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Tag: investment banking certification

How Much Money Do Investment Bankers Make?

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How Much Money Do Investment Bankers Make?

Investment banking is a lucrative, yet demanding career path which requires hard work, good attitude and excellent communication skills. Read onto find out the biggest perks of this career.
Investment banking is an envied coveted industry that many aspire for.  It holds a status symbol in the society and investment bankers earn the respect of their peers and neighbors.  You may be wondering why this job is so valued. This is mainly since it is a high risk, high return kind of an opportunity. A career in investment banking is lucrative from the start and builds up to ensure that individuals in the field can lead a luxurious lifestyle.
Many companies also provide their employees in finance with an opportunity to learn and understand the field of investment banking better by pursuing investment banking training.  This, in turn, will also help the company evaluate the decisions made by bankers to raise funds for their business. Individuals who work in their field need to have qualities such as charisma, grit and quick thinking.  Investment banking also requires dedication and ability to cope with a high-pressure work environment.

Even beginners who have completed an investment banking course can expect salaries of 50,000 dollars in the U.S. making it a big career for many. On the downside though, there is a huge demand to invest long working hours to achieve success in the field.
While the hours are long, the base fee that investment bankers start at ranges between 25-35$ per hour but it also entirely depends on the firm that they work for on Wall Street. Read onto to find out the different elements of the money that investment bankers make.
In their 20s
If an individual has started their career in investment banking in their early 20s, this is the time that requires the most amount of time and dedication to learning the tricks of the trade. Typically, investment bankers spend between 60-100 hours per week at work and can earn up to 100,000$ annually not counting the bonus depending on their work. The entry level role for an investment banker is that of an analyst and this predominantly deals with a lot of paperwork.
In their 30s 
As they progress, the next role in question for investment bankers in that of an Associate who can earn anywhere between 100,000-120,000$ per annum. A talented young analyst can also aspire for the role of an associate at the beginning of their career and earn a big pay cheque. The salaries are also completely dependent upon the ranking of the firm, the clients and size of the firm.
In their 40s 
Someone who has moved up the ladder in investment banking can aspire to be a Vice President or a Director in their late 30s to early 40s. Their pay cheques can range between 120,000 to 300,000 $ or for someone very senior it can be up to a million dollars. Investment bankers are well paid mainly since they are responsible for making or breaking a company and its business and their skill-set is very niche.
Conclusion
A lucrative career path, investment banking may demand long working hours, quick thinking in a stressful situation and more. However, the results can be deeply rewarding to individuals who pursue the same.

Career Benefits from Investment Banking Boot Camps And Modeling And Valuation Courses

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Investment banking is one of the hottest careers available right now. It offers high salaries and an exciting career dealing with corporate acquisitions and mergers. Investment bankers help corporations and companies raise funds for different opportunities and walk them through dealings with other companies. Becoming a successful investment banker involves a fundamental and intimate knowledge of financial systems and products, operational challenges, and regulatory requirements.
If you are thinking about making the transition to investment banking, you might be wondering about the value of the multitude of investment banking courses available and their impact on your career. These courses come in all shapes and forms, and you have to check their offerings in order to match it to your expectations. Here are a few things you must keep in mind when going for investment banking training. One of the first things you will want to check is if the course you are interested in is an investment banking certification. Not all investment banking courses give you a certification, and not all of the certified ones are industry recognized. Some of the courses will prepare you to take industry certification exams, but you need to make sure that it is an exam that is valid or recognized in the region you want to work.

Make sure that you research the tutors as they are very important in regards to what you learn. Ideally, they should be industry experts and should provide knowledge that they are familiar with. Once you know the instructor, you will be able to understand the scope and direction of the course. Some courses provide general knowledge about investment banking while other courses focus on exploring concepts in detail.
Now that you know what to look for in investment banking courses, you need to understand how they can help your career. One of the most important things a course will give you is finance related knowledge. Depending on your previous knowledge and the course you pick, you will learn concepts of business valuations, debt securities, capital markets, cash equities, money markets, derivatives markets, and deal structuring.

