INVESTMENT BANKING: PROS

                       

Preamble:

Are You Ready for an Exciting and Rewarding Investment Banker Career?

The lucrative, prestigious nature of investment banking job makes this a highly desirable and competitive field. If you have an aptitude for finance, a reasonable tolerance for risk, outstanding communication skills, and sharp analytical and mathematical skills, you’ve got the basics required to explore opportunities in the field. Add in a healthy dose of self-confidence, motivation and competition, and you’ll be primed for the exciting world of an investment banker! 

Just as banks are at the center of the global economy, investment bankers are key to structuring the financial deals that facilitate business operations and keep the economy moving forward. These highly-skilled, well-paid professionals advise companies on issuing stock and configuring stock offerings.

What is Investment Bank (IB)?

A financial intermediary that performs a variety of investment services, including underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations and also acting as a broker for institutional clients. Finance dictionary.

Core investment banking activities:

Investment banking has changed over the years, beginning as a partnership form focused on underwriting security issuance, i.e. initial public offerings (IPOs) and secondary offerings, brokerage, and mergers and acquisitions, and evolving into a "full-service" range including securities research, proprietary trading, and investment management. In the modern 21st century, the SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: (1) investment banking (fees for M&A advisory services and securities underwriting); (2) asset management (fees for sponsored investment funds), and (3) trading and principal investments (broker-dealer activities including proprietary trading ("dealer" transactions) and brokerage trading ("broker" transactions)

In the United States, commercial banking and investment banking were separated by the Glass–Steagall Act, which was repealed in 1999. The repeal led to more "universal banks" offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable large banks with significant investment banks include JPMorgan Chase, Bank of America, Credit Suisse, Deutsche Bank, Barclays, and Wells Fargo. In Nigeria Stanbic IBTC Bank tops the chart.

Another term for the investment banking division is corporate finance, and its advisory group is often termed "mergers and acquisitions". A pitch book of financial information is generated to market the bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. The investment banking division (IBD) is generally divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry – such as healthcare, public finance (governments), FIG (financial institutions group), industrials, TMT (technology, media, and telecommunication) – and maintains 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, public finance, asset finance and leasing, structured finance, restructuring, equity, and high-grade debt – and generally work and collaborate with industry groups on the more intricate and specialized needs of a client.

Investment Banker Job Outlook

The U.S. Bureau of Labor Statistics (BLS) reports that jobs in the securities, commodities and other investments industry will experience strong growth nationwide from 2008 through 2018. As global markets increase levels of investment, and baby boomers move into their retirement years, demand for investment bankers’ expertise will grow. Individuals with a strong background in accounting, finance and economics, industry certifications, and advanced education, such as an MBA in Finance, should have the best prospects for landing one of these competitive and high-salary positions.

Investment Banker Job Duties

Job duties of investment bankers revolve around connecting the businesses that need financing to the investors who will provide it, in the form of bonds or stock. They help private corporations go public by structuring initial public offerings, or IPOs. These offerings are subject to strict financial regulations, and the companies who undergo IPOs must meet stringent requirements.

Mergers and acquisitions are another specialty area of investment bankers. When companies are interested in becoming acquired, or purchasing or merging with another firm, they seek the expertise of mergers and acquisitions experts. Investment bankers in this specialty advise clients on how best to structure a deal, analyze potential gains or losses, and develop detailed agreements.

Much of an investment banker’s time is spent consulting with clients in person, by phone or through mobile devices. Other daily tasks may include conducting research, maintaining data in spreadsheets and creating reports. Analyzing data and making recommendations are additional activities of investment bankers.

Most investment bankers put in long hours, but are highly compensated for their time. Travel, including international, may be required in this job. In addition, these professionals may spend time outside work meeting with current and prospective clients and building industry relationships.

Potential Salary for Investment Bankers

The BLS reports that in May 2010, the average annual salary for financial services sales agents was $95,130. The middle 50% earned between $40,860 and $124,450. Salaries for the lowest 10% were approximately $31,330, while the highest 10% brought in upwards of $166,400 per year. Recent bachelor’s degree graduates will typically start out toward the lower end of the scale and move up in salary with experience, but every job seeker is encouraged to do independent research into local trends and requirements. In addition, investment bankers are typically paid commissions on the financial products they sell; success in sales can lead to higher salaries.

Education and Training for Investment Bankers

Breaking into the investment banking field requires a high level of education and skill. Employers expect at minimum a bachelor’s degree in finance, accounting, economics or a related field. Entry-level analyst positions involve on-the-job training, and usually last from two to three years. Those with advanced degrees generally begin as an associate, and are typically in line for promotion to vice president.

The road to becoming a highly-compensated investment banker can begin with enrolling in a Master of Business Administration with a specialization in Finance degree program. Coursework typically includes portfolio analysis, financial markets and institutions, managerial accounting and investment management.

Employers can be confident that graduates of Advance Business/Finance degree program are able to:

• Solve real-world corporate-level problems in finance.
• Apply the techniques, theories and concepts behind investment policy and strategy development.
• Analyze interest rates and their determining factors.
• Evaluate portfolio performance.
• Leverage advanced skills and knowledge to succeed as an investment banker.

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Gracia.