Interview prep · FIG
FIG interview questions
FIG interviews start from a demolition: most of the standard toolkit does not work on banks and insurers, and the first thing tested is whether you understand why. For a bank, debt is not financing to be stripped out — it is raw material, and interest is an operating line. That single fact reshapes the whole technical conversation.
Screeners ask for exactly that reasoning: why enterprise value and EV-based multiples break for financial institutions, and what replaces them — P/E, price to tangible book value, and dividend discount models built on distributable earnings. The next layer covers the operating model: net interest margin and its drivers, credit provisioning, and fee income. Superday questions reach the constraints that make FIG genuinely different — regulatory capital requirements and how they cap growth and payouts, and for insurance, float, reserving, and the combined ratio.
None of this excuses you from the generalist set; FIG interviewers commonly test standard accounting and valuation first, then the FIG layer. The candidates who impress are the ones who can articulate why the rules change at the boundary between a normal company and a balance-sheet business.
FIG: what candidates ask
Do FIG interviews still test regular accounting and valuation?+
Yes. The FIG-specific material is a layer on top of the standard set, not a replacement for it. Expect three-statement and general valuation questions alongside the bank-specific ones, and expect the transition question itself — why the standard approach fails for financial institutions — to be a favorite, because it tests both bodies of knowledge at once.
Do I need to know banking regulation in detail?+
Conceptually, not encyclopedically. You should be able to explain that regulators require banks to hold capital against their assets, name a headline measure like the CET1 ratio, and reason about the consequence: capital requirements constrain lending growth, dividends, and buybacks. Rule-level detail and current threshold numbers are beyond what interviews typically demand.
Is FIG prep worth it if I don't know my group placement yet?+
A light version, yes. If FIG is a realistic outcome of your process, understanding why banks are valued differently is high-value insurance — and even in generalist interviews, the why-doesn't-EV-work-for-banks question occasionally appears as a discriminator. Go deep only once a FIG-specific interview or placement is actually in view.
Every FIG question in the bank
All 84 published questions from FIG (Banks & Insurance) — each links to its own page. Free ones show the full model answer.
6
- Why do bankers value financial institutions on equity value only, never enterprise value?
- Walk me through a typical commercial bank's balance sheet.
- What is net interest margin, and how do you calculate it?
- What is insurance float, and why did Buffett build Berkshire on it?
- Written versus earned premium: a $1,200 twelve-month policy is written on July 1. What do the year-end financials show?
- Why FIG?
36
- Why is EV/EBITDA a meaningless multiple for a bank?
- Why does a standard unlevered DCF fail when you point it at a bank?
- What does it mean when people say 'debt is raw material, not capital structure' for a bank?
- Why is interest expense an operating item for a bank when it's a financing item everywhere else?
- If revenue and EBITDA are out, what P&L lines do FIG analysts actually anchor on for a bank?
- Why do people say a bank's income statement is just its balance sheet in motion?
- Net interest income versus noninterest income — and why do investors pay a premium for fee income?
- What is a deposit franchise, and why is it the core of a bank's value?
- What is deposit beta?
- Distinguish the provision for credit losses, the allowance for credit losses, and net charge-offs.
- What does it mean for a bank to be 'asset-sensitive,' and what happens to its NIM when rates rise?
- Compare the accounting for held-to-maturity and available-for-sale securities at a bank.
- What is a bank's efficiency ratio? A bank has $6B of noninterest expense and $10B of total revenue — compute and interpret it.
- A bank earns a 1.0% return on assets and runs assets at 10x equity. What is its ROE, and why do bank analysts think in ROA terms at all?
- Break down CET1, Additional Tier 1, and Tier 2 capital — what sits in each layer?
- What are risk-weighted assets? Give example risk weights under the US standardized approach.
- Why do regulators require both a risk-based capital ratio and a leverage ratio?
- Why does regulatory capital constrain a bank's growth and its buybacks?
- Why do book-value multiples actually work for banks when they're dismissed for most industries?
- Why do some banks trade below tangible book value — and is that automatically a buy signal?
- When do you use P/E versus P/TBV for a bank?
- Why is the dividend discount model considered THE intrinsic valuation method for banks?
- Why does relative valuation dominate intrinsic valuation in FIG practice?
- Two banks both trade on tangible book: one at 0.6x, one at 2.0x. What explains the gap?
