Investment Banking

1.    CAREER OVERVIEW

Investment banking is a specific division usually within an Investment Bank. Careers within this division usually revolve around the creation of capital through the equity and debt capital markets, the underwriting of equity and debt securities, organizational restructuring, mergers and acquisitions and advisory roles.

Investment Banks are usually split into bulge brackets and boutiques. Bulge brackets are the largest and most profitable investment banks like Goldman Sachs, Morgan Stanley and JP Morgan. Boutiques are relatively smaller banks who usually specialize in specific areas of investment banking. Popular boutiques include Lazard and Rothschild.

Generally fresh graduates enter into an investment bank as an analyst (no MBA) or associate (with MBA). Each product group or sector coverage team usually has a fixed number of people in each level.

The hierarchy of Investment Banks

Roles

2.    EMPLOYERS

Notable employers are listed but not limited to the ones below.

Goldman Sachs                                     Barclays

Morgan Stanley                                     Credit Suisse

JP Morgan                                              Deutsche Bank

Bank of America                                    Lazard

3.    OPPORTUNITIES

1st Year Student (3 Year Course)/ 2nd Year Student (4 Year Course)

Most if not all the popular Investment Banks offer spring internships to students in their 1st year of university if the student is on a 3 year course or 2nd year of university if the student is on a 4 year course. These programs usually last for the duration of a few days to 2 weeks depending on the bank and occurs during the spring holidays. A spring internship is used as a stepping stone to attaining a summer internship in the same firm the following year as it is not uncommon that the banks offer summer internships to students who perform well during the spring week.

Penultimate Year Student

Most if not all the Investment Banks offer internships to penultimate year students in the form of summer internships. Penultimate year students are 2nd year students on a 3 year course or a 3rd year students on a 4 year course. The internships usually last for 8-10 weeks on average at a specific area within the Investment Bank.

Graduating Student

All Investment Banks offer graduate jobs to students who have graduated from university and are looking for jobs in Investment Banking. Graduate jobs are available across most if not all areas of the Investment Bank.

4.    RECRUITMENT PROCESS

Spring Weeks

Recruitment for spring weeks starts around September and ends at the beginning of January. However, they are looked at on a rolling basis hence it is essential that one applies early. Some firms start giving out interviews as early as October and offers in November. It is recommended that one sends out the majority of the applications by the end of October or beginning of November.

Stage 1 (Online Applications/ Psychometric Testing)

Most firms simply require applicants to attach a cover letter or CV but there are some firms that may ask small essay style questions. The questions and cover letters must not be taken lightly because they serve as a screening measure to eliminate weaker candidates.

After submitting the application, most banks require applicants to complete online psychometric tests. Some firms will ask for a math based psychometric test, logic, a comprehensive reading, or a situational judgment test. Applicants should aim to excel in these tests so as so have a higher chance of going to the next round of the application process.

While these tests are not too tricky, they may be daunting for some. However, as with normal examinations, practice makes perfect. The University of Manchester has practice psychometric tests on its Career Services website and it is not uncommon for applicants to go to websites such as CEB and purchase the test packet for additional practice.

As the actual psychometric tests are done online, it may be tempting to cheat on these tests. However, it is completely unadvisable to do so because in most cases, these tests have to be completed once again at the assessment centers and if the applicant attains a score which is too far off from his/her original score, the application will be voided.

Stage 2 (1st Round/ 2nd Round Interviews)

There is usually only one round of interview for spring weeks and they are over the telephone. Sometimes there are two interviews and some firms hold their interviews in person. The majority of first round interviews are competency based and last around 30 mins. This means the firm will ask the applicant a set of questions where they are looking for important attributes such as teamwork, problem solving and communication. In these questions the firms will expect applicants to draw from past experiences to demonstrate these attributes. Applicants can expect questions along the lines of “tell me about yourself”, “what are some of your strengths/weaknesses”, and “why this firm”.  The best way to deal with such questions is to list down answers to all the different questions and practice answering them. Also, the firms tend to ask applicants why they would be interested in working in that particular firm. As such, it is important to do some background research on the firm beforehand.

If there are second round interviews, they usually tend to be more technical. In order to do well, applicants need to be up to date with current news and have more in depth knowledge about the department he or she is applying for. Sign up for a free subscription of the Financial Times (FT) through the University of Manchester and start reading.

 

Summer Internships

Recruitment season normally starts in mid to end August and ends in January or February and the competition for such roles is definitely higher than the competition for spring weeks. Furthermore, for those who did not secure summer internships through their spring weeks, attempting to land a summer role in an investment bank will be an even harder task. However, many individuals still manage to land internships even without prior experience.

Stage 1 (Online Applications/ Psychometric Testing)

Most firms will have their applications open in September for summer roles and it is absolutely imperative to get them in as fast as you can as most banks look at resumes on a rolling basis.

It is always advisable to sit down for a solid week in September to plan and complete applications. Most firms simply require applicants to attach a cover letter or CV but there are some firms that may ask small essay style questions. The questions and cover letters must not be taken lightly because they serve as a screening measure to eliminate weaker candidates.

