Our corporate banking/commercial banking friends (friends only when they extend credit, otherwise just acquaintances) have brought to our attention the lack of corporate banking interview questions on the website. Good point!
Corporate banking is substantial in the US, but is becoming more and more relevant in China. There are now myriad banks offering loans to SMEs with deals being transacted in Hong Kong as a finance hub – so we will look to grow our corporate banking content as corporate banking itself grows.
We have curated only the greatest corporate banking questions here – but any corporate bankers who would like to be so altruistic as to donate more questions to our question bank please feel free to contribute to society and freedom of information. In addition to the standard investment banking interview questions (and sales & trading interview questions if the bank engages in a lot of ancillary business via the trading floor), these are standard:
- What is EBITDA and how do you calculate it from net income?
- What is a positive covenant? What is a negative covenant? What is a financial covenant?
- What are some negative covenants?
- Where is LIBOR? Where is CDOR?
- What is a change of control clause?
- What are some events of default?
- What is debt capacity?
- What is the debt cushion?
- Starbucks has EBITDA of 10 Billion and Debt of 30 Billion. The pre-tax cost of debt is 5% (definitely not the case in today’s market).
- What is Debt/EBITDA?
- Let’s say there is a leverage covenant of 5x. What is the EBITDA cushion?
- There is a coverage covenant of 3x. What’s the threshold?
- What is a waiver?
- What is a Debt Service Coverage Ratio (DSCR)?
- What is a cash sweep?
- Why are loans syndicated?
- Why is it hard for US banks to lend money to Canadian corporates?
- How do you get to the effective interest rate on bank debt?
- What is the difference between a pricing grid and a leverage grid?
- Walk me through $10 of accounts receivable through the three statements.
- What is a borrowing base facility?
- Let’s say we are in Canada – an what is the drawn margin for a large, unsecured revolver on a A- rated credit? What is the undrawn margin?
- What is an upfront fee?
- Tell us about some deals we have led. Tell us about a recent acquisition finance we have done.
- What are some loans that corporate banks offer in addition to revolvers?
- Let’s say you are working in Oil and Gas Corporate Banking or Mining Corporate Banking. We have a more junior company that would not be able to get an unsecured revolver – what sort of facility would be proposed for working capital or liquidity purposes? How would that work?
- Do banks prefer amortizing debt or bullet debt?
- What is a bridge loan?
Answers some time in July – stay tuned! If you have a corporate banking interview coming up and need answers immediately, like our Facebook page and message us there and we may prepare emergency responses.