Are You Ready For the Challenge?

Investment Banking is one of the most exciting, rewarding and enriching professional fields today. Investment banking is also quite a diverse business and there can be several different departments in any one bank.

Underwriting: banks determine and guarantee the issue price of a new corporate security. This might be a stock or bond issue. An investment house advises the client, determines a price, announces the issue and sells it. In the U.S. commercial banks are barred from underwriting functions due to a 1933 Banking Act known as Glass-Steagall.

Private Investing or Placement: the bank sells corporate equity or debt on a non-public basis to large, market-aware, sophisticated investors. The bank's client will usually be a private company that needs to raise capital. The bank often just advises and obtains financing at most favourable terms, but its function may include evaluating the capital requirements of its client, analysing the private market, establishing the structure and prices of offerings, targetting potential investors and negotiating transactions to get the best price.

Mergers and Acquisitions: the bank helps its clients buy other, or sell their, companies. The client company may want to sell an unprofitable division, expand by buying another's division, merge with another company, or defend themselves against a buyout or takeover, in order to make themselves more competitive.

Merchant Banking: the bank advises, analyses, negotiates and finances mergers and acquisitions of, its clients. It may also invest in a deal, becoming a shareholder with its client.

Real Estate Financing: the bank constructs financial deals to satisfy the buyer and seller of proerty. Bankers evaluate and analyze the property, target buyers or sellers and develop customized finaning schemes.

Sales and Trading: Equity salesmen work with clients to reach the best investment decisions; they sell the bank's underwritten securities and other securities the bank holds on its books. In the US this might include common and preferred stock, options, and international stock. Fixed income is the area that includes corporate and municipal bonds, CDs, and money markets, among many others. One popular offering in the eighties was junk bonds.

Traders, basically, trade. This person has the responsibility of obtaining the best possible price on securities he or she thinks the firm should buy or ones its clients want. Traders sell and buy futures, currencies, precious metals and commodities.

In the diverse financial services sector Retail Brokerage and Venture capital play a significant role. Investment Banking is not limited to these areas; there are many functions banks perform, and they vary from firm to firm, and country to country.

In entry level positions, such as Equity Research Analyst or Financial Analyst in the US, expect to work long, real long hours. Expect to be continually challenged, both physically and mentally. The expectations place don you are high, but the rewards are commensurate with your skill, dedication and hard work.

Use the Career Forum to find out more about entry positions, and also more about Investment Banking from a variety of people in a variety of firms.

Good luck