How should you choose which banks to apply for?
Deciding where to launch your investment banking career can be tricky. Whether you’re basing your decision on prestige and strength of brand, or perhaps financial resilience, there is plenty to consider.
In this article, we will guide you through the most important banks for you to know about in The City. We’ve arranged the banks into four groups, to help make it easier to understand the similarities and differences between them.
The bulge bracket
The "bulge bracket" banks are the giants of the banking sector. The investment banks listed below have the biggest and most profitable investment banking divisions in the world – and we do mean the world, as another important feature that these banks have in common is a significant presence in each of the globe's major financial zones: North America, Europe and the Asia Pacific region.
They're not just giants in terms of size. These banks all have big reputations for technical expertise thanks to consistent involvement in the world's biggest deals and the role they've played in creating new financial products and trading systems. These banks are often where the world's largest corporations, governments and other major organisations go to for advice.
If you start your career at a bulge bracket bank you’re guaranteed excellent training and exposure to high profile deals, although this comes hand-in-hand with the expectation that you will be in the office whenever you are needed.
Goldman Sachs – Goldman Sachs has been a big name on Wall Street since the nineteenth century. Goldman’s initial public offering in 1999 was, at the time, the second biggest in US history.
While still a leading name in finance, the bank’s formidable reputation has come under scrutiny in recent years, as several key income streams have stagnated. Industry monitor Coalition ranked Goldman joint-third in terms of investment banking revenue for the first half of 2017 – its lowest position since the rankings began in 2007.
J.P. Morgan – One of the oldest investment banks in the world and one of two to grow out of the business interests of nineteenth century financier J.P. Morgan. It is now one of the world's largest public companies, having acquired former rival Bear Stearns and insurance company Washington Mutual during the past decade.
J.P. Morgan has thrived in the years since the financial crisis. The bank reported record group profits in 2016, while net income from the investment banking division nearly doubled year-on-year to $3.4 billion.
Morgan Stanley – Morgan Stanley grew out of the J.P. Morgan banking empire along with the institution that bears his name. Along with Goldman Sachs, it became a bank holding company in 2007 to comply with the new regulation.
Following a choppy few years, the bank is starting to reap the financial rewards of its restructuring programme. This includes expanding the firm’s wealth management business rather than traditional investment banking lines.
Bank of America Merrill Lynch – Bank of America’s purchase of Merrill Lynch in 2008 took Bank of America into the bulge bracket big league. The resulting new universal bank, often referred to as “BAML”, integrated the investment banking expertise of Merrill Lynch into wider Bank of America financial services conglomerate.
BAML rose to third place in Coalition’s investment banking ranking for H1 2017, drawing level with Goldman Sachs.
Deutsche Bank – Germany’s biggest bank burst onto the international investment banking scene with its purchase of the then leading London-based investment bank Morgan Grenfell in 1989.
The third-largest bank worldwide in 2017, Deutsche has endured a torrid time of late. Though by no means alone in this regard, the firm has been hit with fines of more than $9 billion by regulators since the financial crisis, resulting in losses of $7 billion in 2015.
Credit Suisse – Zurich-headquartered Credit Suisse is one of the big two Swiss investment banks. As well as its important role at home, the institution also built a strong pedigree in the US through its acquisition of the then New York investment bank First Boston Corporation.
After consecutive annual losses of nearly $3 billion in both 2015 and 2016, positive financial results for Q3 2017 suggest the bank’s restructuring strategy is starting to bear fruit.
UBS – UBS is headquartered in Basle and Zurich and is the other major global investment bank in the strong Swiss banking sector. The institution's current incarnation came about through a 1998 merger of Union Bank of Switzerland and Swiss Bank Corporation.
UBS’s wealth management business is world renowned. The rapid expansion of the business has helped offset flat income growth from investment banking activities in recent quarters.
Citi – Citi's investment banking business is part of financial services conglomerate Citigroup, Inc. The group came into being in 1998 as a result of a merger between Citicorp and Travelers Group, one the highest value merger deals in financial history.
Citi’s investment banking arm is performing well, placing second only to J.P. Morgan in the first half of 2017 in terms of income, according to Coalition.
Barclays – Barclays investment bank, formerly known as Barcap, was created in 1986 in the wake of Thatcher's "Big Bang" deregulation of the British banking sector.
Acquiring the US operations of the bankrupt investment bank Lehman Brothers in 2008 has seen investment banking become a key part of the wider Barclays business.
That said, Barclays cut 7,000 employees from the division globally in 2016 as part of a wider restructuring effort.
Best big deal challengers
These are some of the banks which stand alongside the biggest names, all of which operate in many respects in an equivalent way to the bulge bracket banks. You may find that many of the features that distinguish them from bulge bracket banks (such as smaller offices and deal teams, particular specialisations, or still developing business areas) fit your career needs better.
BNP Paribas – A huge, stable, Paris-headquartered bank with a lot of major corporate clients based in France. Their trading operations are mainly in London. The BNP Paribas group also includes a strong European retail banking business.
RBC Capital Markets – RBC Capital Markets is the investment banking division of Royal Bank of Canada, a large North American retail and investment banking group. It has a growing presence in London.
RBS – Edinburgh-headquartered RBS is well-known for its large retail and corporate banking presence in the UK and internationally, and is also active in some areas of investment banking.
The company’s investment banking division was renamed NatWest Markets for regulatory reasons in 2016.
HSBC – HSBC is one of the largest banking and financial services organisations in the world. Its headquarters are in London’s Canary Wharf, but it originated in China and continues to have a strong Asian business.
Nomura – Nomura is one of the few leading global investment banks with an Asian heritage, having been founded in Osaka, Japan in 1925. It boosted its international presence with its acquisition of the European and Asian operations of Lehman Brothers in 2008, although it has recently been scaling down its operations in Europe.
Jefferies – the smallest of this category, they specialise on raising money through the capital markets for more unusual deals.
Emerging markets experts
A select number of investment banks in London are focused on clients in emerging markets. If you speak an African or Middle Eastern language, or are interested in being a part of deals involving these regions, one of these banks could be an ideal place to start your career.
Standard Bank – Originally the South African arm of a British entity but now runs its Africa-focused business from Johannesburg. The bank is strong in Asia too - one of its major shareholders is Chinese bank ICBC.
Standard Chartered – Standard Chartered is headquartered in the UK, but makes most of its profits from Africa, Asia and the Middle East. Standard Chartered's presence in Asia is strengthened by its ties with Chinese bank ABC.
Pure Advisory firms
These are firms that focus on giving advice to their clients, unlike the other banks we’ve covered so far who also help their clients raise money by providing access to the capital markets and providing loans.
While they are frequently referred to as ‘boutiques’, for some advisory firms this term may be misleading. While they are indeed smaller than traditional investment banks, some of the larger advisory firms (such as Rothschild and Lazard) employ the same number of people as the advisory arms of other banks.
Rothschild – Today's Rothschild is one of the descendants of a long-standing family banking business that has had a presence in European finance for centuries. The bank is still predominantly family-controlled and has a particularly strong reputation for M&A.
Lazard – Originally a trading business set up by two French brothers in nineteenth century New Orleans, Lazard is one of the aristocrats of the banking world. Today the firm focuses on transactional advice and its asset management business.
Evercore Partners – This New York-headquartered investment bank is a relatively new player, but is already among the biggest names in the sector. It concentrates on advising on complex transactions and investment management.
Greenhill – Greenhill was created by a former Morgan Stanley senior banker and now has a formidable reputation of its own for its M&A advice. Greenhill recently sold its private equity branch to concentrate on advisory work, acquiring financial advisory firm Cogent Partners in 2015.