Investment banker ...
Investment banker (corporate finance)

Entry Requirements
Investment banks are interested in graduates from all discipline...
Investment banker (corporate finance)

Career Development
Most graduates begin in analyst roles. These are two to three-ye...
Investment banker (corporate finance)

Information Sources
AGCAS and Graduate Prospects products are availabl...
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Investment banker (corporate finance)


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Investment banker (corporate finance)

  1. 1. OCCUPATIONAL PROFILE Investment banker (corporate finance) Job Description Corporate financiers provide a range of financial services to companies, institutions and governments. They manage corporate, strategic and financial opportunities, including mergers, acquisitions, issuing bonds and shares, lending, privatisations, and overseeing initial public offerings (IPOs). Corporate financiers advise and lead management buyouts, provide strategic advice to clients, and identify and secure new deals. Investment banking is frequently used as a catch-all term. In reality, banks are made up of many divisions and investment bankers perform a range of different functions. Traditionally, investment banking incorporates corporate finance and mergers and acquisitions (M&A). The definition has blurred in recent years and may also include trading bonds and shares. Typical Work Activities The main role of corporate financiers is to advise companies, institutions and governments on how to achieve their financial goals and implement their plans. Corporate financiers work in dedicated teams, focusing on specific transactions or market sectors. A typical corporate finance deal involves two stages: • Origination: assessing a deal's desirability, which is sometimes an innovative idea from the bank rather than the client. Financial models are used to simulate possible outcomes (this requires a deep understanding of a sector). • Execution: structuring and negotiating the detailed terms of a deal, often in liaison with other professionals. Many investment banks deal in three main areas: • Mergers and acquisitions (M&A): assisting clients with expansion to increase profitability, safeguard market position, diversify, etc. Investment bankers manage the transaction process, assessing the target organisation and the impact of the deal. This involves knowledge of legal and regulatory issues. • Debt capital markets: working with lenders such as financial institutions, agencies and public and private companies to support client debt. This includes restructuring debt, refinancing debt and raising new debt. • Equity capital markets: advising clients on how much capital to raise, from whom and when. Although dealing with different, specific business areas, project teams liaise with one another during the two phases of a deal in order to obtain relevant specialist information and market intelligence. Typical activities on a day-to-day basis include: • thoroughly researching market conditions and developments; • identifying new business opportunities; • carrying out financial modelling, then developing and presenting appropriate financial solutions to clients; • liaising with the chief executive and chief finance officer of large organisations; • structuring marketing campaigns for transactions; • co-ordinating teams of professionals, including accountants, lawyers and PR consultants. Work Conditions • The average starting salary is £35,500, well above the average UK graduate starting salary of £23,500 (salary data collected February 08). After three or more years, salaries may range between £50,000 and £75,000. Those with significant experience may earn a base salary of around £150,000 (salary data collected February 08). • Pay is often performance-related. For a new trainee, salaries may be increased by up to 50% annually through bonuses. Managing directors' salaries often account for less than 15-20% of their total earnings, with the rest being bonus-related. However, every year up to 10% of an investment bank's workforce may be lost as a result of poor individual performances. The environment is strongly meritocratic. • Hours are regularly long and often unsocial. Weekend work is common as deals approach crucial stages. Fifteen-hour days are not unusual and investment bankers work up to 100-hour weeks. • Investment banks are increasingly keen to attract a diverse workforce. Many companies run events aimed at attracting women to the profession (see Chances Events (www.chancesevents.com)). Most have internal support networks for under-represented groups. A number of banks are members of the Diversity Champions