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What Is An Investment Banking Course? A Full Guide

The scope of Investment banking deals with areas like Mergers and Acquisitions, Takeovers Initial public offers, follow-up offers, Portfolio Management, and Risk Management whereas general banking deals with tasks such as Loans and Advances, Deposits, KYC Compliance, and providing everyday services. Investment Banking (IB) is one of the most adored jobs to be considered. Check here for the full guide to what is investment banking course. 

What is an investment banking course?

Ever seen typical Hollywood Wall Street movies towering skyscrapers men in homogenous dull suits hurriedly moving towards their workplace while holding a coffee in one hand and financial pink newspaper in the other with Bluetooth in their ears talking while, moving and also sipping coffee then reaching their workplace which is characterized by a frenzied activity of traders loudly talking at their phones, others staring at multiple big screens full of complex financial data and charts.

Well, if that fires your imagination and you want such a life then you should consider going to investment banking training. You will need a detailed guide to what is an investment banking course but before we understand the course, we should understand the difference between Investment banking and general banking.

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Difference Between Investment Banking and General Banking.

As a detailed guide to what is an investment banking course, we must inform you about the distinction between investment banking and general banking. However, Investment Banking and General banking both come under the umbrella of the term banking, they are very different from each other. They are like distant cousins who meet each other just at weddings but the former is more sophisticated than the latter. Here are some key areas of difference:

Target Segment- Investment banking is generally concerned with corporate, institutional Investors, and High net-worth individuals (HNIs) in some cases while general banking deals with common public and small-scale companies.

Risk- Investment Banking involves a greater degree of risk as it involves dealing with complex financial instruments and volatile capital and commodity markets whereas general banking is subjected to lower risks such as default risk.

Business Model- The main source of income in investment banking is through fees and Commision (It is a fixed percentage of the total profit earned) whereas in general banking. The main sources of income are interest and fees for day-to-day services such as Overdraft and ATM charges.

Thus, we say that General banking is a simpler, routine, low-profit, and low-risk kind of banking whereas Investment banking is a complex and high-risk high return kind of banking.

Find here the top-ranked investment banking courses for career advancement:

 

What is Meant by Investment Banking?

Investment banking is a kind of financial service that aids corporations governments and financial institutions in their complex and vital financial processes such as raising money through an Initial Public Offer (IPO), Underwriting (providing guarantee) of shares and bonds, Mergers and Acquisitions(M&A) and Trading of Securities.

Investment Banking also includes helping clients with their investment decisions through detailed financial Analysis. Investment Bankers usually earn a substantial fee for providing their services and even for taking risks in the case of Underwriting.

Investment Banking is a highly lucrative but equally demanding career. As for a detailed guide to what is an investment banking course, we should inform you about the facilities offered by investment bankers.

Investment Bankers Provide the Following Facilities to Clients-

Underwriting of securities: Underwriting of securities involves providing a subscription guarantee related to the issue of securities. When a company issues an IPO or Bonds there is a possibility, that they won’t be fully subscribed to which will force the company to sell them at lower rates, so the underwriter provides the guarantee to subscribe to the issue in case it is not fully subscribed.

Mergers and Acquisitions: Investment bankers provide advisory services related to mergers and acquisitions through comprehensive market research and in-depth data analysis thereby helping corporations negotiate terms of agreement with potential partners or buyers.

Debt financing; investment Bankers provide their services related to the issuance of debt instruments such as Bonds and debentures and help their clients get sized loans, The advantage of debt over equity is that the ownership is not diluted thus providing the clients with the right amount of Leverage.

Equity financing; Investment bankers help companies in meeting their financing needs by assisting them in raising equity share capital through initial public offers (IPO), follow-up public offers, bonus issues, Splitting of shares, and equity buyback. Equity financing is preferable when a corporation does not want the additional recurring cost of interest and principal repayment. They advise their clients on deciding the proportion of debt and equity in their financing thus achieving the right Financing mix.

Trading and Liquidity Management-The Investment Bankers provide trading services to their clients. They trade securities on the client’s behalf according to the risk-taking capacity of the client. They also manage liquidity by buying and selling securities.

Financial Advice: Investment Bankers assess their client’s profile, objectives, and long-term Mission along with client’s the standing in their respective industry vis–a–vis competitors, and after a thorough assessment provide financial advice best suited to their client’s needs.

Research-Investment Bankers carry out detailed financial and market research for their clients. They assess the competitors’ strategies and help their clients make effective investment decisions.

