Careers in Banking and Finance Outside The Investment Banks

Careers in Banking and Finance outside
the Investment Banks
Patrick Fearon
Autumn 2012
© Patrick Fearon 2012

The Banking and Finance lecture is divided into two
parts:
Part One What is Investment Banking?
Part Two Careers in Banking and Finance outside of

Investment Banking
9 Opportunities outside IB 2012 © Patrick Fearon 2012

In the Investment Banking lecture we looked at:
Corporate Finance
– Financial Advisory
– Advice on M&A
– Private Equity
Capital Raising
– Debt Capital Markets Origination
– Equity Capital Markets Origination
Sales & Trading
– FICC Sales & Trading
– Equities Sales & Trading
Research
– FICC Research
– Equities Research

In the “Opportunities in Banking and Finance outside
Investment Banking” lecture we’ll look at:
Why you might look at a career outside of Investment Banking

Investment Banking activities that are dealt with by other institutions
– The Debt Markets
– The Equity Markets
– Corporate Finance
– Private Equity
Wealth Management
– Private Banking
– Institutional Asset Management
Corporate Lending
– Project Finance
– Leveraged Finance
– Syndicated Lending
– Some of the active Corporate Lending Banks you might consider
Retail Banking
– Domestic and International
The Audit firms
Governmental Banks

These are the topics I am going to discuss with you now:
What careers are available to graduates in Banking and Finance

outside Investment Banking?
Who are the players?
What is the corporate culture like?
How do you get hired?
What are these institutions looking for?
What are the roles and functions?

If there is one truth about Investment Banking that I
would like you to understand, it is this
You do not have to work in an Investment

Bank to do Investment Banking business

Investment Banks provide many interesting careers
Corporate Finance
Debt
– Origination
– Sales
– Trading
– Research
Equities
– Origination
– Sales
– Trading
– Research

But there are some real issues about working in
Investment Banking
Investment Banks are difficult to get into

The work is very transaction-oriented
Investment Banks are notoriously resistant to applicants who are
seeking to change careers
Life style issues
You’ll get deal experience as an Analyst but not much client contact
And the rewards are likely to be less good as bonuses are curbed

And all of these Investment Banking activities are dealt
with by institutions other than Investment Banks
Sales & Trading

Analysis/Research
Mergers & Acquisitions
Corporate Lending

Opportunities in Sales and Trading are not confined to
Investment Banks
As a new product matures, different banks are involved in trading and

distributing the product…
High
Profit
Margin
x x
x
x
Low
Profit
x
Margin
New product Product is sold Product is traded Product is traded Product is

is created to clients by other big banks generally quoted in FT

Commercial Banks are stronger in a number of traded
products than Investment Banks
Foreign Exchange
Treasury Products
Euro Commercial Paper
Loan Assets

And other institutions get involved in Sales and Trading
too
Small Trading companies like Optiver

Corporations with big Foreign Exchange flows and borrowing
requirements i.e. big enough to have a Treasury department.
– The oil companies
– FTSE 100 companies
Hedge Funds that take proprietary trading positions in these
instruments.
And the Brokerage companies like ICAP and Cantor Fitzgerald have
started recruiting at a number of Schools

Analyst/Research roles exist in Commercial Banks too…
In addition to the Analysis of traded instruments

Risk Management
Credit Risk Management
Economic Research
Analysis in the Lending departments

We talked earlier about the involvement of the
Investment Banks in Equities
Derivatives
New Issuance
Trading
Sales to Clients Cash Equities
Research

Over the last couple of years, there has been a lot of
recruitment going on in Cash Equities
Don’t just look at BNP Paribas, look at Exane too; CA Chevreaux, not
just Calyon
Look at Cash Equities players like
– Evolution
– Unicredit has been building a presence in Cash Equities in the UK and
has recruited some senior Research Analysts
– McQuarrie has been building in London in pan-European Equities
– Raymond James, Mirabeau, Piper Jaffrey are examples of smaller
brokerage houses that are expanding
And these brokers are often active in Private Client business and
Corporate Finance

These are the leading UK brokers
There are some obvious names like

JP Morgan Cazenove Morgan Stanley
Bank of America Deutsche
UBS RBS Hoare Govett
But Also
Evolution Brewin Dolphin Matrix
Strand Hanson Seymour Pierce Arbuthnot
Mirabaud Arden Partners Goodbody
HB Corporate Panmure Gordon Astaire
Numis Securities Cenkos Securities FinnCap
Cannaccord Oriel Securities
23 © Patrick Fearon 2012

If you want to get into M&A, think what it is you like
about the business
Phase 1: The board of a company reviews the company’s strategic plan
The board would work with a management consultancy company like:

- McKinsey,
- Bain,
- Cap Gemini,
- AT Kearney,
- BCG,
- Accenture,
- Booz Allen,etc
Therefore if it’s Strategy you enjoy, you would be better off working for one of
these companies

Phase 2: The board decides to implement the strategy recommendations
and get into a new business area or get out of an existing business
That’s when the board talks to Corporate Financiers
They could come from an Investment Bank but they could also come
from:
– a regional bank
– an accountancy firm
– a boutique
The skills needed are similar to those required by an Investment

