Author: Fmi_Online

How an investment banking simulation can train you for your dream career in investment banking

Investment banking is a complex field; graduates and fresh recruits are often told that they would gradually learn by doing things. Investment banking simulations allow an individual to learn by trying different things at their own pace and time. A simulation is any model that replicates the real world or a particular situation, to deliver a specific experience in a controlled environment. In this article, we will explore how an investment banking simulation can train you for your dream career.

Problem-Solving

Investment banking requires creative problem solving but at the same time when transactions are in millions, small mistakes can be costly. Aspiring investment bankers can use simulations to test their decision-making skills in a given real-life situation. 

With hundreds of variables influencing each decision, simulations are optimal for investment banking. Providing a safe and controlled environment allows young investment bankers to adapt to creative problem-solving and experiment with different approaches. It further enables them to reflect on their actions, build confidence based on the results, or take feedback for improvement. 

Simulations can prepare candidates to answer case study questions asked during the investment banking interviews, since they are required to act as a decision maker, evaluate variables, and draw conclusions. To put things in perspective, imagine being the M&A head of a top global investment bank, in the middle of the global financial crisis, being asked to decide on acquiring one of the rival investment banks. Hard, right? You can be part of situations like this with this M&A simulation, for example, which not only helps you develop vital skills but also evaluate your own decisions.  

Skill development 

Simulations not only help candidates understand the job role, but also enables them to develop the necessary skills. With simulation like this on investment management, you would get an opportunity to create your portfolio, conduct equity research, work on stock allocation and of course, manage risk.

Working as a fresh investment banker in a dynamic market environment might overwhelm you with an overload of information and new concepts, making learning difficult. Moreover, since a small mistake could incur huge losses you might not get a chance to be part of key decisions in the initial years of your career. However, in a simulated environment, the real world is replicated and includes multiple attempts. This makes the learning process fun and you can take risks, which as a real investment banker may be difficult to do. As a result, you can trust your judgement and build the traits that are required in the industry. 

Better understanding of the job role 

Aspiring investment bankers often make wrong career choices because of limited information about the job role. Although investment banking job profiles include a comprehensive job description, it is hard for fresh graduates to imagine the responsibilities that come with the role and the level of commitment required to fulfil those responsibilities by reading a piece of paper. 

Simulations can help investment bankers understand the job role in a much more effective way. The individual not only understands their duties but can also experience vital factors that result in job satisfaction, such as is the work repetitive in nature, does it involve a lot of reading, does it require deep communication with team members, etc. 

Simulations further aid the investment banking candidate during job interviews, where recruiters often test a candidate’s understanding of the job role. If you have experienced an investment banking division’s work through a simulation, you will have a better answer around the topic since you were involved in the job and have experienced the work.  

Conclusion 

Simulations, which replicate real-world situations, are a great way of both learning and knowing yourself, which further allows you to make rational decisions. Learning through simulations is like net practice in investment banking. Aspiring investment bankers can develop problem-solving skills, gain confidence, learn to evaluate different components that drive the economy and more importantly make the right career choices, one that suits their personality and skill sets. 

Here’s what your resume should look like as an investment banking aspirant

A career at a top investment bank is demanding, fast-moving, and competitive. It requires industry specific knowledge, dedication, and a willingness to learn along the way. When it comes to landing your dream career, your resume is the first stage of the job application. Senior bankers spend 30 seconds, on average, on an individual resume to make a decision. Therefore, it’s important for you not to miss out on any vital information that the recruiter is looking for, and at the same time, find a way to stand out from the crowd. 

In this article, we present an investment banking resume structure that will help you construct an effective resume. This resume structure is standard and therefore, widely used.

Resume structure 

Top investment banks look for certain aspects in a candidate’s resume, thus it’s important to start with the correct composition. Since you are a fresh graduate, you most likely lack work experience and hence, should centre your resume around your educational background. 

This, however, does not mean that you should shy away from presenting any relevant work experiences, such as internships. That would be an added advantage. Following is the list of sections that should be in your investment banking resume:

  1. Summary/Objective 
  2. Education
  3. Key Skills
  4. Work experience (if any)
  5. Certifications (if any)
  6. Awards & Recognition (optional)
  7. Additional Information (optional)

Summary/Objective 

Following your personal information and contact details, you must write a summary or resume objective. This section of an investment banking resume introduces your skill, achievements, and qualifications. It showcases why you are a perfect fit for the industry, the bank, its culture and gives a peek into your career goals. It is essential to alter this section according to different banks and to match specific job roles. 

