In this recent blog from Grad Expectations, Rob talks about what is good experience and how important it is to pick the right industry and have the right attitude. A timely piece for some, it may help those of you still looking for work experience before September or for your placement year next year!

Ticket to the Table – A degree is not enough!

A stark reality for many Graduates leaving University is that your degree, whilst something you should be proud of, is still just a ticket to the table. It is the piece of paper that enables you to have a different conversation with organisations. But on its own however, it will not guarantee you a job!

If you degree is just a ticket to the table, you must therefore seek to differentiate yourself from your peers!

How do you differentiate yourself from your peers?

If all the other applicants have the same (or similar) degree to you, you have to differentiate yourself by getting the ‘Right’ Experience!

What is the ‘Right’ Experience?

For me there are two types of ‘Right’ Experience:

1. The Right Industry:

Some jobs will require a certain type of industry specific experience. If this is the case, this is what you’ll need to get, which I know is easier said than done. However, the right industry experience does not always mean getting that experience in that exact industry. What I mean by this, is that many employers when looking for industry experience are really looking for confidence that you know the industry and more importantly the vocation you’re applying for. For example, you can still prove that you understand and apply your marketing expertise if you’re working in a department store. You can do this by proving that by applying your marketing expertise you’ve helped increase sales and customer satisfaction. This approach is what we call ‘transferable experience’, because your proving that you can transfer your expertise from one area into another.

I should say however, that some technical disciplines will need specific experience. This is really a way of them sifting through the very many applications they get. However, don’t be put off by this. My best advice here is really get creative in how you will get this experience e.g. placements, volunteering, shadowing, research etc…

2. Right Attitude:

The right attitude is something that recruiters always look for, but those looking for a job find it hard prove. For me, as a recruiter of Graduates, the right attitude is as follows:

• You prove that you have drive and ambition – you get involved in activities outside of study and working part time. This could be anything from clubs and societies through to volunteering.
• You prove that you can achieve real results – it’s one thing to say that you’re involved in different committees etc, but what are you delivering through them? I always look for proof of what people have achieved rather than just their participation. E.g. increased the membership of a club by 500% in 6 months, makes me take notice.
• You prove that you fit their team – this is by far the most difficult thing to prove, but what all employers are looking for is someone who fits their team. What runs through my head is; Would I like to work with this person? They way you prove this is through the description of who you are, your achievements and your interests. Whilst all of the other experience is great, if we see you as someone that we wouldn’t want on our team – you’ve got no chance!!

A Last Word… The key to getting the right experience is to be creative and strategic. You have to be thinking like an employer – that is, what are they really looking for in their future employees? By doing this you can then start to be more creative in the full range of things you activities you get involved in, and you can be more strategic in making sure that those activities give you the ‘Right’ Experience!

A familiar idea that is frequently discussed on RateMyPlacement; this latest blog from Grad Expectations is all about making the most out of your placement. A timely piece for some, it may help those of you starting your placement year over the coming months to set off on the right foot!

Sitting in the Corner

On Thursday this week an email arrived in my inbox with a spreadsheet attached. In that spreadsheet was a list of all the Graduates and all the placement students in our company. As a Graduate Programme manager I make sure that I know everyone of these people. However, on Thursday as I scanned through this new list I saw a name that hadn’t been there before.

‘That’s interesting,’ I thought to myself as I checked out who this person was on the directory. Under their name it said that they were a Placement Student. Instantly I picked up the phone to find out more. It turned out that this was true, Mark was a placement student who’d been working in the company for the last 8 months. He’d been brought in through one of the ‘alternate routes’ rather than through the central system, which sometimes happens. And it was only now that the standard reports were showing that he ‘existed’.

“So are you planning to apply for a job with our company once you Graduate?” I asked Mark after he told me his story. “Probably,” he replied. “But I haven’t really enjoyed my time here,” he continued. “I don’t really know anyone and all I’ve been doing is sitting in the corner and analysing spreadsheets for the entire time.” ‘Wow,’ I thought, ‘poor guy.’

After setting him up to talk to some other people so he could find something more interesting to do, I wondered why he wasn’t doing more to get the most out of his placement.

Get the most out of your Placement

Generally I see that there are 3 reasons people do a placement:

1. Their course requires them to
2. They want to get the experience to build their CV
3. They want to land a job with that company once they Graduate

Regardless of the reason you’re doing a placement, it is essential that you use the opportunity to the best of your advantage. And, unlike what Mark was doing (i.e. sitting quietly in the corner) this means doing 3 key things:

1. Know what you’re seeking to achieve Whenever you start any new job or project, always think about what you want to get out of it! This doesn’t mean being purely self motivated, but on a placement you have a great opportunity to develop new skills and new contacts. So if you start with clear goals in mind, you can be more focused on achieving them. For example, if you want to get experience in a specific area of work, then make sure you tell your manager this, as they will usually help you achieve it.

With Mark, he had a goal of trying to get a job after Graduation, but I had to ask him to find that out. If he had made his goal explicit, like other placement students, he would have hunted me down and told me what he was trying to achieve, and then I could help him.

So morale of this part of the story is that if people don’t know specifically what you want to achieve during your placement, they can’t help you – you have to have goals, and you have to make these goals known!