A good course will incorporate experiential learning through live case studies along with classroom training. This will give you the ability to apply all the concepts you have learned and made you a more valuable employee.
One of the most important things your course should cover is the interview process and how to ace it.   Apart from knowing your concepts, you should also stay up to date with financial news and corporations. A good course will conduct mock interviews and give you valuable feedback on how to improve your interviewing skills. A major hurdle most interested candidates face is the interview portion where they find themselves unable to convey why they are good hires.
The bottom line is that there are plenty of courses and opportunities to improve your knowledge available to those interested in investment banking. It is important that you do your due diligence and research these courses and the companies that offer the course. Do not fall for any claims of 100% placements. These courses are viewed as something that adds value to an already strong CV, and you should focus on your primary education first before looking into a certification course in investment banking.

What Is An Investment Bank?

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Believe it or not, even investment bankers find it difficult to describe what exactly investment banks do! This has to do with the sheer complexity and enormity of the financial transactions involved.

In simple words, an investment bank is an intermediary between organizations such as ABC Steel that need money and individuals and institutions that need to invest. Broadly speaking, an investment bank is an institution that:

– Helps organizations or governments to raise money by issuing and selling securities such as stocks and bonds

– Provides a range of advisory services on complex transactions such as mergers and acquisitions

– Offers a range of structured products and services to institutional and individual investors to help them manage their assets and wealth

Role of an Investment Bank

Investment banks could play different roles in a financial transaction. Some of the most common roles played by them are:

– Underwriter
– Principal Trader
– Broker or Agent
– Prime Broker
– Advisor

Underwriter

As an underwriter, an investment bank purchases all new securities of a company and resells them to the public. For example, ABC issues 20,000,000 shares for $10 each. An investment bank directly purchases all these shares from ABC and sells it to the public at a higher price, say $15 each. The investment bank also bears the cost of the sale.

Principal Trader

As a principal trader, an investment bank buys shares from other investment banks and investors and keeps them in its inventory. It may sell these shares at a higher price in the future. The term ‘principal trading’ simply means that the trader of securities is also its owner or principal.
For example, after ABC Steel’s shares are sold to the public, an investment bank may purchase some of these shares from the market. It may sell these shares later when the price rises.

Broker or Agent

As an agent or broker, an investment bank buys and sells securities on behalf of a company. The key here is that the investment bank does not own these securities. It only trades in them for a commission.
The important thing to remember here is that the brokerage or agency represents buyers or sellers who are the principals or owners of the securities.

Prime Broker

A prime broker offers a range of services to professional investors, including:
– Administrative and operational support for trading
– Lending of securities
– Management and safeguarding of securities
– Financing
Without a prime broker, it would be difficult for professional investors to trade with several different brokers and manage their cash and securities from one centralized account.

Advisor

Investment banks provide a range of advisory services on complex transactions such as mergers and acquisitions. They also advise companies on the different options to raise capital. They provide high net-worth individuals with customized wealth management services.
Learn about Careers in Investment Banking by attending one of our complimentary counseling sessions.

Industry Report: Investments and Developments Part – II

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[Read Part 1]
This report analysis would be mainly dealing with all the key investments and developments in Indian banking sector.
Starting from the basic, central level, the RBL Bank Limited, a private sector bank in India, has reportedly raised about Rs. 330 crore as a result of their association with CDC Group Plc. This is a UK based financial development institution and will be helping the RBL bank, to strengthen their capital base, in order to meet their future needs.
The World Bank has reportedly signed an agreement with The State Bank of India, which is worth Rs. 4200 crore. This agreement basically deals with connecting all the solar rooftop projects in India, which are also known as GRPV, and will be receiving financing as a part of this agreement.
JP Morgan Chase, which is considered to be the largest bank in America, has been in talks of expanding their operations in India. They have gotten a head start on the same, with three new branches in, Delhi, Bangalore and Chennai which will be an addition to the current branch in Mumbai.
An investment management company, known as the Canada Pension Plan, has reportedly bought a large stake, which it bought away from a Japan based, banking corporation called Sumitro Mitsui. These said stakes were in Kotak Mahindra Bank Ltd.
India’s very first small finance bank, began its operations by launching about ten branches in the state of Punjab. The Capital Small Finance Bank as it is officially known aims at increasing the number of its branches to about twenty nine, in the current financial year of 2016-17.
Taking a step towards making India, as cashless economy, an e-wallet company, Freecharge, has partnered with Yes Bank and Mastercard. This partnership is in order to launch a new concept of Freecharge Go. This would be a virtual card, with the help of which consumers can pay for goods and services, at online shops as well as offline retailers.
This year, the economy of India would be majorly targeting at being self-sufficient and in the lieu of the same, te government of Andhra Pradesh has signed a Memorandum of Understanding (MoU) with Exim Bank of India, in order to promote exports within this state.
Moody’s, a Global Rating Agency, seems to have upgraded its outlook towards the Indian Banking System. This move is to stabilize its negative based on the assessments of about five drivers, which include improvement in operating environment, stable asset risk and capital scenario.
Rockefeller Foundation, a non-profit organization based out of America, has backed a private Equity Investor known as Lok Capital. This investor has a plan of investing up to USD 15 million in a couple of proposed small finance banks in India, over the period of next year.
The RBI, has reportedly given in principal approval, to about 11 applications, which were in favour of establishing payment banks. These banks may accept deposits, but they are to refrain from extending any loans.
With the chances of the economy and the cash inflow looking bright, the banking and investment industry shows great promise for aspirants.

