In theory, students should be fighting tooth and claw for a chance to work in an investment bank. Goldman Sachs said it received 17,000 applications for 300 internships, while 135 students are grappling for every available graduate job in the sector.
And yet, those who have made it into the hallowed halls of investment banking for this year’s summer internship don’t seem overly enamoured. Rather than single-mindedly doing everything possible to convert their internship into a full-time offer, students are keeping their options open.
“Students are pursuing two or three career options, one of which is investment banking,” said Gordon Chesterman, director of the Cambridge University Careers Service. “Previously, they would have been single-mindedly seeking a job in banking, but this year they’re seeing whether it’s for them and viewing the internship as a great boost to their CV even if they choose to pursue careers elsewhere.”
Maybe it’s down to investment banks’ cookie-cutter recruitment processes of seeking only the brightest academic students from elite universities, but this year’s intake are sure enough of themselves to believe that they can break into investment banking, or management consulting, professional services, fund management or another industry entirely.
Not surprisingly, while still testing and assessing their interns, banks’ HR departments are also trying to convince them that investment banking really is the place to be. “Senior bankers are chatting to us and making presentations about how exciting a place investment banking is to work,” said one intern currently in a bulge bracket firm in the City. “They talk about their longevity, how the long hours are not always necessary and how we can become the generation of analysts to really change the culture of the industry.”
Chesterman said that investment banking is “probably the hardest working sector” when it comes to trying to attract students from their first year at university.
Half and half
This doesn’t appear to be working. The intern says that around 50% of this year’s intake are set on an investment banking career, and around half of those are largely in it for the money. “We’re constantly being asked about our motivations for joining banking. We have to give the impression we’re committed, but a lot of people here are only trying to boost their CV.”
In recent years, interns in investment banking have been treated more like analysts or associates. The networking events and bonding sessions with peers are still offered, but interns are also required to work into the small hours, shouldering the workloads of desks that have been hit by redundancies.
Investment banking still pays more than any other industry at a graduate level – with £45k starting salaries and the possibility of a £20k bonus – and internships offer the same base salary on a pro rata basis. However, interns are still asking whether being forced to work until midnight financial modelling in Excel for the first few years after graduation is really worth it, or if they should be pursuing more interesting work.
“The negative impression in the press has definitely put off a lot of people, who are more convinced by the work in other industries. A lot of people are seeing whether the public perception is justified,” said the intern.
One investment banking managing director who works with HR during the selection process tells us that interns this year are “hard-working, but savvy” and that even in a period of high unemployment among graduates, they’re aware of their appeal to other employers. “No one would tell them this, and they’re still getting tested at every corner, but there’s a slight fear they’ll go elsewhere.”
Internship conversions remain high – Goldman Sachs offers around 60-70% of summer interns full-time roles, while this figure is around 65-75% at Morgan Stanley. Students with an eye on a full-time investment banking role still view it as the best avenue in, according to Shaun Harris, deputy director, careers service at London School of Economics.
“However, students targeting investment banking are also applying to management consulting and professional services firms,” he added.
Perhaps investment banks aren’t getting the calibre of students they want. Of the incoming class of investment bankers at Bank of America this year, nearly 40% failed their entry level exam (versus around 30% in the past), and the likes of Goldman Sachs, Citigroup and J.P. Morgan are also reporting poor test scores.