Working on the structuring desk
People in investment banking, or wanting to get into investment banking, often understand roles in mergers and acquisitions or sales and trading. What the structuring desk does is less known and harder to understand.
Structuring desks typically create bespoke solutions for large clients with complex problems when the ‘off-the-shelf’ product does not exist. People who enjoy solving complex problems that require collaboration with a wide variety of internal desks may find a career in structuring suits them.
What do structurers in banks do?
Corporate and institutional clients of an investment bank have a range of needs. These needs typically can be classified as either:
- Hedging risk,
- Gaining exposure to an asset, or
- Raising capital.
At the most basic level, structuring desks try to figure out solutions to these needs and design bespoke products or exposures. Sometimes a structuring deal will involve more than one of these needs. Structures need to ask themselves three questions.
The ‘what’ and ‘why’ are the simpler of the three questions. The client wants to hedge. The client wants a yield enhanced exposure to an asset. The client needs to raise capital for an infrastructure project. The ‘how’ is the most complicated question to answer. Answering the ‘how’ is where the structuring desk will spend most of their time.
The ‘how’ question typically needs to address tax, accounting, or cross-border considerations. There could be competitive or regulatory considerations. For example, the client requirement could involve building a mining operation in Africa. This requirement would create a range of currency, legal, regulatory, and tax issues when designing a financing or hedging solution.
How is the structuring desk organized?
Because of the bespoke nature of structuring solutions, bank organizes their structuring desks in different ways, aligned to their strengths and coverage capabilities. No desk in any investment bank can offer all the solutions structuring clients require.
Large global investment banks, however, will typically cover all asset classes such as credit, rates, FX, and emerging markets. They will also cover most regions.
Working on the Delta One Desk
Clients of the desk are both corporate and institutional, so people on the desk could be working with some of the best-known companies in the world or the largest asset managers and pension funds. People that are adept at thinking about problems and issues in a practical, logical, and mathematical manner will often have the skills needed to problem-solve for these clients.
While problem-solving skills are essential, the unique nature of the structuring desk means a certain mindset is equally, if not more, important. As this diagram for the Fmi Global Markets course illustrates, versatility and adaptability are vital requirements for people looking at a structuring role.
Structuring desks work to find solutions to problems that evolve as markets change through various financial and economic cycles. This means a desk may face a challenge not seen before, giving people on structuring desks an excellent opportunity to add value and gain valuable experience that could be used in other roles later in their career.
People in a structuring role may be involved in creating pricing models or working with quantitative research colleagues and the models they have made. This means people on structuring desks often have a background in mathematics, computer science, engineering, or economics.
They could equally be involved with presenting to internal colleagues (to describe their client’s needs to other desks and teams within the bank) or external clients (to propose suggested solutions. They may also be involved with creating term sheets to explain their proposed solutions further. Structuring desks by necessity, collaborate with other teams within the bank, such as front office roles like sales and trading, and other teams such as marketing, legal, risk, and compliance. This means working on the structuring desk requires not only strong quantitative skills but also outstanding written and oral communication skills.
Structuring prepares people for any role in financial services due to its diversity. The experience gained on the structuring desk is invaluable and the skills gained are very transferable across businesses and asset class.