[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.
Tag: Investment Banking
The Most Bizarre Questions That Investment Banks Asked This Year
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
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.
Working in a Boutique vs a Bulge Bracket Investment Banking Firm
There has been a lot of news in the media recently about how investment banking fees are at an all-time low and how those multi-million dollar bonuses are about to take a beating. But recently the Financial Times noted how boutique banks like Evercore and Moelis are doing well, and are attracting a great deal of interest.
Firms like Centerview and Moelis have even broken into the top 20 fee earners. But what are boutiques? What is it like working for one and where can you possibly go?
What are boutiques?
Boutiques are independent investment banks that have often been created by senior investment bankers. Houlihan Lokey, the largest boutique in the world, was created by ex-banker Scott Adelson. They often play on the founder’s strength, industry vertical specialization or regional focus, and focus primarily on deal advisory – M&A, Capital raising both in the public and private markets, restructuring and corporate finance.
Boutique banks call themselves independent and without conflict. Essentially this means because they focus only on advisory, there are no conflicts with regard to public trading. So they will never be in a position where they might be advising company A on sale while another department trades that stock.
Boutique structure
They are often top heavy, filled with rainmakers and senior bankers and feature a flat organizational structure. What does that mean? That means as an analyst you are going to work very hard but also gain more exposure while you put in the hours.
Analysts and associates are treated like resources, which are farmed out to deals. In a bulge bracket, it’s quite likely you will spend all your time creating pitches. In a boutique however, because of the flat structure, you might even be asked to come into meetings, be part of the execution and learn something.
An investment banking deal is made up of four parts- Origination, Execution (Marketing) and Execution (Negotiation) and Closing. A bulge bracket is often divided by Origination and Execution, which means you are either going to be making pitches or information memorandums.
At a boutique, industry specialists often divide teams and so if you belong to one team, you will find yourself doing work across the deal process, which means you learn more. Pay is also a little different. Boutiques pay less at the entry level but your potential to earn gets higher closer to the top because bonuses become a large part of your pay structure.
Close a deal and you earn a significant portion of the bonus pool, which is of course spread across a smaller base than at a bulge bracket. You might earn more at a bulge bracket but you will learn less.
How about career progression?
Since they are flat structures with fewer options in terms of departments, there’s much less bureaucracy and more transparency with regards to promotions. But because there are fewer departments and not that many levels, there’s not that far you can go. But that doesn’t matter.
Associates and VP’s in boutiques can often be seen heading to bulge brackets if they don’t find proper career progression at their old firm. Because of their intensive deal experience, they are quickly absorbed into both Private Equity and Bulge Bracket investment banking teams both in the Equity Capital Market and Corporate Advisory.
What are India’s top boutique banks?
Avendus Capital, MAPE, Veda Corporate Advisors, O3 Capital, Spark Capital, Dinodia. You also have global boutiques like Lazard, Moelis and Co and Houghlin Lokey.
The Benefits of a CISI Certification with Imarticus Learning
The Chartered Institute for Securities and Investments is considered to be the leading professional body, globally, for securities, investment, wealth and financial planning professionals. Founded in the year 1992 by the London Stock Exchange, today, it has taken up the role of a global community, spanning around 116 countries and boasting of about 40,000 members. It was conferred the title of ‘Chartered Institute of Securities and Investment’ in the year 2009 when it was granted a Royal Charter. Headquartered in London, this global professional body has its offices spread over various countries, including Sri Lanka, India, Singapore, Dubai, and Dublin.
This professional body is known to offer close to 40,000 CISI qualifications every year in around 70 countries, to qualify for which candidates have to take the Computer Based Test in the various centres worldwide. Apart from this, it is also the chief examining body in the industry and thereby, offers a number of industry memberships and training to the qualifying candidates. Apart from offering qualifications, the CISI is also known to offer, the CPD scheme, also known as, Continuing Professional Development scheme, which is basically rewarded to the members of, every level of seniority, geographical location, as well as industry specialization. The institute is known to have certain charitable objectives, which are as follows;
“To promote, for the public benefit, the advancement and dissemination of knowledge in the field of securities and investments to develop high ethical standards for practitioners in securities and investments and to promote such standards in the UK and overseas to act as an authoritative body for the purpose of consultation and research in matters of education or public interest concerning investment in securities.”
