Who Are Figs And What Do They Do
In order to provide more tailored services, some investment banks may segment areas of expertise for the financial institutions group into a banking or financial services group and an insurance group. Some investment banks use these sorts of divisions more as a marketing technique, which can help attract customers seeking specific types of services under the FIG umbrella.
Nearly all of the large investment banks have a FIG business integrated with their overall offerings. Some of the larger investment banks with a FIG business include Morgan Stanley, Wells Fargo, and Goldman Sachs. The services that FIGs provide for their clients can vary and range from initial public offerings to financings and buyouts:
Global Banking & Markets
Global Banking & Markets provides financial services and products to corporates, governments and institutions worldwide. We offer career opportunities in areas including Banking, Markets and Securities Services, Global Research and Markets Operations.
Global Banking & Markets focuses on building partnerships with our corporate, government and institutional clients to help them achieve consistent, long-term performance. We use the strength of HSBCs international network to connect emerging and mature markets, covering key growth areas. Our products and services include advisory, financing, prime services, research and analysis, securities services, trading and sales, and transaction banking.
Brokerages Exchanges And Investment Banks
Representative Large-Cap Public Companies: Morgan Stanley, Goldman Sachs, Charles Schwab, S& P Global, CME Group, Intercontinental Exchange, Hong Kong Exchanges and Clearing, Coinbase , Moodys, MSCI, London Stock Exchange, CITIC , and Nasdaq.
If youre reading this site, I assume that you know what investment banks do .
All the companies in this category make money with commissions charged on transactions, whether small or large .
So, theyre very close to normal companies, but their transaction volumes are closely linked to the capital markets, which means theyre correlated with overall fiscal and monetary conditions, including interest rates.
Higher interest rates tend to hurt these companies because people are less likely to chase returns trading meme stocks or crypto higher rates also mean that M& A deals and debt issuances are less appealing numerically.
Some of these firms also offer fee-based services to get more stable revenue and avoid complete dependency on the capital markets.
The accounting and valuation here are quite standard, but the operational metrics differ, as in the example Houlihan Lokey / GCA presentation below:
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Radbroke Knutsford & Manchester
The North West is very important to us. We have multiple offices in Manchester and our campus in Radbroke our state-of-the-art technology hub is one of the UKs largest centres for information security. Here, over 5,000 people conceive of, design and develop the innovative technological solutions that protect our customers and lead the world in digital banking.
What Do Bank Codes Look Like In The Uk
UK banks use a 6 digit sort-code to identify the different institutions – for example the code for TSB in Bradford is 77-71-13 and Tauntons branch of HSBC is 40-44-04. The first two digits identify the bank , and the rest of the number identifies the branch. They were introduced in the 1960s as the banking industry started automating more of its processes. You can usually find your sort-code on the back of your debit card or on your bank statement.
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The Financial Institutions Group : Specialization Superhighway Or Dreary Dungeon
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Depending on the person, the Financial Institutions Group could be the most technically challenging and interesting group to work in or a bottomless dungeon with lava-dwelling crocodiles that eat children all day.
These views differ dramatically because the merits of the group depend on your goals going into investment banking.
If your lifelong ambition is to work at KKR or Blackstone doing leveraged buyouts of industrial or retail companies, no, FIG investment banking is not the place to be.
But if youre interested in the most different sector in IB, you want constant deal flow, and you want to advise banks, insurance firms, and other financial companies, nothing beats FIG.
Lets start with the key definitions, setting, and dramatis personae:
What Is An Introducing Broker
An introducing broker is a broker in the futures markets who has a direct relationship with a client, but delegates the work of the floor operation and trade execution to another futures merchant, typically a futures commission merchant . The IB is usually affiliated with the FCM, either as an independent entity that is partnered with that merchant firm or as a direct subsidiary of that FCM.
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Summary Of What Investment Bankers Do
Investment banks play a key role in helping companies and government entities obtain capital financing. As financial advisors to their clients, they help to price capital, allocate resources, and manage investments. Although investment banks have been scrutinized and criticized from many different angles in recent years, they are virtually an indispensable element for the smooth, successful operation of a free market economy. Hopefully, this has helped answer the question for you, What do investment bankers do?
Accounting Valuation And Financial Modeling In The Financial Institutions Group
We covered many of the key points earlier in this article, but in short: the technical side is very, very different for commercial banks, insurance firms, and specialty finance firms but not that different for the others.
