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Become a member
Investment banking in the classical sense consists of the Investment Banking Division (IBD) as well as Equity Capital Markets (ECM) and Debt Capital Markets (DBM). It is therefore made up of different group business areas, all of which place different task profiles and demands on the employees working there - there is therefore not one investment banker, but different job profiles.
As employers, investment banks have fallen into disrepute in the media because of the tough conditions that apply especially to career starters and interns. 60- to 80-hour weeks, working until after midnight and on weekends are the order of the day here. This is because young employees in particular try to attract attention for a possible subsequent job by being totally dedicated to their work. The competitive pressure is great. The US investment bank Goldman Sachs therefore introduced a new guideline in summer 2015, according to which interns should not work more than 17 hours a day.
The different areas of work
Roughly three areas of activity can be identified, which can be classified according to the degree of assumption of market risks. Together, they form a value chain - from issuance to placement in the client portfolio.
Investment Banking Division (IBD)
Here, mainly advisory services are offered, but no securities are traded or placed on the market. The bank therefore does not assume any risks here, but offers M&A advice in this area. The advisors can help clients with a possible acquisition through a market analysis or with the search for potential buyers when a company or a part of it is up for sale.
Companies are valued and examined. In addition, the advisors assist in negotiations by being in close contact with buyers, sellers and lawyers. Other advisory services such as Financial Restructuring or Rating Advisory also fall into this area.
Equity Capital Markets (ECM) and Debt Capital Markets (DCM)
These areas deal with measures to raise capital for companies. They usually work very closely with the IBD divisions of the bank, as ECM bankers use information from the IBD team to prepare IPOs or capital increases, etc. They accompany issuing processes up to the final stage. They accompany issuing processes up to the final pricing of an issue.
The tasks of the DCM team are comparable to this, but they specialise in debt rather than equity. They ensure that new corporate bonds are placed on the market and that large loans are syndicated. Both areas are much closer to the market than M&A advisors. The bank needs its own trading book for these transactions, as shares that have not yet been sold for a short time are taken on the bank's own book.This means that the bank is exposed to changing risks.
Sales & Trading:
Bankers in this area can be divided into four groups: Sales, Trading, Structuring and Sell Side Research. They are all focused on the secondary markets. Here they work with shares, bonds, derivatives and other financial products that are traded on the stock exchange like the CFD brokers- https://sg-exness.com/deposit-and-withdrawal/ or OTC (over-the-counter). In Sales, the Bank's products are sold directly to the customer. Structuring provides a range of these products, which are adapted to the client's risk and return profile. The positions traded by Sales are covered by Flow Traders, who in turn ensure that the client business flows through to the market. Risks taken by the bank are passed on to other market participants.
Prop traders handle the Bank's proprietary trading. In the process, risks are taken on in a targeted manner. The sales team is supported by sell-side research. Analysts from the Equity Research, Credit Research and Macro Research departments examine the future prospects of equities, bonds and currencies and pass this information on to the Sales Teams and the Structuring Teams so that new products can be developed on this basis. In this area of investment banking, risks are actually taken and held.
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