2. Build Your Contacts One of the things I find is really common in organisations is that most managers are happy to spend time talking to new people. And more importantly, they’re happy to talk about themselves to new people – managers love talking about themselves!

With this in mind, against the goals of what you want to achieve, make sure you build your contacts. This doesn’t mean you have to be a ‘networking freak’ who cold calls every manager in the business, but I would encourage you to pick out certain managers and schedule some time to buy them a coffee. When you do this, make sure you start the conversation asking them about their current role, their experience and then, any tips they have for being successful. Then talk about yourself and what you’re trying to achieve. Every manager I know (including me!!) loves this because it makes them feel important as they impart their worldy wisdom to help someone, which gives you the perfect opportunity to build your contacts.

As with my statement above, after they’ve talked about themselves, make sure you tell them what you’re trying to achieve. If they don’t know this, they can’t help you!

Even 30minutes of some-one’s time can open up a range of opportunities for you, if you’re prepared to ask. So do not sit in the corner, get out and make the time to talk to people. This is how you’ll get known and how you’ll find out about new opportunities.

3. Use your Initiative to Get Involved When you start your first professional job, knowing where the boundaries are can sometimes be tough. For many Students and Graduates, the fear of getting it wrong too often prevents them from really showing what they’re capable of. This to me is a flawed approach. With any Student or Graduate, what I want to see is them using their initiative and getting involved in things. If you just sit there doing only what you’ve been asked (as with Mark and his data analysis), you’re not really adding a huge amount of value to your boss or your company. So…seek to get involved.

How do you get involved? – One way is to use your initiative to look for simple things that aren’t working and fix them – I call this positive dissatisfaction and positive impact! Over my years of working I’m yet to see an organisation where every-thing’s perfect. This therefore gives you plenty of opportunity to do other value adding things to show what you’re capable of. And, a good place to start with this is to find out what’s keeping your boss awake at night.

As you look for things to get involved with or to fix, be sure to start small and build up. I’ve seen too many people take on too much too quickly and fail to deliver. So be sure to start with ‘quick wins’, or ‘low hanging fruit’ as they say, and build up to bigger things from there. It’s amazing how often fixing the simple things will help you get noticed…so don’t ever be afraid to show your initiative and get involved!

A Last Thought… Regardless of the reason you’re doing a placement, it is essential that you make the most of your opportunity. However, to do this you have to drive it – you have to make it happen. Within every organisation I’ve seen there are always people or managers who will help you, but as the saying goes – you have to help yourself! If you sit there in the corner like Mark waiting form someone to find and help you, it’s unlikely to happen. But…if you know what you want to achieve, if you get out and make contacts, and, if you show people what you’re capable of, then you will get the most out of your placement!

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Article provided by thegatewayonline.com The Gateway is the business and finance newspaper for students

The final part in The Gateway Guide to Investment Banking. This time we look at what it’s like to work in an investment bank and the work of an analyst…

Doing the job

OK. So now you know what it takes to get the job. What you will be doing once you start?

What will you actually do on a day-to-day basis? The following is a guide to life in the day of a M&A Analyst…

The Work of the Bank

First, a refresher of The Big Picture…

The services that the Bank provides to its client include the following: -

• Sell-side mandate – selling a company whole, or undertaking a partial sale of subsidiaries or divisions – called divestitures
• Buy-side mandate – helping a company acquire another company or division
• Fairness opinion – advising shareholders or debt-holders on the fairness of an offer to buy or sell, with the lead advisory role often held by another bank
• Strategic Review – a wholesale review of a company’s strategic position and its options in the market; the results of the review might to be recommend M&A or corporate finance activity.

In addition, although not strictly M&A work, but occasionally undertaken by M&A practitioners: –

• Restructuring – it means providing advice to companies on refinancing and rationalising its capital structure, for example by refinancing its debt or swapping debt for equity or vice versa; it is more corporate finance work, and could result in recourse to the equity or debt capital markets.

Finally, the rest of the Investment Banking Division will be involved in capital markets work. However, it is key not to categorise this as M&A work:

• Equity Capital Markets – helping a company to float for the first time on a public stock exchange, via an Initial Public Offering (“IPO”) or a company that has already floated return to the market to raise additional funds through a secondary offering or rights issue
• Debt Capital Markets – helping a company raise debt finance through a variety of different means, including regular loans, bond issues, syndicated offerings, securitisations, structured or project finance.

While all work falls into three categories…

• Origination / Marketing – work that contributes to the Bank winning a mandate for a transaction
• Execution /Transaction work – work that contributes to executing or completing a transaction that has been mandated
• Developing in-house knowledge – developing proprietary knowledge that might be useful for origination or execution work in the future.

…there is not always a clear distinction between when the origination phase ends and the execution phase begins because the Bank’s advisory relationships with its clients are a continuum.

The Work of the Analyst

Company Research

The research is most likely to be of companies, but also be of investment funds or individuals.

Research on companies could include: –

• Financial and operational performance, both historic and future, analysed by: Product; Geography; Office locations.
• Competitor analysis
• Porter’s Five Forces Analysis
• Possible takeover targets / acquirers
• Brokers commentaries and price targets
• News commentary
• Share price performance, including annotated share price graphs
• Historic valuation
• Trading / comparable multiples
• Shareholder register
• Board / management profiles

Research of individuals might analyse their suitability for an appointment to the Board, or in their capacity as an investor or shareholder, their actions in precedent M&A situations.

