Wednesday, 18 August 2010


Morgan Stanley BuildingImage via Wikipedia
There are various differences between the types of employers and institutions in Banking & Finance, and all pose different career aspects such as training, exposure, professional development and progression, amongst other things.

Tier 1) 
Bulge Brackets - The term 'bulge bracket' frequently refers to the group of investment banks considered to be the largest and most profitable in the world; their investment banking clients are usually large corporations, institutions, and governments. They usually provide both advisory and financing banking services, as well as the sales, market making, and research on a broad array of financial products including equities, credit, rates, commodities, and their derivatives. They are also heavily involved in the invention of new financial products, such as mortgage backed securities in the 1980s, credit default swaps in the 1990s, and today, carbon emission trading and insurance-linked products. Bulge bracket firms are usually primary dealers in US treasury securities. Bulge bracket banks are also global in the sense that they have a strong presence in all three of the world's major regions: The Americas, EMEA, and Asia-Pacific. Several, if not all of, the Investment Banks offer defined and prestigious graduate schemes and internships for those who have just graduated or obliged to take a year out in industry as part of their degree. What you will find is that many of these dedicate significant budgets for Marketing and HR purposes to showcase and make students aware of thie presence in Banking & Finance. You may even find that some of the larger Investment Banks offer the opportunity to begin your graduate scheme with training abroad, for example on Wall Street in New York. Graduate schemes look to draft the best of the best of fresh graduates; those that are academically brilliant, have had previous experience in the sector, and those who are armed with the right mentality and approach. For these reasons, the application process is extremely competitive. The following is a list of the major Bulge Bracket Investment Banks:
ABN Amro, Bank of America, Barclays Capital (Barcap), Citigroup, Credit Suisse, Deutsche Bank, Dresdner Kleinwort, HSBC, J P Morgan, Merrill Lynch, Morgan Stanley, Societe Generale, UBS, Goldman Sachs.

Tier 2)
Mid-Caps (mid-capitalisation) - These organisations are smaller in stature in comparison to the bulge brackets, and tend to utilise the likes of consultants to make people aware of them. These firms do not have the same level of capacity in terms of marketing and HR budgets, but you may find that you are offered more exposure and at a quicker rate, through learning on the job. A prime example of a mid-cap Investment Bank would be BNP Paribas, specialists in IB and Corporate Finance, or Brewin Dolphin. The term 'mid-cap' is a shortened version of the phrase 'mid-capitalisation';  


A mid-cap company is one that has market capitalisation that is too small for it to be a blue chip (or large cap), but which is bigger than a small cap. As businesses that have reached a certain scale they tend to be more stable than similar smaller companies. Being smaller than large companies, mid-caps are more likely to have room for growth within their industry. They tend to be less complex than large companies, and therefore easier to analyse.

Tier 3)
Boutique Firms - Small investment Banks that specialize in certain types of investment banking. They are fiirms that do not have the resources to dedicate towards a detailed training scheme, or to offer a varied range of different services. You will often find that your exposure to real-world projects and applications tends to start from day one. In recent times, boutique firms have been attracting alot more in terms of employees, as individuals are not only attracted to the opportunity to climb the corporate ladder in quick time, potentially becoming a partner, but also because of the ability of these firms to specialise in a chosen niche area. The future looks bright for these firms because of these recent trends. Typically, Boutique Investment Banks have one or two offices and may specialize in advisory services for certain geographic regions. Some banks may specialize in certain types of transactions. An example of a boutique firm would be Baillie Gifford & Co or Brown, Shipley & Co.
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Friday, 6 August 2010

Business Areas: What is INVESTMENT BANKING?

Investment banking (UK definition) is the traditional aspect of investment banks which involves helping customers raise funds in the Capital Markets and advising on mergers and acquisitions. When speaking of jobs in “the City” or on “Wall St.” people are often referring to Investment Banking jobs. Investment banking may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target.
Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate Finance.
In this definition of Investment Banking we include Merchant banking as most of the Merchant Banks have been acquired by Investment Banks. Merchant Banking involves the private equity activity of investment banks. Sometimes, merchant banking is a part of the Alternative Investment Division.
Investment Banking includes the advisory, execution and deal making activities likely to take place in a corporate finance environment.

