If you are a finance student, then your dream is probably to work in investment banking. If you are a European finance student, then your dream is probably to work for an investment bank in London.
But how can you land an internship in one of the most coveted sectors in the job market? We have spoken to former interns at top banks to give you all the information you need before trying to land a job in the City.
Front Office vs. Back Office
Investment banking is split into front office, middle office, and back office activities. Front office is generally described as a revenue-generating role and is the most sought-after department by prospective interns. It is more widely assumed that the middle/back office internships attract students with inferior qualifications or less famous universities on their CV. However, the functions these departments carry out are vital to the functioning operations of an investment bank. In fact, risk management is a sector which is becoming more attractive than ever for prospective students, due to the effects of the credit crisis.
Front office is divided between the Investment Banking Division (IBD) and Markets. IBD is then further divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry and maintain relationships with corporations within the industry to bring in business for the bank. Product coverage groups focus on financial products – such as mergers and acquisitions, leveraged finance, restructuring – and generally work and collaborate with industry groups on the more intricate and specialized needs of a client. Markets is instead divided between Sales & Trading, Structuring, and Capital Markets. The most popular divisions are IBD and S&T because they are also the ones where the biggest revenues arise.
“To get hired in IBD appearances and communications matter a lot, and prestigious university and work experiences on the CV can get you far”,
is what one of our intern friends told us. You don’t have to have an exceptional knowledge of finance, as the first few years the work is very hard and dull, almost mechanical.
Markets is where people who think they are smarter and most often actually are smarter, end up. It is more technical and harder, and the role that attracts more people is that of the trader because if you are really good you make a difference and a lot of money. Structuring is where people with even stronger technical skills end up. To work in Sales you will instead need stronger communication skills. Some people see Sales as a way to get into Markets and then work their way up into Trading, but this is very hard. What you should really do if you want to work as a trader is to do the first internship in Sales and then come back the following year with the experience and get an internship in Trading.
That being said, these differences between sectors are reflected in the recruiting process. Every division tries to hire a certain type of person, so they will assess those abilities. So in M&A they want nice schools on your CV, interest for deals, excellent knowledge of corporate finance and accounting, and people who are very bright (maybe even a tad arrogant) who will not look bad if they are invited to a black-tie event. They choose people with different majors, but finance and accounting are the best ones to get in.
In Sales, you can see a bit of everything, but people are confident, good speakers (a high English level is fundamental unless you work on a desk that deals with your local country), very interested in news and market stories, with knowledge of financial products. Interns are chosen from a variety of majors, even humanities studies, however, the most common ones are economics, management, and general finance.
In Trading, approximately 85% of interns study maths or engineering, while the rest studies economics. If you are a general finance student, you run the risk of being seen as having a background that is too general. The must-have skill for this position is being a war machine with numbers.
How to get a job in investment banking
Now that you might have an idea of what sector is the aptest for your skills and background, you must know how to land an internship that might lead to a future full-time job. It is important to plan ahead, the recruitment process for a summer internship starts usually during the previous fall. You must also consider in what phase of your studies you are in order to be able to land a full-time job. Here is what one of our interviewees had to say "If you get your first internship during the first year of your Bachelor, you are ahead of the curve, as most people will do one during their second or even third year. However, if you have already started you Master’s degree and don’t have a single internship in investment banking on your resume, then you will be facing an uphill battle.". The best way to do it is to try a get a first internship anywhere you can, just to get the experience, and then for the second internship look for the bank and division where you envision starting your career in.
The average conversion rate from an internship to a full-time job is about 50% (rumor has it that it is higher for Deutsche Bank, lower for Goldman Sachs), and it is your best shot at a job at your dream bank. Direct hires for analyst positions are rare and are mostly done by smaller banks hiring someone who interned at a top bank and did not get a full-time job offer.
It is essential to prepare well for interviews, that goes without saying. You will usually be interviewed by people in the division that you are applying for. However, most banks perform mixed interviews for aspiring traders and salesmen, mainly because traders don’t have time to interview prospective interns. This means that the person interviewing you will come from a non-technical position, and the interview will focus more on soft skills. So the best shot to get an interview is to apply for a position in Sales. Some banks do specific interviews for aspiring traders, for example, HSBC and JP Morgan, and in that case, be prepared to answer brainteasers.
If you come from a less prestigious university but are a class A students, you still have a lot of possibilities. Use your alumni network as much as you can, there will likely be less from your school who work in investment banking, so they will be more likely to help you out.
Living in London
London truly is the capital of Europe (even though the possibility of a "Brexit" now raises the level of insecurity). It offers successful applicants an urban environment that is always changing and developing, with infinite entertainment options. From its mesmerizing museums, theatres and global cuisine, to its endless shopping streets and iconic landmarks, including the Tower of London, Buckingham Palace, and Big Ben, the city has something to offer to everyone. This great offer, however, comes at a price. London is one of the most expensive cities in the world to live in, especially when it comes to paying rent. If you are interning at an investment bank it means you will be working either in the City or in Canary Wharf. Expect to spend everything from £600 to £1200 or more for a single room. You should be able to cover these costs with your salary, as interns make from £3000 and up depending on the bank and their degree level. The best places to live are where the DLR line passes, to make your morning commute easier. The best price/location ratio for students is found in Limehouse and Shadwell. If you can afford to splurge and are working in Canary Wharf, then the Isle of Dogs is a great option, whereas for City bankers Aldgate represents a very palatable, and expensive, option.
Myths about investment banking
Few sectors are as surrounded by as many myths and rumors as investment banking, so let’s set the record straight.
You do not necessarily need an economics or finance degree to land an internship. What you are able to do is more important than your academic background. And while going to a top-ranked university certainly helps, a lesser known university career won’t stop a bright student from having a real opportunity to land an internship.
It is also not true that the ultra-competitive workplace won’t allow you to make any friends or have a social life. If you meet like-minded people who share your same interests, you can actually make friends for life.
There is, however, one myth which can in no way be disputed: the hours are long, very long. But hey, if it really is your dream, you’ll enjoy the hell out of it.