Investment Banking Job Description In Plain English

It’s funny to see how people look at the investment banking job description and get more confused: so, what do you guys do, really?  Here is my attempt to answer the question in plain English.

Investment Banking Job Description Decoded

Investment banks help corporations and governments to improve their way of using and managing money.

These banks have 2 main roles:

1. Capital Raising

Investment banks assist their clients to raise money through stock or bond offerings. The proceeds can be used for expansion, new investments or repay old and expensive debts. Alternatively, i-banks can help companies spend idle cash by buying back stock/debt at a good price.

2. Advisory

Investment banks advise their clients on certain strategic moves such as buying or selling a business, and restructuring business lines to improve profitability. In many cases the strategic move (e.g. acquisition) requires concurrent capital raising exercise described above.

This is what bankers do in boutique investment bank; but for large global banks they have two additional divisions that work closely together.

Investment Banking Job Description In Full-Serviced Firms

1. Corporate finance (or simply known as Investment Banking)

• Responsible for the Capital Raising and Advisory work mentioned above.
• To get a more tangible idea of what corporate finance analyst does in daily life, please click here.

2. Sales and Trading:

• Responsible for buying and selling financial products for their Institutional clients (mostly hedge funds, pension funds and other mutual funds) to earn the spread (difference between the buying and selling price) and commission.
• Financial products include plain-vanilla stocks and bonds, together with convertible bonds, high yield bond and other fixed-income products, foreign currencies, commodities, and derivatives (structured products).
• This division also works hand-in-hand with Corporate Finance in stock / bond offerings because their Institutional Sales Team is responsible for promoting these stock/bond to their clients.
• A few big Investment Banks have Proprietary Desk which uses the firm’s own money to buy and sell financial products — this is a high risk high reward business that can bring glory or demise to the firm. Since the financial crisis most banks have either closed or substantially downsized their proprietary trading business but Goldman remains the best of the best in this trade.

3. Research

• Responsible for tracking and writing research reports and make buy/hold/sell recommendations to the Institutional clients.
• This is not a revenue-generating division but is an important one to keep the clients in the Sales and Trading department happy.
• Also, the research reports are useful tools for the bankers in Corporate Finance to talk to their clients and show how much the i-bank as a whole care about them (especially if it is recommending a buy rating).
• As you see there are potential conflicts between Corporate Finance and Research and there must be procedure known as the “Chinese Wall” in place to separate the two.

Other Opportunities Within The Bank

Other than these 3 divisions, a full-serviced Investment Bank has other front-office operations such as private wealth management, fund management, private equity and they might even have full-blown retail banking arm (e.g. Citibank).

An investment bank also has middle and back-office operations such as credit, treasury, operations, risk management, financial control, internal audit, IT, HR, legal,tax and strategic planning departments.

A Word From Stephanie

As you can see the opportunities in an Investment Bank are not limited to the Investment Banking division:

• Eager to work in an intense environment? Go for Sales and trading.
• Wanna train your analytical skill? Research and the credit department might be good for you.
• Or if you simply want a stable job with good benefits, risk management, internal audit, financial control and treasury are excellent choices.

Please take your time to talk to recruiters or your contact in the industry to find out the best career for you. You can also ask a question in the comment section and I will try my very best to get the answer for you.

But Wait… This Job Description Shouldn’t Lead To The Huge Pay That You Guys Are Getting

Yes, another very frequently asked question. Please find my other interpretation on the investment banking job description. Let’s see if you can figure this out over there…

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* Illustration courtesy of Hiking Artist