Investment Banking – the Good, the Bad and the Ugly

Post By RelatedRelated Post

Written by Ellen To

“What’s the culture like?” It’s the question asked by almost all fresh-faced aspiring investment bankers at networking events and careers fairs. And, despite half-heartedly expecting it, they are somewhat disappointed when the answer consists of the words “welcoming”, “supportive” and “inclusive”. One can hardly blame them when the mere thought of investment banking paints a picture of gruelling hours and a macho testosterone-fuelled world where analysts brag about going home only to take a shower. So is the ‘sink or swim’ culture a myth or reality?

The headlines do not help to dispel the horrors of the industry. In 2013, 21-year-old investment banking intern Moritz Erhardt was found dead in the shower after working non-stop for 72 hours at Bank of America Merrill Lynch. The news sent shockwaves through the world of global finance; a statement issued by the bank proposed actions for the future including creating a senior working group to examine the office culture and in particular, the hours worked by its junior staff. However, when the source of a problem seems to be rooted in the culture and the people, measures undoubtedly take a long time to create an impact. Polly Courtney, an intern at Merrill Lynch in 2001, said “During my internship, all-nighters were like a rite of passage. They were discussed among us in the canteen each night with an outward sense of loathing, but tinged with pride… it wasn’t just a culture of long hours and hard work; it was more a culture of desperately trying to impress, with ‘face time’ – pretending to be hard at work even when you were done for the night”.

So you may be thinking that cases like Erhardt’s are extreme and rare; some may even question whether it is the culture of the bank that led to the tragedy or Erhardt’s personal determination and drive to succeed. If you do not want to work gruelling hours, surely you can just quit your job right? The answer is that it depends. The more recent case of 22-year-old Sav Gupta who died after struggling to quit his job in 2015 as an analyst on one of Goldman Sach’s most prestigious investment banking teams, sparked outrage and thrust the culture of the industry in the limelight again. The difference between Gupta and Erhardt was that Gupta was aware of the physical and emotional toll of the culture. In a phone call to his dad, he says “It is too much. I have not slept for two days, have a client meeting tomorrow morning, have to complete a presentation, my VP is annoyed and I am working alone in my office”. The young banker died that day.

Firms including Goldman Sachs have pledged to improve the experience for their new recruits. The shift, prompted by cases such as the death of Erhardt and Gupta, has been driven in part by a fear that the brightest graduates don’t view investment banking as a sustainable career. And indeed, drastic measures are being introduced: Goldman Sachs hired larger classes of analysts and encouraged them to stay out of the office on Saturdays. The firm also started making analysts full-time employees from the start, instead of offering two-year contracts. Many more global employee networks have been established at banks such as HSBC and Morgan Stanley, aimed to address issues like gender, age, ethnicity and sexual orientation. These groups also provide a forum for employees of differing levels of seniority to discuss working conditions and campaign for changes.

And banks know that it is important to debunk the myths and showcase the changing culture to students from a young age. For example, there has been an increase in insight programmes offered to A-Level students at major investment banks, consisting of panel sessions on work-life balance and one-to-one conversations with senior bankers. Students are actively encouraged to ask any question they wish. An increasing number of these programmes are targeted at female students or students from a disadvantaged socioeconomic background- a clear initiative to inspire the brightest students, regardless of who they are, to pursue a career in the industry. Competition for these insights are fierce; at the ‘Step In, Step Up’ three-day programme at Morgan Stanley for female A-Level students, over 500 applications were received for just around 56 places. But the insight is worth it: many students walk away feeling more confident about the industry after hearing about the vast range of roles on offer and the process of meeting the bankers themselves dismisses the image of the ruthless, calculating, goal-orientation individual.  

However, it is also important to avoid generalising the industry as a whole. Within investment banks there are many divisions, each which demand a different skill set. For example, life as an analyst in investment management requires building long-term relationships with clients which may add up to long hours but the payoff is working with some of the world’s biggest investors. Global Banking is known for its high pressure and intensely demanding atmosphere from day one but some people thrive in this exact climate. A Deutsche Bank representative working in Global Markets, an area renowned for its intense pressure, tight deadlines and high-stake environment, revealed that “It’s not all about making immediate trading decisions at a fast pace- I’m on a flow desk and some of my trade ideas might be for six months or two years in debt markets”.  

So some areas may have longer working hours but most are manageable. One could also argue that starting a career and making a good impression in any industry requires dedication and long hours to get ahead. And despite the focus on the lowlights of investment banking, for some people it can be a very rewarding experience both emotionally and financially. Speaking at the LSE last week was former Head of European Leveraged Finance of Barclays Capital PLC, John Kelting, who gave an honest insider’s view on investment banking. Although he revealed that “you can’t bubble along in the middle of the pack as you’ll be out” and he himself “rarely went a month without thinking [he] was going to be fired” due to the “nature of the industry”, he spoke with sincere enthusiasm about the “bright people, with a common goal” and how he “had some brilliant times” for which he “wouldn’t change for the world”.

Sometimes there are some words that make such an unlikely pairing that we find it hard to put them together. Italy and efficiency, for example. Or Bake Off and Channel 4. ‘Investment banking’ and ‘relaxed’ may be another one. It’s true that the industry is difficult: hours can be gruelling and the culture stifling. But measures are in place to ensure that the industry is slowly evolving; after all, banks do not want to scare off the best talent. Ultimately it depends on you as a person, the role that you are going for, and the individual culture of the bank itself.

As aptly put by John Kelting, “it can be a fantastic experience but it depends on whether you are the right person. And there’s a lot of luck involved; who you work with is key. But at its worst, investment banking can be very ugly indeed”.

Ramone Bedi

Deputy Editor for the City