such as through repaying due debts to avoid breach of contract. Common SFs include collateralized Debt Obligation, a financial product combining securitized assets and loans, or Syndicated loan, which is built around loans managed by arrangers.
Also, banks can customize investment portfolios for each participant. Participants are introduced to large deals with other products simultaneously hedging. Therefore, SF with a broad customer base is vital for investment banks. Scroll down to see what roles you could apply for:
✅ Risk Analyst/Specialist: SF is a high-risk investment product which takes into consideration a wide array of factors, including whether or not the government has the ability to repay its debts or how a bank values its products. Concurrently, to prevent the onset of a mass financial crisis, Risk Analysts conduct large-scale risk modelling and analysis of enterprise futures through cash flow to determine the interest rate, thus minimizing the losses of the bank and corresponding participants.
✅ Structured Finance Specialist: A Structured Finance Specialist is also in charge of modelling and analysis, and since SF requires the conducting of investment and trading in various countries, they are required to be familiar with local financial and legal knowledge to a certain extent. Those who wish to become Structured Finance Specialists should present adequate technical learning capabilities!
✅ Relationship Manager: SF must be able to comprehend and process significant amounts of information, such as project cash flow or how a relationship manager gathers borrower information before pitching to lending clients. Banks like Societe Generale also require RMs to compile reports and bridge the work between the back and front offices. The role is less demanding in terms of modelling skills, so long as students have a basic understanding of Bloomberg as well as sufficient communication skills, it could be a viable path for joining the product team of investment banks!
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