Introduction to Investment Banking
The banking field can be split into three sectors: retail, trading and investment. Retail banking (high-street banking) generally involves working for high-street banks such as Lloyds, Natwest and Barclays, often in-branch. Trading (or foreign exchange) involves buying and selling goods and services in foreign currencies.
Investment banking involves helping clients - corporations, individuals and even the government - raise financial capital by underwriting and issuing securities. It can also involve the provision of other services, such as private wealth management, professional advisory services and working with mergers and acquisitions. Each of the different sectors offers a range of opportunities and career paths; the information below focuses on investment banking.
What roles are open to me?
If you’re keen to enter investment banking, there are a range of career paths open to you. Investment banks house a large number of different departments, from Finance and Compliance to Merchant Banking, Private Equity and Information Risk Management. The different roles are divided into front, middle and back office. Front office roles are client-facing roles that generate revenue. Middle office roles deal with compliance, rules and regulations. Back office positions are generally support roles such as operations, HR and secretarial. Graduates with a BA generally apply for analyst positions, while those with an MBA will often apply for associate roles.
Major companies include Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch, Deutsche Bank and Citigroup. There are also many smaller, independent investment banks, including Allen & Company, Brown, Shipley & Co. and Guggenheim Partners, as well as financial conglomerates that provide multiple services including investment banking.
What qualifications and skills do I need?
All graduates entering investment banking will generally need a 2:1 degree. Although some investment banks are very keen on applicants with degrees in a related field such as maths, business or finance, many actively encourage graduates from other, seemingly unrelated subjects. Work experience will also stand you in very good stead, especially if you can display experience relevant to the role you are applying for.
Although there are some entry-level roles in banking for those without a degree, the world of investment banking is fiercely competitive and securing a position is unlikely without one.
Investment banking graduate programmes are essentially training on-the-job. The kind of training you receive varies from bank to bank. Some banks will immediately assign you a role and you’ll be expected to develop within that role. Others offer broad training across different roles, which helps candidates develop a better understanding of the entire division before specialising.
The application process varies depending on the investment bank in question, but generally follows the steps below:
- Application form including aptitude tests
- Telephone interview (may be strength or competency-based)
- Assessment centre aptitude tests (may include role plays and group exercises)
- Final interview
The average salary varies depending on the role and bank. The below is a rough guide for analyst, associate, VP and MD roles (all figures shown are per annum):
First year salary: £50,000 to £55,000 Salary after three years: £50,000 to £65,000
First year salary: £90,000 to £98,000 Salary after three years: £100,000 to £120,000
Vice President (VP)
£120,000 to £175,000
£350,000 to £550,000+
Are there any downsides?
Investment banks are open 24/7. As a result, bankers typically work extremely long hours, sometimes 100+ a week (although this is an extreme case). The workload is intense and competition fierce, so you’ll need to have a thick skin and be happy to work in a very high-pressure environment.
Is it right for me?
Investment banking can be a richly rewarding career, both in terms of financial rewards and job satisfaction. If you thrive under pressure, have a strong character and can handle long hours and a heavy workload, it could be the perfect industry for you. Visit our forum to find out more.
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