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OCCUPATIONAL

PROFILE

Investment banker (corporate finance)

Job Description
Corporate financiers provide a range of financial services to companies, institutions and governments. They manage
corporate, strategic and financial opportunities, including mergers, acquisitions, issuing bonds and shares, lending,
privatisations, and overseeing initial public offerings (IPOs). Corporate financiers advise and lead management buyouts,
provide strategic advice to clients, and identify and secure new deals.

Investment banking is frequently used as a catch-all term. In reality, banks are made up of many divisions and
investment bankers perform a range of different functions. Traditionally, investment banking incorporates corporate
finance and mergers and acquisitions (M&A). The definition has blurred in recent years and may also include trading
bonds and shares.

Typical Work Activities


The main role of corporate financiers is to advise companies, institutions and governments on how to achieve their
financial goals and implement their plans. Corporate financiers work in dedicated teams, focusing on specific
transactions or market sectors. A typical corporate finance deal involves two stages:

• Origination: assessing a deal's desirability, which is sometimes an innovative idea from the bank rather than the
client. Financial models are used to simulate possible outcomes (this requires a deep understanding of a sector).
• Execution: structuring and negotiating the detailed terms of a deal, often in liaison with other professionals.

Many investment banks deal in three main areas:

• Mergers and acquisitions (M&A): assisting clients with expansion to increase profitability, safeguard market
position, diversify, etc. Investment bankers manage the transaction process, assessing the target organisation and
the impact of the deal. This involves knowledge of legal and regulatory issues.
• Debt capital markets: working with lenders such as financial institutions, agencies and public and private
companies to support client debt. This includes restructuring debt, refinancing debt and raising new debt.
• Equity capital markets: advising clients on how much capital to raise, from whom and when.

Although dealing with different, specific business areas, project teams liaise with one another during the two phases of a
deal in order to obtain relevant specialist information and market intelligence.

Typical activities on a day-to-day basis include:

• thoroughly researching market conditions and developments;


• identifying new business opportunities;
• carrying out financial modelling, then developing and presenting appropriate financial solutions to clients;
• liaising with the chief executive and chief finance officer of large organisations;
• structuring marketing campaigns for transactions;
• co-ordinating teams of professionals, including accountants, lawyers and PR consultants.

Work Conditions
• The average starting salary is £35,500, well above the average UK graduate starting salary of £23,500 (salary data
collected February 08). After three or more years, salaries may range between £50,000 and £75,000. Those with
significant experience may earn a base salary of around £150,000 (salary data collected February 08).
• Pay is often performance-related. For a new trainee, salaries may be increased by up to 50% annually through
bonuses. Managing directors' salaries often account for less than 15-20% of their total earnings, with the rest being
bonus-related. However, every year up to 10% of an investment bank's workforce may be lost as a result of poor
individual performances. The environment is strongly meritocratic.
• Hours are regularly long and often unsocial. Weekend work is common as deals approach crucial stages.
Fifteen-hour days are not unusual and investment bankers work up to 100-hour weeks.
• Investment banks are increasingly keen to attract a diverse workforce. Many companies run events aimed at
attracting women to the profession (see Chances Events (www.chancesevents.com)). Most have internal support
networks for under-represented groups. A number of banks are members of the Diversity Champions programme
from Stonewall (www.stonewall.org.uk).
• The job market is volatile. The recruitment and retention of staff may be adversely affected by economic
downturns. Between 2001 and 2003, there were more than 35,000 redundancies in the sector due to the effects of
events such as the September 11 attacks in the US and the decline of the dot.com boom. Buoyant financial
markets saw opportunities increasing from 2005 to 2007, but 2008 has seen jobs in the City under a new threat
due to the global credit crisis.
• The main financial centres are New York and London, followed by major European cities such as Frankfurt and
Paris. UK-based positions are almost exclusively in London. Many investment banks have global offices and offer
trainees the chance to work overseas within the first two years. Once qualified, investment bankers may spend
significant time working overseas.
This Occupational Profile forms part of Prospects Planner www.prospects.ac.uk/links/occupations Page 1 of 4
Investment banker (corporate finance)

Entry Requirements
Investment banks are interested in graduates from all disciplines, not just those with finance-related degrees. Standards
are high and companies usually ask for at least a 2.1 degree with a strong, consistent, academic performance. They
often specify a minimum number of UCAS points.