Activities include:

  • Raising capital for seed, start-up, development or expansion capital
  • Mergers, de-mergers, acquisitions or the sale of private companies
  • Mergers, de-mergers and takeovers of public companies, including public-to-private deals
  • Management buy-out, buy-in or similar of companies, divisions or subsidiaries – typically backed by private equity
  • Equity issues by companies, including the flotation of companies on a recognised stock exchange in order to raise capital for development and/or to restructure ownership
  • Raising capital via the issue of other forms of equity, debt and related securities for the refinancing and restructuring of businesses
  • Financing joint ventures, project finance, infrastructure finance, public-private partnerships and privatisations
  • Secondary equity issues (ie. selling additional shares in the company), whether by means of private placing or further issues on a stock exchange, especially where linked to one of the transactions listed above.
  • Raising debt and restructuring debt, especially when linked to the types of transactions listed above


i) Corporate Finance

A career in corporate finance means you would work for a company to help it find money to run the business, grow the business, make acquisitions, plan for it’s financial future and manage any cash on hand. You might work for a large multinational company or a smaller player with high growth prospects. Responsibility can come fast and your problem-solving skills will get put to work quickly in corporate finance.
On a day-to-day basis, typical activities in Corporate Finance will 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 and small organisations;
  • Structuring marketing campaigns for transactions;
  • Co-ordinating teams of professionals, including accountants, lawyers and PR consultants;
  • Provide advice on capital structure;
  • Constructing new issue and takeover timetables;
  • Constructing IPO prospectus (Offering price, number of shares, subscription procedure, management details, operations of business, industry, financial statements);
  • Liaise with UK Listing Authority (UKLA) to produce ‘Listing Particulars’;
  • Due Diligence on prospectors & financial statements;
  • Breakfast, Lunch, Dinner Road Shows (Drinking);
  • Publish financial announcement (notify exchange, send circular, send to information provider).

ii) Mergers & Acquisitions:

The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate finance dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.
Usually mergers occur in a consensual (ie. both parties agree) setting where executives from the target company help those from the purchaser in a due diligence process to ensure that the deal is beneficial to both parties.
Corporate mergers may be aimed at reducing market competition, cutting costs, reducing taxes, removing bad management, “empire building” by the acquiring managers, or other purposes.
Such actions are commonly voluntary and involve a stock swap or cash payment to the target.
An acquisition, also known as a takeover, is the buying of one company (the ‘target’) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target’s board has no prior knowledge of the offer.
Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover.
The term demerger is used to indicate a situation where one company splits into two, generating a second company separately listed on a stock exchange.

As a junior M&A banker, or analyst, you will spend a lot of time working on documents outlining a bank’s ideas for a particular transaction. Analysts in M&A usually conduct basic research and build the financial models used to price the companies concerned.
One notch up from analysts are associates, who oversee analysts’ work and check their models are correct. Further up the scale are vice-presidents, who survey the work of analysts and associates.
Vice-presidents report to directors and managing directors, who ‘own’ the client relationship (i.e. the main point of client contact).
When a client elicits a positive response, the M&A team see the deal through to completion.
On a day-to-day basis, typical activities in M&A will 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 and small organisations
* Constructing takeover timetables
* Due Diligence on prospectors & financial statements
* Breakfast, Lunch, Dinner Road Shows (Drinking)

