Investment Bankers - What Is It That They Actually Do ?

[BOR]

Some people think the sun shines out of their arses, some think that they are evil personified and the cause of all the problems facing humanity.

And whilst I've got a vague idea what they do, I wouldn't be able to formally explain it.

So here is a chance to put the case for IBs, by explaining, in detail, what an IB does day-to-day, and discuss whether that justifies their bonuses/salaries.

[Mattt]

Exchange of securities

[BOR]

It's an opportunity for them to put their side of the case.

They don't need to justify anything if they don't wish to. But they are currently the most hated group of people in the world, and they can allow that perception to continue, or they can argue against it.

[Chilli]

There are a lot of different roles that can be described as Investment bankers. I don't think any of them should have to justify their salaries, whilst they are making money for their employers...they are paid what the Banks think is a reflection on their achievements.

[rocksteadyeddie]

BOR said:

Some people think the sun shines out of their arses, some think that they are evil personified and the cause of all the problems facing humanity.

And whilst I've got a vague idea what they do, I wouldn't be able to formally explain it.

So here is a chance to put the case for IBs, by explaining, in detail, what an IB does day-to-day, and discuss whether that justifies their bonuses/salaries.

What does an investment banker do is a question as broad as it is wide. In its narrowest interpretation an investment banker might advise corporate clients on mergers and acquisitions, or capital raising (amongst pther things).

However, the people who sit within investment banking (and who are the subject of the current furore) will include traders (who buy and sell currencies, equities, bonds, interest rates and many many other things often using the bank's money. Note that traders can also make a lot of money trading on the back of customer orders in the market), sales people (who are the interface between the bank's corporate customers and traders in all the above products), as well as IT, quants, model-traders, middle and back office, legal, compliance, risk-managament and all manner of other 'support' roles.

They justify their bonuses by making huge amounts of money. If you make £10 mio for your employer, and your skills are transferable to another employer, then it is reasonable to expect that the market is going to pay you for that.

[RichardD]

Chilli said:

There are a lot of different roles that can be described as Investment bankers. I don't think any of them should have to justify their salaries, whilst they are making money for their employers...they are paid what the Banks think is a reflection on their achievements.

If you read the OP, that isn't the information requested - which is "what do they do".

[Legend83]

Chilli said:

There are a lot of different roles that can be described as Investment bankers. I don't think any of them should have to justify their salaries, whilst they are making money for their employers...they are paid what the Banks think is a reflection on their achievements.

Agreed. If you are a securities trader and through a combination of luck and judgement / research happen to make £10m for your employer using just £5m of their money, would you not expect a small cut of that £5m profit?

Or if you spend weeks away from your family wining and dining a prospective client who is planning a company acquisition, you secure that client through your hard-work and persistence, and bring with it £1m of fees, would you not hope for a small cut of that to reflect the work you had put in.

Risk = Reward. They play with big money.

[anonymous-user]

They take huge risks with other peoples money. If they get it right they make lovely big personal bonuses, if they get it wrong they make whopping losses and their banks get bailed out by the taxpayer. It's a win-win situation basically.

[rocksteadyeddie]

unrepentant said:

They take huge risks with other peoples money. If they get it right they make lovely big personal bonuses, if they get it wrong they make whopping losses and their banks get bailed out by the taxpayer. It's a win-win situation basically.

Not really the whole story... Traders take calculated - and generally well controlled - risks with other people's money, and manage the risk that the bank inherits from clients. They are very good at it. That is why they are employed. If they make money on it they get a bonus. If they lose money they lose their jobs. Being fired from one bank us generally a bad sign for your career prospects.

Bear in mind that their employer will take in excess of 90% of the gains, and it is not unreasonable that their employer should take the losses.

[BOR]

RichardD said:

If you read the OP, that isn't the information requested - which is "what do they do".

Yes. Possibly my initial post wasn't clear enough. If you take rocksteadyeddie's answer for example, whilst I understand that a bank does those things, it's still not clear what those things are.