Moreover, since most investment banks and financial institutions use the ATS system to filter resumes, it is recommended that you use relevant keywords in the summary section to make it past the initial sorting. You can find relevant keywords for your resume, here. 

Education

A relevant educational background helps you establish yourself as a worthy candidate for the role. Along with mentioning the university and degree(s) you earned during your college years, it is also important to mention any special designations or noteworthy academic achievements you earned. Moreover, you can also mention the graduation date (expected, if you are still in Uni) and the GPA score, or any other equivalent grade. 

You can include any specialised courses that you completed relevant to investments, finance or banking. Bridge courses such as algorithmic trading, statistical analysis, business law, and valuation of distressed assets are highly useful certifications to mention in your resume. 

Skills

When going through an investment banking resume, recruiters look for skills pertaining to investment banking, or a trait that differentiates you. You can also use this section to add relevant keywords, which will help your resume to get past the ATS systems. 

If you lack technical skills (hard skills – career-specific), you can list soft skills (personal/non-career specific) that are considered important in investment banking. Many of these skills are interconnected and are part of the investment banking skill set. To avoid any possible overlap, you must think carefully about each skill mentioned in your resume. One such example is presentation and communication skills. Being good with presentations generally suggests that you are good with communication as well.

Work experience

Job selection is heavily influenced by internships, so it’s important to demonstrate how your internship has given you a deeper understanding of the job role and the working of the industry. You must use this opportunity to showcase your willingness to dedicate time and effort to the chosen job role. It is further beneficial to have done an internship in the bank you wish to work for. You can also mention your work experience in fields such as business, equity investing and private equity.

In case you don’t have any relevant work experience in the industry, you can make up for that by enrolling in relevant and renowned investment banking courses. You can add these in the certifications section of your IB resume to show your passion and commitment towards the industry. 

Others 

Apart from the above-mentioned sections, you can add sections such as certifications, awards and recognitions. Specific interests in IB coupled with a financial background can also help you get a job in a sector-specific department. Investment banking jobs cannot be obtained by these sections alone and require immense preparation but they can certainly help you stand out.

Here are the top 3 investment banking interview questions

Investment banking interviews are designed to evaluate how fit a candidate is for the leading job role in the field of finance, and therefore should be attended with a decent level of preparation. 

Candidates must have a solid understanding of corporate finance fundamentals, and company valuation, along with a certain degree of knowledge about the tools used in the industry, accounting, investing fundamentals, and banking. The following article will explore the top investment banking interview questions for you to prepare. 

Q. How do you value a company?

Top investment banks seek candidates who can value a firm, to a certain degree of accuracy, by evaluating different pieces of information such as the company’s financial statements,growth drivers, etc. and making appropriate assumptions. The 2 primary valuation methodologies are Intrinsic value, and Relative valuation (multiple-based valuation).

You may get a case study from the recruiter and be required to provide an in-depth analysis of the given company during the interview. You can also carry one of your investments to demonstrate how you value a company. 

When talking about absolute valuations – Intrinsic Value or the DCF method, you must mention that the value of all financial, productive assets equals the present value of the future free cash flows, discounted at an appropriate discount factor. To know more about DCF valuation you can also refer to this article. 

Q. What are the different methods of valuing a company and how would you value a loss-making business?

With the rise of loss-making startups hitting Wall Street, the possibility and relevance of such a question are high. This question is about different valuation techniques that you must be familiar with and know how to value a loss-making company. Since most valuation methods rely on earnings, valuing a loss-making company could be tricky. 

You can start your answer by describing different ways to value a company on both an absolute and relative basis. Common valuation methods include: 

  • Asset valuation
  • Liquidation value
  • DCF Valuation 
  • Abnormal Earnings Valuation
  • Earnings multiple or variation of relative valuation method 

Coming to valuing a loss-making company, you can mention relative valuation techniques based on a sales multiple or the basis of users. Moreover, if you have a good understanding of the company, the industry in which it operates and its competitive landscape and feel confident about projecting its cash flows, you can also mention DCF valuation. However, you must have very deep industry knowledge to project cash flows and future CapEx (capital expenditure). 

