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Investment Banking

Traditionally, commercial banks and investment banks performed completely distinct functions. When someone needed a loan to buy a car, he visited a commercial bank. When he needed to raise cash to fund an acquisition or build its fiber-optic network, it called on its investment bank. Paychecks and lifestyles reflected this division too, with investment bankers reveling in their large bonuses and glamorous ways while commercial bankers worked nine-to-five and then went home to their families. Today, as the laws requiring the separation of investment and commercial banking are reformed, more and more firms are making sure they have a foot in both camps, thus blurring the lines and the culture. Investment banking isnt one specific service or function. It is an umbrella term for a range of activities: underwriting, selling, and trading securities (stocks and bonds); providing financial advisory services, such as mergers and acquisition advice; and managing assets. Investment banks offer these services to companies, governments, non-profit institutions, and individuals. The action and players in investment banking are still centered in New York City and a few other money centers around the world, but the list of players is getting smaller as the industry consolidates. Today, leading banks include Merrill Lynch, Goldman Sachs, Morgan Stanley, Citigroups Corporate and Investment Bank (whose investment banking arm was until recently known as Salomon Smith Barney), Credit Suisse First Boston, and JPMorgan Chase Wall Street is filled with high-energy, hardworking young investment bankers who spend hours hunched behind computers, poring over financial statements and churning out spreadsheets by the pound. Others are traders who keep one eye on their Bloomberg screen, a phone over each ear, and a buyer or seller on hold every minute the markets in session. Traders work hand in hand with the institutional sales group, whose members hop from airport to airport trying to sell big institutions a piece of the new stock offering they have coming down the pipeline. Then there are the analytically minded research analysts, who read, write, live, and breathe whichever industry they follow, 24/7. To survive in investment banking, much less to do well, youll need to like the work itself. And, quite honestly, even if you love the work, an investment banking career can still be a tough road. But, if you like fast-paced, deal-oriented work, are at ease with numbers and analysis, have a tolerance for risk, and dont mind putting your personal life on hold for the sake of your job, then investment banking may be a great career choice.

Securities Sales and Trading


An investment bank relies on its sales department to sell bonds or shares of stock in companies it underwrites. Investors who want to buy or sell a certain stock or bond will place an order with a broker or sales representative, who writes the ticket for the order. The trader makes the trade. Securities sales and trading are high-profile, high-pressure roles in the investment banking industry. Unlike other i-banking careers, such as corporate finance, public finance, and M&A, where the emphasis is on the team, securities salespeople and traders are independent, working on commission to bring to market the financial products that others create. In the United States, the securities business revolves around markets (also known as "exchanges") such as the New York Stock Exchange, the Chicago Board of Trade, and Nasdaq, where debt, futures, options, stocks, and other financial instruments are bought and sold. Salespeople and traders are independent agents working under a simple contract: The firm provides a place to do business in return for a percentage of the business that salespeople and traders generate.

Salespeople are called brokers or dealers. As one of them, you're expected to build a "book" of clients. No matter how long you've been working, and no matter how many clients you have, you're expected to cold call. New brokers make as many as 600 cold calls a day. Most of the work takes place over the telephone: soliciting clients or selling a particular stock or bond issue. You'll use analyst research and every sales trick in the book to push your securities to investors. Traders make money by trading securities. Although they're the ones who transact trades for the brokers and their clients, traders are primarily responsible for taking a position in a security issue, and buying or selling large amounts of stocks or bonds using an employer's (or their own) capital. When they bet right, they win big; when they bet wrong, they lose big. Securities sales and trading is a high-pressure career. You're responsible for the financial fortunes of your clientsor yourself, if you're a lone trader. Every day you're making $100,000 (or more) decisions under severe time constraints. The daily fluctuations of stock prices can make you rich one day and break you the next. Brokers eat a lot of antacid. Securities salespeople and traders work independently, usually with little supervision and very little interaction with managementprovided they succeed. If they don't, they're quickly out of a job. To do well, you need a good head for numbers and a hidebound determination to make money. If you're on the sales side, you'll need exceptional customer service skills; if you're a trader, you'll need to be able to handle huge riskand stomach huge losses. The upside of these careers is the money brokers can make.

