What Do Bankers Do?

via The World of Wealth, “What Does a Banker Really Do?”

Bankers are people whose job is to raise loans and deposits. Some are commercial bankers (focusing on businesses) and some are personal bankers (focusing on individuals).

So my job, when it’s boiled down, is to originate loans. I do a lot of real estate stuff (though rarely traditional mortgages), I can finance cars/boats/planes, we give unsecured lines of credit, and we do various equipment or working capital loans for smaller medical practices and law firms. I can do just about anything, and we can be very flexible on terms.

I am compensated with a comfortable base salary, but I receive quarterly bonuses based on my portfolio’s net interest revenue. I literally have a balance sheet and income statement for my very own cost center which shows my loans, my deposits, my fees, my expenses, and shows exactly what the bottom line is that I produce for the bank.

If my clients get overdraft fees, that’s good for my bottom line. If I waive a client’s overdraft fees, that’s bad for my bottom line. If I charge an origination fee on a loan, that’s great for me/the bank. I can set the pricing and terms on all the loans I do – the bigger the spread between the bank’s cost of funds and the interest rate I charge, the better. But I also personally lose if a client defaults on a loan or an overdraft ends up having to be charged off.

I still think it’s crazy how I can just make up terms and rates and quote them to a client. I have to be aware of what other lenders in the market are charging so I am not too far off base. And of course I have a manger who has been in the business for decades and can offer guidance on what we’re likely to be able to get approved.

Another “job” of the banker is to walk the line between what will please your clients and what will please the credit approvers. You are literally a middle-man, an advocate, trying to simultaneously “sell” the client on a deal and also “sell” the approver on it.

Many times you have to go back and forth. The credit people want more collateral – the client balks but offers his rich uncle as a limited guarantor on the deal – well the credit guy wants an unlimited guarantee – well then the client wants a lower rate – well then I might have to charge a fee since it’s not profitable to the bank anymore… Some of our clients will choose another bank which offers better terms, or they may just shrug and pay in cash for whatever they were doing. Or it might get so far as their attorneys, who reject some random clause in the loan documents that I can’t control. Months of expenses and time down the drain.

Good bankers don’t just make loans, especially in the private banking world. I am my clients’ advisor and advocate. I typically work with their financial planners, their attorneys, their CPAs, and/or their estate planners to help them meet their goals.

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Comments
One Response to “What Do Bankers Do?”
  1. dem says:

    This might be one of the most helpful things we have! Of course, this is more personal banking rather than corporate banking, but I would assume the same basic idea applies, just scaled up?

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