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Financial Career Track #2: Investment Banking
This week’s focus is on a very prestigious financial career track: Investment Banking. It is otherwise known as Corporate Finance, Mergers & Acquisitions, Corporate Banking, Global Banking, and Merchant Banking. This article will cover the following areas:
What is Investment Banking
What are the top Investment Banks
What roles are out there in Investment Banking
What skills are you expected to bring on board
What would a graduate analyst’s work look like
What salary can you expect to have
What is Investment Banking
Fundamentally, Investment Banking is about helping corporate clients build their businesses by providing them with financial and strategic advice as well as products. The corporate clients investment bankers work with are typically large blue chip companies. As an investment banker, you would be expected to raise money for your client by issuing shares and debts in the firm, advise your client in times of merger with another company, helping develop financial strategies for your client, as well as identifying new business deals.
Top Investment Banks
There are three top investment banks that are globally recognised: Goldman Sachs, JP Morgan, and Morgan Stanley. Getting into any of these three requires perseverance and hard work. As a student, you might think of getting ahead of your competition by participating in Spring Weeks organised by the banks or by interning during a Summer Analyst Scheme. For example, have a look at Goldman Sachs’ website on Division Spring Internships: http://www2.goldmansachs.com/careers/choose-your-path/our-programs/emea-programs/division-spring-internships.html and Morgan Stanley’s Summer Analyst Programme: http://www.morganstanley.com/about/careers/internships.html
Other investment banks are typically regionally oriented or situated in the middle market. You might come across boutique investment banks, which are oriented toward an industry vertical, bond-trading, M&A advisory, technical analysis, or program trading.
Other top investment banks include – Citigroup, Bank of America, Deutsche Bank, UBS, Credit Suisse, HSBC, Royal Bank of Scotland, Lazard, etc.
Roles in Investment Banking
An investment banker will usually find himself/herself in one of the following two teams: client team or project team.
In a client team, an investment banker is a specialist. He/she will be looking after specific clients in a designated region or industry. The main tasks in a client team are to identify a client’s needs and to then call on product specialists for advice on which products and services would satisfy the client’s requirements.
In a product team, an investment banker is more of a generalist. He/she has to have extensive knowledge of a particular product in order to be able to advise client teams on the range of services that the bank can provide clients with. There are several different product areas that investment bankers can specialise in:
Mergers & Acquisitions – when clients are seeking to buy another firm, they are provided with strategic and financial advice by the bank. The advice may relate to potential target companies, pricing and valuation, as well as how to integrate the firms post-acquisition. Banks which specialise in this area are Goldman Sachs, Deutsche Bank, and Morgan Stanley.
Structure Financing – investment bankers provide clients with an alternative to standard business loans. They borrow against a company’s cash-flow history. In order to successfully do your work in this area, you must have good spreadsheet, accounting, and legal skills.
Equity Capital Markets – in this case, investment bankers help clients structure, buy, sell, and issue shares. What they decide to do with the shares is highly dependent on the financial situation and future estimates of the client firm’s performance.
Debt Capital Markets – when clients have limited access to…
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