If you’re a late 20-something MBA wanting to work in investment banking, the employment report of London Business School is a good bellwether of your chances. LBS MBAs typically account for 40% of business school graduates recruited into investment banks in EMEA, so a lot can be assumed about the state of the job market by what happens there.
LBS has just unveiled its 2014 employment report – here are 11 things it tells you about the chances of breaking into banking after taking an MBA qualification.
[efc_twitter text="Fewer MBAs are going into finance than at any point over the past seven years"]. In 2007, 46% of the LBS MBAs ventured into the financial sector, a proportion that has gradually been shrinking as banks offer fewer opportunities and graduates seek exciting new opportunities in the fast-growing tech sector. Now, at least, finance recruitment has stabilised – 28% chose finance in 2013 and the same proportion were hired in 2014. [efc_twitter text="In investment banking, 12% of LBS graduates were hired – slightly up on the 11% in 2013."]
Investment banks are shrinking their associate classes at the same time as private equity, fund management and wealth management firms are offering more opportunities to finance-focused MBAs. However, investment banks still offer the bulk of jobs. 12% of the LBS class of 2014 went into investment banking, compared to the 7% who went into private equity, the 6% who went into investment management and the mere 2% who headed for retail or commercial banking.
Comparatively speaking, US investment banks are all over LBS MBAs. Citigroup was the investment banking recruiter on campus in 2014, with nine recruits compared to eight in 2013. Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley and Nomura (a Japanese outlier) also increased their intakes and each hired four MBAs from LBS.
By comparison, Deutsche Bank, Credit Suisse and Barclays – all of which recruited in 2013 – no longer made the list of top finance employers. HSBC was there, but reduced its intake to three people from five in 2013.
Worse: Deutsche Bank hired 11 people in 2012, reduced this to three in 2013 and last year appears to have hired just two people.
Citi hired nine LBS MBAs last year (see point three), eight in 2013 and 12 in 2012. It is the biggest recruiter of LBS MBAs in the finance sector.
What's the chance of converting an internship into a full time job? Try 28% to 80%.
There’s no guarantee that the same people who interned at the various banks went on to apply for a full time role, but based on the number of summer interns versus new recruits in investment banking, the conversion rate is: 80% at Bank of America Merrill Lynch, 78% at Citi, 66% at Morgan Stanley, 66% at Nomura, 57% at Goldman Sachs, 50% at HSBC, 33% at J.P. Morgan and 28% at Credit Suisse.
The main motivation for working in finance remains – bigger pay. LBS MBAs going into finance received an average of $206.2k in 2014 including sign on and year-end bonuses. This compared to $178.4k in consulting and $167k in the corporate sector.
Finance pay is up from a $204k average in 2013. What’s more bonuses are growing – albeit by a very small amount. Mean sign on bonuses in the financial sector were $38.8k (down from $39.9k in 2013), but year-end bonuses increased to $49.8k (from $47k in 2013).
At LBS finance still trumps technology as an employer of choice. 16% of this year’s class went into either internet or high tech firms, compared to 28% across the financial sector. Amazon has increased its MBA intake to 18 LBS recruits (up from 11 the previous year),. However, Google reduced its recruitment spree from seven in 2013 to five in 2014 and Microsoft hired four, rather than five, people this year.
Goldman Sachs will be taking on 10 interns from LBS in 2015, up from four last year. Credit Suisse (9) and Citi (6) are the other big investment banking intern recruiters. Internship choices seem more indicative of MBAs' switch across to tech – Amazon (22) and Google (15) have taken on the largest number of interns for 2015 and 18% of MBAs are interning in internet/ecommerce companies compared to 11% in investment banks.
32% of the LBS class of 2014 went into consulting, up from 29% in 2013. McKinsey & Co alone hired 31 LBS MBAs and The Boston Consulting Group a further 21 people. Most (28%) went into strategy, suggesting more of an appetite for the attributes MBAs bring to the table in the consulting world.
28% of the class of 2014 worked in finance pre-MBA. One assumption from this – as it’s the same proportion that went back into the financial sector – could that bankers are using an MBA for career progression, rather than to switch sectors. However, there’s no way of telling which people are moving where in the employment report. What is clear, though, is that fewer finance professionals are taking MBAs, at least at LBS. In the class of 2015, just 23% herald from finance backgrounds.