iii) Private Equity

Private equity is an asset class consisting of equity investments in companies that are not traded on a public stock exchange.
Private equity and venture funds exist to help raise money for companies by offering cash in return for an ownership stake. As a result, they become co-owners or even sole owners of the companies in which they invest.
Private equity firms generally receive a return on their investments through one of three ways: an Initial Public Offering (IPO), a sale or merger of the company they control, or a recapitalization. Unlisted securities may be sold directly to investors by the company (called a private offering) or to a private equity fund, which pools contributions from smaller investors to create a capital pool.
Private equity investments can be divided into the following categories:
  • Venture capital: an investment to create a new company, or expand a smaller company that has undeveloped or developing revenues;
  • Buy-out: acquisition of a significant portion or a majority control in a more mature company. The acquisition normally entails a change of ownership;
  • Special situation: investments in a distressed company, or a company where value can be unlocked as a result of a one-time opportunity;
  • Merchant banking: negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies.
In an ideal situation, they invest in an underperforming company, turn it around and sell their stake at a profit some years later. However, they also occasionally engage in the unpopular practice of asset stripping, or breaking a company up and selling its assets individually to make a profit.
The money invested by private equity funds is frequently used for management buy-outs (MBOs) where a company, or a division of a company, is bought by its managers. Alternatively, it may be used for a management buy-in (MBI), where managers from outside take over a company.
The investors in a private equity fund can usually afford to have their capital locked in for long periods of time and are able to risk losing significant amounts of money. This is balanced by the potential for huge returns.
The majority of investment into private equity funds comes from three sources:
  • Institutional investors through pension funds, corporate pension plans, insurance companies, endowments, family offices and foundations.
  • Fund of funds. These are private equity funds that invest in other private equity funds in order to provide investors with a lower risk product through exposure to a large number of vehicles often of different type and regional focus.
  • Individuals with substantial net worth (Sophisticated Investors).
The amount of time that a private equity firm spends raising capital varies depending on the level of interest amongst investors for the fund, which is defined by current market conditions and also the track record of previous funds raised by the firm in question. Firms can spend as little as one or two months raising capital where they are able to reach the target that they set for their funds relatively easily, often through gaining commitments from existing investors in their previous funds, or where strong past performance leads to strong levels of investor interest. It is not unheard of for funds to spend as long as two years on the road seeking capital, although the majority of fund managers will complete fundraising within nine months to fifteen months.
The credit crunch has created uncertainty for the private equity industry, with many banks unable to sell on the loans they made to clients to help finance deals.
Private equity houses will hire research analysts who number crunch and scrutinise the accounts of companies in which a fund is thinking of investing.
The principals appraise whether a deal is worth pursuing and, if it is, do anything from arranging legal documentation to negotiating the right price.
Originators are usually a funds partners who find new companies to invest in. They oversee the deals and make the most money if an investment is sold at a profit.
In private equity you will often be providing management of the companies the fund invests in with skills and funding. Private equity houses encourage companies to succeed and in doing so, make a profit themselves.
Often private equity fund managers will employ the services of external fundraising teams known as placement agents in order to raise capital for their vehicles. You will be dealing with placement agents who will approach potential investors on behalf of the fund manager, and will typically take a fee for the commitments that they are able to garner.
In a nutshell, you will be heavily involved in the businesses in the fund and everything that goes along with that including analysing the companies, developing the companies and raising funds for the companies are looking to return your investment many times over.

iv) Venture Capital

Venture Capital and Private Equity are closely related and the terms are used to mean the same thing by different people. Private equity / Venture Capital firms generally receive a return on their investments through one of three ways: an Initial Public Offering (IPO), a sale or merger of the company they control, or a recapitalization. Unlisted securities may be sold directly to investors by the company (called a private offering) or to a private equity fund, which pools contributions from smaller investors to create a capital pool.

v) Underwriting

Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products like equity capital, insurance, mortgage or credit to a customer.

