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Introduction to Investment Banking
GUTIC Board
17th October 2013
Contents

• Introduction to investment banking
• Financial news update
• Intern’s story at UBS.
Introduction to Investment Banking
Yassine Essadiq
Introduction to Investment Banking
What is investment banking?
• Financial institutions assist:
 Individuals, corporation...
Introduction to Investment Banking
What is investment banking?
• Front Office:
- Investment Banking
- Sales and Trading
- ...
Introduction to Investment Banking
Front Office:
• Investment banking:
 Industry coverage:
- Healthcare, public finance (...
Introduction to Investment Banking
Front Office

• Sales and Trading:
 Traders buy and sell financial products with the g...
Introduction to Investment Banking
Front Office

• Research:
 Reviews about companies with “buy” or “sell” ratings.
 Sel...
Introduction to Investment Banking
Front Office/Middle office

• Risk Management:






Analyze the market and credit...
Introduction to Investment Banking
Middle office

• Corporate treasury
 Investment bank’s funding
 Capital structure man...
Introduction to Investment Banking
Back office

• Operations:
 Data checking trades that have been conducted.
 Ensuring ...
Introduction to Investment Banking
Back office

• Global Transaction Banking:
 Provides cash management, custody services...
Financial News
Investment Banking Edition
Osborne Welcomes China








Chancellor Osborne strikes
groundbreaking deal to allow Chinese
banks to open UK branch...
Woodford Leaves Invesco
•
•
•













Sources
http://www.ft.com/cms/s/0/405f7ed6-35a0-11e3b539-00144feab7de.htm...
Moody's to Downgrade South Africa








Ongoing labor disputes continue
to stifle growth
BMW has canceled expansion
...
The Banks


Citigroup, 3rd biggest US bank, missed profit estimates



RHB will expand into the Philippines, expects imp...
US Ends Shutdown








US passed law to temporarily fund government and raise debt
ceiling through January
World ma...
Brian McCarthy
UBS Summer Internship
Contents
1.
2.
3.
4.
5.
6.

UBS Overview
Application process
How we were prepared
Typical day
How HR assessed us
Questions
Basic Overview
• Largest bank in Switzerland; one of the 10
largest banks in the world
• Over 150 years old
• 50 offices a...
Recent history
• Huge exposure to mortgage securities; heavy
losses in financial crisis
– Last year announced it would sli...
UK Business
• Based in the City, next to Liverpool Street
Station
• Two distinct parts: the investment bank and
UBS Global...
Internship opportunities
• Spring insight week
– One week over Easter
– Available to first and second years
– Ops, HR, IT,...
Application process
1.
2.
3.
4.

Online application
Online numerical reasoning test
Telephone interview
Assessment Centre
Online application
• Basic personal details
• Standard awkward questions: “Please
describe why you have chosen to apply
to...
CV
• Needs work
• Must be tailored to banking, and UBS in
particular
• See the seven “core competencies” on their
website
...
Online numeracy test
• Invitation via email a few days after first stage
• Practice, practice, practice:
SHL Direct
eFinan...
Telephone interview
• Called by HR a week in advance to arrange
suitable time
• Composed of competency-based and
commercia...
Assessment Centre
• Informed by email about 10 days in advance
• Bank pays for your travel and hotel
• 5-6 hour day consis...
AC Preparation
• Use online resources such as the Gateway, the
Student Room and WikiJobs
• Prepare for competency question...
Pre-internship prep
• Contract
• Background screening
• Contact with other interns (clean up your
online presence!)
• Onli...
First week
•
•
•
•

Introduction day with markets overview
Lots of networking events with other interns
Day two: markets &...
My desk
• Operations: cash equities client support
– First contact for clients if a trade breaks
– Concentrated more on pr...
Average day
• 6.30-8.30 to 17.30-19.00 (varied a lot
depending on desk)
• Project work
• Shadowing
• You have to ask for w...
Assessment
•
•
•
•

Weekly meeting with Line Manager
Mid-way progress report
Exit meeting
Find out if get grad scheme a mo...
Questions?
Introduction to investment banking
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Introduction to investment banking

