[D i g i S y n c]

Originally Posted by pendyal

what i had in mind when i talked of the traditional role of investment banks was acting as a conduit between ppl who had surplus money to invest and ppl who needed this money in their operations (again from my limited knowledge of i-banking)....

Investment banks do have high-profile clients who have lot of surplus money. Banks invest their money various funds, securities etc. In return banks have their commissions. That can also come under asset management.

never even kostined if trading cud be called i-banking

Trading is not called as I-banking. Actual traders and sales people are not called as I-bankers in professional language. Investment banking and sales and trading (S&T) are totally different businesses. I happened to interact with an analyst from the DB - global markets and she said the same.

People have made a huge generalization really. Guess they find the term 'investment banker or i-banker' really cool. Investment bankers might work for some 15 hours+ a day in most of the cases. Traders work according to market hours with say around 2 hours before and after. On an average a trader will work less hours than an investment banker. The work they do is totally different, though it is related (both can make a lot of money!). Terms might mean different at different working places over the world. Basic remains the same. I-bankers are I-bankers and traders/sales people are traders/sales people.


Cheers!

[anupam will return]

Originally Posted by D i g i S y n c

Trading is not called as I-banking. Actual traders and sales people are not called as I-bankers in professional language. Investment banking and sales and trading (S&T) are totally different businesses. I happened to interact with an analyst from the DB - global markets and she said the same.

People have made a huge generalization really. Guess they find the term 'investment banker or i-banker' really cool. Investment bankers might work for some 15 hours+ a day in most of the cases. Traders work according to market hours with say around 2 hours before and after. On an average a trader will work less hours than an investment banker. The work they do is totally different, though it is related (both can make a lot of money!). Terms might mean different at different working places over the world. Basic remains the same. I-bankers are I-bankers and traders/sales people are traders/sales people.


Cheers!

Disagree. At the end of the day, an investment bank raises money through public, private or other means. Without a sales and trading unit, how would an ibank make money?
To just give an idea of what the various divisions in an investment bank are:
1. Sales & Trading - In a classical sense, this is what ibanking is all about. The sales and trading desk is one of the core divisions of an ibank. (Actually you have two seperate units: sales and trading, but for some desks like forex you generally have a single sales cum trade desk in most banks)

2. Mergers & Acquisition (buy side/sell side) - The unit where people donot sleep. Supposed to be the cream of an ibank, you'll always find some of the best graduates getting recruited for MnA.

3. Syndication - Act as conduit between sales, trading and other units of ibanks, also when a deal involves multiple ibanks.

Yes, it is true traders work only during market hours, but their work remains hectic and mood/emotion driven. On the other hand M&A analysts are supposed to be in the deal room so long as the deal is underway. This may stretch from 6-7 days at a stretch to even 1-2 months.

cheers,

-awr

[konqueror_vivek]

Originally Posted by D i g i S y n c

Trading is not called as I-banking. Actual traders and sales people are not called as I-bankers in professional language.

People have made a huge generalization really. Guess they find the term 'investment banker or i-banker' really cool. Investment bankers might work for some 15 hours+ a day in most of the cases. Traders work according to market hours with say around 2 hours before and after. On an average a trader will work less hours than an investment banker. The work they do is totally different, though it is related (both can make a lot of money!). Terms might mean different at different working places over the world. Basic remains the same. I-bankers are I-bankers and traders/sales people are traders/sales people.


Cheers!

You just under-estimated the configuration for a trader and number of hours a trader has to work on {agreed to anupam}, just to add, traders are not supposed to work only in market hours, there is whole lot of other things they work on, apart from taking position in various debt / equity / and credit markets, the most important job of a trader is to evaluate risk involved in the exposure.

It is difficult to compare some Vice President (deal captian in Syndicated Finance) with a Vice President in Credit Markerts (Trader), both have different roles to play, different responsibilities, however both of them work under one roof of Coporate and Investment Banking.