Other research might analyse precedent situations, such as what other companies have done historically in the same situation in other M&A deals as a client or target. Such situations could include a deal (looking at due process or management or shareholder reactions), disputes or what happens to share prices after profit warnings.

The Analyst could also analyse the work of other banks, monitor press coverage of clients or relevant events.

Most of this research will be written up into powerpoint slides to be incorporated into “Books” – to be presented to an external audience such as the client or a potential investor.

Modelling Financials

As a starting point for likely further valuations modelling work, the Analyst will model the Company’s financial projections. The input numbers will be derived from management or from external analysts, brokers or consultants.

The Analyst may reorganise the forecasts into the most useful format to be used for subsequent valuations work.

The Analyst will almost certainly produce profit and loss and cashflow forecasts, and may or may not produce a balance sheet. Income and expenditure information could be split by any number of variables including product, operating division, office location, geography etc.

The above work will be done in Excel. The model will include presentational output tables and graphs that will be copied into powerpoint slides for incorporation into Books as necessary.

Modelling Valuations

Different valuations models are undertaken to provide answers to different questions about target or acquiring companies or offers. These questions include the following:–

• What is the market’s view of the current value of the target
• How much is the target worth to us?
• What is the value of any synergies produced by the merger of the target with the client company?
• How much should we offer / pay for the target?
• How should we finance the acquisition of the target?
• How much might offer bidders potentially bid for the target, if (a) strategic i.e. industry buyer? (b) private equity i.e. financial buyer?
• What will be the effect on our share price of buying the target, for a certain price, for a certain combination of finance?

There are various modelling methodologies that are either specifically geared to answer one of the above questions, or transcend a number of them.

The three classic valuations models are as follows: –

• Discounted Cashflow Analysis (“DCF”) – discounting the free cashflows produced by a company or project at the opportunity cost of its capital; the purpose is to determine the Net Present Value (“NPV”) of the target
• Comparable Companies Analysis (“Comps”) – applying multiples of value drivers to the target company drawn from comparable companies; such value drivers include Price / Earnings (P/E), and EV / EBITDA, as well as industry specific drivers; the purpose is to determine the market value of the target
• Precedent Transaction Analysis – similar to Comps but where multiples are derived from previous completed deals where companies similar to the target have been acquired; again the purpose is to determine a market-tested value of the target; the key difference between the Comparables Companies and the Precedent Transactions Analyses is that the latter will contain a control premium that a buyer has paid.

In addition: -

• Sum of the Parts (“SOTP”) – uses any combination of the first three methodologies to value an overall company, by applying specific valuations to individual subsidiaries or operating divisions; the purpose is to derive a valuation for a target where a blanket valuation across its whole would fail to take account of materially different financial or operational issues when analysed at a subsidiary or divisional level

Four other models answer specific questions: –

• Premium Analysis – in the same vein as Precedent Transactions; where precedent transactions are analysed to calculate the percentage premiums that were offered to acquire companies vis a vis their share price or valuation prior to the announcement of offers to acquire them; the purpose is to find out what premium might have to be paid to acquire the target by referring to previous deals and the current market climate
• In Price Analysis – analyses the weighted average price that an investor has bought into the shares of the target company in order to see at what price they might be minded to sell
• Impact Analysis / Merger Model – analyses the impact of the client company combining (i.e. merging) with its target and shows the effect on its financial performance and capital structure; the purpose of this model is to determine whether the merger is accretive or dilutive to earnings per share (“EPS”) and the effect on its financing covenants
• Leveraged Buy-out (“LBO”) model – analyses a private-equity buy-out where a high level of leverage (i.e. debt financing) is used to buy the target; the model shows the cashflows produced by the target (without discounting them to account for the time value of money, as is done in a DCF) then uses the cashflows to meet interest payments and repay debt; the purpose of this model is to see how much a private-equity buyer could afford to pay for the target company; this model will usually be run even if the buyer is not a private equity house, because an industry acquirer will need to be able to pay a price that would beat one that might come from the private equity community; the model can uncover the maximum price that can be paid, assuming the company borrows a certain amount of debt and will show the internal rate of return that a private equity buyer will earn over the life-time of its investment.

The above work will be done in Excel, copied into powerpoint slides for incorporation into Books as necessary.

Client Management / Transaction Process Management

The Analyst will also get involved in producing the documentation that will regulate the relationship between the Bank and the client and in the various legal and administrative processes that are required by the law, relevant codes or precedents to complete a deal.

• Engagement letters – producing the document that regulates the Bank’s relationship and engagement with the client – specifically what fees will be paid and when
• Confidentiality and Non-Disclosure Agreements
• Compliance Documentation – ensuring the deal and the Bank’s work comply with the FSA and City Code
• Information Memoranda – producing a document that acts a teaser to the market to garner interest in the Bank’s client; for example, for a sell-side mandate, the Bank will produce a short document that summarises the client’s business and sends it to prospective buyers
• Organising then observing conference calls and meetings – communication with the client, its other advisers and all the various counter-parties takes a lot of time; the Analyst will arrange these and usually listen in or observe, take minutes etc.
• Due Diligence – this could be a subject in itself
• Creation of a data room or virtual data room – making available documents, including reports and accounts, shareholders register, debt debentures and covenants, meeting minutes etc. for review by the various parties and advisers in a deal
• Arranging and attending the closing dinner, ordering the tombstones.