Q. The cost of debt or the cost of equity – which is higher?

This is one of the most asked investment banking interview questions since it tells the interviewer about your knowledge of finance beyond the basic formulas and definitions. 

The cost of equity, generally, is higher than the cost of debt. A higher cost of equity means that equity holders require a higher rate of return as compared to debt holders. This compensates for the additional risk that equity holders take by not being guaranteed fixed payments, unlike debt holders. Moreover, they are also last in line to receive compensation in the case of liquidation, after the debt holders. Additionally, the cost of equity is also higher because interest payments – the cost associated with debt (interest expense) is tax deductible, offering businesses a tax shield.

Conclusion 

Practising finance, valuation, and mergers and acquisitions questions extensively will help you ace your investment banking interview. You should focus heavily on the fundamentals of corporate finance and company valuation to get good results. You should also reflect on your experiences if you have previously been through IB interviews to learn from them and correct any shortcomings. You can also check out online courses on investment banking interview preparation for added guidance. 

To stay relevant and competitive, investment banks have adapted new hiring practices in the technology-dominated, post-COVID world. These hiring trends were visible across financial institutions. While in the previous calendar year institutes were worried about staffing and labour shortage, banks were predicting a long struggle for employees to continue to post the COVID-19 pandemic, according to the American Banker. Let’s see how the hiring trends are predicted to be in 2023. 

2023 – Back to ‘Normal’

Employees were instructed in 2021 to strictly comply with Covid guidelines. Many were told that if they weren’t vaccinated, they would lose their jobs or get lower pay. Global financial institutions like Citigroup and JPMorgan laid out a clear Covid mandate and required COVID-19 vaccinations for employees to return to the office. 

Since then things have changed. 2023 seems like a ‘back to normal’ year, and banks are indicating fresh hiring. Investment banks such as Goldman Sachs and Morgan Stanley have dropped their mandates for Covid vaccination and loosened other restrictions. Many other financial institutions have followed the same trend while easing Covid-related restrictions.

High Demand for Accounting and Finance Professionals

Accounting and finance jobs along with other middle office roles performed the best and showcased high demand. This, perhaps, suggests that banks expect their added infrastructure to prove useful in the near future. There is also a concerning fact behind this strong demand. The average age of a financial advisor is 55, and 20%, or 1 in 5 financial advisors, is over 65. This suggests that in less than a decade, over 100,000 of those advisors will retire, accounting for over one-third of the industry workforce. To stay ahead of the problem, banks are changing their hiring and retention strategies and therefore, this trend might only be a cyclical catch-up to avoid future struggles.

Rising number of applicants

According to a study conducted by EFinancialcareers, in London, there is a large rise in the number of job applicants, across the financial sector. As a general trend, for the top 10 job categories, companies have received close to nine applicants for each role, which was previously around six applicants. This is a 50% increase. Competition is rising in investment banking as well. This trend, however, might be limited to London or could be a result of mass layoffs done after the Covid pandemic. 

A slowdown in remote jobs

Financial institutions witnessed a large rise in remote jobs in 2021 and 2022. From 4% in 2019 to nearly 12% in 2022, the share of jobs explicitly stating remote working nearly tripled from the pre-pandemic levels, according to ZipRecruiter data, 

According to a study conducted by LinkedIn, in 2023, the number and share of remote jobs in the overall job market will stagnate or decline, as employers prefer their staff in the office. The study showed that the trend is already underway. On the other hand, remote working is becoming increasingly popular among employees and job seekers. This was evident from the rise in demand for remote jobs from job seekers. 

While current technology allows people to work from anywhere in the world, CEOs from top global investment banks have previously expressed their concerns about remote working due to issues like insider trading, leaking of information, etc. Investment banks have spent millions of dollars in upgrading their infrastructure to make it Covid compliant. This could create a mismatch between demand and supply in the near future. 

Promoting Internships 

Investment banks have been at the forefront of employing interns, recruiting good talent and introducing fresh graduates to the required work culture. Goldman Sachs and other top investment banks are promoting investment banking internships and encouraging participation by women and minorities historically underrepresented in the industry.

