If you're a junior banker working in M&A or capital markets, you might think that whichever bank you work for, life will be pretty much the same. The hours will always be long, the spreadsheets will always be heavy. All that matters is deal exposure and a big brand on your CV. This is very right, but it's also very wrong - different banks structure their IBD teams differently. That structure will have a big influence on how you work.
Broadly speaking, there are two ways that banks organize their IBD juniors. They either place them into 'generalist pools' or they place them into sector-focused groups. Some banks also operate a halfway solution in which juniors are placed into very broad sector-focused 'super groups'.
Confusingly, the arrangements aren't fixed. "Generalist pools come in and out of fashion like flared trousers," says one recruiter. Banks that have been following a generalist approach might suddenly switch to a sector approach, and vice-versa.
Take Goldman Sachs. Until recently, the US bank placed its European analysts and associates into two large generalist groups. One covered Northern Europe; the other covered Southern Europe. Analysts in associates in either group were staffed on deals in any sectors as long as those deals took place in the appropriate geographical region. In recent weeks, however, we understand that Goldman has scrapped its regional pools and gone for a sectoral approach instead.
Goldman didn't respond to a request to comment on the change, but several recruiters told us they'd noticed it. "Goldman just scrapped their Northern and Southern European teams," said one. "They now have some odd combinations like 'consumer, healthcare and real estate'."
While Goldman's reinstating its IBD sectors, other banks are moving in favour of generalist pools. We understand that Barclays has just implemented a pool for its first year analysts. Earlier this month, Berenberg reconfigured its entire IBD class so that juniors across M&A, equity capital markets (ECM) and debt capital markets (DCM) sit in a single generalist pool to be allocated between London and Frankfurt as appropriate."It's been a busy period for ECM, and so we've merged ECM, DCM and M&A into a new corporate finance team, in order to allocate resources more efficiently," Berenberg's head of corporate finance Olivier Diehl told Financial News.
Banks are tight-lipped about their structures, but others like UBS, Deutsche Bank, Bank of America Merrill Lynch and Morgan Stanley are said by recruiters to have tight sector-focused teams. Midway between the two, Credit Suisse is understood to have a few 'super groups' which combine many sectors at once. The Swiss bank declined to comment
The upside of being in a generalist pool is simple: exposure. When you can work across deals in multiple sectors using multiple products, you'll learn a lot more than when you're stuck in a single sector.
"Barclays is focused on providing an attractive and interesting experience for its junior bankers with plenty of scope for future development," said a spokesman, talking about the bank's new pool.
The downside of being in a generalist pool is workload: it's easy to end up over or under-worked when you're not assigned to any particular sector. "When you have a pure pool system it's all about finding managing directors (MDs) you can gel with," says the head of one M&A recruitment firm which focused on analysts and associates, speaking off the record. "In a pure pool system, analysts gravitate towards certain MDs and that can make it more political - some people get no work and some people get too much. The analysts who have breakdowns are the ones who can't say no."
"The thing with a pool system is that if you're not a thrusting type who puts yourself forward, or the MDs don't like you, you can get overlooked," said another junior M&A recruiter, also speaking anonymously. "It can be a problematic structure," he added.
This doesn't mean that sector-focused teams are great either.
The danger with the sector-focused approach is that you end up in a team you don't like, or in a sector where there's no activity. In this case, the early and important years of your career in IBD are blighted by dissatisfaction or inaction, or both.
This leaves the best option looking like banks which operate broader teams or which carefully assign analysts and associates to particular deals without leaving staffing to the whim of MDs. Barclays analysts get 1-1 meetings to discuss their career plans and are staffed on deals that reflect these. The head of (another) recruitment firm, also speaking off the record, says Goldman Sachs and BAML's system of staffing juniors on deals is particularly good: "They run a central staffing system which assigns juniors to deals. It makes the whole thing less political."