Internal Administration, Business Development and Training

As a junior member of the Bank’s staff, the Analyst will spend time on a variety of other tasks that help the Bank’s work. This will include: attending recruitment events to hire other staff; training and personal development.

Article written by and used with permission from The Gateway.

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Article provided by thegatewayonline.com The Gateway is the business and finance newspaper for students

The most daunting thing about interviewing to work in investment banking (aka “corporate finance” or “IBD”) is how many unknowns there are. Interviewing is stressful enough, but with investment banking interviews it is exacerbated by the fear of facing a barrage of technical questions about DCFs, EBITDA, NPVs and other seemingly mysterious technical financial issues.

Even if you’ve done an internship, these questions can still be unsettling. Allow me, then, to help you conquer the fear of these unknowns. The points below cover what you need to understand, and how you can make sure you do understand.

1. The investment banking industry

In the first place, you have to understand what you are applying for and how one sub-sector of the investment banking industry differs from another. What is your motivation for wanting to work in investment banking? Why does it interest you more than other high-potential careers, like strategy consulting? Don’t be unprepared for these questions. Read one of the books that give a good overview of the City like The Vault Guide to Investment Banking by Chris Prior and Tom Lott.

2. The theory behind corporate strategy

Why do you need to understand this? Because you will impress if you can demonstrate that you understand the strategies and operations of companies and how they create competitive advantage. Basically, you will be showing that you have what it takes to be an outstanding banker. At a practical level, you should be ready to answer questions like why, at the time of writing, BP has been struggling during a period when the oil price has been close to an all-time high? On a subject closer to the hearts of most students, you should be able to explain Facebook’s revenue model and whether it merited the recent investment from Microsoft which valued it at $15bn. Michael Porter’s best-seller, Competitive Strategy, covers these issues.

3. Financial statements

A company’s financial statements should represent the ultimate distillation over time of its business strategy. A company’s published financial reports contain three separate financial statements. You need to know the different categories of information that each one shows. This is where investment banking meets accounting. You can’t find a much better starting point than Accounts Demystified by Anthony Rice.

4. Valuation

Of all the activities in which an investment banker gets involved, valuation is arguably the most essential (see page 5 for more on this) . There are lots of ways to value a company, and you will need to be familiar with at least three of them. They fall into two distinct categories.

The first valuation category is “Fundamental Valuation”, and the most used technique here is known as Discounted Cashflow (“DCF” for short) The second category is “Relative Valuation”, and there are two techniques involved: (1) Comparable Companies Analysis and (2) Precedent Transactions Analysis. David Fryckman’s book, Corporate Valuation, is as accessible an introduction as you’ll find anywhere.

5. Corporate finance theory

Broadly, a company is faced with a choice between two overall forms of finance: equity and debt, although there are now a number of hybrid options.

Financing is a job in itself in capital markets roles. Jobs in Equity and Debt Capital Markets (ECM and DCM) involve raising new finance and optimising the financial structures of client companies. Brearley and Myers’s Principles of Corporate Finance is to financing what Hamlet is to English literature: a sheer classic.

6. Mergers and acquisitions theory

In an mergers and acquisitions (M&A) deal the investment banker and his client are looking to create value, either by buying an asset for less than its true value, or from synergies, where the new corporate whole will be greater than the sum of its parts. This is the theory that says that one plus one can equal three. Once a deal is underway, the investment bankers manage a continuing process of price negotiation, deal structuring, legal compliance and due diligence, in order to progress the transaction to a conclusion. Get a head start on the competition by getting up-to-speed with this. A quality overview of M&A is Bruce Wasserstein’s text, Big Deal.

7. The financial news

At interview, you are likely to be asked to put your theoretical knowledge into practice by commenting on a live or recent deal. So make an effort to know a couple of the headline-grabbing deals that are live during the week you interview, or recent transactions involving the bank or the specific team with which you are interviewing. The best reference source is The Financial Times.

Article written by Andrew Williams and used with permission from The Gateway.

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The first Sunday without the Monday morning looming is the perfect time to reflect and gather thoughts on the summer just gone. Having packed up my life and taken the slow boat home, with the monstrosity of Canary Wharf gradually disappearing behind me, it looms how quickly time does fly.

I think it’s important to reflect and recognise what a wonderful experience this summer was and how privileged that I was to be a part of it. It seemed it was yesterday the morning of Monday 29th June, our first day, when we were told how lucky we were, how honoured we were, how we were chosen from a pool of 9,000 applicants to be a part of Credit Suisse for the summer. We must make the most of it. I for one hope I did, I have no regrets. Credit Suisse is a wonderful firm, truly exceptional. I’ve interacted with some amazing peers, who I’m sure will become the next business leaders of our generation.

The quality and organisation of the summer was faultless, so a big thank you to the HR recruitment team for that. From initially being told I had the job the day after the interview, to the different events organised over the summer, everything was superb.

The events really offered a sense of the Credit Suisse “One Firm” culture. The interaction between all departments, whether front office or back office enabled networking and chin wagging. These interactions can be characterised by our finale event, the hiring of PEP-C bar on Haymarket; a free bar was provided to eschew clear heads the next morning for all, no matter the department.