programme from Stonewall (www.stonewall.org.uk). • The job market is volatile. The recruitment and retention of staff may be adversely affected by economic downturns. Between 2001 and 2003, there were more than 35,000 redundancies in the sector due to the effects of events such as the September 11 attacks in the US and the decline of the dot.com boom. Buoyant financial markets saw opportunities increasing from 2005 to 2007, but 2008 has seen jobs in the City under a new threat due to the global credit crisis. • The main financial centres are New York and London, followed by major European cities such as Frankfurt and Paris. UK-based positions are almost exclusively in London. Many investment banks have global offices and offer trainees the chance to work overseas within the first two years. Once qualified, investment bankers may spend significant time working overseas. This Occupational Profile forms part of Prospects Planner www.prospects.ac.uk/links/occupations Page 1 of 4
  2. 2. Investment banker (corporate finance) Entry Requirements Investment banks are interested in graduates from all disciplines, not just those with finance-related degrees. Standards are high and companies usually ask for at least a 2.1 degree with a strong, consistent, academic performance. They often specify a minimum number of UCAS points. Entry without a degree or HND is not usually possible. Selection is competency-based. Candidates are assessed on their ability to demonstrate a range of the skills considered desirable by the sector. These include: • strong numerical and analytical skills; • excellent teamworking and team leadership skills; • communication and interpersonal skills; • project and time management; • dedication, energy and commitment; • self-confidence and ability to make difficult decisions; • the ability to work under pressure. Employers also look for commercial awareness and knowledge of financial markets. A second language may be useful, but is not essential. The recruitment process normally has several tiers: an online application form, numerical (and often verbal) reasoning tests, first interview/assessment centre, and final interviews. Competition for positions is fierce. Some investment banks receive 9,000 applications for around 150 places per year. This means, on average, there are around 60 applicants per position. Around 7,500 of these applicants do not make it past the initial application stage, so preparation and planning are essential if you want to succeed at each of these stages. Completing an internship with an investment bank is a valuable way to improve your chances of securing a job. Investment banks do offer their interns full-time positions, with some banks offering jobs to between 50-90% of interns. The application process is similar to that of graduate schemes. Internships are normally open to penultimate-year students. Some investment banks accept applications from students who require a work permit. Most investment banks have a strong presence on university campuses, posting vacancies through careers service bulletins and websites, holding presentations and attending recruitment fairs. Details and dates may be found on company and careers service websites. It is illegal for employers to discriminate against candidates on the grounds of age, gender, race, disability, sexual orientation or religious faith. For more information on equality and diversity in the job market see Handling Discrimination (www.prospects.ac.uk/links/discrimination). Training New trainees are normally introduced to the sector via intensive, company induction programmes, which may last four to eight weeks. These programmes are delivered by senior professionals from within the company and industry experts. They are designed to provide a comprehensive overview of the sector, covering areas such as accounting, corporate finance, economics, capital markets and financial modelling. Induction programmes may bring together new trainees from across the organisation. The focus is on team building and case-study-based learning. Training is rigorous, challenging and comprehensive. Once inductions are completed, additional training may be provided through in-house courses and seminars. Some employers may also require further professional qualifications. The Securities and Investment Institute (SII) (www.sii.org.uk) provides a number of qualifications related to the work of investment bankers, which are approved by the Financial Services Authority (FSA) (www.fsa.gov.uk). These include the Certificate in Corporate Finance. Corporate financiers successfully completing this certificate may then opt to continue their professional development by studying for the Corporate