Accounting
The accounting industry has been rocked by scandal in recent times, with one major firm, Arthur Andersen, being forced out of the picture. Before Andersens collapse, the top tier of the public accounting industry was known as the Big Five. Now, its the Big Four: Deloitte Touche Tohmatsu, Ernst & Young, KPMG, and PricewaterhouseCoopers. Accounting concerns itself with the day-to-day operations of bookkeeping. Accountants balance the books, track expenses and revenue, execute payroll, and pay the bills. They also compile all of the financial data needed to issue a company's financial statements in accordance with government regulations. Accountants are taking a step away from the ledger sheets and are becoming essential to every successful business team. They're the ones who understand the language of money and a company's complex financial situation. Consequently, accountants are increasingly being called on to offer advice and even make business decisions based on hard facts rather than on speculation or gut instinct. Finance and accounting jobs require critical & detail-oriented thinking, a knack for using numbers to understand patterns that influence business, ability to think critically about the numbers you're working with.

Commercial Banking
Commercial banks are banks that are in classic business of accepting deposits and making loans. As against merchant banking where primary responsibility is to help people find money. Thus they help companies to raise capital through issue of equity or bonds etc In few countries like US and Japan commercial banking is separate from investment banking by law. Few countries like UK we find that commercial banks carry out investment activities through a subsidiary. Only in countries like Germany where we find Universal Banks like Deutsche that is both a commercial and I-bank. The legislation that kept banks and investment banks separateGlass Steagallwas struck down by

Congress in 1999. So banks are now moving into highly visible spheres of activity, such as investment banking, mutual funds, and brokerage. Commercial banks hold customers money and supply loans, in exchange for checkwriting fees and interest collected from loans. The work of commercial bankers is critical retail consumers get their credit lines extended, their checking accounts upgraded, their mortgages, cars, and home improvement loans approved.

A commercial bank can either be a retail bank or a wholesale bank or both. Retail Banking Retail banking involves high street branches, dealing with the general public, shops and very small businesses. Retail banking covers current accounts, cheque facilities, saving accounts, and loan facilities like overdraft, personal loans and mortgages. The use of cheque and cheque clearance are of prime importance. Here we are talking about high volume low margin business. Wholesale Banking Wholesale banking covers banks lending to larger entities like corporate, governments etc It also includes activities like money markets, foreign exchange and finance for trade Small businesses are also highly dependent on the goodwill of commercial bankers. Even as dot coms, angel investors, and VCs monopolize the news, most small businesses continue to fund their growth with commercial loans. Such loans allow them to secure new inventory, cover payroll, remodel their stores, buy registers, and manage their overseas accounts receivables. Commercial bankers perform core financial analysis to assess risk, creditworthiness, and the likelihood a business will succeed. They play a key part in deciding the best business initiatives, expanding existing businesses, developing new markets and clients, and creating new products for e-commerce, the Internet, international markets, and consumers. In addition, Commercial bankers have to combine business acumen with strong accounting and interpersonal skills. After all, commercial bankers are at the front lines of the banking business. Ideally, they know their clients' lives intimately and can recommend additional products and services. Commercial bankers are a key distribution point and referral source for the rest of a bank's financial services activities. Many commercial banks are consolidating in order to branch out and provide other services such as mortgage, mutual funds, investment banking, and insurance. As other financial firms expand their services, commercial banks are diversifying to keep up, and often a merger with a peer company is the best way to do this. Since 1995, more than 200 large and small banks have merged. Consolidation usually results in layoffs and fewer job opportunities, but jobs in banks that are more diversified offer more opportunities for career development. And a growing number of non-banks are pioneering new ways of delivering financial services, providing more jobs in the finance industry.