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Being a member of this prestigious organization, sends out a message to all your clients and colleagues, including the wider public, that you as a professional, are committed to professionalism, integrity, and excellence. Becoming a CISI endorsed member is the most beneficial in terms of networking for a professional. One can easily access the international network of 40,000 financial practitioners.
Apart from this, the CISI body organizes a number of formal mixers, like forums, events, and other social media activities, which involve and encourage their members to build an array of networks and connections, with similar professionals from across the country. Any professional who is affiliated by the designations of CISI can meet up and keep abreast with the current happenings in the financial markets, while at the same time can also discuss them, with the top level delegates from across the world at any given point. The CISI body also offers a number of training courses apart from its social events and conferences. In order to get an entry into this elite bunch of people, one has to acquire the much coveted CISI certification.
International Certification & Placement You will receive the industry endorsed Certified Investment Banking Operations Professional (CIBOP) certification and the optional CISI certified IOC (Investment Operations Certificate). The Imarticus Learning Career Services and Placements team provides you guidance and assistance throughout the program, giving you the best career opportunities in leading international firms.
Why A Career In Investment Banking Would Be The Best Decision For You?
A lot of graduates today, decide to pursue higher studies, so as to ensure that they are able to get into the career of their choice. This is the age where just having a generalized degree, does not seemingly cut it.
This has given birth to a whole new aspect of specialization in the society, only those who have specific additional degrees, get the opportunity to kick start their career well. As specialization study, becomes the popular choice there are an array of courses to choose from. The same applies to the field of finance.
Investment Banking has increasingly become a popular career choice and there are a number of esteemed institutions, Imarticus Learning, offer courses in various branches of finance and ensure that your career choice, is the best decision that you would make.
We at Imarticus learning as an institute are instrumental in ensuring that candidates get a slight edge over the other qualified professionals in the field of Investment Banking.
Investment Banking is known to be a very prestigious, competitive field, where the number of qualified candidates, greatly exceeds the job openings. This is the reason why taking up a specialization course makes more sense, because that way you get trained according to the industry standards, thus ensuring that you get the perfect kind of start in this landscape.
Once you have narrowed down on a career and begun your journey towards its, there are a lot of indicators that prove it as the best decision. First of these indicators, would be the fact that you actually possess the perfect combination of academic as well as industry skills. Imarticus Learning ensure, that you develop certain skills, to supplement your academic knowledge, which would serve you at various junctures in your career.
Apart from having the right skill set, various other indicators like having the right kind of connections and contacts, being goal oriented, driven and extremely dedicated towards your work, willing to work a more than 100 hour week and closing high value deals, all of these ensure your entry into the very fabled world of investment banking.
This is one of those careers where if you posses the right kind of skills, nothing can stop you from being on top of your game, all the time. It is a field which not only pushes your limits, but also rewards you very generously. Especially when it comes to salary packages, Investment Banking professionals get the best signing bonuses, hikes and other monetary luxuries, as compared to their peers.
Professionals here argue that it was their best decision, because their time literally is worth every single paisa that they earn. From working long hours, to having mind numbing deadlines, anything and everything seems fine here, mainly because of the sterling rewards that an Investment Banker receives.
It is common knowledge that Investment Bankers, usually make much more than their peers and also receive greater recognition for their hard-work. While some of the professionals here are pure geniuses, others are able to achieve the same through perseverance and the help of esteemed, Imarticus Learning, help ensure they are thoroughly ready to achieve their dreams.
Confused Between Model Building Approach Historical Simulation? Things To Consider!
If you consider Basel II, there are two ways of calculating Market Risks VAR:
• Historical Simulation Approach
• Model Building Approach
What makes them different?