Entry without a degree or HND is not usually possible.

Selection is competency-based. Candidates are assessed on their ability to demonstrate a range of the skills considered
desirable by the sector. These include:

• strong numerical and analytical skills;


• excellent teamworking and team leadership skills;
• communication and interpersonal skills;
• project and time management;
• dedication, energy and commitment;
• self-confidence and ability to make difficult decisions;
• the ability to work under pressure.

Employers also look for commercial awareness and knowledge of financial markets. A second language may be useful,
but is not essential.

The recruitment process normally has several tiers: an online application form, numerical (and often verbal) reasoning
tests, first interview/assessment centre, and final interviews.

Competition for positions is fierce. Some investment banks receive 9,000 applications for around 150 places per year.
This means, on average, there are around 60 applicants per position. Around 7,500 of these applicants do not make it
past the initial application stage, so preparation and planning are essential if you want to succeed at each of these
stages.

Completing an internship with an investment bank is a valuable way to improve your chances of securing a job.
Investment banks do offer their interns full-time positions, with some banks offering jobs to between 50-90% of interns.
The application process is similar to that of graduate schemes. Internships are normally open to penultimate-year
students.

Some investment banks accept applications from students who require a work permit.

Most investment banks have a strong presence on university campuses, posting vacancies through careers service
bulletins and websites, holding presentations and attending recruitment fairs. Details and dates may be found on
company and careers service websites.

It is illegal for employers to discriminate against candidates on the grounds of age, gender, race, disability, sexual
orientation or religious faith. For more information on equality and diversity in the job market see Handling Discrimination
(www.prospects.ac.uk/links/discrimination).

Training
New trainees are normally introduced to the sector via intensive, company induction programmes, which may last four to
eight weeks. These programmes are delivered by senior professionals from within the company and industry experts.
They are designed to provide a comprehensive overview of the sector, covering areas such as accounting, corporate
finance, economics, capital markets and financial modelling. Induction programmes may bring together new trainees
from across the organisation. The focus is on team building and case-study-based learning. Training is rigorous,
challenging and comprehensive.

Once inductions are completed, additional training may be provided through in-house courses and seminars.

Some employers may also require further professional qualifications. The Securities and Investment Institute (SII)
(www.sii.org.uk) provides a number of qualifications related to the work of investment bankers, which are approved by
the Financial Services Authority (FSA) (www.fsa.gov.uk). These include the Certificate in Corporate Finance.

Corporate financiers successfully completing this certificate may then opt to continue their professional development by
studying for the Corporate Finance Qualification (www.cfqualification.com). This is a global qualification jointly provided
by SII, the Institute of Chartered Accountants in England and Wales (ICAEW) (www.icaew.co.uk) and the Canadian
Institute of Chartered Accountants.

The ifs School of Finance (IFS) (www.ifslearning.ac.uk) (formerly the Chartered Institute of Bankers) also runs many
courses relevant to corporate finance. These include a degree or diploma in financial services or a specialisation in
corporate banking.

The UK Society of Investment Professionals (UKSIP) (www.uksip.org) (UK member of the CFA Institute, formerly the
Association for Investment Management and Research) and the Association of Corporate Treasurers (ACT)
(www.treasurers.org), also provides relevant training courses.

The Financial Services Skills Council (www.fssc.org.uk) provides guidance on which qualifications are most suitable for
your role.