PS - Traders are different from "Brokers", who work only in markets hours, probably 1 hour ahead and after the market opens / closes for settlement of trade.

[D i g i S y n c]

Originally Posted by anupam will return

Disagree. At the end of the day, an investment bank raises money through public, private or other means. Without a sales and trading unit, how would an ibank make money?

That is right. Most of the investment banks make their profits from their sales and trading departments. For example, in the year 2005 the global markets division - Deutsche Bank contributed for around 50% profits of the firm. I never disagreed on that. Simple. My point was that traders and sales people are not called as investment banker in professional language. There wasn't anything for you to disagree on

Thank you for taking part in the thread.

Cheers!

[D i g i S y n c]

Originally Posted by konqueror_vivek

You just under-estimated the configuration for a trader and number of hours a trader has to work on {agreed to anupam}, just to add, traders are not supposed to work only in market hours, there is whole lot of other things they work on, apart from taking position in various debt / equity / and credit markets, the most important job of a trader is to evaluate risk involved in the exposure.

I did not under-estimate the configuration for a trader. The work a trader does apart from taking positions is all fine. From what I know and understand, a trader will work less number of hours than an investment banker at a given bank. Maybe this does not happen in India but I'm sure it does in Europe and the US. Traders might work around 12 hours a day. But IBD people might work 15 hours+ everyday.

One shouldn't be surprised if IBD people working on a M&A deal stay on till 2:00 a.m. at work for months. But this might hardly happen with any trader. Seriously, if we only talk about hours, a trader will work less number of hours than an investment banker.


Cheers!

[anupam will return]

Originally Posted by D i g i S y n c

That is right. Most of the investment banks make their profits from their sales and trading departments. For example, in the year 2005 the global markets division - Deutsche Bank contributed for around 50% profits of the firm. I never disagreed on that. Simple. My point was that traders and sales people are not called as investment banker in professional language. There wasn't anything for you to disagree on

Thank you for taking part in the thread.

Cheers!

If I may still choose to disagree actually trade and sales units in an ibank are called as investment bankers. Commercial and corporate banks also have a sales and trading unit, and likewise they cannot be termed as ibankers. But, in an ibank, all sales and trade people are definitely called investment bankers. Hope this helps.

cheers,

-awr

[krishsuraj]

Originally Posted by anupam will return

If I may still choose to disagree actually trade and sales units in an ibank are called as investment bankers. Commercial and corporate banks also have a sales and trading unit, and likewise they cannot be termed as ibankers. But, in an ibank, all sales and trade people are definitely called investment bankers. Hope this helps.

cheers,

-awr

Yes Sales & Trading and IBD(IPOs, M&As) both come under an I-Bank, but not every one who works in an I-Bank is called an I-Banker. The term 'I-banker' or more commonly a 'banker', is reserved only for the IBD people.
So if you are working in S&T, you can say that you work in an I-Bank but you normally dont call yourself an I-banker!
And regarding work hours, its an accepted fact that S&T people work less hours than people in IBD. But S&T people hardly get time to go off their seat even for their lunch while in IBD, people do have that comfort. So as far as intensity is concerned, both are as tiring

[konqueror_vivek]

Originally Posted by D i g i S y n c

I did not under-estimate the configuration for a trader. The work a trader does apart from taking positions is all fine. From what I know and understand, a trader will work less number of hours than an investment banker at a given bank. Maybe this does not happen in India but I'm sure it does in Europe and the US. Traders might work around 12 hours a day. But IBD people might work 15 hours+ everyday.

One shouldn't be surprised if IBD people working on a M&A deal stay on till 2:00 a.m. at work for months. But this might hardly happen with any trader. Seriously, if we only talk about hours, a trader will work less number of hours than an investment banker.


Cheers!

