The banking summer analyst and associate season is nearly upon us. In a few weeks' time the lucky few will be congregating in clusters on the streets of London and Manhattan and feeling - momentarily - empowered. Thereafter, reality may sink in. Because although investment banking internships are still incredibly hard to come by (Goldman Sachs receives 45 good applicants per summer analyst role), they don't necessarily amount to much at all.
If you're about to start an internship in an investment bank, here's how we suggest you let yourself down gently before the internship lets you down hard.
Banks' careers websites are marketing tools. As such, they will paint banks' commitment to student hires in the most glowing terms they possibly can. Take the boutique investment bank Gleacher & Co, which boasts on its website that it offers its junior bankers 'exposure to world class investment banking' and that it has 'an exceptional record' of giving students full-time jobs. This week, however, Gleacher shut its investment banking business and dismissed all its interns even before they arrived.
In the good old days, investment banking internships were an important route into investment banking jobs after graduation. We spoke to one former Lehman Brothers intern who said that 90% of the bank's fixed income class received full-time job offers in 2007 (only to be let go when they joined in 2008). One head of graduate recruitment said conversion rates of 60% to 70% used to be normal for summer internships in banks five years ago.
Unfortunately, that's all changed. The finance-focused head of the careers service at one UK-based MBA school, speaking on condition of anonymity as he doesn't want to discourage anyone from studying an MBA or to discourage banks from hiring his students, said banks now use interns as dispensable labour.
"Banks have stopped using internships as part of the recruitment process and started using them as flexible recruitment tools. Instead of offering students full-time job offers after graduation, they will now often now offer them another six-month internship, with the option to extend it," he said. "You need to do a succession of internships before you get a job."
If you're spending the summer interning in an investment bank, you're probably expecting to work long days on Excel or Powerpoint. Instead, you may find you have nothing to do. As our own intern diaries regularly reflect, an investment banking internship can be a bit of a non-event.
Polly Courtney, an author who previously worked at Bank of America Merrill Lynch, said interns tend to fall into two categories: those who are worked to death and those who have nothing going on.
"There are usually a small number of interns who are assigned work and are very proud about how much they've got to do, but most interns are under-worked and like to pretend they're not," she said.
Interns are commonly commanded to fetch coffees on the trading floor. They are also set to work on pointless tasks simply to stop them wasting everyone's time. "Most interns are incapable of doing anything except answering the phone," said one equity salesman. "You usually just throw them a pile of work and make sure they're out of the way. The work has to be unimportant, but they have to be made to feel that it's very important and you have to turn the screws on them to get it done," he said.
Several bankers told us that banks treat interns unusually nicely. This may be no bad thing, obviously, but it won't prepare you for joining a bank full time.
"Interns are given easy work, set no deadlines, can go home at 5pm and are bought numerous free drinks by ageing managers desperate to associate themselves with these fresh-faced banking prodigies," said one accountant at a bank in London. "This all helps create the illusion that the bank is a fun, friendly and stress-free place to work.”
Geraint Anderson, the ex-Dresdner banker who wrote a book about the seamy side of the City, also spent some time blogging about the mistreatment of banking interns. "We might begin by anonymously putting him on the subscription list for a hardcore gay p*rn mag using the office as his favoured address of receipt. If this fails to moderate his attitude, we may use his computer to type into the in-house intranet message system (accessible and visible to the whole bank) the domain name of some dubious website – thus making out he has inadvertently revealed to every co-worker his particular proclivities," Anderson claimed.
By law, banks are compelled to give you a few days' holiday during your internship. If you don't want to appear flaky, don't take them. "Interns are young, fit, bright and enthusiastic people," said the head of graduate recruitment. "The internship is their chance to prove themselves, not to book themselves a weekend break."
Some people may make friends on the internship. Others may realise that the people they thought were friends were simply competing for the same job.
Intern classes are often comprised of self-regarding types who are obsessed with their own advancement, said Courtney: "There's a lot of competition over who's being worked the hardest and is on the most important deals."
The satirical 'Goldman Sachs Elevator' blog offers advice on intern self-advancement. For example, it advocates the use of dismissive nicknames for fellow interns (Chico, Bud, Fox, Fredo, Bubba) in order to subtly demean the competition.