  1. 1. Introduction to Investment Banking GUTIC Board 17th October 2013
  2. 2. Contents • Introduction to investment banking • Financial news update • Intern’s story at UBS.
  3. 3. Introduction to Investment Banking Yassine Essadiq
  4. 4. Introduction to Investment Banking What is investment banking? • Financial institutions assist:  Individuals, corporations, and government. • Raising capital by issuing securities. • Assist companies involved in mergers and acquisitions. • Provide ancillary services: market making, trading of derivatives, and equity securities.
  5. 5. Introduction to Investment Banking What is investment banking? • Front Office: - Investment Banking - Sales and Trading - Research • Front Office/Middle Office: - Risk Management • Middle office: - Treasury management, and internal control. • Back Office: - Operations - Technology - Other businesses
  6. 6. Introduction to Investment Banking Front Office: • Investment banking:  Industry coverage: - Healthcare, public finance ( government), industrials . - Maintain corporate relationships with corporations.  Products coverage: - Mergers and Acquisitions. - Leveraged finance, asset finance and leasing.
  7. 7. Introduction to Investment Banking Front Office • Sales and Trading:  Traders buy and sell financial products with the goal of making money.  Sales calls high-net-worth investors to suggest trading ideas. Then they transfer orders to the traders.  Structuring: create new complex financial products such as derivatives.  Strategist advise external and internal clients on the strategies that can be adopted into a various market.
  8. 8. Introduction to Investment Banking Front Office • Research:  Reviews about companies with “buy” or “sell” ratings.  Sell-Side and Buy-Side analysts which cover various industries.  Give advices to outside clients.  Resources used by traders and sales.
  9. 9. Introduction to Investment Banking Front Office/Middle office • Risk Management:      Analyze the market and credit risk. Taken into consideration on their balance sheet. Focus on bonds, restructuring and leveraged finance. Reviews of sales and trading activities Provide hedge funds solutions to portfolio managers.
  10. 10. Introduction to Investment Banking Middle office • Corporate treasury  Investment bank’s funding  Capital structure management  Liquidity risk monitoring. • Financial control  Analyze capital flows of the division  Controlling the firm’s global risk exposure and profitability.
  11. 11. Introduction to Investment Banking Back office • Operations:  Data checking trades that have been conducted.  Ensuring that they are not erroneous  Transacting the required transfers • Technology:  Creation of in-house software by Technology team.  Technical support for the firm.  Trades are electronically made.
  12. 12. Introduction to Investment Banking Back office • Global Transaction Banking:  Provides cash management, custody services, lending and securities brokerage.  Investment management: management of various securities and other assets.  Private wealth management and private client services. • Merchant banking:  Provide to startups firms possibility of offering private equities to investors.
  13. 13. Financial News Investment Banking Edition
  14. 14. Osborne Welcomes China     Chancellor Osborne strikes groundbreaking deal to allow Chinese banks to open UK branches in London "The deal will make London the first overseas territory from which investment can be made directly into China. Investors will have the right to buy up to RNB80bn (£8bn) of stocks, bonds and money market instruments. Currently all deals must be routed through Hong Kong." (Aldrick 2013) Tuesday, yuan rose to 6.1007/USD, likely to continue rise as trading expands More liquidity and higher yields available in onshore markets vs Hong Kong (Bloomberg 2013) • • Sources: http://www.bloomberg.com/news/2013-1015/china-u-k-agree-on-yuan-pound-direct-tradinginvestment-quota.html • http://www.telegraph.co.uk/finance/newsbysector/ banksandfinance/10381311/Osborne-aims-tomake-London-renminbi-hub.html
  15. 15. Woodford Leaves Invesco • • •       Sources http://www.ft.com/cms/s/0/405f7ed6-35a0-11e3b539-00144feab7de.html#axzz2hw2BEpoE http://www.telegraph.co.uk/finance/personalfinan ce/investing/10380415/Neil-Woodford-leavesInvesco-sell-Invesco-Perpetual-Income-and-HighIncome.html Famed British fund manager Neil Woodford will leave Invesco Perpetual Woodford believes in a long term investment approach and will open his own fund management house after 6 months notice Invesco shares dropped 5% and the outlook for the company is grim as customers are expected to follow Woodford out Woodford currently has £33bn under management and one of the best return records Tobacco and pharmaceutical stocks feature heavily in portfolio, including GlaxoSmithKline, AstraZenica, Roche and British American Tobacco Advice: Watch his funds but don't panic! Investors will be waiting to see how things are sorted out over the next 6 months – 1 year
