Investment banking is an exciting, diverse and highly rewarding career path, based in a high-octane environment. In the UK economy alone it generates billions every year and creates hundreds of thousands of job opportunities. If you’ve got the commitment and determination to be successful in this competitive industry, here you’ll find the information that you need in order to get started.
Any role in the banking industry has high stakes and tangible results, requiring a level head and the ability to make quick decisions, but this is particularly true of investment banking. It is also known as ‘higher finance’, meaning that investment banks offer their services to large organisations and help them to raise large sums of capital. Banking at this level comes with its own set of risks and challenges, but the rewards are clear to see and could help you create the lifestyle you’ve always aimed for.
What does an investment bank do?
Investment banks offer two main services which assist large companies and contribute directly to the economy. They offer expertise and financial advice to clients, but also deal directly in financial markets – buying financial assets from one company and selling them to another.
Some of the main activities that investment banks take part in include:
- Raising equity capital by issuing new shares
- Raising debt capital by issuing corporate bonds or government bonds
- Corporate finance advice and services including syndication and underwriting
- Advising organisations on types and amounts of finance to raise
- Structuring new financial products such as credit default swaps
- Mergers and acquisitions, or M&A (combining or purchasing existing companies)
- Proprietary trading (generating in-house profits)
How is an investment bank structured?
Broadly speaking, investment banks are split between the ‘buy’ side and the ‘sell’ side. On the buy side, investment bankers help companies to invest their capital – in pension funds, insurance companies, mutual funds and similar – in order to generate the biggest possible returns.
On the sell side, investment bankers sell new share issues, place new bonds, help clients to facilitate transactions or take part in ‘market making’ services, which means holding shares in order to enable effective trading.
What types of careers are there in investment banking?
Staff at investment banks work in a wide range of areas – not all of them client-facing, and not all of them dealing directly with financial assets. They tend to work across three categories:
- Front office services which include corporate finance, M&A and investment management for high net worth clients
- Middle office services such as capital flow monitoring, which ensure industry regulations are followed and risks are closely managed
- Back office services which enable the efficient operation of an investment bank, by managing IT and infrastructure across high value trading in hundreds of markets
Job Roles in Investment Banking
As the investment banking industry continues to expand it offers a vast range of exciting opportunities. The most commonly sought-after roles in investment banking include:
- Investment analysts become experts in particular sectors and markets in order to advise their colleagues in client-facing departments of the investment bank.
- Specialised analyst roles such as those across security and IT are back office positions which ensure that trading takes place efficiently, securely and productively.
- Traders who undertake transactions in bonds and currencies, using analytical skills and wide-ranging knowledge of the markets to create financial gains.
- Fund managers who make investment decisions on behalf of clients, buying and selling in order to increase the value of business portfolios. Institutional fund managers tend to handle the largest sums of money, and hedge fund managers work to balance risk and return by mixing investment methods and techniques.
- Salespeople develop relationships with clients, taking orders and negotiating rates, and working across different projects every day depending on the markets.
- Client advisers provide specialised services for particularly wealthy individuals, such as managing portfolios and handling estates.
- Risk managers identify and assess risks in markets that can be in constant fluctuation, in order to protect the bank’s clients’ assets and investments.
- Compliance officers ensure that industry rules and regulations are adhered to, and work discreetly and sensitively in order to investigate any suspected breaches.
What you’ll need to work in investment banking
Investment bankers can come from a wide range of backgrounds, but they have several things in common:
- The commitment and determination to work in an industry which can be incredibly stressful
- Willingness to routinely work long and unsociable hours, and make personal sacrifices in return for big financial rewards
- A keenly analytical mind
- Relevant degree qualifications in mathematics, economics, actuary or another financial discipline
- The stamina to juggle multiple workloads under immense pressure
Each day in investment banking offers new opportunities and new risks, making it a varied career path but one which is incredibly competitive to break into.
Courses in investment banking
One way to set yourself apart from the competition – many of whom will have similar backgrounds and qualifications in financial industries – is to take an investment banking course. These offer excellent networking opportunities, the very latest industry insights and the detailed understanding that can underpin a successful career, whether you’re interested in dealing directly with clients or working behind the scenes in an analytical role.
Our Theory into Practice – Investment Banking Certificate for university students is designed to give participants the knowledge, skills and competitive advantage required for applications into placements such a spring week, internships or full-time analyst positions in the investment banking industry. The program uses real life case studies to develop participants skills in applying corporate finance theory to the practical rigours expected in the role of an analyst in the areas of DCF Valuation, Trading Comparables, Transaction Comparables, M&A Modeling, LBO Modeling and Charting and Data Visualization.
Our one-day Capital Markets Fundamentals course presents an overview of the role and function of capital markets and the corporate lifecycle, as well as introducing the fundamentals of both equity capital markets and debt capital markets. It is suitable for anyone from graduates looking to prepare for an interview to banking professionals seeking to refresh their knowledge.
M&A Accounting & Analysis Fundamentals is also a one-day in-person course based at our London office, which offers the opportunity to understand M&A transactions and equity investments in detail by working on a number of practical examples.
Our two-day Financial Statement Analysis course provides participants (particularly those who have no prior knowledge of finance) with an introduction to financial statement analysis. The income statement, balance sheet and cash flow statement are introduced, and the key interactions between the income statement and balance sheet are explained. Participants will build simple financial statements using a list of transactions.
Flexible learning in investment banking
Whatever your background, if you’re looking to move into investment banking then you might need a course that fits around your existing working hours and commitments. Particularly in the current climate, e-learning and virtual participation are the preferred option for many – so we have a range of courses available online to help you get your career started.
Our Banker Intern Bootcamp bundle gives you 12 months’ access to a range of expertly delivered courses, covering everything from business valuation and financial modelling to the fundamental mathematical techniques used right across the finance industry.
What kind of salary can you earn in investment banking?
If you can successfully navigate the steep learning curve of investment banking then there are substantial rewards available – some of the very best in an industry which offers higher-than-average salaries. For many, this is the biggest motivation for working long hours (often including weekends) in a highly pressurized, results-driven environment. On top of generous salaries, there are often significant performance-based bonuses to aim for.
On average, an analyst role in a mid-market investment bank yields a salary (excluding bonuses) of between £30,000 and £60,000 per year, while the same in a larger investment bank brings in between £55,000 and £80,000. Salaries for management roles at the former carry an average salary of £60,000-£80,000, and at the latter they can be as high as £150,000.
Executives and directors at investment banks can earn on average £200,000 per year plus bonuses, depending on the size of the organisation, although this can be significantly higher.