The technical side is so different that we have an entire course dedicated to Bank & Financial Institution Modeling:
Bank Modeling
Master bank accounting, valuation, M& A, and buyouts with 4 global case studies based on Shawbrook, KeyCorp / First Niagara, ANZ, and the Philippine Bank of Communications.
I would summarize the key differences as follows:
- Accounting: For commercial banks, you need to know loan loss accounting and how the Allowance for Loan Losses is set up, how the Provision for Credit Losses affects it, and how charge-offs and reversals flow through the statements.
For insurance companies, the timing makes the accounting tricky because even if a company writes premiums for a policy and collects the cash, it cant recognize them as revenue upfront. Instead, a line item similar to Deferred Revenue called the Unearned Premium Reserve is created and reduced over time, and there are similar timing issues with commissions and the reserves held for loss payouts.
- Regulatory Capital: There are many important ratios related to the Balance Sheet for both types of firms, such as the CET 1 Ratio for banks and the RBC Ratio for insurance :
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Recruiting: Who Gets Into The Financial Institutions Group
The same types of candidates who get into investment banking anywhere also get into FIG investment banking: your university or business school, internships, grades, networking, and recruiting/interview prep matter most.
Although certain sectors within FIG use very different accounting and valuation, bankers dont necessarily expect you to know all the details going into it as an Analyst.
It helps to know the basics, such as whats covered in this article and our Bank Modeling tutorial, but you dont need to be an expert youll still get standard technical questions as well.
Similarly, FIG-specific experience helps, but its more important at the MBA and lateral hiring levels, as bankers want industry specialists there.
Compared with other specialized industry groups, there are fewer opportunities to break in through the side door.
With real estate investment banking, for example, you could gain experience in dozens of real estate-related roles and use it to move into an investment or advisory role.
But these adjacent roles are less common in the financial institutions space, so if you want to be in this group, you should start early and stay specialized.
What Are Bic Codes
Until recently, BIC stood for Bank Identifier Code, but that has now changed to Business Identifier Code. BIC codes are managed by SWIFT – for more information on that, take a look at our article about the SWIFT network.
BIC codes are used to identify specific businesses – most commonly banks. In the UK, the first four characters of a BIC code form part of the IBAN as well. To see how a BIC code is made up, take a look at our BIC code toolkit.
BIC codes are also known as SWIFT codes, which can be confusing, but SWIFT payment codes are the same thing as a BIC.
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Financial Institutions Group Trends And Drivers
Most financial institutions except FinTech have the following qualities in common:
- They tend to follow the broader markets but with cycles that dont necessarily correspond to broader economic cycles.
- Companies tend to be value-oriented because many firms in the sector issue stable, predictable dividends and trade at somewhat lower multiples.
- Theyre highly sensitive to interest rates and broader monetary policy.
- Theyre heavily regulated, especially in commercial banking and insurance, where government officials set the rules and financial ratios that firms need to follow.
- Theyre highly leveraged because these firms all use other peoples money to make money.
Each driver makes a slightly different impact depending on the vertical.
For example, consider interest rates: do higher rates help or harm financial institutions?
Higher rates mean that banks earn more on their loans and pay more on their deposits and debt but they generally still come out ahead because the spread tends to increase when rates are higher.
However, higher interest rates also mean lower asset values, which could hurt bank valuation even if it helps their operational performance.
The point is that FIG is a complex sector thats sensitive to many factors, but its more complicated than saying that Factor X is good or bad.
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Find out more on our public website www.dbresearch.com, or access research.db.com if you are a client.
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Pros And Cons Of The Financial Institutions Group
FIG investment banking has a lot going for it: the most deal activity of any group, quite a lot of variety in deals, companies, and business models, and a higher bar for technical skills than most other groups.
Youll always be busy because even if there are no equity or M& A deals, banks still issue debt all the time to fund their loan growth.
If youre a senior coverage banker, this setup can be quite lucrative because youll get clients that come back to your firm over and over for capital raises and you just have to execute.
The main downside is that FIG investment banking is also perceived to be very specialized, even if you work outside the bank and insurance verticals.
There are exit opportunities, but its difficult to break into non-FIG roles if you stick around too long, and theres far less private equity activity than in most other industries.
So, if your main life goal is to work at a private equity mega-fund as a generalist, FIG is not the right group for you.
But if you want to advise or invest in financial institutions, or youre planning to work in the group and transfer elsewhere, the Financial Institutions Group should be less of a dungeon and more of a delight.
What Do You Do As An Analyst Or Associate In Fig Investment Banking
This one depends heavily on your vertical and the size of your firm.
