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How to get a capital markets job in an investment bank

  • Capital markets bankers help clients raise money through public markets.
  • Capital markets bankers usually specialize in equity or debt. They’re known as Equity Capital Markets (ECM) bankers and Debt Capital Markets (DCM) bankers.
  • Capital markets jobs are well paid. The highest pay goes to people originating deals and bringing in new clients rather than just executing on capital raising transactions.
  • Entry to the best capital markets teams is highly competitive;junior bankers get ahead by impressing bosses with skill and hard work.
  • To succeed, you need to be good with people and have a really strong eye for detail

Capital markets bankers are all about facilitating expansion for their clients. When companies want to make investments and expand, they need to raise money to do so.  Sometimes they just take out a bank loan, but if you want to raise a lot of money at the best rates possible – or if your financial needs are a little bit more complicated than the average lending officer can accommodate – then you might need to go to the global capital markets and sell debt or equity to investors.  If you do that, it’s the Capital Markets divisions of an investment bank you’ll be talking to.

As Virginia Draper, graduate recruitment manager at Deutsche Bank says, “Roles in corporate finance can broadly be divided into two categories; origination teams, who work with clients to understand their needs and identify new business opportunities, and product teams, who develop and execute specialist solutions within capital markets or by providing advice they may require” 

Investment bankers working in Capital Markets are responsible for providing advice to companies on capital raising and then finding investors to provide the money.  To do this, they act as a kind of go-between. – On one hand they talk to client facing advisory bankers to understand corporate clients’ capital raising requirements. On the other, they talk to the sales and trading division to understand what the investors are prepared to buy. As they move between the two, capital markets bankers are responsible for managing the process, including hiring lawyers, getting the documentation put together and ensuring that everything complies with all of the regulations that cover the act of issuing securities to the public.

What’s a debt capital markets banker? What’s an equity capital markets banker?

Because they depend on investors to be able to deliver the cash to the corporations, capital markets teams are usually split into Debt Capital Markets (DCM) and Equity Capital Markets (ECM), specialising in either bond or equity issuance.  The two areas are quite different from each other, because companies tend to issue bonds much more regularly and as an everyday part of their financial management, while equity issuance is a much rarer and more strategic decision.

“DCM brings a unique combination of corporate finance (a profound knowledge of how our clients’ business operates and how to advise on their financial needs), fixed-income markets exposure, and mastering of complex financial products,” says Demetrio Salorio, Chief Executive Officer, SG London Branch and Chief Country Officer, UK & Ireland.  Firms expect their DCM analysts to be highly numerate, and to have an understanding of the technicalities of company financing

However, while most investment bankers are very focused on individual deals, the high-volume nature of debt issuance means DCM bankers must be able to develop relationships with clients over time and provide them with relevant market information at regular intervals. Salorio says success in DCM depends on having a “strong capacity to develop a relationship based on mutual confidence with the issuer clients”.

ECM bankers, on the other hand, have to go out and make deals happen.  “A typical day begins by understanding the market complexities for that day and week,” says one co-head of EMEA capital markets at a European bank. “We do this by reading newspapers, listening to the research briefings, and participating in team meetings.”  A good capital markets team will anticipate their clients’ needs –maybe there’s an opportunity to take advantage of good news to issue shares at a higher price.  As the opportunities are identified, the team moves into “pitch” mode.

As soon as a pitching process opens up, it’s the senior ECM bankers that will hop on a plane (COVID-permitting) and try and sell the investment bank to a potential client. This is the ‘origination’ stage of the deal, but although it’s the directors and managing directors who are expected to be the face of the bank, junior employees are engaged in preparing the marketing material required to convince a client to go with a particular bank. If they’re successful, the team involved moves on to the ‘execution’ stage of the deal.

“Origination could include preparing or conducting client pitches. Executing would include drafting or structuring work with clients, lawyers and/or accountants or distribution efforts involving syndicate, sales, and investors,” says a senior banker at a boutique investment bank.  “Syndicate”, in this context, refers to a specialist team that sits (in organisational terms, but usually also physically) between the equity capital markets division and the sales and trading floor. If you work in syndicate your job will be liaising with the sales and traders and keeping track of investor interest in the products being issued.  During a deal, syndicate is responsible for preparing feedback from the market about how well received the offering is going to be.

Equity capital markets jobs are typically divided into three separate areas. Firstly, there will be the industry group or sector that you’re focused on – such as healthcare, technology media and communications or financial institutions. Then there’s the geographical area you’re covering and then there’s the product type you specialize in.