Bank, though the smaller deals may be less complex and you may
have to sell more than in an IB

The Investment Banks focus on the big M&A deals, but
much less on the smaller transactions
European M&A League Tables 2011 Ranked by Value,

Completed Transactions any value
Number of Average deal

Investment Banks US $ billion Deals size ($billion)
1. Goldman Sachs 384 163 2.4
2. Morgan Stanley 278 168 1.7
3. JP Morgan 229 135 1.7
4 Credit Suisse 211 132 1.6
5. Deutsche Bank 193 123 1.6
Source: www.thomsonreuters.com/dealsintelligence/reviewsandanalysis

With smaller transactions, the advisors are completely
different
European M&A League Tables 2011: Ranked by Number of Deals

Completed Transactions of $500 million and under
Number of Average deal

Investment Banks US $ billion Deals size ($million)
1. KPMG 7.6 265 28.7
2. PriceWaterhouseCoopers 4.2 161 26.1
3. Rothschild 12.3 152 80.9
4. Ernst & Young 4.5 140 32.1
5 .IMAP 0.9 124 7.3
6. BDO International 2.2 99 22.2
Source: www.thomsonreuters.com/dealsintelligence/reviewsandanalysis
There is also a wide range of boutiques to choose from
These range from the international:

– Hawkpoint Partners - Leonardo & Co
– IMAP - Lincoln International
– M&A International - Jefferies & Co Inc
To the very domestic:
– Greenhill (UK) Financière Cambon (France)
– Close Brothers Ltd (UK) Bryan Garnier & Co (France)
– ABG Sundal Collier (Nordic) Goetzpartners Corp Finance (Germany)
– Socios Financieros (Spain) Intesa SanPaolo (Italy)
For your best source use
www.thomsonreuters.com/DealsIntelligence/ReviewsAndAnalysis
mid-market M&A section

Phase 3: The deal needs to be financed
Equity & Fixed Income issuance is dominated by the Investment

Banks
But not Acquisition Finance which is provided by

– Commercial Banks (see next slide)
– Specialist Mezzanine Providers like ICG
– And to some extent Hedge Funds

These are the banks that arranged Global Acquisition
Finance in 2011
MANDATED ARRANGER Volume €billion # of issues
1 JP Morgan 224.5 107
2 Bank of America Merrill Lynch 218.1 144
3 BNP Paribas 201.3 85
4 RBS 190.7 68
5 Barclays Capital 163.8 59
6 Mitsubishi UFJ 149.5 53
7 Citi 137.7 66
8 Deutsche Bank 135.5 40
9 SG Corporate & IB 125.5 28
10 HSBC 124.3 54
30 Source: Dealogic Loanware Opportunities outside IB 2012 © Patrick Fearon 2012

And there are any number of structuring/lending roles in
Commercial Banking
Leveraged Finance
Project Finance
Real Estate
Which we will look at later in this lecture
…all of which need a Relationship Manager to sell them

It is also possible to work in Finance on the buy side
• In M&A the “Business Development” team is responsible for pre-

acquisition work and strategy
• In a major corporate, the Treasury team is responsible for arranging
lines of credit, borrowing under them, negotiating bond issues and
trading foreign exchange
• Construction companies, Oil & Gas companies, Power generation
companies and others all need to borrow through Project Finance.
• Some of the more innovative products in Project Finance were
created by the construction companies, not by the banks
• Real estate companies have a group that borrows to finance
developments

The forgotten piece of Private Equity is Venture Capital
Investing in companies at an early stage of their development

Tend to be small organisations with only a few Partners
Often specialised in specific sectors (biotech, IT, pharmaceutical etc)
Easy to identify at least in the UK through the British Venture Capital
Association (www.bvca.co.uk) though less easy to see who is
recruiting
Keep an eye out for European government initiatives to create new
VC entities, in order to create new jobs

Investment management companies and Private Banks
also get involved in Private Equity through creating
funds of funds
Institutional Money
Fund of Funds Venture Capital
Private Equity
Investee Companies
A second thought I’d like to leave you with
There are a number of areas that the Investment

Banks get involved in, but do not dominate.
- Asset Management
- Private Banking
- Corporate Lending

Asset Management & Private Banking

What is Asset Management?
Institutional Funds stem from

– Pension Funds
– Central Banks seeking diversification of income
– Charities seeking better return than deposits
– Corporations’ excess liquidity
These funds have Trustees, Advisors or Treasurers who establish the criteria
for measuring investment performance
The Trustees of the Pension Fund will need to stipulate how much volatility
they will accept in the Portfolio, which then dictates the mix of
Debt/Equities/Cash

How is Asset Management structured?
Asset
Originators Research Trading
Managers
• Usually senior people • A group that • Proprietary • Execution of client

who take part in manages the funds research which puts orders
competitive pitches to day to day in ideas to the Asset
manage accordance with Managers and the
client guidelines investor base
- pension fund money - US$/€
- central bank assets - high/low risk
- charities - Debt/Equities

What would a graduate do in Asset Management?
As a Researcher, an Analyst would

– probably look at one geographical sector
– develop his/her own ideas
– communicate those ideas to the Asset managers
As an Asset Manager, an Analyst would