If you advise large commercial banks, expect many debt deals and relatively few M& A mega-deals.
There is plenty of M& A activity within commercial banking, but due to regulations on the percentage of total deposits in a country that may be held by one bank following an acquisition, its concentrated among smaller firms.
Larger banks may be more active in smaller acquisitions, especially of non-depository firms, and in divestitures and spin-offs.
Equity issuances happen as well, but mostly when banks need to shore up their regulatory capital .
Deal activity is more varied in insurance, but youll still see more debt deals and fewer equity and M& A deals.
In the other FIG verticals, deal flow will be even more varied, but youll see more equity and M& A deals in FinTech because its the high-growth area.
Finally, traditional leveraged buyouts are not common in any of these verticals.
Thats because of regulatory issues and the inability to lever up these firms, as theyre already highly leveraged and constantly issue debt.
That said, private equity has become increasingly active in insurance over time, and LBOs in the sectors such as FinTech are possible for more mature companies.
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The History Of Ib Schools
The IB diploma was developed by teachers at the International School of Geneva. These teachers created an educational program for students who moved internationally and who wanted to attend a university. The early project was concentrated on developing an educational program to prepare students for college or university and creating a set of exams that these students would need to pass to attend universities. Most of the early IB schools were private, but now half of the worlds IB schools are public. Arising from these early programs, the International Baccalaureate Organizationfounded in 1968 and based in Geneva, Switzerlandoversees over 900,000 students in 140 countries. The United States has over 1,800 IB World Schools.
The mission statement of the IB reads as follows: The International Baccalaureate aims to develop inquiring, knowledgeable, and caring young people who help to create a better and more peaceful world through intercultural understanding and respect.
What Is A Clearing Code
A National Clearing Code is needed for making a payment to an account that doesnt have an IBAN. They are also known as Routing Codes. If you have a SWIFT/BIC or IBAN code then you dont need an NCC. These days they are mostly used for payments outside the EU.
For more information on non-EU banking codes, check out our article about IFSC, BSB, NUBAN and Hong Kong Clearing Codes.
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What Does Ach Stand For In Banking
For most of us, sending bills and receiving paychecks by mail are things of the past. We shop online, enroll in direct deposit, pay our bills, and file taxes online. If you have ever wondered what facilitates all these digital transactions, youve probably heard or read about three little letters with a big job: ACH, or Automated Clearing House. Heres what you need to know about the ACH system.
Tips For Managing Your Money
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- Whether youre looking to open your first bank account or switch to a new bank, make sure you shop around for the best option. Interest rates vary widely, so the decision could be worth thousands of dollars. Check out our round-up of the best savings accounts to compare rates and features.
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Examples Of An Ach Payment
An ACH payment can take the form of several different payment types such as using your online bank account to pay a bill or receiving your paycheck digitally from your employer. All of the uses of an ACH payment can be categorized by these three examples of ACH payments:
- ACH Debit: This transaction pulls funds directly from an account. Setting up ACH payments to come out directly from your bank to pay your mortgage each month is an example of an ACH debit.
- ACH Credit: This transaction moves funds into an account. Using a payment app, like Venmo or PayPal, to transfer your account balance to your bank account is an example of an ACH credit.
- ACH Direct Deposit: This transaction occurs when you receive funds directly into your account, like receiving your paycheck funds from work.
What Do Investment Bankers Do Jobs And Titles In Investment Banking
Its probably already easy to see that investment banking is not just a single job. Rather, it is a business, within the banking industry, that includes a number of jobs. Looking at job titles will further answer the question of, what do investment bankers do?
Admittedly, things can get a bit confusing, since virtually anyone, other than clerical support staff, who works at an investment bank will usually describe themselves as an investment banker, regardless of their specific job title.
There are two ways to look at what investment bankers do. One is by their job title, which basically determines what type of tasks they handle. The other is by the division of the investment bank they work in, which determines the types of projects they work on.
1. Analysts and Associates
Analysts and Associates are both considered entry-level positions at an investment bank, with associates occupying a slightly higher rung on the corporate ladder, usually by virtue of possessing an MBA or substantial prior experience in the financial industry.
Analysts are typically recent college graduates or individuals who may have some financial industry work experience, but who are new to investment banking. Analysts can usually work their way up to becoming associates within three or four years, although doing so may require not only gaining work experience but additional education as well. Most investment banks prefer their associates to have an MBA or other graduate degree related to finance.
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