The Most Bizarre Questions That Investment Banks Asked This Year

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We are all aware about the road to a great career in Investment Banking isn’t complete without the biggest roadblock, which is the interviews. For any freshly minted candidate, there always is a string of common run of the mill questions revolving mainly around their weaknesses, the 5 year plans that they intend to work on and so on. But, what usually catches the candidate off guard, is the list of weird questions. While these questions may be weird and a tad bit scary, they are the absolute crucial determinants, of whether you get that coveted position, or not.
Here’s a list of freakishly weird questions, which some of the top-notch banks asked in the year of 2016:
1. “How would you value a cow using a discounted cash flow (DCF) analysis?”
The above question, as out of the blue as they come, was asked to a potential candidate in an interview round, in London Based Firm last year. While any DCF question, is extremely inevitable in corporate finance interviews, there are those Bovine DCF questions, which are not.
2. “How many pairs of shoes do you expect to wear over your lifetime?”
An interview is absolutely incomplete, without any brain teaser questions, which ensure that your analytical skills undergo a rigorous jog. This was most expectantly one of them. While the internet service engine, Google, might deem such questions as a tad bit irrelevant, all the to banks out there just cannot get enough of these. The above question was reportedly asked in an interview for risk management at Nomura.
3. “What would you do if we gave you 10,000 Euros now?”
If you are a finance aspirant looking to get into the field of investment banking, you would surely be expected to know all there is about Investments. Any bank, regardless of its position, expects the candidates to have some very solid investment ideas in response to questions like these. The above question was asked during an interview wit ICAP.
4. “Who is your best friend?”
This question was asked during the final round of an interview, conducted by Credit Suisse. In their attempt to go beyond the technicalities and mundane aspects, many HR managers try to ask unconventional questions. The above question was asked in a similar vein, in order to know about the candidate, through the eyes of someone, who is close to them.
5. “How would you manage the portfolio of an astronaut that will be isolated from earth for the next 10 years?”
This is another question, in the line of most out-of-the-context yet, relevant questions. This one in particular was asked during an interview about securities at Goldman Sachs and the student who was asked all of these questions said it was the best interview of all times.
As the popularity of Investment Banking, as a field grows, the number of professionals wanting to be a part of this field also multiplies. In order to look for the perfect candidates, these top banks usually end up asking very out of the box questions. To become thoroughly industry endorsed, professionals usually pursue certification training programs, Join Imarticus Learning, here we offer proper training to crack such interviews.