After submitting the application, most banks require applicants to complete online psychometric tests. Some firms will ask for a math based psychometric test, logic, a comprehensive reading, or a situational judgment test. Applicants should aim to excel in these tests so as so have a higher chance of going to the next round of the application process.

While these tests are not too tricky, they may be daunting for some. However, as with normal examinations, practice makes perfect. The University of Manchester has practice psychometric tests on its Career Services website and it is not uncommon for applicants to go to websites such as CEB and purchase the test packet for additional practice.

As the actual psychometric tests are done online, it may be tempting to cheat on these tests. However, it is completely unadvisable to do so because in most cases, these tests have to be completed once again at the assessment centers and if the applicant attains a score which is too far off from his/her original score, the application will be voided.

Stage 2 (1st Round/ 2nd Round Interviews)

Either through successful networking or applying online, the applicant will then be invited to a first round of interview by the firm. These interviews can either be done through the phone or in person in the firm’s office.

Most of the time, the first round will primarily be strengths based or a competency based interview. Applicants can expect questions along the lines of “tell me about yourself”, “what are some of your strengths/weaknesses”, and “why this firm”.  However, with Investment Banking, it is always best to expect the unexpected and prepare for technical questions such as basic valuations and accounting questions. Furthermore, keep up to date with current financial news and be able to talk about a recent deal or activity that the firm had been involved in.

The first round interview serves as a way for bank to determine if the applicant fits the firm’s culture, so it is always advisable to draw reference to the firm’s core competencies or core values when answering their questions.

Some firms have a second round after the first round before the applicant proceeds to the next stage of the recruitment process. The second round interview usually tends to be more technical based. Thus, it is best to brush up on one’s technical knowledge.

Stage 3 (Assessment Centers)

Successfully progressing through first or second round interviews or standing out in a spring week will see the applicant progress to the Assessment Center (AC).

The format of each individual AC may differ from one firm to another. Hence, it is hard to definitively point to a one-size-fits-all method of preparing for an AC. However, one of the commonality among most ACs are the presence of case studies. Case studies allow the firm to see how applicants can apply their knowledge in a business scenario. A good way to prepare is by practicing case study like scenarios that can be found online and watching videos that provide an in depth knowledge at how to prepare for case interviews at either:

ACs may also require an applicant to undergo technical interviews or even behavioral fit interviews again and there is no limit as to how many interviews one may have to undergo in one day. Another form of interview that one may have to go through can be in the form of group based activities which allows the firm to test the applicant’s teamwork capabilities.

Applicants should be prepared for anything at this stage and come in fully prepared with additional supplementary knowledge on the day itself such as the firms current stock price, its P/E ratio and even the name of its CEO. ACs provide applicants with the best opportunity to “put a face” behind his or her CV so it is important to be as open and friendly as possible and never try to sabotage other applicants to gain a competitive advantage.

Timeline

           Projected recruitment timeline

Graduate Roles

The recruitment process for graduate roles in Investment Banking is similar to that of the process for the summer internship program. In summary, the recruitment process starts with the online application and psychometric tests followed by 1st and 2nd round interviews and finally ending with the assessment center. It should be noted that this is not a fixed recruitment process for all firms. Some firms may have slight variations in their recruitment process and it is always advisable to check with the firm to fully understand their entire recruitment process.

Useful Tips

Networking

Last year, around 10,000 people applied for vacancies of around 300 Goldman Sachs’ summer program in IBD, which rounds off to roughly 3% acceptance rate. Naturally, if one wants to forge a career in Investment Banking, one needs to utilize every tool to gain an advantage and one of the most important tools is networking.

Networking is a very simple process as opposed to what a lot of people make it out to be and it helps applicants to distinguish themselves from other applicants. The process centers on building relationships through informational interviews, reaching out to university alumni for a coffee or a phone call, and most importantly going to networking events that banks organize on an almost weekly basis during recruitment season. Another form of networking can also center on cold calling boutique/local smaller investment banks to ask about job opportunities directly. Networking, if done right, can literally open doors for the applicant’s CV to be pushed to the top of the interview pile.

In order to network properly, one just needs a background story that centers on why one is interested in banking and how one stands out from the rest. Next, scour through Linkedin, social media, and ask the career service for records of past alumni to create a list of names/emails to call or email about for a discussion on why one is interested in a career in Investment Banking.

Networking at the end of the day is not just about simply making connections, but about building a mutually beneficial professional relationship with the other party that can benefit both parties.

Additional “tools”

Financial modeling courses– There are many online courses available that can be purchased to enhance excel knowledge and provide a competitive advantage. These courses teach users how to build complex merger models, DCF models, and LBO models even before having an internship. Good courses include BIWS courses (breaking into wall street) and Wall Street Oasis Prep.

Reading- Reading will one to understand the industry and unravel what Investment Banking actually is and puts one in a better position to answer questions. Some solid books to read are Monkey Business, Liars Poker Vault Career Guide to Investment Banking and Investment Banking Explained: An Inside Guide to the Industry.

External Coaching- One can pay industry coaches to provide guidance through the entire recruitment process from networking to assessment centers. They will help brand the applicant and improve the technical knowledge and interview competencies of the applicant.