Buying and selling equities or currencies as a prop-trading desk, is relatively easy to grasp - bank buy/sells with their own money or on behalf of a client etc, but what else ?

To re-phrase, what are the mechanics of what an investment bank actually does, or what is it that their clients ask them to do ?

[rocksteadyeddie]

BOR said:

RichardD said:

If you read the OP, that isn't the information requested - which is "what do they do".

Yes. Possibly my initial post wasn't clear enough. If you take rocksteadyeddie's answer for example, whilst I understand that a bank does those things, it's still not clear what those things are.

Buying and selling equities or currencies as a prop-trading desk, is relatively easy to grasp - bank buy/sells with their own money or on behalf of a client etc, but what else ?

To re-phrase, what are the mechanics of what an investment bank actually does, or what is it that their clients ask them to do ?

We could be here all week answering that one. Happy to have a go, but is there one role you would like me to run through in paricular as an example?

[ukwill]

BOR said:

Some people think the sun shines out of their arses, some think that they are evil personified and the cause of all the problems facing humanity.

And whilst I've got a vague idea what they do, I wouldn't be able to formally explain it.

So here is a chance to put the case for IBs, by explaining, in detail, what an IB does day-to-day, and discuss whether that justifies their bonuses/salaries.

Interesting. Wasn't it you who was busy castigating them in a thread not so long back?

[BOR]

ukwill said:

Interesting. Wasn't it you who was busy castigating them in a thread not so long back?

Yes. Yes it was, and I probably will be again. But I'm offering the IB world a chance to "put me straight" .

And that means in the first instance, describing what it is that this part of society actually do. Naturally, at some point after, there may be further castigations, or not, as the case may be.

[RichardD]

Rolling Stone don't seem to like one investment bank, Goldman Sachs !

http://www.rollingstone.com/politics/story/2881632...

rolling stone said:

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

[Legend83]

BOR said:

ukwill said:

what it is that this part of society actually do.

Pay a lot of tax to Mr Brown.

[ukwill]

BOR said:

ukwill said:

Interesting. Wasn't it you who was busy castigating them in a thread not so long back?

Yes. Yes it was, and I probably will be again. But I'm offering the IB world a chance to "put me straight".

And that means in the first instance, describing what it is that this part of society actually do. Naturally, at some point after, there may be further castigations, or not, as the case may be.

So you're happy to admit that you're on record here moaning and slating people without any idea about what it is they actually do?

[BOR]

It's the trditional PH way.

[fido]

RichardD said:

Chilli said:

There are a lot of different roles that can be described as Investment bankers. I don't think any of them should have to justify their salaries, whilst they are making money for their employers...they are paid what the Banks think is a reflection on their achievements.

If you read the OP, that isn't the information requested - which is "what do they do".

And if you read what Chilli posted, there are numerous roles that you can perform in an investment bank ... myself, here's a selection of roles which i've done:- Quantitative Analyst (testing models for traders, middle office and risk management .. equivalent to an Engineer in Bor world), Executions Trader (buyer role similar as you might do for a Supermarket in Bor world), also done a stint in Fund Management (which is equivalent of retail banking for rich folk and institutions).

[BOR]

swerni said:

What makes you think the IB world even care if you continue to suck oxygen let alone anything else?

<<shrug>>

BOR said:

It's an opportunity for them to put their side of the case.

They don't need to justify anything if they don't wish to. But they are currently the most hated group of people in the world, and they can allow that perception to continue, or they can argue against it.

[okgo]

swerni said:

BOR said:

ukwill said:

Interesting. Wasn't it you who was busy castigating them in a thread not so long back?

I'm offering the IB world a chance to "put me straight" .

That's nice of you.

What makes you think the IB world even care if you continue to suck oxygen let alone anything else?

I think that is fairly well demonstrated by the fact that the few known traders on here don't even bother commenting on such threads