- You're building a bank comps page. Which metrics go on it?
- Define the loss ratio, expense ratio, and combined ratio. An insurer has $650M of incurred losses, $300M of underwriting expenses, and $1B of earned premium — is it making an underwriting profit?
- Compare the economics of P&C insurance and life insurance.
- What risks does a life insurer actually take?
- Why do insurers buy reinsurance, and what are the two basic structures?
- How do you value an insurance company?
- Walk me through an asset manager's business model. What revenue does $100B of AUM at a 50bp fee rate produce, and what moves the model?
- You said EV/EBITDA is banned for banks. Why is it perfectly fine for asset managers?
- What does a FIG analyst actually model differently from a generalist coverage analyst?
- Why did Basel III follow the 2008 crisis — what specific failures was it built to fix?
- What sub-sectors sit inside FIG coverage, and how does the analysis change across them?
- What makes a truly great bank franchise?
42
- Why are capex and working capital effectively undefined concepts for a bank?
- You must build an intrinsic, DCF-style valuation for a bank. What do you actually build?
- Is there any FIG vertical where enterprise-value multiples ARE acceptable? Why the exception?
- What is CECL, and how did it change bank loss accounting?
- Do unrealized losses on a bank's AFS securities reduce its regulatory capital?
- Give me a DuPont-style decomposition of a bank's ROE.
- What credit-quality metrics do you check on a bank, and how do they fit together?
- What is PPNR, and why do stress tests and analysts care so much about it?
- Rates jump 200bp. Walk through what happens to a typical bank's net interest income in year one versus the longer run.
- What are the Basel III minimum capital ratios, and what do the buffers add on top?
- What is the Liquidity Coverage Ratio?
- What is the NSFR, and how does it differ from the LCR?
- Explain CCAR/DFAST and the stress capital buffer.
- What is the G-SIB surcharge?
- A bank needs to raise its CET1 ratio by 100bp without issuing stock. What levers can it pull?
- Derive the justified P/TBV multiple and apply it: ROTE of 14%, cost of equity of 10%, long-term growth of 2%.
- Quick DDM: a bank has $10B of tangible common equity, earns a 15% ROTE, retains one-third of earnings, and has a 10% cost of equity. Value it.
- How do you handle excess capital when valuing a bank?
- All-stock bank deal: the acquirer has 100M shares at $10.00 tangible book value per share, and issues 25M new shares at $18.00 ($450M) for a target with $150M of tangible common equity, creating $300M of goodwill and intangibles. Compute the TBV dilution.
- That deal dilutes TBVPS by $0.80 on 125M pro forma shares and adds $20M of annual earnings including synergies. What's the TBV earnback period, and what methods exist?
- What is a core deposit intangible?
- How do fair-value marks work in bank M&A, and why do interest-rate marks 'come back' through earnings?
- What is a core deposit premium, and how do bankers use it in deal conversations?
- In a bank DDM, the bank doesn't actually pay out everything it could. What dividend stream do you discount?
- An insurer runs a 103% combined ratio. Can it still be profitable — and should every insurer target sub-100%?
- What are loss reserves and IBNR on an insurer's balance sheet?
- What is reserve development, and why do insurance investors obsess over it?
- What does it mean that annuities are a 'spread business'?
- Why is P/E a noisier multiple for insurers than for most companies?
- How does investment income drive an insurer's ROE? An insurer holds $30B of investments against $10B of equity and portfolio yields rise 100bp — quantify the effect.
- What is the underwriting cycle — what makes a market 'hard' or 'soft'?
- What is a loss triangle, and how do actuaries use it to set reserves?
- Why are life insurers considered harder to value than P&C insurers?
- Explain operating leverage at an asset manager — and its flip side.
- Why do exchanges trade at premium multiples within FIG?
- How does a large retail broker actually make money, and where is the rate sensitivity?
- What is a BDC, and how do investors value one?
- A fintech lender argues it should trade on revenue multiples like a software company. What's the counterargument?
- How do traditional and alternative asset managers differ, and how does valuation reflect it?
- What happened to Silicon Valley Bank, and what does it teach about duration risk?
- What did the 2023 US regional-bank stress reveal about deposit franchises?
- Rates rise sharply and stay higher. Walk across the FIG verticals: who wins and who loses?
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