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Invest Banking Clients

Through the detailed guide to what is an investment banking course, we should inform you about the types of clients you will deal with. Investment bankers serve a whole variety of investors/institutions, Investment Banking Clients can be broadly listed into three main categories:

Corporations: Investment bankers provide consulting and advisory services to corporations in areas of different financial niches. Investment banks help corporations with their IPO, share buyback, securities trading, and Mergers & Acquisitions.

Institutions: Investment bankers provide their expert services to institutions such as private equity funds and hedge funds helping these institutions manage investors’ money. The saying ‘money makes money’ had its genesis in investment banking as they help their clients make the most of their money.

 

Government: Investment bankers assist the government in deciding the right mix of sources to raise debt such as bonds, T-bills, and selling off public sector companies (Disinvestment) as disinvestment also helps in improving the efficiency of lagging PSUs as it brings private expertise.

Investment Banking Skills

There are certain skills required to become successful in investment banking. The following skills are developed during the course.

Financial Modeling: Investment Bankers build various financial models predicting equity market behavior with the aim of maximizing returns for their clients so a person going for investment banking training should be comfortable with numbers and statistics.

Business Acumen: Investment bankers analyze their client’s business risks and opportunities and help them come up with a proper plan to deal with risks and exploit the opportunities thus an investment banker must have at least a basic understanding of business fundamentals and strategies.

Communication: Investment bankers give a lot of presentations to their clients to pitch their services and explain complex data, statistics, and metrics they also negotiate the terms of mergers and acquisitions on behalf of their clients which usually involves big numbers so an investment banker must have good communication and presentation skills.

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Detail Orientation: Investment bankers have to analyze key financial indicators and comprehensive legal documents. Since we live in a globalized world, they must keep track of various national and international political events as they might have a bearing on the financial sector so a good Investment Banker must have an eye for detail.

 

Commitment: Investment banking requires long work hours and keeping in touch with constant updates of national and international financial and political situations as they have a direct bearing on capital markets.  In Wall Street, they have a saying ‘Money never sleeps’ So the guy managing money can’t expect much sleep either.

Now that we have understood what investment banking is. Let’s delve further into the subject with a detailed guide to what is an investment banking course.

Investment Banking Courses

Investment banking courses are designed to provide students with an in-depth knowledge of the investment banking industry. Investment banking programs typically include knowledge about fields such as capital markets, risk management, Porfilio management, valuation, regulatory framework, and case studies.

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Investment Banking Course Curriculum.

However, the expanse of the curriculum varies slightly from institute to institute, and the time duration of the course, as a detailed guide to what is an investment banking course, we must touch upon the curriculum in detail. The following topics are covered.

Introduction to Investment Banking-It gives a heads up to the students about the course and makes them understand various facets of investment banking that will be covered during the course. It covers the different divisions within an investment bank and their responsibilities.

Financial Statement Analysis: The Investment banking program teaches you how to read and analyze financial statements such as balance sheets and profit and loss statements. It tells the students how to make sense of different financial ratios which help ascertain the profitability, liquidity, and solvency of a business. The ratios are also used as a key tool in competitor analysis.

Capital markets: Good investment banking training will teach you about capital markets that form the basis of making investment decisions. It teaches students about the workings of equity as well as the bond markets as they are the core financing and investment options for corporations and investors respectively.

 

The importance of capital markets can be ascertained from the fact that the size of the Global equity market is 107 trillion dollars whereas the size of the global bond market is 133 trillion dollars.

Valuation: The Investment Banking course includes various valuation methods that help to determine the financial value of the company. Students are taught Comparative Company Analysis (CCA) methods such as discounted cash flow method, Market capitalization, and EBITDA method.to determine the actual value of the company. The metrics are analyzed in relation to competitors and market leaders of the respective industry.

Derivative Markets: Investment banking students are also taught derivates. They are complex financial instruments. Derivates are essentially contracts between two parties in which the value of the derivative itself is dependent on the value of an underlying asset (in layman’s terms, a derivative is like a politician’s son, his actual value is derived from the position of the underlying asset, his father), called as weapons of mass destruction by Warren Buffet.

The derivates were single-handedly responsible for the Global Recession of 2008 or the Sub Prime Crises. These are highly risky financial instruments such as swaps, forwards, futures, and options. Derivatives are preferred by investors who can handle high risks in anticipation of high returns.

