Agile and active career planning in times of uncertain money markets
The money market refers to short-term debt investments or trade between banks and other financial institutions. The period of investment varies from 90 days to 270 days. Certificates of Deposits, Treasury Bills (Government Bonds), Commercial Papers, etc. are some of the instruments of the money market.
Reasons behind Uncertain Money Markets
The last three years have been different and difficult for the money market. The concluding months of 2019 were the flag-bearers of gloom that rocked the world in unique ways, seldom witnessed by the human race. The Wuhan virus from China, which later came to be known as COVID-19, played havoc with human life for two consecutive years. Additionally, the world economy at large also suffered a tremendous setback. Gross Domestic Product declined due to a sharp drop in production. Many working middle-class people lost their jobs during this period. The worst hit was the poor working class, who worked solely on a ‘no work no pay basis’.
When factories stopped functioning and project construction came to a grinding halt, these people became helpless. During those times, the socio-economic situation of the world as a whole and India, in particular, was quite bad. As we were slowly recovering from the deadly disease by early 2022, the Russian invasion of Ukraine ushered in a new chapter of uncertainty in the money market. The war disrupted quite a few supply chain logistics and created several man-made crises. Energy in quite a few forms is the best example. Though the economies of the western countries including the US and Great Britain have been hit hard, India struggled to strike a balance. Meanwhile, the rapid socio-economic changes in China and the aftermath of its several virus-borne diseases have swayed potential investors of the west to other Asian nations.
The impact of the Ukraine–Russia war is worst felt by the common people of the US and other western countries because of their continued funding of the war to support Ukraine. This may lead to the greatest recession in the year 2023. Great Britain has already started feeling the heat and the results of the latest mid-term election in the US are also a testimony. India has always tried to steer clear of all these controversies and has always put the interests of the nation first while taking a stand in foreign policy.
Agile and Active Career Planning
In the recent past, we have witnessed a very high quantum of lay-offs in renowned western companies and even a few cases in India. Most companies are now expected to ramp up their portfolio management with the help of Investment Bankers. Amidst these uncertain times, it is advisable to learn investment banking and take it up as a career option.
Investment banks are generally of two types with respect to the services that they offer — Bulge Bracket Investment Banks and Boutique Investment Banks. The first type covers those large multinational investment banks, which offer services to all types of clients in various types of industries. Government and corporate sectors and even large banks are their clients. However, Boutique Investment Banks cater only to one or two portfolios. They work for smaller clients in limited capacities.
Investment Bank Functions
Large international investment banks like Goldman Sachs offer financial services and manage portfolios of a diverse clientele. Functions can be broadly classified into:-
1) Underwriting segment
2) Advisory segment
3) Investment management segment
4) Investment and lending functions
5) Institutional client solutions
Investment Banker Roles
Underwriting functions are those that an Investment Banker does to support an organisation in its process of creating an IPO/FPO etc. All the analysis a company goes through for a suitable merger and acquisition, valuation of a company, prediction analysis, etc. are advisory functions of an Investment Banker. Investment banks offer different financial products to their clients to invest and grow their money. The Investment Banks lend their own money to their clients and thus this function is a combination of investment and lending both. This function strengthens the Investment banker further in the process of helping their clients. The institutional client solution functions of an investment bank help their clients to solve several complex financial transactions, most of which are international.
Broadly Investment Bankers have two types of roles — back-end bankers and front-end bankers. The ones who do the advisory analysis, financial models, valuation, etc., are the back-end bankers. However, those Investment Bankers who meet the clients and convince them of their products are called front-end bankers.
Roadmap to Become an Investment Banker
Students may take up science or commerce in their higher secondary. At the UG level, they must study a related field such as commerce, mathematics, economics, or statistics. Thereafter they must acquire the basic skills required to become an Investment Banker. These include Financial Modelling, Equity Research, Valuations, Merger and Acquisition analysis, Leverage Buyout analysis etc., with a top-notch knowledge of advanced Excel. Besides these, to become a front-end Investment Banker, students are required to learn several other soft skills, which will help them to face clients confidently.
The job of an Investment Banker is a very reputable and prestigious one. The Certified Investment Banking Operations Professional course by Imarticus offers both online as well as offline modes of training. This is a banking course with placement(s) that will guide you to become an Investment Banker and help you achieve your dream.