Conclusion

Investment banking hiring trends are constantly changing, so you must also adapt accordingly. Major hiring trends to look forward to in 2023 are:  

  • A slowdown in remote working
  • Rising competition in terms of number of applicants per job role
  • A rise in investment banking internships
  • A rise in PE jobs 
  • Increasing use of AI and ML in investment banking

By following the trends and making the necessary changes, you can increase your chances of getting a job. To check out for more details on hiring trends you can also read LinkedIn learning reports.

The lucrative growth prospects of investment banking make it a brutally competitive industry. Having done a relevant investment banking course improves your odds of breaking into the industry. However, investment banking courses come in different shapes, sizes and forms. The elementary investment banking courses provide students with an overview of the industry and its functions, and advanced investment banking courses focus on niche topics such as M&A, Company valuation, or regulations in greater depth.

Choosing the right investment banking course involves taking into account a few key variables. In this article, we will explore how to get the right investment banking certification. 

Reliability of the course

Hundreds of websites and individuals providing online investment banking courses claim to cater to thousands of students. However, it is important to spend time selecting a credible course provider, otherwise, you could end up with a fake degree. 

When selecting a high-end investment banking course, it is advisable to stick with a top institute or certification provider such as NYU or the CFA institute. This will not only ensure a credible certification but would also provide assurance to investment banks that you have consumed relevant and industry-standard information, through these courses. 

If you prefer going with a certification of your choice, here are some important guidelines to ensure the credibility of the online course provider:

  • If the online investment banking course is offered by a university you can check the background of the university, its faculty, alumni and global ranking for reference. 
  • Check the credibility of the person who is leading the course along with their educational credentials. 
  • Check online reviews, on third-party platforms, such as Quora or University forums. 
  • To ensure that the organisation is well-accredited, you can look for national and global accreditations and approvals that the university has.

The Right Fit 

While selecting an online investment banking course, you must consider your education, area of interest and the purpose of doing an online course. As a recent graduate or someone who’s planning to enter the industry, you should start with the elementary investment banking course. These courses will help you understand the industry, and its operations and develop the relevant technical skills required in investment banking. Moreover, these certifications will help you stand out of the crowd and demonstrate that you are willing to learn and are passionate towards the job role, assisting you in the selection process. 

On the other hand, if you are a postgraduate or an undergraduate who is well aware of the technical skills, fundamentals of corporate finance and company valuation and is looking to pursue a job in a particular department such as M&A, or IPO financing, you should consider going for an advanced, niche course. Moreover, general criteria, such as eligibility and course specifications must also be checked. 

Budget

Cost is the most significant factor affecting students’ choice of an online investment banking course. Free online investment banking courses rarely provide value and never impress the interviewer. You can evaluate an online investment banking course on the basis of these criteria:

  • Course Curriculum 
  • The duration of the course 
  • Level of education (elementary, postgraduate, specialised, WILP – for working professionals) 
  • The type of course (diploma, certification, degree course)
  • Networking and learning support services

The length of the course is the most difficult factor to evaluate. A longer course may not always justify a higher price. A student must evaluate the length of the course, along with the curriculum, level of education of the course and the background of the instructor. 

In light of all these factors, longer courses, courses at a higher level of education, courses with detailed and comprehensive learning support features and degrees tend to cost more.

Flexibility 

Flexibility is vital for students. Most online courses provide recording for lectures, encouraging self-paced learning with minimum restrictions. This allows students to pursue other prospects while continuing the course. Course providers are also flexible with examinations and provide a bracket of days, enabling students to create their own exam schedules.

However, some online course providers prefer a more traditional approach, which requires students to attend live classes, at a given time, with more constraints, such as minimum attendance. It is, therefore, important to go through the specifications of an online investment banking course to make the right choice.  

Conclusion

Being able to complete an online investment banking course certainly helps you stand out from the crowd and improves your chances of getting a job in the industry. Choosing the right course requires consideration of factors such as the credibility of the provider, alignment of the course with your goals, monetary value, and general specifications. Students should prefer sticking with known, credible universities and certification providers to consume relevant and industry-standard content.

Investment bankers are responsible for heavy corporate transactions like mergers, acquisitions, IPOs, fundraising, and investment advisory. A career in investment banking is demanding, highly competitive and challenging. The right skillset, however, can help you build a successful career in investment banking by making the job easier and more efficient. In this article, we will explore the rare skills that top global investment banks are looking for.