Industry Report: Banking Sector in India Part – I

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This article will be principally dealing with the basic understanding about the banking sector, specifically in India and all the aspects and components of the size of the market. According to the Reserve Bank of India, the banking sector in India is believed to be sufficiently capitalized and well regulated. Recent reports state that the financial and economic conditions in our country, are way better in comparison to the other countries, in the present times. This basically puts the Indian economy, which is considerably stable, against the other alarmingly unstable and equally dysfunctional economies, all over the globe. Studies conducted in various fields like Credit, market and liquidity risk conclude that the banks in India have shown a general tendency, of being resilient and have been able to withstand the global economic turmoil really well.
This may have been a result of the various innovative banking models, for instance, the payments and small finance banks, which have had a positive impact on the Indian banking industry in the recent times. In the financial year of 2015-2016, about 10 small finance banks and around 11 payment banks, have received the principle approval from the central bank. This is a part of the new measures put in place by the Reserve Bank of India, which show great signs of going a long way, in terms of helping in the restructuring of the domestic banking industry. Let’s talk facts and numbers now, in keeping with the same we need to focus on the numeric aspects of the banking units across the country.
Primarily, the Indian banking system is made up of around 26 public sector banks, 25 private sector banks, 43 foreign banks, 56 regional rural banks, 1589 urban cooperative banks and around 93550 rural cooperative banks, in addition to the existing cooperative credit institutions. 80% of the entire market, is supposedly controlled by the public sector banks, thereby evidently a very small share of the market is left in control of the private counterparts. While on the other hand, every bank out there has begun to encourage their customers, in order to manage all of their finances using mobiles phones.
While there have been a number of predictions and assumptions in terms of credit growth, especially with the current banking situation, as well as the Union Budget almost being right around the corner. There are various estimates made, among which the Standard and Poor, have gone on to make the estimates, that the credit growth in the Indian banking sector, is likely to improve to 11-13 per cent in this financial year, that is 2017. This is a great news in terms of growth and progress, from the past three years, when the second half of the year, 2014, showed less than 10 per cent credit growth. As the future prospects of the Indian banking sector seem extremely bright and by extension, so do the job prospects in terms of Corporate Finance, Investment Banking and so on. This is why many finance enthusiasts have begun to turn to professional training institutes like, Imarticus Learning, that help them achieve the perfect career roles.

Banking Domain Primer

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By Zenobia Sethna
The Banking, Financial Services and Insurance (BFSI) sector is the backbone of the Indian economy employing approximately 4.5 million professionals. If you are looking for a career in Finance, you will see vacancies listing “Banking Domain Knowledge” as a requisite. But what does it mean? Banking itself can be of multiple types based on products and services on offer and the type of customers serviced.
For simplicity, one may define banking domain knowledge as the body of knowledge dealing with how different banking segments operate – across customers, sales & distribution, products & services, people, process and technology. This definition basically covers the end to end functioning of any bank.
Investment Banking Course
Let’s take a closer look at the operating model of a bank.
• Banking Segments – Broadly we have four types of banks: retail banks, corporate banks, investment banks and private banks. These are known as Banking segments.
• Clients – These are the customers who buy the bank’s products or services. These may be individuals looking to open a bank account or Institutions or other Banks looking for more corporate solutions or ways to invest their funds.
• Sales and Distribution Channels – This includes how the bank reaches out to its customers to make sales. This could be through emails, phone calls, on the Internet, TV ads etc.
• Products and Services – Products and services are the things the bank sells to customers for a fee. These would vary according to the banking segment. In retail banks, we would have products like deposit accounts and loans.
• People, process and technology – Finally we have the three components that underpin all of the above. These are people, processes and technology. People includes job roles and responsibilities, organization structures; processes define how customer transactions are fulfilled and what procedures to follow, while technology defines the IT infrastructure and systems that support the business.
Imarticus Learning offers many courses on Investment Banking and Retail Banking covering the multi-faceted functioning of these banks and their products and services. Contact us to know more.

Investment Banking – Why do Sellers use an Investment Banker? (I)

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If you looked at the economic times headlines today, you would have read how the Government has shortlisted three Investment Banks, also known as Merchant Banks, to manage the stake sale in the SUUTI portfolio companies. (Source)
This means the government has mandated Citibank, Morgan Stanley, and ICICI Securities, to sell their minority stakes in various listed and unlisted entities on their behalf. What does this mean? And how would the transaction take place? In this post and the next series of posts, we will try and understand how a deal takes place, what happens and what Investment Bankers actually do. These posts will help you prepare for Investment Banking and Corporate Finance interviews as this is a common question. This is part of our interview prep module in our FMVC course at Imarticus Learning, one of India’s leading Financial Modeling and Valuation courses.
Why do they need a banker at all?
I mean after all who knows your company best, you or an outsider. You, of course. And why should you really pay 4 percent of what you get to someone when you could do it yourself. Well Investment Bankers add immense value to a deal and this is why most major transactions use one.