– help to formulate investment strategy
– decide on trades
– meet with brokers and management of client companies
– meet with institutional investors

Leading Asset Managers 2011
Source: Pension & Investments http://bitly/bs5Cfd

What that slide shows is that there are many different
ways of raising money for investment
Directly from Pension Funds

– BlackRock, State Street etc
Through mutual funds
– Fidelity, Vanguard etc
Through insurance premiums
– Allianz etc
Through Funds of Funds

investing on behalf of UK Pension Funds
Source: Investment & Pensions Europe

investing on behalf of European Institutions
Funds under management

Asset Managers
€ billion
1 BlackRock 581
2. Legal & General Investment Management 302
3 APG Group 284
4 State Street Global Advisors 239
5 Amundi Group 211
6 Allianz Global Investors 181
7 BNP Paribas Investment Partners 167
8 Natixis Global Asset Management 164
9 Deutsche Asset Management 152
10 Credit Suisse 136
Source: Investment and Pensions Europe
And there are many different styles of investing the
assets under management
Active Management
– Top down
– Bottom up
Passive Management
– Index Tracking
The ability to go short as well as long
– Long only funds
– Mixed Funds (e.g. 130/30)
– Predominantly Short Funds (The Hedge Funds)
An increasing move to specialised funds
– Real Estate Funds
– Emerging Market Funds
– Commodity Funds etc

Are Asset Management companies recruiting?
Yes, but there has been considerable retrenchment in the industry

A number of asset managers have sold all or part of their businesses
– SocGen sold its UK business to a Hedge Fund and has merged the
European business with Credit Agricole’s to form Amundi
There has also been considerable consolidation in the insurance
industry
– Lloyds Bank and HBOS post merger has merged Scottish Widows’ and
Clerical Medical’s investment management business
For banks this is a sellable division without any “problem assets” at a
time when they need to raise Tier one capital

Are Asset Management companies recruiting? (contd)
Few Asset Management companies outside the Investment Banks

have a Summer Internship Programme
Look at Graduate Programmes
Or apply for Equity Research positions

What is Private Banking?
High Net Worth Individual client base

Who are these individuals?
– Very diverse internationally
– New money/old money
Why do they use Offshore Private Banks?
– Sophisticated advice
– Anonymity
– Seeking to minimise political risk
– They may be taxed in several jurisdictions
Pressure on Private Banks to disclose client information
The service provided to clients is either deposit, advisory or discretionary

How is Private Banking structured?
Origination / Asset Specialist

Relationship Manager Research Trading
Manager Products
• A Relationship • Constructs portfolio • Available to clients who • Provides • Execution of client

Manager develops in accordance with wish to pursue specialist investment ideas to orders
business with High client wishes areas of investment the Asset Managers
Net Worth - currency - foreign exchange
Individuals - High/Low risk - fine art
- Debt/Equities - real estate
- Deposit - trust creation
- Brokerage - Islamic investments

What would a graduate do in Private Banking?
As an originator
– join a team which would be geographically focused e.g Middle East,
Greece, UK, France etc
– help to bring in new clients and service existing
• clients
– learn the investment product
– oversee Asset Managers to ensure they follow client requests
As an Asset Manager or Researcher

– similar to Asset Management

Which are the main Private Banking houses?
Global Private Banking Assets under Management
50 Source: www.scorpiopartnership.com/ Opportunities outside IB 2012 © Patrick Fearon 2012

And it’s an industry that’s expanding rapidly
2000 2011
Number of banks managing more than $100 billion in
Private Banking Assets 2 27
And becoming much less US-centric 2007 2011
US 57% 42%
Europe 29% 35%
Asia Pacific 7% 13%
Estimated Total Wealth Under Management $15.5 $16.5
trillion trillion
51 Source: www.scorpiopartnership.com Opportunities outside IB 2012 © Patrick Fearon 2012

Is Private Banking hiring graduates?
A number of banks say they are (Goldman/Barclays/UBS)

Recruitment is particularly strong in Asia, where Singapore is
expanding as a Private Banking centre at a time when there are now
more HNW individuals in Asia (3.3 million) than there are in EMEA
(3.1 million)
One issue is that Private Banks prefer to recruit more experienced
employees who can bring with them funds under management
New hires increased by 6% in 2011 despite industry margins falling
by 32% over the last 4 years. Cost/Income ratios are now up to 80%
At that level, you should expect to see some lay-offs and mergers in
the industry, e.g. Merrill Lynch is selling its Wealth Management
business to Julius Baer
Is Private Banking hiring graduates?
JP Morgan recruited a number of Business School students last year

for Geneva into the Operations area
Risk continues to be an important area for graduate recruitment

The Corporate Banks

What does Corporate Lending Mean?
Banks still lend to companies but

– the best credits now have access to the capital markets
– and loans to the best credits are often made at a loss
– Which will be exacerbated by Basle 3
Corporate Bankers increasingly lend against the cash flow of a

project or asset to boost their margins
– Project Finance
– Real Estate Finance
– Aircraft Finance
– Shipping Finance
– Acquisition Finance
– Film Finance