Financial skills (hard skills)

Investment bankers must be proficient with the fundamentals of corporate finance, company valuation and different valuation methods. Investment bankers perform their jobs efficiently when they possess strong financial skills, especially in economics, mathematics, and accounting. Moreover, along with these core financial competencies, curiosity about finance and the economy, in general, helps investment bankers solve complex problems and grow in their careers.

Top financial skills required as an investment banker include:

  • Financial modelling
  • Financial and statistical analysis
  • Company valuation
  • Data interpretation and knowledge about economic indicators
  • Risk analysis and management
  • Knowledge about regulatory policies and procedures for the financial sector (depends on the job profile)
  • Business analysis, competitive analysis
  • Basic awareness about investment products and advisory services.

Discipline and time management 

Managing time, being productive and staying disciplined are other requirements for success in the investment banking industry. Today, time is the most valuable asset for any organisation and has a huge impact on its profitability. Companies that have effective time management controls in practice are more efficient, which allows them to generate more revenue at a relatively lower cost. Investment banks look for candidates who possess these traits so that they can blend well with the organisation’s culture. 

The use of planners, notes, journals, and reminders can help you keep track of time and tasks. You can use the following tips to start managing your time effectively:

  1. Set goals: Establishing clear goals saves you from falling off track and motivates you to work towards them. You can also follow the SMART method of setting goals. 
  2. Plan: Planning ahead saves you time and avoids the unnecessary stress that follows. Ensure that you make to-do lists in the evening for the next day.
  3. Prioritise: Prioritise each item on your to-do list. This helps you to stay focussed and accomplish tasks in tandem with deadlines.

Technological Proficiency

The finance industry is no stranger to technology. Over the last few years, investment banks have shown interest in hiring engineers and candidates with a tech background, moving away from hiring only MBA students. Being the largest contributor to the GDP of the most developed nations, IB is the third most tech-savvy industry.

Finance professionals should be broad-minded and willing to learn and adapt to new technology. Even if you don’t possess tech knowledge you must be open to learning. Regardless of the department, an investment banker works in, he/she will need computer skills and the ability to pick up new programs quickly. AI, big data and ML are increasingly becoming common on the trading floor. 

Communication Skills

The importance of effective communication in investment banking can’t be overstated. Recruiters from the industry often test the ability of candidates to communicate effectively during the interview. 

One of the most crucial aspects of investment banking is the ability to cater to clients, superiors and corporates. A finance professional must be able to explain the impact of a proposed decision to their client to establish trust and form a long-term relationship. Presenting an idea requires comprehensive communication and presentation skills, which include spreadsheets, documents, and slideshows. Communication skills are also required within the office. An investment banker must be able to distil the core points and effectively convey them to the management to close a deal. 

In order to improve your communication, you can talk with industry professionals and people in business. For a better understanding of the financial markets, you can also listen to podcasts and interviews.

Conclusion

Investment banking is a very competitive industry, and it is difficult to break into due to a required combination of relevant soft skills such as communication skills, along with the hard skills. The good news is that many of these skills can be learned and improved over time. Excellent communication, managing time well, being disciplined and the required financial knowledge are vital for a career in investment banking.

Top investment banks offer investment banking internship programs, each year, hiring graduates to work for 3-4 months in their offices. Through these internships, interns get first-hand experience working in an investment bank, gain an opportunity to network with other bankers, and improve their resumes. More importantly, aspiring investment bankers can see if they have the required skills, work ethic, and personality fit to work in an investment bank. In this article, we will see how investment banks hire interns, and how you can apply for an internship. 

The first step in applying for an investment banking internship is to prepare a relevant and concise resume. Circulating your resume will be the next step after it is ready. You must take advantage of both online and offline channels to push your resume and make yourself recognisable.

Online recruitment channels 

With the availability of the Internet, hiring interns has become much simpler for investment banks. Similarly, for applicants, contacting investment banks and sharing their resumes has become easier. The internet offers the following ways for you to apply for an investment banking internship.

  1. Job portals 
    Investment banks post internship details, deadlines, and other relevant information on job portals. You can either directly apply for these internships from the portal, or you will be directed to the official website from where you can apply. In either case, you would be required to create an account on the website, and submit the necessary information along with your resume.
     
