IBD – Investment Banking Division

It's important to note the distinction between the "Investment Banking Division (IBD)" and an "Investment Bank (IB)". The Division refers to the subset of a bank that performs investment banking activities, typically:

  • M&A Advisory
  • Underwriting

Banking refers to the specific field of finance as a whole and as a firm that offers a wide array of services such as:

  • Corporate finance and advisory (Investment Banking Division)
  • Acting as a broker for clients and even trading its own funds (Sales and Trading)
  • Managing assets for clients (Asset Management)

The slide below does a great job of breaking down the banking structure:

investment_bank-careers_banking-structure

Investment Banking Division Overview

Here's a fellow WSO user breaking down this division:

Investing Banking is usually broken up into product groups and industry groups:

  • Product groups are separated into M&A, restructuring, leveraged finance
  • Industry groups focus on specific industries (healthcare, technology, consumer, etc.)

Usually the product groups collaborate with the industry groups and in some cases each industry group does bits and pieces of the work that a product group would normally do.

For example, at Goldman each industry group does their own M&A work, there is no separate M&A product group. The specifics really depend on the bank but for the most part it usually comes down to product groups vs. industry groups.

Making a decision between working in a product group vs. an industry group depends on whether you want to gain in-depth knowledge of a particular industry or whether you want the breadth of working with a variety of industries but in one particular function.

IB Deal Specialization

The purpose of both groups is to provide advisory on transactions, mergers and acquisitions and to arrange (and sometimes even provide) financing for these transactions. This area of banking is the subject of the popular book Monkey Business: Swinging Through the Wall Street Jungle

IBD products comprise the following types of deals:

investment_bank-careers_investment_banking_division

Industry groups focus on one specific industry (Technology & Media & Telecoms, Financial Institutions, Energy etc) but carry out all the different kinds of deals for firms within that sector. For example, the Financial Institutions (FIG) team will work with clients on raising debt, IPOs, acquisitions etc, but will only work with clients within that sector.

Some banking firms are known for being particularly good at certain sectors, for example Goldman Sachs TMT (Technology, Media & Telecoms), Morgan Stanley M&A, and Bank of America LevFin.

Other Divisions in an IB

As mentioned in the first image of the article, here are a few other divisions in an investment bank besides the IBD:

Each of these divisions in an investment bank is considered the front office. There are also other divisions in the middle office and back office. Each one has their own nuances that separate them from each other, but the key distinction is that divisions in the front office are client facing while the others are often not.

Industry Groups

As mentioned earlier, certain banks are good at certain sections of business. Here are a few examples of some industry groups:

  • Technology, Media & Telecoms
  • Energy
  • Industrials
  • Real Estate
  • Healthcare
  • Mining

Skyline

Job Titles in the IBD

The hierarchy within the banking division is very well defined. The actual role names may differ from region to region and bank to bank, but all follow the same general pattern.

Investment Banking Analyst

This is how you will enter banking once you have completed your degree. The usual way to be offered a place is to complete an internship with the bank at the end of your junior year at school and then to receive a full time offer to come back at the end of your final year, although it is also possible to apply directly for a full-time job. Typically the analyst does all the 'grunt' work on projects such as valuing companies, creating models, putting together pitch books etc. Analysts are well known for working 80-100 hours per week but are well paid for it.

IB Associate

If you have been working in finance for several years and/or gone to a business school for an MBA, you can break into IB as an associate. It is also possible to be promoted to associate directly from analyst level if you stay on with the bank for a 3rd year as an analyst. Your work as an associate will be focused on coordinating the work of the analysts to meet the expectations of the vice president. Associates tend to work as much as or slightly less than analysts, but are paid more for it.

Investment Banking Vice President (VP)

Vice presidents are where the managerial work starts to kick in. Your role is to make sure that the work your analysts and associates produce is what your senior vice president and managing directors want. There is a lot of client interaction and the work becomes more client relationship orientated. At some firms this position is called 'Director'.

IB Senior Vice President (SVP)

This is basically a mixture between vice president and managing director. The focus is both on executing deals and client relationships and what you actually do will depend on the needs of the group at the time. Also known as 'Executive Director'.

Managing Director (MD)

MD is the highest level you can achieve within a bank without becoming a group head or higher (CEO, CFO etc). Almost all of an MD's time is spent on client relationships and sourcing new clients.

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