An investment banker is a new buzzword from the last two decades that attracts thousands of students into that. Even students preparing at CA institute in Mumbai aspire to become an IB after CA. So What’s this IB is all about.
AJ Next Education, the top-notch CA final coaching in Mumbai has come up with a detailed blog on that.
What is the meaning of investment banking?
Investment banking denotes a special segment of all banking operations or any financial services company or a corporate division that helps state and central government, individuals, and other services like corporations, organizations, institutions, commercial and non-commercial banks etc. They help in advisory-based financial transactions, mergers and acquisitions to raise capital and provide financial consultancy services to them.
It means identifying the field as a categorization of financial services that mainly focuses on selling securities and underwriting a company’s sale of new equity shares to cause a rise in the capital.
Who is an investment banker?
An investment banker is someone who is a professional in finance who often operates as part of a financial institution and who is concerned mainly with an increase in capital by issuing stocks or borrowing money for companies, governments, or other organizations and entities.
Examples – Goldman Sachs (GS), Deutsche Bank (DB), Bank of America Merrill Lynch (BAC), JPMorgan Chase (JPM), and Morgan Stanley (MS).
Can a CA become an Investment Banker?
Investment Banking is a career which demands a solid and hardcore knowledge of financial concepts, with a strong hold on numbers and spreadsheets.
It requires in-depth knowledge of finance. And the curriculum of the Chartered Accountancy course does cover finance in-depth. CA Finals has eight subjects, out of which only one is finance: Strategic Financial Management.
This means a CA get good knowledge about finance. The very course is structured to make CAs competent enough for an Investment Banker profile because they are familiar and acquainted with financial concepts and theories.
You will need to complement a Chartered Accountancy degree with a CFA, or MBA with a specialization in finance or an FRM degree to train oneself exclusively in finance. Having any of these degrees along with a CA degree makes you outrun the other candidates. CA salary in Investment Banking in India is far better than someone working as an investment banker with other degrees.
What is the scope of investment banking?
Investment Banking is growing quickly among the energetic and enthusiastic youth in India and has become a career option. The following are the reasons why the youths in India want to pursue this career—
- It is an enriching, rewarding job with many rewards in financial terms and self and career growth. This career requires an individual who is updated about the market, leaving huge scope for learning. The salary of an Investment Banker in India is quite lucrative.
- Another very valuable reason for this being a favoured career choice in finance is that this job opens your trails to bigger careers like wealth, management, entrepreneurship and venture capital.
- As the economy of India is emerging, career in investment banking is broadening with new job opportunities opening up for them. A minimum salary of 6-8 lakhs per annum is provided in the first place, which eventually grows as one works more and gains more experience.
- It is a great career option because of the increase in the rate of FDI in India.
- Nowadays, due to settlement in Investment banking and its financial services, banks require a skilled investment banker who can contribute to the growth of the organization.
- As multiple ingredients can contribute to the rise and fall of markets so there will always be a demand for an Investment Banker, who has the good market knowledge and high financial aptitude to manage the market.
How to become an investment banker in India?
There are multiple ways to get into Investment Banking from any stream. So, the possibility of becoming an investment banker is open even if one is from a science or humanities background.
However, the aspiring candidate must have an MBA degree (Master in Business Administration). Apart from the education profile, a candidate must have internship experience in a well-known company so that the chances of being hired become higher.
Other ways are—
- Chartered Accountant (CA)
- Chartered Financial Analyst (CFA)
- Financial Risk Manager (FRM)
- Certified Financial Model and Valuation Analyst (FMVA)
Career path in Investment Banking
The career of an investment banker advances along an impartially standard path. Investment banking positions in the hierarchy are as follows:
Analyst– People just after graduating work as an analyst. They are the lowest in the hierarchy and do the maximum amount of work including presentations, analysis, and administrative.
Associate– People with brilliant success are promoted to Investment Banker associate after a minimum of three years. An associate’s role is the same as the analyst’s role. The only additional responsibility is that he serves as a mediator between junior and senior bankers, and in some representative cases, works directly with clients.
Vice President – A VP coordinates a team of associates to put together everyday work and spends their days speaking to clients constantly. They create presentations, and legal agreements, offering memorandums, proposals, and engagement letter term sheets and foster client relationships.
Senior Vice President / Executive Director– It is the highest rank a person can get in Investment Banking. The role of a senior VP is very different from life as an analyst, associate, or VP, mostly because the responsibility shifts toward prospecting for new business.
Managing Director– It takes a very long time and luck to become a managing director. They are the highest authority and are responsible for the profitability of the bank. In rare cases, he takes an active part in the deal, but he hires an efficient VP and senior VPs to carry out their everyday tasks.
Investment banking is growing enormously these days. It is one of the best finance-related jobs in the world. Investment Bankers in India get a minimum remuneration of 6 lakh per annum at the junior level and a maximum of 30 lakh per annum at the highest rank.
According to LinkedIn, the average salary of a CA is 6-10 lakhs per annum whereas that of an Investment Banker is 12-15 lakhs per annum. So you can imagine the Salary of CA in Investment Banking.
If you’re interested in making a career as IB, take the CA route by enrolling at AJ Next Education, The best IPCC classes in Mumbai.