  2. Official company websites
    Companies regularly post information about the openings for internships on their official website, under the careers tab, or under summer internships. Start by making a list of top investment banks based on criteria that suit you, such as geography, number of employees, etc. Then, post your resume on their website. If there is a relevant opening, apply for the same.

    You can also categorise investment banks in the following manner: global investment banks, boutique investment banks, and middle-market investment banks. You can also find a list of investment banks online.
     
  3. Professional social media platforms 
    You can circulate your resume on professional social media platforms such as LinkedIn. Moreover, join internship/finance internship groups on Facebook, Telegram and Google Plus to make sure that you don’t miss out on relevant openings. Start following job portals, and finance influencers on platforms such as Instagram to know more about relevant investment banking internships. 

Offline recruitment channels 

Apart from the internet, there are a few ways to get through a company for a relevant investment banking internship opportunity.

  1. University Job Fairs
    The best part about job fairs is that you get this opportunity three or four times, depending upon the duration of your undergraduate course. Every year universities organise job fairs and campus interviews. It is important that you prepare for the interviews, be familiar with the company information, industry background, fundamentals of finance, and the job profile to make sure you don’t miss out.
  2. Networking
    Networking is vital in investment banking, not just to enter the business but also to survive in the industry. Besides social media platforms, you must create your network by meeting people in the investment banking sector. Continue to keep in touch with your contacts as they might provide an avenue into suitable opportunities. This will also help you grow in the industry.
  3. The old-school way 
    Coming to the traditional ways of getting a job, meet with a job consultant. To get the best results you must keep yourself in focus, and show your presence by meeting up with the consultant once a week. Once they know about an investment banking internship opportunity in the market, you would be the first one to get a notification. 

    Unlike other methods, you might have to spend money when working with a consultancy firm. Some firms might charge you a joining fee, in case the internship is unpaid, or you might pay a fee after you get placed. If the consultancy firm has a tie-up with an investment bank, you get the information and the application for free.

Conclusion 

Getting an investment banking internship is not easy, thousands of candidates apply for a handful of positions. However, there are enormous benefits to doing an investment banking internship. It gives you first-hand experience working in an investment bank, provides the opportunity to network with other bankers, and allows you to improve your resume. You must leverage both online and offline platforms to circulate your resume and build your network at the same time. University job fairs and company websites are most effective when it comes to applying for investment banking internships. 

Top investment banks, around the globe, anticipate global economic growth to come to a further slowdown in 2023. 2022 has been a year of turmoil, with Russia’s invasion of Ukraine inflation skyrocketing, which triggered one of the fastest monetary policy tightening in decades. 

Barring Japan, central banks of major economies, across the EU, North America, and Asia, have hiked interest rates to combat inflation. The Federal Reserve has increased interest rates by 425 basis points (4.25%) since March, which marked the start of current monetary policy tightening. Major European central banks, including Switzerland, Norway, and Germany have followed the same path. Asian economies like Hong Kong, Taiwan, and UAE, among others, have also hiked interest rates in the range of 75-100 basis points, in the third quarter. This rise in interest rates has sparked worries about a recession in the western world and an economic slowdown in Asian economies. In this article, we will explore what are the views of top investment banks on an economic slowdown. 

JP Morgan Chase

JPMorgan Chase Chairman and CEO Jamie Dimon expressed his concerns in May by saying that a “hurricane could be on the way, as the Federal Reserve began throttling back inflation by hiking rates substantially and steadily.”

However, his views were much more positive post-July, when he highlighted the current state of the US economy. Dimon said that there are “plentiful jobs, higher consumer income, consumer spending 10% over 2022 and 30% over the pre-Covid period, even though some of that comes from gasoline and other essentials rising in price.” On the commercial side, he said, “we’ve never seen business credit be better ever in our lifetimes. That’s the current environment.” This was recorded during the earnings call of JP Morgan Chase. He also expressed the possibility of rate hikes and stagflation in the near future, “The future environment, which is not that far off, involves rates going up, maybe more than people think, because of inflation. There may be stagflation. There might be a soft landing.”

