What is the City?

"The City" used to refer to the merchant banks, stockbrokers and insurance companies that had their headquarters in the so-called "Square Mile", roughly equivalent to the old walled city of London. Now the City means the plethora of financial institutions that have spread themselves out across London - from Mayfair in the West End to Canary Wharf in the east.

And it doesn't just refer to investment banks, but also to the asset managers, hedge funds, private equity houses, accountants, lawyers, PR firms, headhunters and other brokers and advisers who all work together to provide the great fuel of the world economy - finance.

The diagram on the right explains how this intricate web of organisations works, the role they each play and how they make money. Each one offers career options for you - perhaps as an intern or as a graduate hire.

It will require specialist knowledge to get ahead of the masses who will interview with them for an internship or a full-time position. Therefore, it's never too early to familiarise yourself with their respective roles in the economy so you can be ready when the time comes to apply.

Professional services

Key employers:

  • Deloitte
  • Ernst & Young
  • KPMG
  • PwC

To support any transaction, as well as to simply comply with the law, companies must prepare accounts - either reporting historically or forecasting into the future. Usually these accounts must be audited and warranted as accurate. "Big Four" firms like Deloitte, Ernst & Young, KPMG and PwC are the major providers of such services.

A huge cost for companies is tax, so these firms will also help companies minimise (legally) the tax they pay. Risk management is another important service these firms provide.

Such firms support their clients on a continuous basis, as what they do underpins everything a business does.

Investment banks

Key employers:

  • Goldman Sachs
  • J.P. Morgan
  • Morgan Stanley
  • Nomura
  • UBS

The term "investment banking" used to refer to institutions that acted purely in an advisory, intermediary or underwriting capacity - not investing or trading their own capital, unlike "merchant banks" which did.

Now, investment banking is an umbrella term that refers to the host of advisory, wholesale money market, trading, research, asset management, custodial and other services provided by these supersized giants, though there are also some strong boutique players.


Key employers:

  • Proctor & Gamble
  • Tesco
  • Unilever

"Corporates" means companies that actually make products or sell services to customers. The largest companies in the UK include Shell, Vodafone and GlaxoSmithKline. To make their product or sell their service they organise themselves into a host of separate but interconnected departments, such as research and development, procurement, manufacturing, sales, marketing, logistics, finance, HR and so on. To expand, they can grow organically, which often requires expansion capital, or take over rivals, customer companies or supplier companies, which requires acquisition finance. Either way, companies need money and advice, which is why they turn to the other players in the City for help.


Key employers:

  • Bain
  • Booz & Co
  • Boston Consulting Group
  • McKinsey

The business badge of "consultancy" could mean anything from a one-man band to multinational conglomerates. The term refers to any business that earns money by advising another one. A consultancy makes its money by charging out its time and expert advice.

The big players include the consulting divisions of major accountancy firms like Deloitte and PwC, and also specialists, such as Accenture. They provide services across every industrial sector and every commercial discipline. The elite consultancies like Bain, Booz & Co, Boston Consulting Group and McKinsey confine themselves to "strategy". Some consultancies specialise in providing advice in a defined sphere, such as information technology (e.g. IBM) or sector, such as oil and gas.

Asset managers

Key employers:

  • Fidelity
  • Henderson Global Investors
  • M&G

Conventional asset managers look after the wealth of companies, pension funds, insurance companies and individuals. They tend to invest in stocks or bonds and stay "long", that is, they buy securities, hold them for the long term and hope their value will go up. They are allowed to advertise to attract money from the public, but in return they are heavily regulated.

Hedge funds

Key employers:

  • Citadel
  • Man Group
  • Olivant

Hedge funds are a special type of asset management company. They are not allowed to advertise for money to invest and instead they attract pools of private capital. In return, they are largely unregulated and can go "short" (sell shares they have borrowed in the hope that their value falls before they have to buy them back), use leverage (invest money they have borrowed) and use derivatives (for example, futures and options) to add extra risk or reward or to hedge, that is, to minimise, their exposure to risk through the use of complementary investments.

Hedge funds are less well-known than other asset management firms, but the ones to look out for are listed above.

Private equity

Key employers:

  • Blackstone
  • KKR
  • Terra Firma

Like hedge funds, private equity funds sit outside of the boundaries of traditional finance. Instead of buying minority positions in public companies like conventional asset managers, private equity investors seek to buy companies whole, taking them off the public stock market and back into private ownership. Outside the scrutiny of the public market, there is more scope for changing the company to improve its value or for financing it in a different way, often by using debt finance, that is, arranging for the company to borrow money.


Key employers:

  • Allen & Overy
  • Clifford Chance
  • Freshfields Bruckhaus Deringer
  • Slaughter & May

In strict terms, a law firm is a type of consultancy, in that it advises companies about legal issues. It does not produce a product per se - it sells its time and advice. Whereas an investment bank will advise a company on the financing aspects of a transaction, a law firm will advise on its legal aspects, ensuring it complies with relevant legislation, for example, the Takeover Code or the

Stock Exchange rules. And if things ever turn nasty, a law firm can attack with a litigation claim or defend a company against one.

Law firms support their clients on an on-going basis with advice on every aspect of their relationships with customers, suppliers, investors, financiers and staff.

In the City, the legal world is dominated by the firms listed above.