The final review process (luckily not the next morning) was conducted in a professional and thorough manner as to be expected. It involved my manager to identify my strengths and weaknesses and determine whether I would be recommended for future employment. I feel that the only thing missed from the review was a real thorough, tough appraisal to assist in pinpointing my weaknesses and flaws. I understand it’s difficult to criticise others, but when its constructive and it’s always needed, I personally would’ve received it well.

I was lucky enough to be recommended for future employment and should be starting from September 2010 after I finish my Masters.

So, yes, I would recommend Credit Suisse as a possible future employer of all future interns. If you’re willing to work hard, listen, contribute and take real responsibility over then summer then you should apply. However if you’re just in Investment Banking for the money and for an easy summer, please don’t as you’ll be wasting an opportunity of someone else who is ready for the challenges working in this industry brings.

Find out what our Guest Bloggers are getting up to. Throughtout the year we will be following the progress of our Guest Bloggers as they find a placement or keep us updated as to what they are doing on their placement. Click here to read all entries from our bloggers or click here to meet them.

The final straight; 9 working days; not long. So the beginning of the end is well under way, with the majority of our internship almost over it is evident that the working wheels are beginning to slow down.

More work for us now means more work for the full time staff to finish after we have gone. It has also meant that the last few weeks have been little short of hectic for me personally.

I guess the hecticness (is that even a word? Spell check said no – I’m going to roll with it anyway) started after I demanded more responsibility and a greater work load. I wanted to be pushed and tested and I wanted to make a difference. I’m not sure how much difference I’m making but I’m certainly being pushed and tested. It is a liberating experience having real responsibility, real projects to deliver, and real deadlines to meet. Execution is a terribly difficult thing to complete with quality.

Part of my role as a business analyst is to delve into problems and suggest solutions, but where do you draw the line? It’s a fascinating role which enables you to engage your brain, other people’s knowledge and experience then apply practical solutions to real problems. My undergraduate degree of Computing and Management has been a great help during my placement. Understanding technology and data whilst also understanding different financial products and banking terminology has left me with a reservoir of knowledge to apply to the different projects I have been working on.

The last few weeks has also seen us do various non work related events. We have had social networking events at the various drinking houses situated around Canary Wharf. We were given a day off to clear Mile End cemetery park – a day which involved the 160 interns in Credit Suisse T shirts rolling our sleeves up and doing good for the local community. The philanthropic work Credit Suisse does in the local community has been very impressive. Corporate Social Responsibility is a buzz word in the industry; especially because of the negative rep the financial services industry has taken over the last two years. But Credit Suisse has identified where they feel they can really make a difference and there is a lot of commitment to do good in local schools and for local children.

The next two weeks hold the key to whether we are to get an offer to return next year, I have presentations to give to my director regarding the projects I have been working on, I have an end of year review to undertake with my line manager and my HR correspondent. I’m hoping for an offer, I very much believe in my ability to contribute change through my role within Credit Suisse however I understand the competition for places in fierce. I’ve put all my efforts into the previous 8 weeks and I know the last two are going to be just as much hard work; I hope it will pay off.

Find out what our Guest Bloggers are getting up to. Throughtout the year we will be following the progress of our Guest Bloggers as they find a placement or keep us updated as to what they are doing on their placement. Click here to read all entries from our bloggers or click here to meet them.

The first week is over; the body clock is back into the swing of those mesmeric 6am starts; the body is back running on caffeine as the primary carbohydrate; the perma-smile needed for the first few days has disappeared; and overall I’m pretty excited about how the next 9 weeks are going to pan out.

I thought it was worth while blogging the first week as it seems to be the most important and will arguably set the tone for the remainder of the internship, that and some quite interesting interactions only occur in the first week. One meets their team, one meets the fellow interns, one navigates their commute, one explores their office, one meets senior management, and one is given their tasks for their role.

So, Monday morning, 8:30am, Credit Suisse head office congregated 160 interns who could probably be compartmentalised between rabbits caught in head lights and impenetrable confidence. Small talk, brief introductions and first impressions were the order du jour before being separated out by division and frog marched to our holding cells where we were provided with a splendid spread of fruit skewers, pastries and fresh coffee.

Forms completed, ID cards got, buddies identified. Post formalities, we were ushered into a Credit Suisse branded auditorium for a morning of introductions: to the industry, to legal and compliance, to health and safety, to business continuity planning, to IT regulation. This process despite being a bit tedious was I guess necessary to make sure we weren’t going to get fired and/or sued during our summer stint of employment.

Next came another wonderful spread for lunch, which offered a more “informal” chance to interact with fellow interns; perhaps the word informal is too much of a suggestion and not a reality, there is little informal about the process of networking (introduction, small talk, information gathering, attempt to create a way of matching name to face, impossible: smile and query their university, degree and job, then repeat).

The afternoon consisted of a quiz to test how much we took in during the morning session, it was wholly light hearted and had very much a “who wants to a millionaire” feel about it, buzzers and all. Unfortunately there were no millions on offer (yet). After the fun and games came a serious panel with senior management. The interns were offered really an unparalleled access to a team of Managing Directors from across the banks activities. Questions were posed from one of the recruitment team to the panel and their insight was really something; thoughtful and truthful expression about the economy (challenging), the firm (progressive, exciting), industry (aware of regulators), interns (amazing to get so far, 7000+ applicants to 160, talented, future leaders).