 - Securities Underwriting
Securities underwriting is the way business customers are assessed by investment houses for access to either equity or debt capital.
When an Investment Bank raises money for a company they will use an underwriter in order to guarantee the purchase of securities in the event that nobody else will purchase.
This is a way of placing a newly issued security, such as stocks or bonds, with investors. A syndicate of banks underwrite the transaction, which means they have taken on the risk of distributing the securities. Should they not be able to find enough investors, then they end up holding some securities themselves. Underwriters make their income from the price difference, or underwriting spread, between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering.
If the investment bank and company reach an agreement to do an underwriting, also known as a firm commitment, then the investment bank will buy the new securities for an agreed price. It will be your job to facilitate this transaction.
You will be registering the new securities with the London Stock Exchange, setting the offering price, possibly forming and managing a syndicate to help sell the new securities, and to peg the price of the new issue by buying in the open market, if necessary.
One of the biggest tasks of an underwriter is determining the price of the transaction. If the offer price is too high, the investment bank will fail to sell all of the new issue (aka undersubscription), then it will have to hold some of the issue in inventory, hoping to sell it later. If the investment bank holds the new issue in inventory, this will tie up capital that can be used elsewhere, or, worse yet, it will have to borrow money.
If this happens you will have to answer to the initial customers who paid a higher price for the new issue who will be disappointed that they paid a higher price, and the investment bank may lose these customers in a future offering. You will be reporting back to investors throughout the transaction.
If the offering price is too low, then the new issue will quickly sell out, and the price of the new issue will rise quickly because the supply will be limited (aka oversubscription), inducing the initial investors to sell for quick profits commonly called flipping.
Essentially your job is to evaluate risks, use financial modelling to come up with an underwriting level and facilitate the transaction.

 - Insurance Underwriting
Underwriting may also refer to insurance; insurance underwriters evaluate the risk and exposures of potential clients. They decide how much coverage the client should receive, how much they should pay for it, or whether to even accept the risk and insure them. Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to acquire or to “write” business that will make the insurance company money, and to protect the company’s book of business from risks that they feel will make a loss. Underwriting work is largely about relationship building and it demands close attention to detail. You are likely to be involved in networking to get things done, gathering and assessing information, studying proposals and, for any given scenario, calculating possible risk, weighing up the likelihood of a claim being made and in what timeframe. Underwriters compute results to determine the cost of insurance and decide whether the risk is viable. You might also find yourself liaising with specialists, negotiating terms with policyholders or brokers, specifying conditions for certain types of cover, and drawing up policies and contracts.

vi) Syndicating

Syndicators usually sit on the trading floor, but don't trade securities or sell them to clients. The syndicate provide a basic role in placing stock or bond offerings with buy siders and aim to find the right offering price that satisfies both the company, the salespeople, the investors and the corporate finance bankers working the deal. In any public offering, syndicate gets involved once the first prospectus is sent out to potential investors. At this point syndicate associates begin to contact other investment banks interested in being underwriters in the deal. Investors who agree to put up money for the IPO participate in what is called the syndicate. In the prospectus each participant is allocated a number of shares.
You will spend most of your time on the phone and meeting with people working on the prospectus. You will also spend time pricing the IPO by supply and demand. Syndicate professionals:
  • Make sure their banks are included in the underwriting of deals
  • Put together the underwriting group in deals the investment bank is managing
  • Allocate stock to the various buy-side firms indicating an interest in the deal
  • Determine the final offering price of various offerings
  • Sorting out people who are likely to invest and those who are likely to pull out
  • Distinguish investors who are looking for a quick profit and will sell the stock immediately after inflation from the longer term investors
  • Keeping the company in touch with pricing

vii) Investor Relations
Investor Relations (IR) is the field of corporate communications specializing in information and disclosure management for the companies it holds as clients and the investment banks shareholders.
Investor relations encompasses the broad range of activities through which a quoted company communicates with its current and potential investors. The constantly evolving requirements of disclosure, transparency and corporate governance create significant challenges for all quoted companies. Investor relations practitioners, whether they work in-house or in an advisory capacity, have a vital role to play in helping companies to manage these issues and to communicate more effectively with the investment community.
The job of investor relations in investment banking can be split into three main roles:
  • Communicating with the investment bank’s shareholders
  • Communicating with the institution’s clients about the clients share price
  • Communicating with investors in the institution’s public issues (ie. when the bank sells new shares in the market)
They communicate with the investment community at large. The term describes the department of a company devoted to handling inquiries from shareholders and investors, as well as others who might be interested in a company’s stock or financial stability.
The investor relations function also often includes the transmission of information relating to intangible values such as the company’s policy on corporate governance or corporate social responsibility.

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Tuesday, 3 August 2010

Financial Qualifications

CFA Institute signImage via Wikipedia
Undertaking a financial qualification for your chosen Banking and Finance sector will show to the employer your fit and suitbaility for the division, given that you would have learned real-world knowledge and application that you can apply to the workplace right away. It is also a big step in strategizing your move into a particular sector, given that you are showing your commitment to that particular division.