Citigroup 

Citigroup’s CEO Jane Fraser expressed her concerns on recession in her opening remarks: “While sentiment has shifted, little of the data I see tells me the U.S. is on the cusp of a recession. Consumer spending remains well above pre-Covid levels, with household savings providing a cushion for future stress. And as any employer will tell you, the job market remains very tight.” 

She further said that the American economy “is well-positioned to withstand” recession. However, she is not as confident about the European economy and believes that it is headed into a recession as early as fall 2022. As for China, she said, “its economy is bouncing back but another wave of Covid could be more problematic there.”

Morgan Stanley

Morgan Stanley published a report on the economic slowdown. The financial institution predicted a sharp difference between developed economies “in or near recession” and emerging economies “recover modestly”, in 2023. They believe an overall global pickup would likely remain “elusive”, with inflation peaking out in the current quarter and deflation being dominant in the next fiscal year. 

Morgan Stanley anticipated that inflation, in the US, will remain strong and peak in the fourth quarter of 2022, whereas the Fed will keep rates high in 2023. The report further said, “The U.S. economy just skirts recession in 2023, but the landing doesn’t feel so soft as job growth slows meaningfully and the unemployment rate continues to rise, predicting a 0.5% expansion next fiscal year. The cumulative effect of tight policy in 2023 spills over into 2024, resulting in two very weak years.”

Moreover, according to Morgan Stanley’s forecasts, China’s economy will grow 5% in 2023, outpacing emerging markets’ 3.7% growth, while developed countries’ (top 10 developed countries) average growth would be around 0.3%.

Conclusion 

Top global investment banks see inflation peaking out in the current quarter, with developed economies struggling to grow in the coming fiscal year. However, the fundamentals of developed countries remain strong, barring the concerns for the EU and Japan. Asian economies are expected to outperform western countries, with some economies, like India, expected to grow north of 5%. Job markets in western countries could remain tight. With the slowdown in western economies, export-oriented Asian economies could face some headwinds in growth. 

Going through the fundamentals of finance, working on DCF calculations, and preparing financial models are some of the more obvious things that an aspiring investment banker prepares for before interviewing for a job at a top investment bank. But what about the subtle nuances that could determine whether you will land a job or not? Here are some vital things that you might be lacking in your investment banking interview preparation. 

Not knowing your bank

According to an ex-investment banker, not having enough information about the financial institution that you are interviewing for is the single biggest and most common mistake made by candidates. You should be able to demonstrate your knowledge of general investment banking practices and your specific duties. An entry-level analyst position, for example, involves collecting information, creating presentations and news reports, etc. 

This further extends to the division you would be working for. You must have background information about the division, its operations, and the related job roles in the vertical. An investment banking candidate must be aware of these crucial details. Doing additional research about the bank such as the recent deals of the bank and its area of expertise, highlights your passion towards the job and the financial institute. 

Lack of self-awareness

It is important for investment banking candidates to come across as authentic and present themselves as who they are. Trying to incorporate a lot of jargon and textbook definitions in your answers can make you look fake. You must answer questions in your own words rather than recapitulating a rehearsed response. 

Similarly, if you don’t know an answer, rather than making something up, you can ask the interviewer to elaborate, if you have any doubts, or even say you don’t know the answer but would surely get back with it. You can later send the answer separately or attach it along with the thank you email. 

This, however, does not mean that you should get overly friendly with the interviewer or act casually. You must respect the interviewer and be as professional as possible, including your dress code and body language. Interviewers often assess how you would hold yourself in front of clients and senior bankers throughout the interview. 

Not being able to present your strengths

During the interview, interviewers look for specific traits in candidates that gives them a sense of their compatibility with the job role. Therefore, it is important that you communicate your strengths through your answers. However, it is not possible to do it directly in most cases. You may be asked to talk about your successes and failures and how they motivated you to pursue a career in investment banking or finance. You can take this opportunity to illustrate your approach towards learning, career choices, teamwork, and finance. Apart from these attributes, you could focus on instances which demonstrate high emotional quotient, resilience and the ability to grasp new concepts.

You must go into an interview with broad ideas that you want to convey and centre your answers around them. You should be able to do this without sounding rehearsed. To improve your communication and presentation skills, you can practise these answers with a friend. This will help you build confidence and select concise responses for the final interview. 