This panel led to another but with former interns who were there to offer the golden rules to a successful summer: socialise, network, be friendly, get your hands dirty, don’t worry if at 4am when you’re finishing work your brain isn’t working 100%…(!). This panel lead to an evening event consisting of dinner and drinks at a local bar (up market, the food was great), time for more networking and a few beers to wind down a long, action packed first day.

Day two was training and having already been through a third party finance training regime at my previous internship, plus being a finance nerd, the whole ordeal was pretty slow. If you’ve read Michael Lewis’s “Liars Poker” I was comparable to those morons sitting at the back of the room shouting out the answers at the detriment of the rest of the class, c’est la vie. The training was conducted by Martin; Martin was a bright and interesting teacher who shared with us his views and knowledge on the banking fraternity, the equity markets and the fixed income world all shaken together with personal stories. By 5 o clock we knew our commercial banks from our retail banks; our primary from our secondary markets; our private equity from our hedge funds; and we were ready to jump into the deep end of the Investment Banking world.

Wednesday, Thursday and Friday were all a bit surreal and now looking back seem to be jumbled into one. We were introduced to our “buddies” on Wednesday morning for breakfast and introductions, this informal setting allowed them to say what they did in some more detail and what was really to be expected over the course of the internship. However I was in the strange predicament as my manager was away in Singapore on business for the next two weeks and I hadn’t been assigned a desk, I was nomadic.

This wasn’t an issue, someone was on holiday, I jumped on his desk and instantly I had made two new contacts either side of me! My team were a stone’s throw away and I was given a general overview of the floor which seemed to consist of 100 teams all within the same sub division. I didn’t realise the complexity of this place, well I did, but now I saw the complexity of the world I was now a part of.

I got the macro view of my world throughout the first three days, I was given a brief outline of the expectations placed on me for the summer. Then there I was shoved into the deep end! So what does one do when they can’t swim? One piggy backs onto someone else. I was told I was kind of involved in a project with a lady who sat near me, so off I went and plonked myself down next to her and grilled her about what she did, how I could help, asked those around her what they did and how it was involved to what I was going to be doing…. It all worked out pretty well, I’m unsure whether this is what my boss intended for me to do, but I’ve got responsibility now, I’m involved in some pretty interesting projects that are happening.

If I’m doing something that is useful to the bank then as an intern within three days, in my opinion I’m of some benefit, and I’m learning, that’s the main thing! First week over and I’m impressed, not too fussed about not having a desk it means I can meet new people, the work I’ve managed to get myself involved with is interesting and I seem to be helping out. What more can I ask for. I’ll let you know in a few weeks time how this plan works when my boss returns and see’s what I’ve actually been doing…..

Cheers Julian

Find out what our Guest Bloggers are getting up to. Throughtout the year we will be following the progress of our Guest Bloggers as they find a placement or keep us updated as to what they are doing on their placement. Click here to read all entries from our bloggers or click here to meet them.

Name: Julian Reddick University: Loughborough University Course: Computing and Management Company: Credit Suisse Job Title: Summer Internship

Bonjour, I am writing this introductory blog from the sunny climate of the south of France where I am spending 10 days relaxing with my family before starting my placement on June 29th. This summer I will be working for Credit Suisse at their Canary Wharf office in their derivatives division. I have recently finished my finals at Loughborough University where I studied Computing and Management, so this holiday is a much needed break before the busy summer ahead.

So the natural question is to why I’m going to be interning this summer rather than looking for a graduate role. Next year I will be studying for my MA at Warwick, in order to make the most of the summer I decided to gain some experience in the financial sector. However this wasn’t always my plan.

The third year of my degree was a “sandwich year”; this was spent working in the Finance division at Lehman Brothers. Upon completion of this year out I was offered two jobs (great!) within the IT department and upon the general management program. The Friday I received my job offer was the Friday before the announcement of Lehman’s declared bankruptcy. Obviously having worked at the bank for the previous year I knew there were problems at hand, however I didn’t, nor did anyone else, think that the American government would allow the bank to go under. After this news I was back to square one, no job offer and stuck in a rapidly contracting job market. This in reality presented a great opportunity to continue my education in the form of a post graduate degree and it also allowed me a free summer to gain more experience.

From the work I had done at Lehman, the people who I had met and the high level of expectation placed upon staff, whether interns or not, I knew I wanted to work in the financial sector. Lehman being an American Bank had a very distinct culture, so I wanted to experience a new culture and with British Banks offering little distinction between their Investment Banking divisions (where I wanted to be) and more commercial activities I decided to apply for roles with European Banks. The Banks I applied for and successfully navigated the plethora of questions, online tests et al were Credit Suisse, UBS and Deutsche Bank.

Credit Suisse invited me to come in for assessment centre and interviews almost immediately, this was a great sign. As I’m sure many of you students know it can be an eternity between steps of an application. With little to no correspondence, one enters a land of hope with every ring of your mobile potentially being a job offer. So for Credit Suisse to be so prompt was impressive.