  16. 16. Moody's to Downgrade South Africa     Ongoing labor disputes continue to stifle growth BMW has canceled expansion plans, other companies likely to follow South Africa's sovereign up 84 basis points, over triple similarly rated countries Current rating is Baa1, 3rd lowest grade on par with Russia and Thailand • Source: http://www.bloomberg.com/news/201310-16/moody-s-flags-downgrade-risk-on-bmwretreat-south-africa-credit.html
  17. 17. The Banks  Citigroup, 3rd biggest US bank, missed profit estimates  RHB will expand into the Philippines, expects impressive growth  Bank of Montreal appoints new COO  JPMorgan Chase & Co continues to face fines and decline over investigations, has set aside $23 billion in reserves
  18. 18. US Ends Shutdown      US passed law to temporarily fund government and raise debt ceiling through January World markets and USD rally on news Shutdown cost US economy $24 billion Considered loss for Tea Party, Republicans Fed will not Taper anytime soon, expect continued market gains in short term
  19. 19. Brian McCarthy UBS Summer Internship
  20. 20. Contents 1. 2. 3. 4. 5. 6. UBS Overview Application process How we were prepared Typical day How HR assessed us Questions
  21. 21. Basic Overview • Largest bank in Switzerland; one of the 10 largest banks in the world • Over 150 years old • 50 offices and over 60,000 employees across the world • Big global player in wealth management and investment banking. (Also does retail banking in Switzerland.)
  22. 22. Recent history • Huge exposure to mortgage securities; heavy losses in financial crisis – Last year announced it would slim line its FICC business – Share price has grown >50% since • Rogue trader 2011: £1.5bn loss • LIBOR rigging: £75mn fine + significant reputational loss
  23. 23. UK Business • Based in the City, next to Liverpool Street Station • Two distinct parts: the investment bank and UBS Global Asset Management • Investment bank split in two: – ICS (Investor Client Services): Sales, trading, research, operations, IT – CCS (Corporate Client Services): M&A, etc
  24. 24. Internship opportunities • Spring insight week – One week over Easter – Available to first and second years – Ops, HR, IT, ICS & CCS • Summer internship – Nine weeks over July & August – For third and fourth years – All areas
  25. 25. Application process 1. 2. 3. 4. Online application Online numerical reasoning test Telephone interview Assessment Centre
  26. 26. Online application • Basic personal details • Standard awkward questions: “Please describe why you have chosen to apply to UBS?” • CV • Useful resources: TheGatewayOnline.com TargetJobs.co.uk/Employer-hubs/UBS WikiJob.co.uk
  27. 27. CV • Needs work • Must be tailored to banking, and UBS in particular • See the seven “core competencies” on their website • Useful template available on website Mergers and Inquisitions
  28. 28. Online numeracy test • Invitation via email a few days after first stage • Practice, practice, practice: SHL Direct eFinancialCareers student section
  29. 29. Telephone interview • Called by HR a week in advance to arrange suitable time • Composed of competency-based and commercial awareness questions • Preparation essential
  30. 30. Assessment Centre • Informed by email about 10 days in advance • Bank pays for your travel and hotel • 5-6 hour day consisting of: – Another numeracy test – Company presentation – One-on-one interviews with Director from relevant business area – Group discussion
  31. 31. AC Preparation • Use online resources such as the Gateway, the Student Room and WikiJobs • Prepare for competency questions • Make sure you’ve been following the news • Have a very convincing answer for why you want to work in this role • Be able to explain what desk does
  32. 32. Pre-internship prep • Contract • Background screening • Contact with other interns (clean up your online presence!) • Online training • Recommended reading • Grad buddy
  33. 33. First week • • • • Introduction day with markets overview Lots of networking events with other interns Day two: markets & compliance training Day three: “grad buddies” intro & excel training • Day four: Introduction to Line Manager and your desk • Day five: Shoreditch Games
  34. 34. My desk • Operations: cash equities client support – First contact for clients if a trade breaks – Concentrated more on project • Profile of other interns – All courses and wise variety of unis (from Oxford to Salford…) – Of 23 Ops interns, 13 guys and 10 girls. More male-centric in other departments
  35. 35. Average day • 6.30-8.30 to 17.30-19.00 (varied a lot depending on desk) • Project work • Shadowing • You have to ask for work! • Other: Mindallign, coffee, lunch, attire • Intern events (weekly class, networking, etc)
  36. 36. Assessment • • • • Weekly meeting with Line Manager Mid-way progress report Exit meeting Find out if get grad scheme a month later
  37. 37. Questions?

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