  1. Most companies don’t have the expertise– Investment Bankers bring with them specialized knowledge on how to sell something. How to package a product in a way that showcases it best to optimize value. But how do they know the company well enough to do that? Well, they work very hard to gain both a broad working knowledge of the industry and specific knowledge about the sector. So yes, while you know your company very well, they probably know the industry, your competition, both domestic and international as well as you do and perhaps even better in some cases.
  2. Most companies don’t have the time– Are you going to focus on running the company or selling it. Selling a business is an extremely time consuming process from gathering all the information, to putting it together in one place, to contacting buyers, scheduling meetings, doing site visits and taking care of documentation. It’s also an important job; you can’t just put your EA on it, however good she might be. So do you pull your most efficient person out of their current job, or are you better off hiring someone who does this day in and day out?
  3. Being objective– Value is a very subjective thing. You might believe your company is work x but the market and the buyers might value it at Y.  Because you are too close to the transaction, sellers find it very hard to take an objective view because the value of a company is marred by conflicts and emotions. Yes, finance is a minefield of aspirations, attachments, ambitions, hard work, years of toil and legacy. Less said about inflated egos the better. So having a banker that can assess value from the outside is not just helpful but critical in achieving your objective.

 

Introduction to Investment Management

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What is Investment Management? What does the investment management industry constitute?

The world of finance can be complicated. To simplify for the sake of understanding, let us consider the financial world as broadly constituting of banks – (retail, commercial, and investment), insurance companies, and investment managers.

Banking: Retail and commercial banks are the ones most people are familiar with and are mostly straightforward. They take in money through deposits from customers, other banks, and shareholders. They then distribute this money through credit cards and loans to individuals, companies, and other banks.

Retail and commercial banks make money on the interest charged on these loans. Investment banks on the other hand are more complicated. They allow their clients, which include investment managers, to trade on the financial markets. They also deal with IPO, mergers, and acquisitions.

Insurance: Insurance companies take in money by charging for private and corporate insurance policies, in return for against the unexpected. They in turn are protected from being unable to payout on policy claims by moving money to a reinsurance company and therefore reducing exposure.

Investment Management: Investment managers also known as fund or asset managers do as the name suggests – they manage investments of private investors, corporates, banks, or insurance companies. Investment managers make their clients’ money grow by using investment banks to buy and sell investments.

Let us consider the funds managed by an investment manager as raw material whether in shares, bonds, commodities, or derivatives, and an investment manager as a machine that converts this raw material into a product by using a series of processes. The product is a fund. The goal of the fund is to make money for the investors. Thus, an investment manager uses an investor’s money to make money.

These processes vary greatly and depend on the investment strategy used. E.g.: passive vs. active investment. However, the principle remains the same. The fund aims to make a return by balancing risk and rewards and thus, in a process-driven manner ensures effective mobilization/channeling of its resource i.e. money from investors.

Thus, the players in the investment management industry can be classified into just two broad categories – the investment managers and the investors. Investment occurs directly i.e. investment contracts or more commonly via collective investment schemes. A mutual fund is a type of collective investment scheme. They provide an efficient way of pooling funds for investment purposes.

The Flow of funds in the asset management industry:

*PMS – Portfolio Management Services, AMC – Asset Management Services, WM – Wealth Managers.

What is the Investment Process? What role does the investment manager play? What is the role of portfolio performance measurement in the investment process?

Like any process, the investment process can be broadly classified based on four phases – Plan, Do, Check and Act. Similarly, it is pertinent to note that the investment management process, forming a part of the investment process cannot be improved without performance measurement. The following is an overview of the Investment Process.

From the above, it is clear that for the investment process to be complete it needs to be measured. This measuring of the portfolio performance should preferably be a part of the investment management process itself. In this case, it will contribute to improving the portfolio management process internally and thus contribute to process improvement. On the other hand, performance measurement can be undertaken by the investor as a part of the larger investment process. In this case, the same measures behave as a stricter audit function rather than a must-suited process improvement role.