The assessment centre and interview process was a really enjoyable experience, I am lucky enough to not really be phased or nervous before such events. Having other options at other banks gave me a bit of a stronger position regarding finding the company which fitted in with my personal ethos and plans. So the interviews were really a two way process, I probably asked more questions than they asked me! The assessment centre consisted of a group activity and three interviews. The interviews were conducted by managers who were looking to bring interns in to their teams, this was the first time I had seen this and thought it was a great idea. The managers could align their expectations and needs with the prospective candidates to see whether they would fit in.

The whole process went really well and I was offered a job in the Asset Management division. Perfect! I accepted this offer almost immediately: the people who had interviewed me, the role they had offered and the culture of Credit Suisse seemed like a perfect match for me. I informed the other banks of my decision and whilst they tried to talk me out of it I stuck to my decision.

As I stated initially I will be working in the derivative division, but I had been offered a job in Asset Management. As it turned out, through the economic down turn Credit Suisse decided to concentrate on their core competencies which didn’t include their Asset Management team; this was sold off so I was transferred to their to derivatives team.

This in all honesty is a better fit for me. Due to the change of division I was invited to their head office to have a chat with an MD in derivatives and to see where I would fit in and the type of work I would like to do. This level of personal contact between someone so senior and an intern I really appreciated and showed the approachability of all their staff.

Phil, the MD, allocated me a team he thought I would be suitable for and I met my prospective manager at an event organised by the recruitment team. All the successful applicants were invited down to the head office to meet one another, the current placement students as well as their prospective managers. I saw a bunch of friendly faces from the interview process which was great, had many of my questions answered, a tour around their very impressive Canary Wharf office and a long chat with my manager about what was to be expected of me during my internship.

This summer will be full of new experiences and will be a great learning opportunity and I look forward to sharing it with you all.

Cheers, Julian

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Article provided by thegatewayonline.com The Gateway is the business and finance newspaper for students For more essential reading visit thegatewayonline.com

Discuss the issue of outsourcing an investment bank and you get a mixed response. Back (and middle)-office employees deny that it has any impact to their function, while front office staff say that it will wither the lower ranks, leaving the company leaner and meaner with the core revenue generating business left unscathed. (Interestingly very few appear to understand the business as a whole, even at the MD level).

The history of investment banks as partnerships and stories of wealth generation in yesteryears leads to a blinkered approach when analysing their own franchise. Yet quietly banks are going about outsourcing areas, careful to retain goodwill. This trend has been well-established in back office functions, with temporary staff used to train their counterparts overseas and then natural job cuts are announced. As prospective graduates entering the industry, this is an issue glossed over by recruiters but could be crucial to our career development opportunities.

One argument is that this is a back office issue and high value jobs won’t be sent overseas. Given recent losses however, the trend for outsourcing is gaining a foothold in front office roles. Let’s place ourselves as the embattled CEO of a bank facing a quarterly result forecasts.

Revenue can’t be maximised in this market. To maintain or restore profits we have to cut costs. Suppose we made redundancies in all areas that could take them. We even take on temporary hires and long term interns (as one French bank is known to do). What now? Technology spend is curtailed, but a core spend is needed to keep the business efficient and facilitate further cost cutting in the future. Outsourcing is suggested. It worked well in back office roles, what about bringing it to the front, gradually. Which jobs can be commoditised and sent overseas?

Research

Bulge bracket banks have been working on shifting parts of their research function abroad. Given that the grunt work of building financial models and populating spreadsheets with Bloomberg updates. Now specialist outsourcing firms are offering ‘the junior analyst’ for hire to senior MDs. The cost saving can be significant; with 500% of the salary cost of having an analyst in London or New York, compared to Wroclaw or Pune. (There are banking outsourcing firms in Wroclaw, Poland!). It’s simply not possible to deny this sort of cost saving. The best case scenario is that a smaller group of graduates are hired into junior research positions in financial centres. Worst case, why have research in expensive cities at all when it will just be emailed to clients anyway.

Sales

Outsourcing sales is a much harder proposition. The level of client interaction and the closeness of the relationship to the revenue stream and engagement directive is difficult to replicate without face to face contact. Nonetheless, any support functions can expect to be tinkered with in the near future.

M&A

Similar to research, junior level work in Investment Banking divisions is being outsourced to firms set up by American investment banks. But for the turmoil, many of these were to handle the IPOs of their counterparts. Although there are clear confidentiality issues, the nature of technology changes means that an office in New York is no safer than one in Kuala Lumpur or Singapore.

Senior managers can be supported by far fewer analysts in the long term.

Trading

Trading is a difficult one to place, because of the umbrella nature of the business. Prop trading is closer to asset management and that will likely be kept in-house. Recent edicts from regulators have impressed on banks the need to cut back on prop risk taking.

Flow trades, processed to offset client orders are becoming harder to profit from. Bloomberg and its rivals offer direct and immediate comparisons for clients of bid-ask spread across markets. Moreover, electronic brokerage means that computer algorithms are used more often to offload large orders, which rely on programmers and some input from experienced traders rather than large, costly trading desks.

So what’s a graduate to do? Head to the buy-side? Sure that might offer some respite in the short-term. Buy-side shops have a tendency to copy the sell-side. In fact, why do fund managers and hedge funds need to be in locked down in any particular country? Why pay the extortionate rental rates charged in cities like London and New York. Watch out, the future of finance might lie with offshore tax havens, regardless of governments liking otherwise.

