Investment Banking by P_Gallo


									                                         A CAREER IN INVESTMENT BANKING

This booklet has been prepared by the Human Resources Directors of a number of investment banking groups which are
Members of the London Investment Banking Association. Its aim is to provide guidance to those considering a career in
the investment banking industries.

What is an investment bank?
The term “ investment bank” does not have a precise definition, but is generally applied to financial houses which,
starting from trading as merchants, expanded their role to financing the trading and commercial activities of others,
especially in the international market place. For many years, the British houses were known as merchant banks, reflecting
their origins. Investment banks have retained this strong international flavour and often have offices in many other
countries, particularly in the major financial centres. While a number of overseas-based investment banks now offer very
similar services, some of the best known and longest established firms in the City grew from UK origin.

Typically, an investment banking group nowadays provides world-wide some or all of the following services, either in
divisions of the bank or in associated companies within the group:

•        corporate finance and advisory work, normally in connection with new issues of securities for raising finance,
         takeovers, mergers and acquisitions;

•        banking, for governments, institutions and companies;

•        treasury dealing for corporate clients in currencies, with financial engineering services to protect them from
         interest and exchange rate fluctuations;

•        investment management, either for corporate pension funds, charities, private clients, either via direct
         investment for the more wealthy or via unit and investment trusts. In the larger firms, the value of funds under
         management runs into many billions of pounds;

•        securities trading, in equities, bonds or derivatives and offering broking and distribution facilities.

Despite the variety of these services and the consequent complexity of some of the groups, investment banks are still
small when compared with the large clearing or commercial banks. Staff numbers of even the largest investment bank are
in the low thousands. Success in the investment banking business depends on the ability to provide whatever financial
services a client may require, and so the people employed need particular qualities of flexibility, innovativeness and
client handling skills.

For mainstream banking positions applications are welcomed from graduates in a wide range of disciplines, and there is
demand for trained specialists with additional qualifications such as in law, accountancy or from a Business School.
Opportunities are also available in most firms for those seeking a career in information technology. For other roles, most
investment banks recruit at several different levels. There are vacancies, at certain times, for school leavers at GSC, ‘A’
level or equivalent, although nowadays the opportunities for those without at least ‘A’ levels are rather limited.
Investment banking can offer an excellent career to the energetic and intelligent school leaver, but with ever increasing
competition the need for those with graduate and professional qualifications is increasingly regarded as a minimum.

Relationships within investment banks and with their clients are essentially direct and personal. For this reason the
personality of the candidate is of great importance. Imagination, application and readiness to adapt are important
aptitudes in any candidate. Fluency in foreign languages is always an asset.

Entry Requirements and Career Structure
Because of the differences in the structure and size of the individual firms, the numbers of staff recruited vary
considerably from one to another. For the same reason, the recruiting requirements are by no means identical. The
following, however, outlines the prospects for progression of a successful candidate in relation to his or her initial
academic qualifications:-

1.       With ‘A’ Levels
         Those joining an investment bank with ‘A’ levels or business studies diplomas will usually start in clerical
         positions, although there are certainly excellent opportunities for advancement.

2.       With a Degree
         The usual minimum entry requirement is an upper second class honours degree or a professional qualification in
         law or accounting. There is no particular preference for any specific degree subject, although a numerate
         discipline or subject such as economics, law or business studies can prove to be particularly useful. Graduates
         will commence as trainees and can progress rapidly to senior managerial appointments, depending on their
         performance, the potential they show and the results they deliver.

Starting salaries can differ among investment banks and the working day is often long. However, candidates with the
necessary skills and abilities can rise quickly to positions carrying considerable responsibility, where they will be
rewarded accordingly. Increasingly a major element of remuneration is related to performance or profits and paid as an
annual bonus.

Technical training is both ‘on the job’ and arising from specific training needs highlighted by the requirements of a
particular assignment or by annual appraisal. Regulatory compliance training is becoming very important and trainees are
likely to have to take examinations to qualify to work with clients. Management training may include specialist external
courses where necessary.

Professional Qualifications
An appropriate professional qualification is an advantage. The choice of professional institute will depend upon the area
of specialisation, but could be The Chartered Institute of Bankers, The Institute of Chartered Secretaries and
Administrators or any of the professional accountancy bodies. The regulatory framework set up under the Financial
Services Authority have special examinations for those dealing with investment or securities business. Studying for
such qualifications will require attendance at evening classes, and time off for revision is usually allowed. Some firms
offer limited day-release facilities and payments are usually made to cover costs of tuition, examinations and text books.

Further Information
Candidates who are interested in seeking a career with an investment bank or a securities house should write direct to
the Human Resources Director of one or more of the Houses on the accompanying list of Members of the London
Investment Banking Association.


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