Let’s look at a typical Corporate Bank in London (SEB)
Most commercial banks in London will have some or all of the

following divisions
– Equity Markets (Origination, Sales, Trading and Research)
– FICC (FX, Interest Rates, Commodities and Fixed Income)
– Mergers & Acquisitions
– Equity Investments (Venture Capital)
– Asset Management/ Private Banking
– Real Estate Finance
– Global Specialised Finance (Advisory, Arranging, Underwriting, and
Lending)

SEB
Global Specialised Finance Real Estate Finance
Project Finance Financing

Shipping Finance Advisory
StructuredFinance Securitisation / REITs
Acquisition Finance
Commodity Finance
Export Finance
Capital & Equipment Finance

A big bank like Barclays will have an even greater
number of specialist lending areas
Leveraged Finance
Structured Project Finance
Private Finance Initiatives
Asset and Sales Finance
Aircraft Finance
Syndicated Lending
Leasing
Corporate Lending
Shipping Finance
Real Estate Finance

One of the areas of banking you might look at is Project
Finance
It’s a huge business. $214 billion globally in 2011, with 47%

undertaken in Asia-Pacific.
It’s not recession-proof. Volume was down 44% worldwide in 2009,
but up again by 46% in 2010.
It’s a good area for students with an engineering background to
consider.
A significant number of banks get involved in it.
Likely to increase in importance as governments tap Private Sector
finance for Public Sector projects
Can be approached both from an advisory and a lending perspective.
The leading advisors are often the accountancy companies

Project Finance lending banks
Leading Arrangers of Syndicated Project Finance Loans Worldwide 2011
Mandated Arrangers Proceeds $mil 2010 Rank # of issues

1. State Bank of India 21,156 1 50
2. Mitsubishi UFJ Financial Group 9,297 7 87
3. Sumitomo Mitsui Financial Group Inc 8,188 10 71
4. Crédit Agricole CIB 6,646 6 61
5. Société Générale 5,760 9 55
6. Axis Bank Ltd 5,750 4 19
7. Mizuho Financial Group 5,608 20 54
8. BNP Paribas 5,530 5 56
9. IDBI Bank Ltd. 5,162 3 10
10. ING 4,916 12 49
Industry Total 214,038 613
60 Source: http://banker.thomsonib.com Opportunities outside IB 2012 © Patrick Fearon 2012

Project Finance used to be driven by oil & gas projects
but no longer
Global Project Finance Loans Proceeds by Sector

(US$m)

Activity is broadly diversified geographically
US$ billion
Corporate Lending: Trade Finance
Leading Arrangers of Syndicated Trade Finance Worldwide in 2011

Mandated Arrangers Volume €million # of transactions
1 BNP Paribas 29,406 123
2 Société Générale 27,831 76
3 Credit Agricole 26,262 69
4 ING 22,350 39
5 Citi 21,784 73
6 Deutsche Bank 21,683 76
7 Natixis 19,832 44
8 BBVA 19,064 97
9 UniCredit 16,328 27
10 HSBC 15,844 62

Corporate Lending: Real Estate Finance
Leading Arrangers of Syndicated Real Estate Finance Worldwide 2011
Proceeds
Mandated Arrangers # of issues
(€m)
1 Bank of America Merrill Lynch 71,893 168
2 Wells Fargo Securities 54,102 189
3 JP Morgan 51,339 81
4 RBS 36,407 48
5 Sumitomo Mitsui Financial Group 35,981 130
6 HSBC 33,091 62
7 Barclays Capital 29,001 33
8 Citi 25,008 29
10 Mizuho 23,358 101

Corporate Lending: Shipping Finance
Leading Arrangers of Syndicated Shipping Finance Worldwide 2011
Proceeds
Mandated Arrangers # of issues
(€m)
1 Nordea Markets 14,741 49
2 DnB NOR Bank ASA 13,316 58
3 BNP Paribas 7,776 18
4 ABN AMRO 6,686 26
5 ING 6,254 16
6 Credit Agricole 5,500 11
7 SEB 5,156 12
9 Natixis 4,275 12
10 HSBC 4,024 14

How is a Corporate Lending department structured?
Relationship
Analysts Risk
Managers
• The Relationship • The more complex • The Credit Officers

Managers are usually the deal, the more would be trained in
responsible for all the modelling required credit by the bank, and
products of the bank would need to approve
• Normally credit-
including the Investment any loan before it is
oriented evaluation
Bank. made
• Oil & Gas might
•They are also
require petroleum
responsible for
engineers
Corporate Lending
divisions and for • Tax based leasing
marketing to clients cash flows in Project
Financing

What’s happening now in Structured Finance?
Bank Lending is down across the board

- Loan demand has reduced in line with the economic
downturn
- Borrowers are taking advantage of low interest rates to
access the fixed income markets, and
- Banks have been holding off from making new loans
ahead of the Basel 3 capital adequacy requirements.

How bad is the downturn in lending?
Shipping and Real Estate Lending have been hit

particularly badly. Banks are contending with significant
write offs and workouts.
Project Finance volume is down 6% for the first 6 months
of 2012, but still fairly healthy.
Overall syndicated loan volume down 27% at the 6 month
mark.