Article written by Ravi Kalia and used with permission from The Gateway. Ravi is a Third year DPhil Student in Statistical Finance at Oxford University.

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Article provided by thegatewayonline.com The Gateway is the business and finance newspaper for students For more essential reading visit thegatewayonline.com

If you’re considering applying for placement or internship roles within Investment Banking – STOP! Make sure you’ve read The Gateway Guide to Investment Banking first….!

Recommended reading: the 20 books that everyone interviewing for an internship or graduate job in investment banking should have read…

General

1. “Vault Guide to Investment Banking” – Tom Lott – the easiest-to-read and most informative guide we have seen about investment banking; essential reading
2. “Vault Guide to Finance Interviews” – D. Bhatawedekhar – introduction to some of the technical knowledge required across all aspects of banking and finance
3. “All You Need to Know About the City: Who Does What and Why in London’s Financial Markets” – Christopher Stoakes – An interesting and comprehensive introduction to the world of banking.  Easy to read.
4. “Accounts Demystified” – Anthony Rice – the best introduction we have seen to accounting for non-accountants
5. “The Age of Turbulence” – Alan Greenspan – the best insight into global macro economic forces over the last 30 years, despite the recent bursting of the Greenspan bubble.

Corporate Finance / M&A

1. “Acquisition Essentials: A Step-by-Step Guide to Smarter Deals” – Denzil Rankine & Peter Howson – a good introduction to the different stages of a deal
2. “Corporate Valuation” – David Frykman – the best introduction to the key subject of valuation; easier to read than either of the classics Copeland or Brearley and Myers
3. “Valuation: Measuring and Managing the Value of Companies” – Tom Copeland – classic textbook, quite technical
4. “Principles of Corporate Finance” – Richard Brearley and Stuart Myers – classic textbook, rather heavy and very technical
5. “Monkey Business” – two years in the life of an investment banking analyst…easy to read and quite humorous
6. “Big Deal” – Bruce Wasserstein – dauntingly large book, but actually very readable and easy to understand; starts with account of major recent M&A deals, then reviews the classic M&A / corporate finance services and techniques
7. “Barbarians at the Gate” – Bryan Burrough and John Helyar – classic business biography of the take-over of RJR Nabsisco in 1988; a thrilling account of a real deal; reads like a novel.

Financial Markets

1. “Vault Guide to Sales and Trading” – Gabriel Kim – the best starting point for this area; we cannot recommend the Vault Guides highly enough
2. “Vault Guide to Investment Management” – Andrew Schlossberg – again, great introduction; pulls off that rare trick of balancing being easy-to-read with having sufficient detail
3. “How the Bond Market Works” – Robert Zipf  – easy to understand textbook
4. “Mastering Credit Derivatives: A step-by-step guide to credit derivatives and their application” – Andrew Kasapi
5. “Market Wizards – Interviews with Top Traders” – Jack Schwager – strange book – quite involved and is a compilation of interviews with traders about their trading strategies – for wannabe traders
6. “Liars Poker” – Michael Lewis – classic real-life account of Michael Lewis’ career as a bond trader at Salomon in London, where he reported to John Merriweather (see When Genius Failed)
7. “Den Of Thieves” – James Stewart – similar in style to ‘Barbarians’, but gives an account of the insider trading in the 1980s that brought down Michael Milken and Drexel Burnham Lambert; again reads like a thriller
8. “When Genius Failed – The Rise and Fall of Long Term Capital Management” – Roger Lowenstein – true-life account of the rise and fall of the largest hedge fund in the world run by John Merriweather – the star character in Michael Lewis’ Liars Poker.

Recommended Employers – the 15 firms that everyone interviewing for an internship or graduate Job in investment banking should aspire to work for

(Click on the Company Name to see if they have any reviews on RateMyPlacement.co.uk)

1. Goldman Sachs – by far the best investment bank in the world, bar none, year in year out and just about survived the credit crunch albeit with a loss of its pure-form investment banking status.  There is Goldman, then there is everyone else
2. Morgan Stanley – second only to Goldman.  Usually credited as having a more humane internal culture and renown for employing very high quality staff
3. Rothschild – British in style and with Lazard largely focussed on corporate advisory work rather than all-round investment banking business
4. Lazard – see Rothschild.  Largely turned round after its troubles surrounding its flotation
5. JP Morgan – sheer size means always a force to be reckoned with and benefits from the old Cazenove business in the UK
6. Greenhill – with Jefferies, next, emerging as the top two super boutiques, although little difference these days in lifestyle between them and the bulge brackets
7. Jeffferies – see Greenhill
8. Citi – big US powerhouse just about remaining as a monolithic business despite calls for a break-up; similar in structure to JP Morgan and Deutsche
9. Deutsche – main European player, striving to establish a major investment banking presence independent of its Debt Capital Markets business
10. Credit Suisse – survived the credit crunch better than most, and surprisingly has exhibited better risk management than its normally more cautious brethren UBS

And one other to note…

1. Blackstone – tiny M&A department compared to the others here, but you are surrounded by the finest financiers in the world in the private equity business down the hall.

Next time, in the final part, we take a look at doing the job itself, and the work of an analyst.