Conclusion

Candidates should not only prepare for hard skills questions and case studies but also select the best investment banks according to their work expectations, areas of interest, and personal goals. Once that is done, they must understand the bank’s operations, and familiarise themselves with its history and its recent developments. It is important to communicate answers that show why you are a good fit for the team. The recruiters and senior bankers want to know if you have the skills they are looking for. It is equally important to be professional and honest; pretending to be someone that you are not or acting casually will surely leave a bad impression.

It is vital to start your career in investment banking with the right organisation, one that not only offers a healthy corporate culture but also supports your personal goals. Some of the critical aspects which you must consider while selecting an investment bank are corporate culture, compensation, core areas of focus, size of operation, history of the financial institute, work-life balance and training. In this article, we will dive deep into the top 5 investment banks you should be aiming for in 2023. 

JP Morgan Chase 

JP Morgan Chase & Co. has its roots dating back to the late 1800s, founded by the famous American banker JP Morgan Sr. The current structure came into existence in December 2000, when JP Morgan and Chase merged to form JP Morgan Chase & Co. The financial institute operates through 2 verticals, JP Morgan, focused on core investment banking and is highly regarded for its work in M&A (mergers and acquisition). Chase, on the other hand, focuses on consumer and commercial banking. A major draw for investment banking applicants is JP Morgan’s culture of deep learning and encouragement, and its CEO, Jamie Dimon.

JP Morgan Chase had $3.77 trillion worth of assets under management, as of June 2022 and an impressive presence in over 100 markets around the globe. 

Goldman Sachs

Goldman Sachs is one of the top investment banks with a rich history of over 150 years. Its major divisions include financial advisory, underwriting and investing portfolios. The bank has one of the most competitive work cultures in the financial industry. Ironically, many applicants are attracted to this trait, considering it can be challenging but offer a learning curve. 

As of June 2022, the bank controls nearly $2.5 trillion in assets and enjoys a worldwide presence with offices in 16 countries. Some of the top officials of global central banks, the U.S. Treasury, and the White House advisors have spent their initial years working here. 

Morgan Stanley

Morgan Stanley was established by J.P. Morgan’s grandson, Henry Morgan, in 1935. The financial institution is known for being intensely competitive and usually competes with Goldman Sachs for the title of the top dealmaker of the year. Morgan Stanley is ranked highly amongst the top investment banks for its advisory services in M&A and initial public offerings (IPOs). Like Goldman Sachs, investment bankers are attracted to Morgan Stanley because of its history, work background, and the compensation associated with the job. 

As of June 2022, the financial institution has over $6.5 trillion in assets and operates one of the largest wealth management verticals in the world, comprising more than $4.5 trillion dollars in assets. It has a presence in 32 countries around the world. 

Evercore 

Evercore is one of the youngest investment banks with just 30 years of history. The bank is considered to be a remarkable financial institute as it records dealmaking numbers comparable to its much older peers that have existed for over a century. The bank is known for its restructuring advisory. It has worked on massive restructuring deals for clients such as GE and Verizon. Evercore has a very ambitious corporate culture. One of the biggest attractions for young investment bankers is the bank’s low analyst-per-associate ratio. Junior investment bankers have relatively higher client-facing opportunities and gain deeper insights into dealmaking. 

Evercore has over $12 billion dollars in AUM, as of June 2022 but has provided advisory worth $4.7 trillion dollars and operates in 11 countries. 

Bank of America 

The investment bank was created through a series of mergers, the most notable being the acquisition of Merrill Lynch during the financial crisis of 2008. Bank of America, apart from its advisory services, is known for its soft work culture. Unlike the alpha male-dominated locker room culture of Wall Street, the bank has an amiable work environment. This is also one of the strongest draws for investment banking aspirants. Moreover, a degree from an Ivy League university is not required for the bank to take notice of your resume. The institution also ranks the highest when it comes to diversity. 

Bank of America is the second-largest U.S. bank, in terms of size, with a balance sheet size of approximately $3.1 trillion. 

Conclusion 

When it comes to getting into one of these financial behemoths, it is important to consider your personality and individual goals, above everything else. If you are interested in restructuring and advisory, you should prefer a bank which shares that interest. Moreover, amongst these five financial institutions, Goldman Sachs is the hardest to break into. It receives over 100,000 applications for 2300 internship positions every year.