Page 2 of 4 See also AGCAS Sector Briefings for an overview of job sectors - www.prospects.ac.uk/links/sectorbs
Investment banker (corporate finance)

Career Development
Most graduates begin in analyst roles. These are two to three-year trainee positions, after which they progress to
associate, though MBAs may have direct entry. Associates typically have a team of analysts working for them. After a
further three years, they may move to vice-president (VP), managing the day-to-day work of both associates and
analysts. VPs are in more frequent contact with clients and may have their own customers. The next step is director or
executive director and then managing director, although promotion beyond VP is difficult. Some banks only promote
around 6-8% of staff to be managing directors. Exceptional individuals may achieve this within ten years of graduating.

Although responsibility increases with seniority, analysts are still put on a steep learning curve and, in order to progress,
they are expected to demonstrate more than just analytical skills. Additional competencies include strong leadership
potential, sophistication of judgement, an understanding of client motivation and expertise in the commercial context of
their work. Being pro-active and gaining experience in as many areas as possible from an early stage demonstrates
commitment and a desire to move upwards.

Performing well not only leads to good bonuses and internal recognition, but attracts outside attention - headhunting is
common within the sector. High performers are in demand and it is not unusual for individuals or whole teams to be
poached by other banks. Headhunting aside, regular moves between banks are possible. Experienced corporate
financiers may also move into senior management positions in industry, commerce or government.

It is also possible to enter corporate finance after training as an accountant or lawyer. Specialist industry knowledge is
highly valued, as is a range of talents, including quantitative skills and general financial knowledge.

Typical Employers
Investment banks are the main providers of corporate finance services. Banks may be ‘pure’ (e.g. dealing only with
corporate wholesale banking) or ‘universal’ (e.g. handling both wholesale and retail banking for corporate clients). Within
London investment banks may now be split into four main categories:

• US 'pure' investment banks, e.g. Goldman Sachs and Lehman Brothers


• US 'universal' banks, e.g. Citi and JP Morgan
• UK and EU universal banks, e.g. Deutsche Bank and Societe Generale
• Specialist independent banks, e.g. Lazard and Rothschild

When choosing which banks to apply to, consider the size of the organisation. Citi, for example, has around 325,000
employees globally and JP Morgan employs 160,000 people worldwide. Meanwhile Rothschild has just over 2,000 staff.
A larger bank obviously means working on much larger accounts but career progression may be more rapid in a smaller
company. It is also worth looking at the bank's reputation. Some companies are strong in mergers and acquisitions
(M&A), while others are renowned for their work in debt capital. Key players in each area are listed in Careers in
Financial Markets (www.efinancialcareers.co.uk/pdf/CIFM-UK-0708.pdf).

Apart from the large investment banks, other M&A advisers include corporate finance boutiques. These tend to
specialise in fewer areas of work or products, or in particular industry sectors, or the corporate finance divisions of
accountancy firms. It is possible, for example, to train as a chartered accountant and then move into corporate finance.

Other employers offering relevant experience include stockbrokers, the Financial Services Authority (FSA)
(www.fsa.gov.uk), the Bank of England (www.bankofengland.co.uk), the London Stock Exchange (LSE)
(www.londonstockexchange.com), investment firms and venture capital firms.

Sources of Vacancies
• Inside Careers: Banking, Securities and Investments;
• Careers in Financial Markets (www.efinancialcareers.co.uk/pdf/CIFM-UK-0708.pdf);
• TARGETjobs City and Finance;
• Hobsons GET Finance Guide;
• Prospects Directory;
• Prospects Finalist (www.prospects.ac.uk/links/finalist);
• companies' own websites and graduate brochures.

Vacancies are also advertised in the financial job pages of the broadsheets such as Times Online
(www.timesonline.co.uk) and the Financial Times (news.ft.com) and in supplements of the national press, e.g. The
Guardian (www.guardian.co.uk) Graduate section on Saturdays.