Corporate Finance
If you like intense project work, with a good deal of financial analysis and customer contactif you like helping new families and new businesses create brilliant futures commercial banking might be for you. You'll just have to function in a larger organization, trying to build synergies with other product groups across different customer and product platforms. People who work in corporate finance and accounting are responsible for managing the money-forecasting where it will come from, knowing where it is, and helping managers decide how to spend it in ways that will ensure the greatest return. This career profile focuses on opportunities in corporate finance and accounting in private industry. Every company has a corporate-finance function. The responsibilities that fall under finance and accounting range from basic activities such as bill paying to very sophisticated ones such as forecasting the value of a potential acquisition. The stakes can amount to hundreds of millions - sometimes billions - of dollars and thousands of jobs. Careful assessment of the financial implications of particular strategic decisions can be critical to a company's success or failure. Of course, a company's size, complexity, economic sector, and stage of development (start-up or established business) influence what tasks the corporate finance team undertakes every day. All companies need to balance their books. Some large technology companies, for example, hire financial experts to valuate potential acquisitions. Others (such as insurance companies) have hundreds of millions of dollars to invest and need financial wizards to manage it. Corporate finance includes two key functions: accounting and finance. Accounting concerns itself with day-to-day operations. Accountants balance the books, track expenses and revenue, execute payroll, and pay the bills. They also compile all the financial data needed to issue a company's financial statements in accordance with government regulations. Finance pros analyze revenue and expenses to ensure effective use of capital. They also advise businesses about project costs, make capital investments, and structure deals to help companies grow. In spite of their different roles, finance and accounting are joined at the hip: The higher levels of accounting (budgeting and analysis) blend in with financial functions (analysis and projections). Thus, finance and accounting are often treated as one, with different divisions undertaking particular tasks such as cash management or taxes.

Insurance
In general terms, insurance means protection. Insurance company clients pay fees (premiums) with the understanding that if specific misfortunes befall themif a fire burns down their house, for instance, or they have an accident and need hospitalizationthey can make a claim and the insurance company will pay them an amount agreed upon in the insurance policy. Careers in insurance are varied. Actuaries, for instance, assess the relative likelihood of various types of accidents by performing a statistical analysis of anything they deem relevant to the subject. They use the resulting information to determine policy prices, as well as to whom they should sell which policy. Agents fill a sales function, and actually sell the policies. Underwriters determine how much overall risk a buyer will add to the company's business and figure out the premium at which to insure a buyer. Money managers invest the money the insurance company

takes in through premiums. Claims adjusters decide what, if anything, the company will pay on claims. Risk managers determine and help implement policies and processes to help clients avoid making claims. Insurance companies tend to be large in terms of both employees and assets, because they need to take in a lot of premiums from a variety of customers in order to diversify and lower their risk of being put out of business by a small number of large claims. Insurance companies also manage their risk by paying reinsurance companies to take on some of that risk. Reinsurers essentially insure insurance companies against unexpectedly large claims. By writing policies with a variety of insurance companies, reinsurers effectively take on many times the number of individual risks as primary insurance companies do. This lessens the likelihood that a small number of large claims will result in an unforeseen risk to their bottom line. If you like sales, have a strong quantitative bent, or like to investigate mysteries, this is a very good place to consider looking for a job. It's also a great field to consider if you're looking for top-notch benefits, reasonable hours, and a sense of belonging to a large organization. There's also a place in the industry for entrepreneurs who want to run an insurance agency or work in other sales positions

Asset Management
Asset management is the business of making money with money. Asset managers manage money - other people's money, and gobs of it. Generally, they convert that money into assets - stocks, bonds, derivatives, and other types of investments - and try to make that money make more money as fast as possible. Mutual funds, for instance, hire asset managers; so do corporations with lots of money sitting around, banks, and high-net-worth individuals. Asset managers have one simple goal: to invest other people's money wisely and profitably. Asset managers use a combination of investment theory, quantitative tools, market experience, research, and plain dumb luck to pick investments for their portfolios, ranging from high-risk stocks to commercial real estate to cash accounts. The profession requires excellent quantitative and analytical skills, organizational skills and nerve - to make split-second decisions with millions of dollars riding on the line. Finance and accounting jobs require critical & detail-oriented thinking, a knack for using numbers to understand patterns that influence business, ability to think critically about the numbers you're working with.