But that in turn creates opportunities
Much of the new lending for Real Estate projects (at least
in the UK) is being made by the lending subsidiaries of
insurance companies (AXA, Aviva, Allianz).
The French and the Japanese banks are still active in
Project Finance.

Loan Syndication

What does Loan Syndication mean?
Underwriting a bank loan

Frequently for a substantial amount
Maybe in excess of the bank’s lending limit
Reducing the bank’s commitment through
– Co-lead managers
– Sub-underwriters
– Participants
Reducing final take to a level the bank can accept
Negotiating loan documentation on behalf of the Syndicate

These loans can be for significant amounts
Top 10 Global Syndicated Loans 2011
US$ billion Purpose
1 GE Capital 23.1 Commercial Paper Back-up Line
2 Texas Competitive Electric 22.3 Refinance Bank Debt
3 AT&T Inc 20.0 Acquisition Finance
4 Wal-Mart Stores Inc 18.6 Refinance Bank Debt
5 CADES 16.6 Refinance Bank Debt
6 United Technologies Corp. 15.0 Acquisition Finance
7 Express Scripts Inc 14.0 Acquisition Finance
8 Toyota Motor corp. 13.0 Commercial Paper Back-up Line
9 SABMiller Plc. 12.5 Refinance Bank Debt
10 CADES 11.7 Refinance Bank Debt

Would a graduate be recruited into Loan Syndication?
Possibly, but probably too specialised as an entry point
EMEA Syndicated Loans 2011– Lead Managers

Proceeds 2010
Bookrunners US$billion # of issues Ranking
1 BNP Paribas 64.0 478 1
2 RBS 55.3 413 2
3 HSBC 52.3 406 5
4 Crédit Agricole CIB 49.4 334 4
5 Société Générale 44.7 340 3
6 Deutsche Bank 40.7 248 6
7 ING 40.0 328 8
8 Barclays Capital 39.5 309 7
9 Commerzbank 35.7 314 12
10 Citi 35.2 251 13
Industry total 1081.8 1580

International Corporate Banks in London

With the consolidation that has taken place, very few US
banks have an international presence
Bank of America - the biggest bank in the States post the merger with
Nationsbank. The bank is a big commercial lender. Significant investment banking
capability, which has increased radically with the acquisition of Merrill Lynch.
JP Morgan Chase – a strong Investment Bank and commercial lender
Citigroup - a diversified Retail/Commercial/Investment Bank with a significant
operation in the UK and Investment Banking business
Wells - the bank is strong in Asset Based Lending and acquired Wachovia in 2008
State Street, Bank of New York and Northern Trust - have become market
leaders in providing clearing and custody services to the investment management
industry, but are also involved in commercial lending

The Canadian banks may, therefore, be of more interest
Royal Bank of Canada - operating through RBC Capital Markets, the corporate
Banking Division covers 11 industry sectors on a bilateral and syndicated basis. The
Investment Bank has abilities in Debt, Equities and M&A.
Toronto Dominion - little international activity
CIBC - CIBC World Markets has substantial presence in London and was one of the
first foreign banks to build an asset-based finance capability in London.
Bank of Nova Scotia - Scotiabank provides commercial, corporate and trade
services out of London.
Bank of Montreal - The Corporate Banking business is built around Nesbitt Burns
in Capital Markets. The Corporate Banking tends to be Canada-oriented.
National Bank of Canada - little international activity

The German banks are among the most powerful in
Europe
Deutsche - dominates the German banking market. Has serious

ambitions as an investment bank that will make corporate loans to its clients.
Commerzbank – merged with Dresdner. It is an interesting bank to look

at for a career in Corporate Banking. It used to be the market leader in Real
Estate lending, post the acquisition of EuroHypo Bank, but seems to have
deserted that business.
The Landesbanks are in a state of disarray with the announcement

that Westdeutsche Landesbank (WestLB) was closing for business earlier
this summer
There are a number of other LBs:Bayerische, Norddeutsche, Bremer,
Hessische, Baden Wuerttemberg, Berlin, Hessen-Thuernigen etc all with a
presence in London, but the whole sector is becoming more domestic and
very risk averse.

The French banks are also strong internationally
Société Générale - the biggest of the French banks in London with 2000
employees. The market leader in Equity Derivatives. The Corporate and Investment
Banking division is a global business and very strong in London, marketing Corporate
Lending and Investment Banking product
BNP Paribas - Corporate and Investment Banking has merged as at Société

Générale. Less strong in the Investment Banking area than SocGen. Other divisions
include Retail Banking, Asset Management and Private Banking
Crédit Agricole CIB - the result of the merger between Crédit Agricole and Crédit
Lyonnais. Calyon has around 1000 people in London. The Global Investment
Banking division and the Financing division are separate. The Financing division
includes Structured Finance (Project Finance, Aircraft, Shipping and Real Estate),
Loan Syndication, Acquisition Finance and Corporate Banking
Natixis - the result of the merger between Natexis (strong focus on Corporate
Banking) and Ixis (an Investment Bank). The bank has approximately 600 staff in
London.

The Scandinavian banks are very focused on Shipping
SEB - the largest Scandinavian bank in London. Some Capital Markets presence
through Enskilda Securities.
Svenska Handelsbanken - Big in Corporate Banking in Scandinavia and the UK.

