What is an investment bank?

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, take-overs, 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.

Recruitment

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 ‘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:-

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.

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.

Remuneration

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.

Training

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 Members of the London Investment Banking Association LIBA, www.liba.org.uk

Contributed by: London Investment Banking Association