What is Investment Banking about?

Good day, I have been on your blog since last night and I just want to commend all your efforts and dedication towards what you do. Unfortunately, we engineering grads dont have people that will give career advice and directions to us. Just so you can have a clearer view of who you’re dealing with….I’m 21 (still very young) and was the one that earlier asked for advice on breaking into oil and gas industry as a finance person. Also, I’ve been hearing about investment banking of late….what is this sector about in terms of career growth and prospect because it seems interesting to me? A friend (computer engineering grad) did 6 or 9 weeks internship with ARM investments and oh my God it felt like she became smarter after. I’ll love if you could also shed more light on that sector too…

Thanks for your time and patience.

An additional question from this questioner

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Thanks for the kind words. Sharing useful information has actually been part of me, right from my university days when juniors always thronged to me to enquire about a course at the beginning of every semester, and I usually supplied the tricks to tackling each course, having taken it a year earlier. It’s a passion. But more importantly, I believe sharing information and experience doesn’t take anything away from you. The idea of this blog is to be multi-disciplinary, that is why I have engineers on my analysts team. But most of the questions we receive are from finance and management courses graduates, hence the obvious bend.

To know about investment banking, please read these articles earlier published here:

Atedo Peterside: Father of Investment Banking in Nigeria

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Want to become an Investment Banker: CFA or Msc Finance?

Investment banking has different branches: private equity, corporate finance, wealth/asset management, financial advisory, stockbroking, research, etc. As an engineer, these may sound Greek to you now, but don’t worry, just read the articles up here, and as time goes on with your experience in the accounting firm you just got job in, you will get to become familiar with some of those things.

It is to me the best and most intellectually stimulating form of banking. Maybe that is why your friend came out smarter in ARM – an investment institution. There are even world class investment institutions like Goldman Sachs, Renaissance Capital etc.

They are not like regular banks that take deposits. They do various services like I mentioned above. For example, they advise private corporations and governments on transactions, act as issuing houses to capital markets deals, arrange transactions like merger and acquisition, project finance, and other capital raising or restructuring exercises.  They operate in the capital markets, locally and globally. That is why after the collapse of the capital market, consequent upon the 2008 economic meltdown, investment banks were the worst hit. In fact, since then, investment banking has become less lucrative as it used to be since the crisis of few years ago. Yet, it still remains the best form of banking that challenges your intelligence.

As for career, between 2004 to 2008, investment banks in Nigeria fared very well. They had many transactions.  They were doing very fine. Soludo’s consolidation policy meant many restructuring, mergers and acquisition, capital raising and advisory jobs for these local investment insitutions and that was their peak. They were paying heavily then and absorbing graduates. In fact, I interned in one of them few weeks after I graduated in 2006. They include Investment Banking & Trust Company (IBTC), Vetiva Capital Management Ltd, BGL, ARM, Afriinvest, etc, while conventional banks also had investment banking subsidiaries like First Capital (by First Bank), UBA Capital, etc.

Despite the challenges they faced aftermath of the economic crisis, domestic and global, some of them are still doing fine. So there are still great career prospects there. It is however very important to have good professional qualifications like Chartered Institute of Stockbrokers (CIS) and Certified Finance Analysts (CFA).  A good MBA is also key. If you want to be a global player, CFA is very critical. While the local ones are still not bad, the best experience can be had in global ones like Goldman sachs, Renaissance Capital etc. In any case, wherever one gets job, the career prospect is bright as you have excellent exposure, both locally and internationally. I’m not a fan of banking career, but if at all one must work in a bank, investment banking is easily the best.

Hope that helps.

Jarus

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