Several branches in the UK.
Nordea - operates a whole range of Corporate Banking, of which Shipping is the

biggest element. 70 people in London
Den Norske Bank - 55 people in London, of whom 16 are in Shipping, including 4

Analysts
Den Danske Bank - more into Retail Banking and going back to its Danish roots.

The Japanese banks have emerged from their period of
credit difficulties in a much stronger form
In addition to Nomura
The Bank of Tokyo - Mitsubishi UFJ Ltd. – A merger of Bank of Tokyo,
Mitsubishi Bank, Sanwa Bank, Tokai Bank and Toyo Trust
Mizuho Financial Group – A merger of IBJ, Fuji and Dai-Ichi Kangyo
Sumitomo Mitsui – A merger of Sumitomo Bank, Taiyo Kobe & Mitsui Bank
All three are showing up in the league tables and are strong in Project Finance, Trade
Finance, Shipping and Real Estate Finance, in Europe as well as Japan.
All have separate Investment Banking institutions

Other Asian banks
HSBC
Standard Chartered
DBS

Before we leave Corporate Banking, let’s look at Islamic
Banking
An area that a lot of banks are trying to develop

Five Islamic banks have now set up in London
– European Islamic Bank
– Islamic Bank of Britain
– Bank of London and the Middle East (BLME) are the biggest
Islamic Banks have been established this year in Geneva and Paris
More than $900 billion of assets are managed according to Islamic
principles and more than 280 institutions provide Islamic products
Many of the Islamic institutions are based in the Middle East, but
London banks are becoming heavily focused on this area.

The basic products have existed for some time
The Koran prohibits the payment of interest (riba) and financial

speculation (gharar)
Financial instruments need to be based on business activity of the
issuer and contain the concept of risk sharing.
SUKUK: Islamic bonds make regular payments to investors out of the
profits of the business
– Example: a Pakistani toll road that issues toll booth receipts to pay
investors
MURABAHA: a commodity transaction where goods are purchased
by a bank and resold to the client
– Example: a bank purchases raw materials for a UK steel manufacturer
and resells with a profit margin

Islamic products have been incorporated into many
areas of Retail, Private and Investment Banking
There are now 500 Financial Institutions in over 80 different countries

offering Islamic Product
Sukuk Bond Issuance is now well developed. $ 17 billion issued this year in
the UAE alone.
Malaysia is a regular issuer of Islamic Bonds in dollars and Ringgit. $ 14
billion issued in 2011.
HSBC has set up HSBC Amanah to provide Investment and Private Banking
Services to Muslim clients. There are Islamic Finance specialists in most
international banks.
Retail banks are seeking to provide Islamic mortgage, Islamic Credit cards
and quasi-overdrafts on a concept known as tawarruq
Investment Banks are developing sukuk and profit-rate swaps
There are Islamic hedge funds, and Islamic hedge fund indices

Islamic Banking is a growth area
Most of these businesses are run through the emerging markets

areas of banks
Considerable demand for people who can understand these products
and sell them (mostly within the Islamic world)
A real opportunity for Business School graduates

The Retail Banks and the Clearers

This is Citigroup, a typical Corporate Bank with a large
Consumer Division

Consumer Banking has been a profitable area for
Corporate Banks, though not in the last couple of years
Consumer Corporate &

$ million Banking Investment Banking Total Net Income 2011
Net Income 2011 Net Income 2011
Citi 6,196 12,779 14,442
JP Morgan Chase 7,900 6,789 18,976
Barclays £4,046 £2,975 £7,900

Citi’s product range is fairly typical of a Consumer Bank
Current Account • Payments
• Interest-Bearing Deposits
Savings • Tax-efficient Savings Schemes
• Own-brand and third party mutual funds
• Personal Loans
Loans • Leasing
• Mortgage Loans
• Home Improvement Loans
• Own-brand and third party
Cards
• Life Insurance
Insurance • Home Insurance
• Household Contents Insurance
• Endowment Insurance linked to Mortgage Lending
Small Corporates • Are often included in this area

What are the challenges of Consumer Banking to an
organisation like Citi?
A strong branch network (8,100 branches worldwide)

Significant number of ‘captive’ clients
Profitability involves increasing the number of products you can sell
to your client base
Consumer Banking is all about
– designing the right product
– selling it effectively
– ensuring that the costs are under control
– finding new ways to distribute the product and attract new clients
(internet/call centres/mobile phone)

What would a career be like in Consumer Banking?
Much less transactional than Investment Banking

More focused on Sales and Marketing
More managerial opportunity, and at an early age
There could be an initial stage “in the trenches”
And there would need to be training in the products

Many of these Consumer Banks are looking to expand
overseas
Where does Citi make its money in Consumer Banking?
NET INCOME 2011 2010
– North America $6,196 million $ 607 million

– Latin America $1,601 million $1,893 million
– EMEA $ 79 million $ 104 million
– Asia $1,972 million $2,172 million

Not surprisingly, therefore, many of the employers
require you to be prepared to travel
A typical career in International Consumer Banking

