Prerequisites to build a career in investment banking?

Prerequisites to build a career in investment banking?

What are the prerequisites to build a career in investment banking?

Banking has various divisions and investment banking is one specific division that is related to creating capital for entities, companies, and the government. The investment banks help underwrite new equity and debt for all types of corporations, selling securities, facilitating mergers and acquisitions, broker trades and reorganization for both private investors and institutions alike. These banks provide assistance to issuers for stock placement. Detailing out the worth of a company, structuring the best deals in case the client is thinking of an acquisition, sale or merger, documentation for a company to become public as per the Securities and Exchange Commission are a few important things included in investment banking. A few popular names in the investment banking division are Morgan Stanley, Goldman Sachs, Bank of America, Merrill Lynch, JPMorgan Chase, and Deutsche Bank who assist in complex financial transactions. This may include advice as to how much a company is worth and how best to structure a deal if the investment banker’s client has decided to acquire, merge or sell. It may also include issuing securities as a means of raising money for the client groups, equity research, and creating the documentation for the Securities and Exchange Board of India (SEBI) necessary for a company to go public.

Role of investment bankers

In the realm of investment banking, bankers are employed to help governments, corporations, and other groups to manage big projects, save client money and time through risk analysis even before the commencement of the project. Therefore investment bankers are experts who have the pulse of the prevalent investment/financial climate at their fingertips. This particular acumen makes various organizations and businesses to seek advice and devise their development plan as they alone can customize recommendations to suit the existing state of economic affairs. Most importantly, investment bankers act as middlemen between the investor and the company when the company wants to issue bonds or stock. The banker assists with pricing financial tools to maximize the revenue and meeting the regulatory requirements. Wfhen a company holds its initial public offering (IPO), the bank will buy all or most of the company’s shares directly and sell it in the market as a proxy for the company. This makes it easy for the company as they contract the IPO to this investment bank which does the rest of the work.

Career options and path for investment bankers

Career options for investment bankers include top level investment banks, organizations involved in bond-trading, middle market or regional investment banks, small specialist firms trading firms, Private Equity, Equity Research (Buy-Side and Sell-Side), Hedge Funds, Asset Management, technical analysis or program trading, capital markets, Government, etc.

In the above mentioned organizations, the path for investment bankers follows a fairly standard path:

  • Analyst

  • Associate

  • VP

  • Director

  • Managing Director


Pre-requisites for becoming an investment banker

To be able to hold good positions in the industry and have a fruitful career, it is necessary to be a certified investment banker. One should be professionally certified by doing courses like Diploma in Investment Banking and Equity Research, PG and PG Programme in Security Analysis, Portfolio Management and Investment Banking, MBA in Investment Banking, Post Graduate Diploma in Global Investment, Post Graduate Diploma in Investment and Business Research etc.

These certifications can be done from  CFA, USA, IIM, Ahmedabad (IIM-A), IIM, Kolkata, Indian School of Business (ISB), The School of Investment Banking (SIB), Mumbai to name a popular few. Apart from these typically courses, one can also obtain certifications from NISM and become a portfolio manager, research analyst, investment advisor, etc. The NISM courses are a correct blend of the latest tools and technical know-how allowing successful candidates to pursue their dreams.

It is not enough to receive certifications from the best of institutions when one lacks the basic skills to become a successful investment banker. To have a successful career and become an investment banker one essentially needs to have a complete understanding of the industry, manage large inventories, combine accounting and legal expertise, have an analytical bent of mind, be dexterous with numbers and demonstrate integrity, attitude and authenticity.