Why do Investment Banks take 2nd year students?

I'm curious to hear everyones thoughts on this. If you look at most students on LinkedIn you can see that those who work at larger banks in their junior year (or those fortunate enough to get a BB internship in their second year) almost always lateralled to a more "prestigious" bank after they have completed their sophomore year internship.

If I was a hiring manager why I would want to hire someone as a sophomore for 4 months knowing that the training and time you put into them is going to be used somewhere else and you will have to go through the hiring process again? Is it some sort of hope that the second year student they get will come back for their third year summer and eventually full time? Seems to me too many opportunities to lateral if you were actually serious about hiring this candidate for the long term

Why is it that most banks do this? Especially boutiques when I'm sure they have a wide variety of juniors to choose from

Comments (5)

  • Intern in IB-M&A

I am not saying that they shouldn't take students. I am saying if they are want to retain their internship students there is no point in hiring juniors because most of the time and I don't think you'd disagree, they will would use that internship to pivot to another role? 

If you just want cheap labour and to give some kids experience and have a set process to hire FT analysts then that makes sense. But if you are a bank that is concerned about giving FT return offers to the students who come to your group then why would you focus on hiring someone who has the means and now experience to leave to a "better" shop?

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  • Analyst 1 in PE - Growth

The bank I worked at during my second year was one that many students before me had cycled through. There was an understanding that the program was only a summer or a year and you wouldn't get a return offer unless you made it clear you wanted to stay. Everyone who did the internship program went on to a different junior SA program. It was a huge help because it was the perfect experience to talk about in summer analyst interviews. There was one guy who stayed longer, but he switched banks later.

  • Prospect in IB-M&A

A lot of them are diversity initiatives so maybe it's more to fulfil a criteria/quota or something? Not too sure

  • Investment Analyst in HF - Event

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