STANDARD CHARTERED
- General Manager, International Network Services, Europe (London) 2000 – present
ANZ BANKING GROUP
– General Manager, International Network Services, Europe (London) 1998 – 2000
– Regional General Manager, Middle East (London / Melbourne based) 1993 – 1998
– General Manager, International Private Banking (London) 1991 – 1993
– General Manager (Country Head), Pakistan (Karachi) 1987 – 1991
– General Manager (Country Head), U.A.E (Abu Dhabi/Dubai-based) 1985 – 1987
GRINDLAYS BANK P.L.C
– General Manager (Country Head), Sri Lanka 1982 – 1985
– General Manager (Country Head), Greece (Athens) 1979 – 1982
– Corporate Head, Greece (Athens) 1977 – 1979
– Unit Head, UK Corporate Bank (London) 1975 – 1977
CITIBANK
– Pro-Manager, World Corporate Group (London) 1974 – 1975
One of the most international Retail Banks is Standard
Chartered
UK-based bank operating in 56 countries

Strategic focus is on Asia, Africa and the Middle East
3 business divisions
– Personal Banking
– Corporate Banking
– Institutional Banking and Treasury

Standard Chartered
Americas, Middle East

Asia
December 2011 India Africa UK & & other TOTAL
Pacific Europe South Asia
Branches 1,164 151 31 245 1,591
Wholesale Banking
Operating Income 2,201 1,531 865 1,386 1,476 9,979
($million)
Consumer Banking
Operating Income 4,380 493 381 134 691 6,079
($million)

Audit

The Audit companies have traditionally been the biggest
employers of graduates in Europe
These Figures are for UK Graduate Recruitment
Accountancy 16.8% of total 2011 vacancies for

graduate recruitment in the UK
Consultancy 12.8%
Investment Banking 9.0%
IT 8.0%
General Management 7.6%
Legal 8.5%
Retail 5.6%
97 Source: Association of Graduate Recuiters Opportunities outside IB 2012 © Patrick Fearon 2012
The most active recruiters are the Big 4, but the smaller
firms recruit too.
The Big 4 is made up of
KPMG
PriceWaterhouseCoopers
Deloitte
E&Y
Smaller names include
Grant Thornton BDO

Mazars PKF
Baker Tilly UHY Hacker Young
Nexia Smith & Williamson
Source: www.
The Career Path
Internships are available, but

The bulk of recruitment will be for students to work in Audit and qualify as a
Chartered Accountant
Once qualified, students can decide whether they wish to
- stay in Audit
- transfer to other divisions of the company (Tax, Advisory, Consulting etc.)
- move to the Finance Division of a Corporation
- move to a different industry, such as Corporate Finance or Private Equity
AUDIT CAN, THEREFORE, BE A STEPPING STONE TO INDUSTRIES THAT

ARE DIFFICULT TO JOIN STRAIGHT OUT OF BUSINESS SCHOOL
99 , Opportunities outside IB 2012 © Patrick Fearon 2012

Many students decide to get their Accountancy
qualifications within a company
Many students choose to join a company in order to get qualified
Perfectly valid way to start a career in the Finance Division of a

Corporation
It can also be used as a stepping stone into other industries such as

Banking

The Governmental Banks

The IMF
The capital of the IMF was increased threefold by $500 billion at the
2009 G20 meeting
Currently negotiating balance of payment loans with the Ukraine,
Serbia, Pakistan, Iceland, Lithuania, Greece etc.
At the hub of a move to boost the firepower of public sector lending
institutions
The IMF is recruiting again, looking for people with a background in
Economics and Finance
Target is to have 40% of staff from developing countries and reduce
the dependence on Americans and Europeans

The EBRD (European Bank for Reconstruction and
Development)
“Established in 1991 at a time when communism was crumbling to

build infrastructure and market economies in countries that are
committed to democratic principles”
1500 staff, 70% in London, 30% in countries of operation (35
operations in 29 countries)
Concentrates on Central Europe and the Baltic States, South-Eastern
Europe, Eastern Europe and Caucasus, and Central Asia
70% of its investments are in the private sector, 30% public
Financed € 9 billion of new projects in 2010 (highest level it has ever
achieved), and has received a capital increase from €20 billion to €30
billion
Lends directly to Eastern Europe and also to banks active in
financing that area
103 Source: www.ebrd.com Opportunities outside IB 2012 © Patrick Fearon 2012

The EBRD is a major recruiter and is looking for:
159 new recruits in 2011 at all levels (same as 2010)

Languages (Russian is a real plus)
4-5 years of work experience for Associates (2 years for Analysts) in
Project Finance or Equities
Candidates should be from one of the 29 countries of operation, and
preferably from an under-represented shareholder country. These
are:
– Switzerland - Japan
– Sweden - Korea
– Spain - Iceland
– Germany - Italy
– Portugal - Netherlands
Application through e-recruitment

If this sounds interesting, you should also look at:
The World Bank in Washington (www.worldbank.org)

The IFC in Washington (www.ifc.org)
Asian Development Bank (www.adb.org)
African Development Bank (www.afdb.org)

