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Become an Investment Banker
Investment bankers, also known previously as merchant bankers, work with clients to advise them on different approaches to financial, commercial and trading activities. They can work for clients looking to buy another company or they can help companies trying to avoid a takeover bid. Investment bankers also work for clients wanting to raise funds. Their clients can be companies, institutions, government departments and wealthy individuals.
Most investment banks in the UK are centred in London although this is an international market, so overseas work is possible, with most banks having offices in key investment centres abroad. New York is the largest international investment centre, followed by London. Hong Kong, Tokyo and Singapore are also well known for their financial trading centres.
Investment banking is wide ranging, but usually falls into two main areas:
Corporate Finance & Mergers and acquisitions.
Investment bankers will advise corporations looking to expand or diversify, providing information about companies that may make a good prospect for a takeover or merger. Alternatively, they support potential takeover targets, presenting options to avoid a takeover bid. Advice can range from strategic suggestions to detailed guidance on how much to bid, how to raise funds and counteracting a takeover offer.
New issue/debt and equity capital.
Clients will approach an investment bank when they are looking to raise funds. Investment bankers will examine the company’s finances, their market and suggest the best option to raise capital. This may include arranging the issue of bonds or providing loans to generate debt capital, or the issue of shares to raise equity. As well as advising, they will implement a programme for clients, offering broking and distribution facilities.
Amongst other attributes, investment bankers need:
• To be self-motivated, and work well under pressure
• Be a team player
• Have a real interest in the financial markets
• Enjoy negotiating deals and making good investments.
The hours of an investment banker can be long and irregular. When a deal is closing, it is not unusual to work 100 hours a week. Most are at their desks before 8am.
Salaries for trainee investment banking analysts start at around £33,000 rising through the grades to an executive director who can earn in excess of £120,000 as a basic salary.
Trainees usually receive an end of year bonus, often between 50 and 100 per cent of their salary. Some employers offer graduates a ‘golden hello’ to join their firm. Annual packages with bonuses can reach well over £100,000 before the age of 30. Membership of a gymnasium, private healthcare, share options and pension schemes are usually provided. Summer internships before the last year at university can help entry onto a graduate scheme. Some banks will offer full-time jobs to as many as 60 to 95 per cent of interns.
The normal 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 the University of Reading’s ISMAICMA* centre Centre offers a BSc in International Securities, Investment and Banking. This course offers students the opportunity to use a simulated trading room within the university to test their aptitude to working in the sector. Banks also consider , but any numerate discipline or subject such as economics, law or business studies all can prove to be particularly useful. Investment banking can offers 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.
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.
The regulatory frameworks 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.
*ICMA stands for the International Capital Market Association, the trade association and market regulator for some 430 member organisations active in the global securities market.