So below, I have outlined a quick and brief overview of relevant financial qualifications, that can be undertaken in preparation for a career in each sector of Banking and Finance:

INVESTMENT BANKING (Mergers and Acquisitions/Corporate Finance):
 - CISI in Corporate Finance; for those working in corporate finance and related areas, such as venture capital, who need to demonstrate a sound understanding of both regulatory and technical aspects of the subject. Not as much clout as the CFA, but still gain good knowledge and practice.
 - CFA (Chartered Financial Analyst); globally recognised and highly-regarded designation symoblizing the highest in professional standards. Three distinct levels. Examinations test your ability to apply investment principles at a professional level. The topics covered are economics, accounting, security analysis, and money management. Popular in large organisations and FSA approved.

 - CISI in Investments; FSA approved for individuals working in regulated firms who will be involved in managing investments on behalf of clients, giving advice on investments or selling investments to or on behalf of clients.

 - IMC (Investment Management Certificate); An FSA approved threshold competency exam for those working in financial analysis, investment management and fund sales. Testing delegates' knowledge and understand of the regulations and practices of financial markets, categories of securities and principles of investment management. Also offers a good introduction to the financial services industry for those working in support areas as information technology and marketing.

 - CFA (refer to previous description above)

 - CISI IAQ (Investment Administration Qualification); an open-entry modular examination recommended by the Financial Services Skills Council. Designed to provide settlement, administration and operations staff with an understanding of the industry, the regulatory environment and their specific area of work.

 - CISI IAQ (refer to previous description above)

 - ACCA: a global benchmark of accounting excellence. Its rigorous exam syllabus ensures technical competence in a range of key commercial subjects.
 - CIMA: Chartered Institute of Management Accountants is globally recognised and well respected membership body which focusses on accounting for business. CIMA is the only qualification with a sole focus on this area. CIMA members are finance professionals that also understand the intricacies of managing organisations. Focusing on future success rather than past performance by using financial skills, CIMA professionals help to drive the world's most successful organisations.

 - CISI in Corporate Finance (refer to previous description above)
 - CISI Diploma in Investment Compliance; specialist qualification for individuals working within compliance, or thoser working within the financial services industry, who wish to increase their knowledge and understanding of compliance. Designed to develop the complicance professional's knowledge and skills in FSA regulation and compliance, as required for the securities and investment industry.

 - CIMA (Strategic side of Management Accounting is useful here. Refer to previous description above)

 - CISI IAQ (Refer to previous description above)
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Graduate Training Schemes

The structure of banks’ training programmes may vary due to the differing educational systems across Europe, but one element remains consistent: whether you’re joining Goldman Sachs, Deutsche Bank or Société
Générale, you’ll have to learn fast.

Training in London
Most banks in the City hire graduates onto fixed training programmes that start each summer. This is as much the case at European banks in the City as at American institutions. For example, Swiss-based UBS hires students from across Europe onto its London-based ‘explore’ programme which is entirely separate from the programme it runs in Zurich. US banks such as Goldman Sachs, Morgan Stanley, J.P. Morgan and Bank of America Merrill Lynch train most of the European graduate hires in their London offices. So, what should you expect if you start your banking career in the City of London?

Classroom training
This usually lasts a few weeks and will teach you how to price a bond, build a financial model or understand a stock option. At US banks like Goldman Sachs and Morgan Stanley (and sometimes at European banks like
Deutsche), the classroom training stage typically kicks off with an all expenses paid trip to
New York. The head of early career development at one European bank says this initial period of training is about “building the business and technical skills you need to know from day one”. Put less opaquely, classroom training is all about teaching you a) what the bank as a whole does, b) what the division you’re joining does, and c) how to do it yourself. The first few weeks of training are also about meeting people. “Banks will ensure that you are given valuable exposure to senior leaders within the business,” says Sarah Crawford, head of graduate recruitment at Goldman Sachs. If you’re learning, say, how to value equity
derivatives, don’t be surprised to find a senior equity derivatives trader standing in front of you and presenting some of the models.

