What is investment banking and what does an investment banking analyst do?

Investment banking is a division of a bank or financial institution which helps governments, corporations, institutions and individuals raise capital, as well as providing financial advisory services to them. Investment banks assist in large, complicated financial transactions. They act as intermediaries between investors (who have money to invest) and corporations (who require capital to grow and run their businesses).


Investment bankers work with client management teams to market and sell companies, find potential targets to acquire and make deals go through. They also recommend the best terms and timing for a capital raise and then market the issue of that debt or equity to investors. An investment banking analyst is the entry level role in an investment bank. They are responsible for Excel and PowerPoint deliverables, administrative tasks, and responding to requests from clients and potential clients. Much of their time is spent revising presentations, tracking buyers and sellers, providing market updates, assisting in valuation calculations and working on financial models.

Key responsibilities

Main responsibilities include, but are not limited to:

  • Developing and using various types of financial models and projections
  • Performing various valuation methods – e.g. comparable companies, precedents
  • Performing due diligence, research, analysis and documentation of live transactions
  • Developing recommendations for product offerings, private equity transactions, mergers and acquisitions and valuations
  • Compiling and presenting reports to the banking group
  • Preparing materials used in the financing of clients, including investment memoranda, management presentations and pitchbooks
  • Developing relationships with new and existing clients in order to expand the business
  • Ensuring that compliance regulations are adhered to

Why are they important?

An investment banking analyst is the entry level position within a team that focuses on advising companies on large, corporate-level transactions such as mergers and acquisitions and debt and equity issuances. The role of an investment banking analyst is important as it is primarily focused on supporting senior bankers in winning and closing deals on behalf of the bank.

Skills needed for this role

Investment banking analysts will need strong analytical skills and the ability to research and evaluate huge amounts of data, along with the ability to work under pressure and meet tight deadlines. A strong work ethic is required (80-hour weeks are not uncommon) as are excellent academics. Excellent communication and presentation skills are also required.

Strategic Professional Options examinations linked to this role

Advanced Financial Management

Career opportunities presented by this role:

Investment banking offers higher entry level salaries than most other graduate programmes. However, this does come at the cost of long hours and a stressful working environment. It is extremely competitive to get into and outstanding academics will usually be required, though the opportunities to further a career are excellent. Typically, investment banking analysts remain in post for three years, after this time a wealth of career opportunities can open up which include, more senior roles in investment banking, private equity, venture capital and hedge funds.

Competencies

High level competencies required include:

  • Advisory and consultancy

    A. Gathers and understands financial and non-financial information to develop complete knowledge of the client business and the environment in which it operates.

    B. Provides expert advice that will add value to the business and gain advantage.

    C. Identify and advise on business partnering to develop strategic relationships to create opportunities, improve performance and solve business problems.

    D. Prepare and present business plans and advise on the actions to implement these plans.

     

  • Corporate and business reporting

    A. Prepares financial statements, corporate financial and integrated reports for external stakeholders using appropriate technology.

    B. Leads effective decision making through analysing, evaluating and communicating performance and position of entities.

    C. Prepares financial statements for groups of entities using appropriate technologies.

    D. Monitors, critically evaluates, and advises on the relevant accounting standards, regulations, conceptual and financial reporting frameworks.

     

     

  • Data, digital and technology

    A. Identifies strategic options to add value, using data and technology.

    B. Analyses and evaluates data using appropriate technologies and tools.

    C. Applies technologies to visualise data clearly and effectively.

    D. Applies scepticism and ethical judgement to the use of data and data technology.

  • Financial management

    A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.

    B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.

    C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.

    D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.

    E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.

     

  • Stakeholder relationship management

    A. Positively develops relationships with internal and external stakeholders.

    B. Communicates and gains commitment from internal and external stakeholder.

    C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.

    D. Applies professional and ethical judgement when engaging with stakeholders.

    E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.