Finance Qualification (www.cfqualification.com). This is a global qualification jointly provided by SII, the Institute of Chartered Accountants in England and Wales (ICAEW) (www.icaew.co.uk) and the Canadian Institute of Chartered Accountants. The ifs School of Finance (IFS) (www.ifslearning.ac.uk) (formerly the Chartered Institute of Bankers) also runs many courses relevant to corporate finance. These include a degree or diploma in financial services or a specialisation in corporate banking. The UK Society of Investment Professionals (UKSIP) (www.uksip.org) (UK member of the CFA Institute, formerly the Association for Investment Management and Research) and the Association of Corporate Treasurers (ACT) (www.treasurers.org), also provides relevant training courses. The Financial Services Skills Council (www.fssc.org.uk) provides guidance on which qualifications are most suitable for your role. Page 2 of 4 See also AGCAS Sector Briefings for an overview of job sectors - www.prospects.ac.uk/links/sectorbs
  3. 3. Investment banker (corporate finance) Career Development Most graduates begin in analyst roles. These are two to three-year trainee positions, after which they progress to associate, though MBAs may have direct entry. Associates typically have a team of analysts working for them. After a further three years, they may move to vice-president (VP), managing the day-to-day work of both associates and analysts. VPs are in more frequent contact with clients and may have their own customers. The next step is director or executive director and then managing director, although promotion beyond VP is difficult. Some banks only promote around 6-8% of staff to be managing directors. Exceptional individuals may achieve this within ten years of graduating. Although responsibility increases with seniority, analysts are still put on a steep learning curve and, in order to progress, they are expected to demonstrate more than just analytical skills. Additional competencies include strong leadership potential, sophistication of judgement, an understanding of client motivation and expertise in the commercial context of their work. Being pro-active and gaining experience in as many areas as possible from an early stage demonstrates commitment and a desire to move upwards. Performing well not only leads to good bonuses and internal recognition, but attracts outside attention - headhunting is common within the sector. High performers are in demand and it is not unusual for individuals or whole teams to be poached by other banks. Headhunting aside, regular moves between banks are possible. Experienced corporate financiers may also move into senior management positions in industry, commerce or government. It is also possible to enter corporate finance after training as an accountant or lawyer. Specialist industry knowledge is highly valued, as is a range of talents, including quantitative skills and general financial knowledge. Typical Employers Investment banks are the main providers of corporate finance services. Banks may be ‘pure’ (e.g. dealing only with corporate wholesale banking) or ‘universal’ (e.g. handling both wholesale and retail banking for corporate clients). Within London investment banks may now be split into four main categories: • US 'pure' investment banks, e.g. Goldman Sachs and Lehman Brothers • US 'universal' banks, e.g. Citi and JP Morgan • UK and EU universal banks, e.g. Deutsche Bank and Societe Generale • Specialist independent banks, e.g. Lazard and Rothschild When choosing which banks to apply to, consider the size of the organisation. Citi, for example, has around 325,000 employees globally and JP Morgan employs 160,000 people worldwide. Meanwhile Rothschild has just over 2,000 staff. A larger bank obviously means working on much larger accounts but career progression may be more rapid in a smaller company. It is also worth looking at the bank's reputation. Some companies are strong in mergers and acquisitions (M&A), while others are renowned for their work in debt capital. Key players in each area are listed in Careers in Financial Markets (www.efinancialcareers.co.uk/pdf/CIFM-UK-0708.pdf). Apart from the large investment banks, other M&A advisers include corporate finance boutiques. These tend to specialise in fewer areas of work or products, or in particular industry sectors, or the corporate finance divisions of accountancy firms. It is possible, for example, to train as a chartered accountant and then move into corporate finance. Other employers offering relevant experience include stockbrokers, the Financial Services Authority (FSA) (www.fsa.gov.uk), the Bank of England (www.bankofengland.co.uk), the London Stock Exchange (LSE) (www.londonstockexchange.com), investment firms and venture capital firms. Sources of Vacancies • Inside Careers: Banking, Securities and Investments; • Careers in Financial Markets (www.efinancialcareers.co.uk/pdf/CIFM-UK-0708.pdf); • TARGETjobs City and Finance; • Hobsons GET Finance Guide; • Prospects Directory; • Prospects Finalist (www.prospects.ac.uk/links/finalist); • companies' own websites and graduate brochures. Vacancies are also advertised in the financial job pages of the broadsheets such as Times Online (www.timesonline.co.uk) and the Financial Times (news.ft.com) and in supplements of the national press, e.g. The Guardian (www.guardian.co.uk) Graduate section on Saturdays. There are some specialist recruitment agencies that deal with investment banking opportunities, such as City Jobs (www.cityjobs.com/). Details can be found through internet search engines, in the specialist financial press or in the Recruitment and Employment Confederation (REC) (www.rec.uk.com). Related Occupations • Banker • Chartered accountant • Investment analyst • Investment banker (operations) • Investment fund manager • Solicitor, commercial • Trader (equities, FX, futures, bonds) Find comprehensive careers information on www.prospects.ac.uk and in your HE careers service Page 3 of 4
  4. 4. Investment banker (corporate finance) Information Sources Bibliography AGCAS and Graduate Prospects products are available from higher education careers services. AGCAS Publications Accountancy and Business Services Sector, AGCAS Sector Briefing Banking, Investment and Insurance Sector, AGCAS Sector Briefing Handling Discrimination, AGCAS Information Booklet Graduate Prospects Publications Prospects Directory Prospects Finalist Other Publications Careers in Financial Markets, eFinancialCareers Ltd, Annual The Economist, The Economist, Weekly Financial Times, Financial Times Group, Daily The Guardian, Guardian Newspapers Ltd, Daily Hobsons GET Finance Guide, Hobsons Plc (http://www.get.hobsons.co.uk), Annual Inside Careers: Banking, Securities and Investments, Inside Careers (http://www.insidecareers.co.uk), Annual The Money Machine: How the City Works, Penguin Books Ltd, 2002 TARGETjobs City and Finance, GTI Specialist Publishers (http://www.groupgti.com), Annual Websites Association of Private Client Investment Managers and Stockbrokers (APCIMS), www.apcims.co.uk Chances Events, www.chancesevents.com Chartered Financial Analyst (CFA) Institute, www.cfainstitute.org City Jobs, www.cityjobs.com/ Corporate Finance Qualification, www.cfqualification.com eFinancialCareers, www.efinancialcareers.co.uk Financial Services Skills Council, www.fssc.org.uk Financial Times, news.ft.com Institute of Chartered Accountants in England and Wales (ICAEW), www.icaew.co.uk International Capital Market Association (ICMA), www.icma-group.org/ London Investment Banking Association (LIBA), www.liba.org.uk Recruitment and Employment Confederation (REC), www.rec.uk.com Securities and Investment Institute (SII), www.sii.org.uk Stonewall, www.stonewall.org.uk Times Online, www.timesonline.co.uk Totally Financial, www.totallyfinancial.com/ Addresses Association of Corporate Treasurers (ACT), 51 Moorgate, London EC2R 6BH Tel: 020 7847 2540 URL: www.treasurers.org Bank of England, Threadneedle Street, London EC2R 8AH Tel: 020 7601 4444 URL: www.bankofengland.co.uk British Bankers Association (BBA), Pinners Hall, 105-108 Old Broad Street, London EC2N 1EX Tel: 020 7216 8800 URL: www.bba.org.uk Financial Services Authority (FSA), 25 The North Colonnade, Canary Wharf, London E14 5HS Tel: 020 7066 1000 URL: www.fsa.gov.uk ifs School of Finance (IFS), ifs House, 4-9 Burgate Lane, Canterbury, Kent CT1 2XJ Tel: 01227 818609 URL: www.ifslearning.ac.uk London International Financial Futures & Options Exchange (LIFFE), Euronext.liffe, Cannon Bridge, London EC4R 3XX Tel: 020 7623 0444 URL: www.euronext.com/home_derivatives/0,4810,1732_6391950,00.html London Stock Exchange (LSE), 10 Paternoster Square, London EC4M 7LS Tel: 020 7797 1000 URL: www.londonstockexchange.com UK Society of Investment Professionals (UKSIP), 4th Floor, 90 Basinghall Street, London EC2V 5AY Tel: 020 7796 3000 URL: www.uksip.org © Content copyright of or licensed to AGCAS (www.agcas.org.uk) Written by Laura Rose, London School of Economics and Political Science, 18/04/2008 The work of writers, editors and other contributors is gratefully acknowledged - full details on www.prospects.ac.uk/links/occupations To view the terms and conditions for the material provided in this publication, please see www.prospects.ac.uk/links/disclaimer Page 4 of 4 Visit www.prospects.ac.uk/links/occupations to see case studies of graduates in this role