Since 2007, when the UK’s Financial Services Authority ruled that passing exams was no longer necessary for bankers dealing only with wholesale clients, exam passes haven’t been strictly necessary. This doesn’t mean, however, that banks don’t go in for them. Every year, thousands of people are put forward for exams
run by the UK’s Securities and Investment Institute (SII), now known as the Chartered Institute for Securities and Investments (CISI). Which exams will you take? If you’re working in a markets area of a bank based in the UK, you can expect to come across exams run by the CISI. If you’re working in corporate finance, you
may be put forward for the CISI Certificate in Corporate Finance. And if you’re working in asset management, prepare yourself for the Certificate in Investment Management, or the Chartered Financial Analyst (CFA) accreditation.

Rotations and on-the-job training
Once you’ve finished the induction, you’ll be assigned to a team and put to work. In some cases, you may be moved to another team a few months later – part of a system known as ‘rotations’. A bank that offers rotations is probably a good idea if you’re not entirely sure which area you want to work in. However, rotations also have a downside. Because you’re moving between different desks and not entering a specific job, you may find yourself slightly exposed if the bank you join is cutting staff. Equally, a rotation programme may also make it difficult to form strong relationships with future managers and leave you struggling to secure a role in the area you’re really interested in. Some banks offer more rotations than others. Morgan Stanley, for example, says graduates in its global capital markets and investment banking divisions get the chance to rotate across country, product and industry group. It also offers a cross-divisional analyst programme in which students who want to experience a broad range of roles in the bank before settling into a job rotate across both investment banking (M&A), and sales and trading. By contrast, Goldman Sachs’ graduates often
join one team and so do not do any rotations. On the whole, rotations are rare in corporate finance but more common in sales and trading positions.

Training in Continental Europe
If this is what you can expect in London, what happens if you join a bank in Frankfurt, Madrid or Paris? Most banks in Continental Europe hire graduates throughout the year. Such ‘rolling’ application deadlines in Europe mean students typically start in batches. There is less emphasis on an initial ‘global orientation’ period, and more on classroom training in small groups, followed by on-the-job work experience. If you join a bank in Continental Europe, however, there may be more opportunities to work overseas. At SocGen, trainees on its twoyear Paris-based Graduate International Programme (GIP) usually undertake three rotations of eight months each: one in Paris, one in London or Paris and a third in either Milan, Frankfurt or Madrid, plus a fortnight’s training at French business school INSEAD.

Professional Development
Whether you join a bank in London or in Continental Europe, you can also expect to be put through continuous training as your career progresses. BNP Paribas, for example, runs a special academy for its investment banking professionals. Goldman Sachs operates ‘Pine Street’, an academy designed to prepare promising staff its more senior management roles. If you’re working in asset management or research in Europe, you may be expected to study and pass Chartered Financial Analyst (CFA) accreditation, of US origin, which comes in three parts and is recognised globally. The CFA is becoming increasingly popular – in June 2009 more than 128,000 people globally took the exams. In Europe, the numbers were up 17% on the previous year. The European Federation of Financial Analysts runs a competing qualification, the Certified International Investment Analyst (CIIA), which is supported by the likes of the Société Française des Analystes Financiers and Deutsche Vereinigung für Finanzanalyse und Anlagenberatung (DVFA). In the US, it has also been common practice for junior bankers to leave the industry after two years to study for a Master’s in Business Administration (MBA) and to come back into the industry once the course is over. This happens less frequently in Europe but some bankers still choose to study for an MBA. If you
do choose this route, you will need to study at a top business school. In Europe banks typically prefer to recruit from the likes of the London Business School and INSEAD in Paris.

How to Approach the Recruitment Process

Getting a job in an investment bank isn’t easy. On average, banks are thought to receive 60 applications per place. At some firms, the proportion is far higher. In the boom times UBS, for example, estimated that it got
95 applications for every offer made and Société Générale reckoned it received some 350,000 applications from which it ended up taking about 2,400 graduates. So how do they sift the candidates?