How to get employed this year

The job market in 2012
We all know that it’s going to be a nervous market

So don’t just apply to Goldman, JP Morgan and Morgan Stanley and
think you’ve done it all.
Go broad. Attend presentations by companies you’re not particularly
interested by. You may be surprised by what you learn. Keep the
cards of people you meet
Learn how to network effectively (family/friends/former
classmates/sports contacts/alumni)
Work with the School to make sure your CV sells you well
And above all research the companies and industries you apply to

Remember that applications to banks open and close
early
MSc Jobs MSc Internships
open close open close
Varies per
Goldman Sachs August
school
August December
Only
Morgan Stanley through summer September December
internship
JP Morgan September October September December

Remember that applications to banks open and close
early contd.
These dates are approximate

Different divisions have different closing dates
Different geographical areas also
Most banks operate a first come/first served basis, so don’t wait to
the last minute to apply
Few banks will be looking to employ big numbers this year

Internships vs. Full-time jobs
Last year more students got internships than full-time jobs at the end
of their studies
There are various kinds of internship you can apply for, but the
summer internship is the most sought after
Usually lasts around three months from June to September
Some organisations are offering longer “off-cycle” internships of 6-12
months
For EU students, have a look at VIEs

The advantages of an internship vs. a full-time job
An internship provides good work experience (you can tell other

employers you have worked in this area)
The banks are hoping that by the end of the internship, the climate
will be better and they can convert the internship into full-time
employment

The disadvantages of an internship
There’s no guarantee that you will be offered a full-time job at the end
of the internship
Internships tend to be less well paid than full-time jobs
Summer internships often coincide with Business Related Projects

Conclusion

Conclusion
This is not going to be an easy year to find a job but there are some
promising signs
It looks as though there will be a reasonable number of internships
and the banks say they want to convert them into full-time jobs for the
students who impress
Full-time Jobs in the Investment Banks are certainly down on the
peak recruitment years but they definitely exist
There are signs that the Public Sector banks, smaller brokers and
commercial banks will be picking up some of the slack
More than ever, you will need to be convincing in your presentation
and your interview

Careers in Banking and Finance Outside The Investment Banks

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Careers in Banking and Finance outside

the Investment Banks

© Patrick Fearon 2012

Part One What is Investment Banking?

Part Two Careers in Banking and Finance outside of

9 Opportunities outside IB 2012 © Patrick Fearon 2012

10 Opportunities outside IB 2012 © Patrick Fearon 2012

Why you might look at a career outside of Investment Banking

11 Opportunities outside IB 2012 © Patrick Fearon 2012

What careers are available to graduates in Banking and Finance

12 Opportunities outside IB 2012 © Patrick Fearon 2012

You do not have to work in an Investment

13 Opportunities outside IB 2012 © Patrick Fearon 2012

14 Opportunities outside IB 2012 © Patrick Fearon 2012

Investment Banks are difficult to get into

15 Opportunities outside IB 2012 © Patrick Fearon 2012

Sales & Trading

16 Opportunities outside IB 2012 © Patrick Fearon 2012

As a new product matures, different banks are involved in trading and

New product Product is sold Product is traded Product is traded Product is

17 Opportunities outside IB 2012 © Patrick Fearon 2012

18 Opportunities outside IB 2012 © Patrick Fearon 2012

Small Trading companies like Optiver

19 Opportunities outside IB 2012 © Patrick Fearon 2012

In addition to the Analysis of traded instruments

20 Opportunities outside IB 2012 © Patrick Fearon 2012

21 Opportunities outside IB 2012 © Patrick Fearon 2012

22 Opportunities outside IB 2012 © Patrick Fearon 2012

There are some obvious names like

23 © Patrick Fearon 2012

Phase 1: The board of a company reviews the company’s strategic plan

The board would work with a management consultancy company like:

24 Opportunities outside IB 2012 © Patrick Fearon 2012

That’s when the board talks to Corporate Financiers

The skills needed are similar to those required by an Investment

25 Opportunities outside IB 2012 © Patrick Fearon 2012

European M&A League Tables 2011 Ranked by Value,

Number of Average deal

2. Morgan Stanley 278 168 1.7

3. JP Morgan 229 135 1.7

4 Credit Suisse 211 132 1.6

5. Deutsche Bank 193 123 1.6

26 Opportunities outside IB 2012 © Patrick Fearon 2012

European M&A League Tables 2011: Ranked by Number of Deals

Number of Average deal

2. PriceWaterhouseCoopers 4.2 161 26.1

3. Rothschild 12.3 152 80.9

4. Ernst & Young 4.5 140 32.1

5 .IMAP 0.9 124 7.3

6. BDO International 2.2 99 22.2

These range from the international:

28 Opportunities outside IB 2012 © Patrick Fearon 2012

Equity & Fixed Income issuance is dominated by the Investment

But not Acquisition Finance which is provided by

29 Opportunities outside IB 2012 © Patrick Fearon 2012

MANDATED ARRANGER Volume €billion # of issues

1 JP Morgan 224.5 107

2 Bank of America Merrill Lynch 218.1 144

3 BNP Paribas 201.3 85

5 Barclays Capital 163.8 59

6 Mitsubishi UFJ 149.5 53

8 Deutsche Bank 135.5 40

9 SG Corporate & IB 125.5 28