Historical Simulation approach is most frequently used by organisations. As the name suggests, we consider daily changes in past/historical values to compute the likelihood of the variations in values of current portfolio between given time frame. The other advanced version of this model places more emphasis on recent observations. The key assumption in historical simulation is that the set of possible future outcomes is fully represented by what occurred in a definite historical time frame/window.
On the other side, model-building approach involves assumptions about the joint probability distributions of the returns on the market variables. This model is also known as variance-covariance approach.
This is more apt for portfolios which has short as well as long positions in their bucket. This consists of commodities, bonds, equities, etc. in the portfolio. Here, the mean and standard deviation are computed from the distribution of the underlying assets returns and the correlation between them.
Daily returns on the investments are normally assumed to be multivariate normal which can be the models biggest drawback. Hence, model-building approach makes it easy to calculate Var.
Model Building approach assumes two things:
• The daily change in the value of a portfolio is linearly related to the daily returns from market variables
• The returns from the market variables are normally distributed
Shortcomings of Historical Simulations
Over reliance on past data can fail to serve the purpose as markets change every moment. The momentum can be gradual or sudden, but does not remain static.
Large number of factors like Technology, regulatory changes, economic conditions, seasonal patterns, etc. influence market and in such scenarios manager who are using historical simulation can face unfavorable situation.
Shortcomings of Model Building Approach
Also this approach is much more complex to use when a portfolio comprises of nonlinear products such as options. It is also a grim task to relax the assumption that returns are normal without a significant increase in totaling time.
When to use? Model building vs. Historical simulation.
Depending on the situation, appropriate model should be adopted by the organisation. While both of them have pros and cons, it is important to list down the objectives of risk model before adopting either of them.
Model building approach producer quicker results and can be used in conjunction with volatility and other correlation procedures.
The advantage of the historical simulation approach is that the joint probability distribution of the market variables is determined by historical data. This approach may not be very complicated however, it is little slow for computation. However, the methodology used in historical simulation is in line the risk factor and does not involve any estimation of variances or covariance’s which are statistical parameters.
One should use historical simulation model only when they have data on all risk factors over a justified historical period if they want the model to depict strong representation of the outcome in future.
To know more about model building join Imarticus Learning’s Financial Modeling Certification Courses, which will help you understanding opportunities in the Investment Banking, Private Equity, Budgeting and Financial Control space.
Introduction to Capital Market
What Are Capital Markets?
Capital markets basically deal with stocks and bonds in general. In simple words, any firm is it private or government, is always in need of funds, so as to finance its various operations to achieve certain long-term goals. Thus every firm is supposed to acquire these very funds or capital; for which, it sells stocks and bonds. These stocks and bonds are basically like shares, all of which are in the companies name. For instance, when the government of any country, issues what are known as treasury bonds, it basically is tapping into the capital markets, thereby generating capital.
This process is basically known as the IPO or Initial Public Offering. Capital Markets are largely divided into two types, the primary markets, and secondary markets. The companies and governments sell their securities in the primary market, whereas the investors trade with these securities in what is known as the secondary markets. Thus, it is safe to say that the capital markets are an important area of the finance industry.
These markets are more like the foundations on the basis of which, various companies and governments are able to invest in businesses, generate employment as well as better infrastructure. One of the core responsibilities of any capital market includes getting the people who are looking to invest, in contact with those looking for capital. Put so simply, this sounds like a very easy task to do, but in reality, a lot of professionals, perform this high-pressure task, to get the desired results.
The private companies look to raise capitals for various reasons, other than just expanding their businesses. They could be looking to finance start-up business ventures, or to battle with the sudden decline in the turnover, or for buying out the competition. While it may seem like it is only those very companies, which are profited from this whole business, it is not so. The very reason someone would want to provide capital is that that person would be looking to gain profit from their financing efforts.