Hurdle 1: The application
form and the CV
“Around half of candidates will fall at this first screening stage,” says Sarah Crawford, head of graduate recruitment, EMEA, at Goldman Sachs. Where do people go wrong? Bad English is one failing. Poor spelling, grammar or punctuation can be a real stumbling block, warns the head of graduate recruitment at
another major US investment bank. Filling in multiple application forms and cutting
and pasting your responses from one to another is also perilous. Applicants have been known to get banks’ names wrong as they copy and paste. Every form you fill out will require effort and attention – banks want to know why you’re applying to them in particular, not why you want to apply to a competitor! For this reason, it’s best to focus your application on a small number of organisations instead of firing it off everywhere. Trendence, a research firm, says some of the most successful students only apply to three or four places.
Don’t expect every bank’s application process to be the same. If the focus is on the CV, make sure it’s easy to read and explains precisely how you can add value to an organisation. Use bullet points and don’t just list your work experience – say what you did and what you achieved.

Hurdle 2: The numeracy test
Banks increasingly use tests, which will normally be in English, to check if candidates are numerate. Some also use language tests to establish candidates’ ability to think logically in English. People applying to Barclays Capital are usually required to complete a timed numeracy and verbal reasoning test in the early stage of the
application process. “Sometimes students call us up and say their girlfriend rang in the middle of the test. But why was their phone on and why did they answer it? They do not realise how serious and time pressurised it is until they are 12 or 13 minutes in and by then it is too late,” says one recruitment head. Although you can’t revise for the psychometric tests, it will help if you’re familiar with the format. Your university careers office may be able to help with advance preparation. offers sample question numeracy tests on our Student Centre at You’ll need to do fairly well in the psychometric tests to go on to the next stage. They typically eliminate 50-60% of applicants.

Hurdle 3: The interview
To describe this section as ‘the interview’ is probably wrong: most banks interview students a lot more than once. The majority usually conduct at least two rounds of interviews – a preliminary screening with a Human Resources professional, followed by a further more testing interview with line managers. Some banks, such as SocGen and Barclays Capital, use telephone interviews to screen candidates before meeting them face to face. At a first interview, banks want to ensure you’re committed to a career in banking and are a good ‘cultural fit’. “You are guaranteed to be asked some questions about your drive and motivation. We don’t want people who give textbook answers about being a team player. We’re looking for natural dialogue with real-life examples,” says another graduate recruitment head. subsequent rounds, banks will drill down
on your technical aptitude. Your interviewers are likely to ask questions that test your numerical, commercial and technical awareness. For example, applicants for fixed-income sales roles might be asked how bond prices respond to interest rate adjustments and why. Make sure you know exactly what the particular
job at that particular bank entails. And make sure you’re up to date with events surrounding the bank you’re applying to.

Hurdle 4: assessment centre
If you make it through hurdles 1-3, you may find yourself in an assessment centre. The idea here is to scrutinise candidates under conditions that approximate the job they’ll be doing. Not all banks use them – Goldman Sachs, for example, doesn’t – but plenty do. Assessment centres usually take place over a single day and include a further interview and numeracy test, plus more demanding forms of psychometric test, a group discussion and a presentation. On average, 12 candidates participate, but sometimes as many as 30 will be present. Typically, 25-50% of attendees get a job offer. Some banks will ask underperforming candidates to leave halfway through the day. As well as a second round of numeracy tests, be prepared to complete reasoning tests. Once you’ve made it through the tests and interviews, the most challenging part of the
assessment centre is probably the group discussion. Around six candidates are given a set amount of time to solve a problem together, and assessors observe how you interact in a team environment. If you’re quiet and shy, make sure you say something! And if you’re loud and overbearing, don’t talk over people or put others down. In the presentation, candidates are normally asked to analyse some data and use it to present a convincing argument on a particular point. Failings include not identifying the salient points, presenting a weak argument and changing your views when challenged. The content of assessment centres and presentations varies from bank to bank. At RBS, for example, one operations candidate was faced with a presentation on how the financial crisis has affected Asia, plus a group exercise based around a fictitious company looking at
which sporting events to sponsor. At J.P. Morgan, a finance candidate had to imagine he was an employee at a new bank that was having teething problems, and to make a presentation about how he would solve them.
For the group exercise, he was asked to look at where an IT support team should be based – Mumbai, Bournemouth or London – and how to fund certain projects.