Lets talk about numbers, a big I bank executes around 178-190 deals in a fiscal year (example - JPMorgan Chase, Bank of America), among these many deals, 30-32 deals are M&A, probably 15-16 are LBOs /MBOs, given that - I understand a person involved in 16 odd deals need to grind for 15 hours for a couple of months, however on an average there is no single team in I banking section, which spends 15 hours for whole 6 months - leave alone 12 months for the time being. For relationship deals, same person will spend probably just 3 hours and that too bank meeting. Just to point these numbers (178-190) is for big I bank - small I banks get to execute 50-55 deals in an year! (probably even less or more, this could be a good average)

Above example illustrates that time, - when we had bull phase, the "good" time, when borrowers were in need of capital for a growing Industry and economy, however now the things have changed a lot, when everything has slowed down, the number of new issuance has reduced, and deals in pipelines are not being executed - resulting steep decline in business for I bankers working in Syndicated Finance, ABS / MBS, M&A - you might have read how many of big arms have slashed a lot of headcount in recent months. Just to point out, last 6 months is only one example, this is what happens when economy takes downward direction (slowdown), which had happened previously as well.

Now for the Trader working under same roof, dosent get the same liberty - he has to measure risk involved, he still has the responsibility to track back the exposure and limits assigned to various brokers (example Lehman has the biggest share in brokerage across). Even when the economy has slowed down, the work a trader has does not get reduced - it is however increased. "A trader is different from a Broker".

Trading arms of these I banks have various line of businesses, they have Strategic Capital arm, Distressed debt / securities - Special Situations group, Risk group for Credit / debt / equity markets. Believe me it involves a lot of work. When it comes to I banking everyone is just gets one thing in mind M&A, which is not the end of the road - however things start from that very point !

Dont confuse traders with Brokers - a Lehman Trader could be equally ranked person like Managing Director / Vice President in Syndicated Finance, however a broker who only works in market hours is only a contractor working for the institution.

[D i g i S y n c]

Originally Posted by konqueror_vivek

Dont confuse traders with Brokers - a Lehman Trader could be equally ranked person like Managing Director / Vice President in Syndicated Finance, however a broker who only works in market hours is only a contractor working for the institution.

Hey Vivek,

There is no confusion between a trader and a broker. I know what you are talking about. My point was really, so simple and straight. Even GS, DB, ML, SG, LB people will agree on that. It's just a universally accepted fact. I'm sure krishsuraj has made everything clear.


Krishsuraj - Thanks mate!


Cheers!

[krishsuraj]

Originally Posted by konqueror_vivek

Lets talk about numbers, a big I bank executes around 178-190 deals in a fiscal year (example - JPMorgan Chase, Bank of America), among these many deals, 30-32 deals are M&A, probably 15-16 are LBOs /MBOs, given that - I understand a person involved in 16 odd deals need to grind for 15 hours for a couple of months, however on an average there is no single team in I banking section, which spends 15 hours for whole 6 months - leave alone 12 months for the time being. For relationship deals, same person will spend probably just 3 hours and that too bank meeting. Just to point these numbers (178-190) is for big I bank - small I banks get to execute 50-55 deals in an year! (probably even less or more, this could be a good average)

The number of closed deals have certainly come down, but there is one difference. The number of unsuccessful deals have been very high especially in private placements and other such dealings with the PEs. Promoters not able to raise money through IPOs, go to PEs. For the uninitiated, this is how it typically works
Make a pitch, get the mandate, talk to the company and its employees ( which takes about 20 days including plant visits and others), make the financial model ( make the promoter understand that the valuation he is seeking is too aggressive and its not possible in this market), make the information memorandum, send it to 10-15 PEs ( of which only 1-2 would want to take it forward) and initiate the deal. This process easily takes about 40-45 days during which you are normally required to put a lot of '15+ hr days'. If the deal falls through, which is highly probable ( 2-3 in 10 is the current ratio), none of this even appears in the number of deals the company has done during the year. So lets just not go by number of deals. Ya working hours are not as long as it was during last year, but IBD has certainly not become a '9-5' job. There are people in IPO execution and ECM teams who are absolutely jobless, but they certainly are not representative of the majority