From the monthly archives:

September 2011

Competition for investment banking jobs has always been fierce. And with the recent belt-tightening among the big banks and an uncertain economic outlook, the job market will only get more challenging in the near term. So those looking to break into investment banking, particularly at the entry level, need an edge.

One such edge has always been the summer internship with an investment bank. Now, it appears, the internship is more valuable than ever. A recent report by High Fliers Research, a UK firm that tracks graduate recruitment, shows that at least half of the entry-level positions at investment banks (and leading law firms) this year will be filled by people who have previous work experience at the very same firm. This compares with just 1 in 5 who receive similar favorable treatment in the media industry, for example.

Internships are no longer something to pursue just to check out if you like a particular career path. They have become an essential stepping stone to landing a well-paid job in finance, reports the Financial Times.

And while internships can certainly open doors, getting access to them is no easy matter. British Deputy Prime Minister Nick Clegg has quipped that internships are the preserve of the “sharp-elbowed and well-connected.” He himself benefited from internships arranged by family friends. It’s as much who you know as how aggressively you pursue them.

The good news is that internships with large financial institutions often pay well, while they work you into the ground. This contrasts with internships in media and politics, which are generally unpaid positions.

You also do not have to be a business or economics major to apply. Many firms accept applications from liberal arts students, according to Jane Clark, head of campus recruitment for Europe, Middle East and Africa at Barclays Capital. After the initial application, the best students are called back for interviews.

But do expect to work extremely hard if you’re fortunate enough to land a coveted internship. “In investment banking you will be working alongside people doing the job and may work much the same hours. This could mean a very early start – perhaps 6am – and working well into the evening,” says Dupsy Abiola, founder of Intern Avenue, which connects interns and employers. Abiola also suggests that you begin thinking about your internships as early as your first or second year in university.

What about you? Are you looking for an internship at a major financial institution? Or, did an internship help you land an investment banking job? Add your comments below.

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The news was all over the papers this week that a supposed “rogue trader” had wiped nearly $2.3 billion off the balance sheet of Swiss banking giant UBS. But well-known Rolling Stone magazine columnist Mike Taibbi questioned why we are even surprised by the news.

He uses stronger language to describe the situation. The reality is, investment banking jobs are filled by people who, by their very nature, are not wired for ‘client-based’ thinking. “This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts.”

Taibbi asserts that investment bankers just don’t get turned on by the “dreary” business of tending to commercial banking or client service. And that investment banks by their nature try to hire people with a big appetite for risk. They look for someone who, as he puts it, “can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up.”

Nevertheless, the wall between commercial and investments banks was torn down in 1998, largely by democrats Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and others. Since then, the marriages of investment and commercial banks that have sprung up have largely been a “disaster,” says Taibbi.

He even eschews using the term “rogue trader” for the simple reason that making big bets with other peoples’ money is exactly what a lot of investment bankers are hired to do. Indeed, you never hear the term “rogue trader” when one of these cowboys earns a cool $1 billion making the right bet at the right time. Only when they’re on the losing end of a trade.

Taibbi’s views are harsh, entertaining, and probably not in line with those of you who are looking to land an investment banking job. Or are they? Let us know by adding your comments below.

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The boom in hiring for investment banking jobs, triggered in 2009 by rising markets and massive fiscal stimulus programs, has begun to wane. Like many politicians, the leaders at major banks anticipated a stronger recovery from the debt crisis and overhired during the 2009-2010 run-up, reports the Financial Times. Now, many investment banks are carrying too many professionals and have begun to trim their ranks, particularly in back office and operational roles that do not add to the bottom line.

Mind you, despite the serious job cuts announced by such firms as HSBC, Goldman and Royal Bank of Scotland, this still only represents between 2 and 5 percent of their global workforce.

Nevertheless, banks are under increasing pressure to both cut costs and bring down the compensation of those who continue to work for them. In addition, regulators and public pressure have forced banks to overhaul the way they structure pay for senior executives. Many bankers are now getting a greater proportion of their total compensation in the form of fixed salaries, and less as cash bonuses. Firms are tying bonuses to shares of stock that can either be deferred for several years or even clawed back in the event of an employee leaving. There are other signs that banks are reining in expenses.

At Goldman Sachs, for example, several hundred senior bankers were reminded that their higher compensation earned during the spike of 2009-2010 was “temporary” and would not be renewed, according to the Times article.

“Do I think that this will remain an industry where top performers are incredibly well remunerated? Yes, I do,” said one UK-based investment banking executive quoted. “But I also think average and even above-average people will be paid less.”

Recent business school grads and others who are looking to break into investment banking jobs at any cost, are also putting downward pressure on salaries. According to the Wall Street Journal, graduates in the U.K sent more applications to investment banking firms than any other business sector. And three-quarters of these applicants would be willing to work for free, for a period of time, just to gain the experience.

These grads know there is little hope for them without experience, and apparently Wall Street hiring managers are taking full advantage of their eagerness. One 30-year-old grad with an economics degree was reportedly offered just $30,000 a year to assist a private bank in Wyoming.

What’s your take? Would you be willing to accept what you know is a “low ball” offer just to get a foot in the door of an investment bank? Add your comments below.

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Using LinkedIn to Find an Investment Banking Job

September 5, 2011

As you know, LinkedIn is the preferred social network for professionals looking to connect with jobs, new hires or business opportunities. In fact, one survey found that 86% of companies that use social networks to recruit talent use LinkedIn, according to an article by Melanie Pinola for No doubt you’ve already established a presence […]

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