Leonie Van Hofwegen, an Analyst in the Corporate
Risk Advisory Department at Barclays Capital, says "Talk to as many people in the industry as possible
to establish whether the job and bank match what you’re looking for. Be genuinely motivated and interested,
not overly eager."

Thursday, 29 July 2010

How to Keep Your Online Resume Exclusive and Effective

Having a great resume is one thing, figuring out where and when to send it is something else entirely.
Recruiters, career coaches and Web gurus say that less is more when it comes to resume proliferation, despite a host of services that will shotgun your CV across cyberspace. Finance candidates, in particular, should show restraint, as so much of the industry's work revolves around personal networks.
Not only does the scattershot approach generally yield dismal results, but the more resumes that a person has circulated, the harder it is to update them or to keep different versions from popping up in the wrong places.
Flags go up when a candidate has spread a CV far and wide.
"There's the old saying that the best talent is always in demand." "And there's a fine line between self-promotion and proactive outreach and spam."
In many ways, the recruiting game has become an arms race of sorts. Recruiters, job boards and Web sites like have built technological systems to store and ship unprecedented numbers of CVs., for instance, takes in about 25,000 resumes a day. Meanwhile, companies have developed equally sophisticated programs to sort, select and scrap all of those resumes.
Job candidates, meanwhile, are often caught in the middle, trying to get noticed. Here's some advice from job pros on how to do just that:

Take Aim
Tory Johnson, CEO of Women For Hire, an online recruiting site, said too many people are using the "spray and pray method." "They're literally spraying their resume out there -- applying and submitting to anything and everything," she explained. "Then they sit back and pray that the phone rings. It doesn't -- and it won't."

Keep It General
Consider an unsolicited online resume a way to "pique interest," not necessarily a way to lock up your dream job, said Sean Ebner, regional vice president for Technisource, an IT recruiter owned by staffing giant SFN Group. "I tend to advise less is more," Ebner said.

Keep Track
That's the advice of Joanne Vincett, assistant director of career development at Dartmouth University's Tuck School of Business. "You have so many different sites now, and it's easy to forget where you've posted," she said. "You have to get your stories straight."

Update Often
Michael Fertik, CEO of ReputationDefender Inc., said the best way to scrub old information from the Web is to replace it with new, more current content. "Claim your Web real-estate," Fertik said, with thorough and timely profiles on Google, LinkedIn and a personal blog.

Think Twice
Look before you leap when it comes to search firm databases. That's the advice of Bruce Lloyd, director of employer relations at Columbia Business School. "You don't know who's had access to them, you don't know who's copied them or who they may have passed it around to," Lloyd said. "The last thing you want is your resume ending up on your boss's desk for another position in the organization."

Go Direct
Save most of your resume traffic for specific jobs. Pongo Resume, which stores and distributes CVs, advises candidates to doctor their documents to include keywords found in the targeted job listing. That's one of the only ways to beat the HR robots.

Forget the Resume
Get networking! The old adage about "who you know" is still very much alive in the finance industry. "People hire people," she said. "So if you're spending the bulk of your time chasing positions with your resume, the results won't be as promising as they could be if you invested in building and nurturing relationships."
And be on the lookout for news of departures. The revolving doors on Wall Street spin at a blistering pace and that is often the first sign of an opening.

Applying for jobs?

Applying for jobs? Make sure that your online profile - and that of your friends - is in good shape: employers may try to look through your Facebook page and any other available information to find out what kind of person you really are.
What are hiring managers and recruiters are looking for when they scan your online profile? Use these tips to cover your digital tracks that could harm your candidacy.
~ Key Takeaways ~
1. Be careful with your "friends" and associations. Employers and recruiters aren't just monitoring your online footprint, but also those of your close contacts.
2. Make sure that your name isn't easily confused in search results; use a middle name or initial if needed.
3. Brand yourself with a Twitter feed, a blog or other relevant Web presence that speaks to your professional experience.