There are some specialist recruitment agencies that deal with investment banking opportunities, such as City Jobs
(www.cityjobs.com/). Details can be found through internet search engines, in the specialist financial press or in the
Recruitment and Employment Confederation (REC) (www.rec.uk.com).

Related Occupations
• Banker
• Chartered accountant
• Investment analyst
• Investment banker (operations)
• Investment fund manager
• Solicitor, commercial
• Trader (equities, FX, futures, bonds)
Find comprehensive careers information on www.prospects.ac.uk and in your HE careers service Page 3 of 4
Investment banker (corporate finance)

Information Sources
Bibliography
AGCAS and Graduate Prospects products are available from higher education careers services.
AGCAS Publications
Accountancy and Business Services Sector, AGCAS Sector Briefing
Banking, Investment and Insurance Sector, AGCAS Sector Briefing
Handling Discrimination, AGCAS Information Booklet
Graduate Prospects Publications
Prospects Directory
Prospects Finalist
Other Publications
Careers in Financial Markets, eFinancialCareers Ltd, Annual
The Economist, The Economist, Weekly
Financial Times, Financial Times Group, Daily
The Guardian, Guardian Newspapers Ltd, Daily
Hobsons GET Finance Guide, Hobsons Plc (http://www.get.hobsons.co.uk), Annual
Inside Careers: Banking, Securities and Investments, Inside Careers (http://www.insidecareers.co.uk), Annual
The Money Machine: How the City Works, Penguin Books Ltd, 2002
TARGETjobs City and Finance, GTI Specialist Publishers (http://www.groupgti.com), Annual

Websites
Association of Private Client Investment Managers and Stockbrokers (APCIMS), www.apcims.co.uk
Chances Events, www.chancesevents.com
Chartered Financial Analyst (CFA) Institute, www.cfainstitute.org
City Jobs, www.cityjobs.com/
Corporate Finance Qualification, www.cfqualification.com
eFinancialCareers, www.efinancialcareers.co.uk
Financial Services Skills Council, www.fssc.org.uk
Financial Times, news.ft.com
Institute of Chartered Accountants in England and Wales (ICAEW), www.icaew.co.uk
International Capital Market Association (ICMA), www.icma-group.org/
London Investment Banking Association (LIBA), www.liba.org.uk
Recruitment and Employment Confederation (REC), www.rec.uk.com
Securities and Investment Institute (SII), www.sii.org.uk
Stonewall, www.stonewall.org.uk
Times Online, www.timesonline.co.uk
Totally Financial, www.totallyfinancial.com/

Addresses
Association of Corporate Treasurers (ACT), 51 Moorgate, London EC2R 6BH Tel: 020 7847 2540 URL:
www.treasurers.org
Bank of England, Threadneedle Street, London EC2R 8AH Tel: 020 7601 4444 URL: www.bankofengland.co.uk
British Bankers Association (BBA), Pinners Hall, 105-108 Old Broad Street, London EC2N 1EX Tel: 020 7216 8800
URL: www.bba.org.uk
Financial Services Authority (FSA), 25 The North Colonnade, Canary Wharf, London E14 5HS Tel: 020 7066 1000 URL:
www.fsa.gov.uk
ifs School of Finance (IFS), ifs House, 4-9 Burgate Lane, Canterbury, Kent CT1 2XJ Tel: 01227 818609 URL:
www.ifslearning.ac.uk
London International Financial Futures & Options Exchange (LIFFE), Euronext.liffe, Cannon Bridge, London EC4R 3XX
Tel: 020 7623 0444 URL: www.euronext.com/home_derivatives/0,4810,1732_6391950,00.html
London Stock Exchange (LSE), 10 Paternoster Square, London EC4M 7LS Tel: 020 7797 1000 URL:
www.londonstockexchange.com
UK Society of Investment Professionals (UKSIP), 4th Floor, 90 Basinghall Street, London EC2V 5AY Tel: 020 7796 3000
URL: www.uksip.org

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Written by Laura Rose, London School of Economics and Political Science, 18/04/2008

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