That’s not to say that you’ll be focused purely on, say, IPOs. ECM bankers work in teams are divided by ‘common’ equity products that includes first issuance, follow-ons, secondary offerings and the like, then convertibles are separated out (and tend to sit in both ECM and debt capital markets teams) and there are also teams that focus on more complex derivative products. In some banks, there are teams of bankers who focus solely on private placements.

Debt capital markets (ECM) jobs have a similar split into geographical and sectoral teams, but the financial institutions team is generally much bigger. This is because financial clients (eg. banks) themselves account for nearly half of all bond issuance.  There are also a number of special types of bonds only issued by banks and insurance companies to meet regulatory requirements and DCM bankers working in this space need to have very detailed knowledge of the ever-changing world of regulation.  For similar reasons, DCM teams will tend to have more emphasis on private placements, as these are more common in the bond market than in the equity market. DCM bankers will also work closely with experts in interest rate and foreign exchange derivatives, so that clients can borrow efficiently even when the investors want a bond denominated in a currency other than the one which the client wants the proceeds.

As a junior capital markets banker, you’ll be doing a lot of spreadsheet work, making financial models of client companies.  For a DCM role, you’ll need to understand the how credit rating agencies model the impact of new bond issuance on a company’s credit rating; you also need to be able to create detailed profiles of interest payments and debt maturities in order to track how a client’s financial structure develops.  If you have a job in ECM, the modelling is a little less nitty-gritty and more devoted to the creation of “pitchbooks.” Pitchbooks are the great big PowerPoint documents that bankers pore over in order to sell clients on the merits of a new transaction, and to promote their own skills as the best bank to execute it.

When they’re not doing pitchbooks, junior bankers are heavily involved in the execution of deals, something which can require a considerable amount of multitasking.  During busy periods, particularly in DCM, you might have as many as half a dozen transactions, all at different stages, with a lot of hard deadlines for things to be completed by.  One of the key skills for a capital markets banker is to be able to keep track of things and prioritise.  At the Vice-President and Director level, this makes up most of the job, marshalling a small army of analysts and associates to keep everything moving through the pipeline.

In the senior ranks, Managing Directors will tend to be either “originators” – the people who bring the deals in and maintain client relationships – or “structurers”, the technical experts who give advice on the right kind of transaction for every client.  As your career develops in capital markets, you might find that you are drawn to one side of this divide or the other, although there is some overlap as structurers are intimately involved in the pitching and origination process while originators have to understand the deal structures relevant to their clients at any given moment.

Skills you’ll need for jobs in ECM or DCM

Because capital markets sits between advisory bankers in areas like M&A and people working in sales and trading, if you work in capital markets you’ll need some of both skillsets.  Capital markets is a job in which long hours are constant; if you aren’t rushed off your feet with deals to execute, you’re expected to fill in the gaps by working on pitches. 

Capital markets bankers are famous for their attention to detail.  Since the actual service is something of a commodity, banks try to differentiate themselves by reassuring the client that they will be able to make the transaction go without a hitch, so any tiny mistake in a pitchbook or model will tend to undermine the overall branding.  Even getting a font or colour wrong can be the occasion for long recrimination sessions and angry managing directors, so beware!

Because of the way that the capital markets division works, people in these jobs also need to be good at teamwork.  Demetrio Salorio says leadership and collaboration skills are key in DCM because you need to forge relationships with colleagues across the firm in order “to attract advisory resources from other units of the bank to present the client with ad-hoc, high-quality strategic financing advice”.  It’s the same in equity capital markets (ECM). “Senior capital markets bankers need to have broad internal and external contacts, as well as strong interpersonal skills, marketing capabilities and strong project management skills to balance interests of complex stakeholders,” says one of Asia’s top ECM bankers.

Finally, if you have a capital markets job you’ll also be required to multitask.  Even a relatively simple capital markets transaction will call for many different skillsets as it moves through the pipeline, from pitching to modelling to legal and compliance to project management.  An ECM or DCM banker is expected to stay with the transaction and to liaise with the clients all through the process, and to retain grace under pressure. 

Virginia Andrews at Deutsche sums up the skills you’ll need for capital markets jobs as follows:

“Ambition - In a profession that attracts high achievers, you’ll need plenty of ambition and determination.

Numeracy - Being able to do quick calculations in your head under pressure will give you the edge when you’re deciding on a course of action.

Hungry to learn - Although you’ll come to specialise in a particular field, you’ll need to keep building your knowledge all the way through your career. It’s quite the learning curve.

Good with people - Some of your time will be spent meeting clients, and you’ll need to be able to bring together diverse groups of people and get them to deliver work.

Attention to detail - You’ll need to be the first person to spot areas of concern for your clients, and understand how global events can affect your work.”

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AUTHORDaniel Davies Insider Comment

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