A lot of people know of capital markets as stock exchanges. These are places where anyone can invest and are more commonly known as the public markets. This is where the Initial Public Offering takes place, which is the first time when any firm, comes out into the public to sell their securities. The next step where securities are bought and sold by investors is known as secondary markets, as spoken about earlier.
These secondary markets take place, subsequently after the primary market proceedings are over. Just as there are public markets, there also exist the lesser-known private markets, which are also known as exempt markets. These can be called as more lenient as compared to the public markets, primarily because there are no regulations to be met. Also, this is seen as a more cost-effective way for companies to fund their financing needs.
Thus the arena of capital markets has come to garner more attention by a lot of people, which is why candidates look for programs, which can make them proficient in the inner workings of capital markets. Imarticus Learning one of the best education institute in India offers industry-endorsed courses in capital markets, finance, and investment banking.
Banking Domain Primer
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.
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.
Education Gets a Virtual Upgrade
India as a country has always been lauded for the educational geniuses it is known to churn out. We have a number of highbrow intellectuals, working in the most sophisticated of places, both in the country and abroad to prove the same. This seems to be the result of the efficient concoction, of the importance given to education and the corresponding mushrooming of classes for every sub field. While the upside has extremely lucrative careers, magnificent laurels throughout, the downside to it is the very popular, single degree disdain syndrome and the crude commercialization of business.
The fear of getting stuck in a dead end job and the anxiety that comes attached to it is pushing the youth today towards this new herd mentality. The job market is gradually transforming into a place where the most polished CV is able to bid for the most lucrative, high reaching job of them all. Students, today feel the pressing need to upgrade their resume by opting for courses, providing them with multiple degrees, thus bringing them one step closer to that dream job. Because of this, there are scores and scores of students checking out various master degree courses, attempting multiple advanced aptitude tests at once, to acquire that seat in a prestigious college.
For colleges, it seems to be a win-win kind of situation as they not only charge these master degree courses exorbitantly, but also give themselves a very formidable reputation by setting the cut off to a grade, and quite high might we add, which would only allow students with extraordinary educational skills.
Digitalization has taken the whole world by storm lately and no field, including the field of education has been spared. Earlier it was just at a primary level, where students would prefer the virtual world to their school or college libraries, for skill enhancement, when it came to delivering exceptional projects. There have been numerous debates, which have gone to expose the simplest of differences among the simple way of teaching and learning online. With many trendy ways of learning online springing up daily, the industry of virtual learning has surely seen a bloom. Education online is no longer confined to just innovative videos, but there has also been a huge breakthrough, which would take higher education to new heights. With prestigious universities offering online masters and post graduate courses, nothing has changed in terms of the fees. These institutes going online and being comparatively more effective does not reflect in a more useful offering.
The scenario is also changing quite a bit on the home front in India, with many institutes offering similar courses online, all over the country. Imarticus Learning is an education institute, with the goal to bridge the gap between academics and industry. They have been making efforts to provide courses, which are not only industry endorsed but are also driven by professionals, with considerable experience from the field of finance and analytics. Their exceptional online programs, have experienced quite a bit of success, the highlight of which are the live webinars conducted by instructors. These most popular of their online courses are the Certified Financial Modelling & Valuation course, Certification in SAS and R Programming. Imarticus is a cut above the rest due to the fact, these online courses provide every bit the similar training a mainstream classroom course would. This allows students to choose their method of studying finance courses such as Financial Modeling & Valuation or Investment Banking, or analytics courses such as SAS & R Programming or Data Science. Imarticus is looking at expanding more of their popular classroom programs to the online platform.
The candidates can take these course while they are working, and pace it according to their own. Their online courses also let the candidates avail the services of a 24×7 online portal and take the benefit of career guidance from the best in the industry. These comprehensive, short term programs, which equip candidates with the necessary skill set for careers in fields such as Data Science, Data Analytics, Investment Banking, and Equity and so on. These programs are one such example of successful career solutions for a changing world, perfectly designed to bridge the gap between quality education and affordability.