International Finance- The International Finance module involves teaching students how to analyze foreign markets’ potential, make cross-border investments, and deal with foreign exchange risks. It also touches on cross-border mergers and acquisitions and international statutory requirements for investments.

Anti-Money Laundering: As a detailed guide to what is an investment banking course, we must touch upon the most pressing issue of money laundering. Money laundering is done through a web of complex financial transactions.

Investment Banking courses have started including topics related to money laundering, so the investment banker understands the legality related to different kinds of investment products as various governments and Interpol started monitoring shady financial transactions that are aimed at funding illegal activities and avoiding tax.

 

Eligibility Requirement To Enroll in Investment Banking Course

As a detailed guide to what is an investment banking course, we must discuss the Eligibility requirements to get into various Investment Banking courses.

Investment Banking Certification CoursesThere is no prerequisite for joining this type of course. But it is advisable that the candidate has passed class 12th.
UG/PG Diploma in Investment BankingA person who has passed the 12th standard is eligible to get admission into an undergraduate diploma, whereas most postgraduate PG Diplomas require a graduation degree in a relevant field.
Undergraduate Investment Banking Degree CoursesCandidates who have completed 10+2, preferably with a Commerce background from a recognized board, can pursue UG-level investment banking courses. Some Universities conduct separate Entrance Exams.
Postgraduate Investment Banking Degree CoursesThe student should be a graduate in Management, commerce, Economics, and mathematics (In some cases) and is eligible for the Postgraduate Investment Banking course. Some Universities might conduct an entrance exam.

 

We have mentioned basic Eligibility criteria for various investment banking courses however there are certain institutes and universities that conduct their own entrance exam in addition to the above-mentioned criteria, while for postgraduate investment banking courses, some universities ask for CAT (conducted by IIM’s), MAT or a XAT (conducted by Xavier Insitute) score.

International Universities ask for a certain minimum TOEFL OR IELTS score. Some of the top international universities may ask for SAT scores (in case of Undergraduate courses or GRE/GMAT scores (in case of Postgraduate courses). Most of the reputed international universities also ask for a few years of relevant work experience before giving entry into postgraduate courses.

Investment Banking Course Fee.

As we are providing a detailed guide to what is an investment banking course, we must share the fee structure of different types of investment banking courses:

Certificate courses: The short-term certificate courses are available at nominal prices starting from a few hundred bucks at Udemy while going up to twelve thousand rupees in Coursera.

Diploma courses: The six-month to one-year diploma courses are available at affordable prices. The pricing usually is around Rupees fifty to sixty thousand for most of the diploma courses. However certain Executive one-year diploma courses can be priced at two-three Lakhs.

 

Degree course: The fees for Degree courses vary based on whether the college of your choice is funded by the Government, or it is a Private Funded college. For Undergraduate Degrees such as B.com in Investment Management, Government or trust-funded colleges charge fees of around rupees twenty to thirty thousand per semester whereas most private colleges charge rupees fifty to sixty thousand per semester.

The Fees for Post Graduate Degree Courses are a little more expensive side. It is around sixty to eighty thousand rupees per semester for Government funded colleges whereas a few lakhs per semester for Private Colleges.

International Degrees: The cost of an International Degree Largely depends on the country you choose as well as the institute. The undergraduate degree fees in Western countries such as the US, UK, and Canada are around twelve to twenty lakhs per annum. Postgraduate degrees cost around 12-15 lakhs per year.

There is also a requirement by certain countries to show a minimum bank balance (to cover the cost of living) before granting admission. The living cost is around seven to eleven lakhs per year.

Careers and Prospects

A detailed guide to what is an investment banking course must inform you about the various career prospects after pursuing a course. Following are the career options for investment banking students.

Investment Banker: An Investment Banker mostly deals with IPOs, Underwriting, Mergers and Acquisitions, and other financial advice. The investment banker, through his expert advice, assists the companies in deciding the best source of financing that aligns with the company’s long-term vision and mission.

Financial Analyst: A Financial Analyst is responsible for analyzing complex financial data and making models to help clients make better investment decisions.

Risk Analyst: A Risk Analyst tries to determine the risk and return paradigm of a project or an Investment decision and suggests the best course of action as per the client’s risk-taking ability.

 

Portfolio Manager: A Portfolio Manager manages various investments of the clients. He decides on what proportion to allocate to debt or equity, within a country or overseas, and the kinds of sectors in which clients’ money should be invested, whether to invest in derivatives or commodities. The portfolio manager forms an asset allocation strategy according to the risk profile of the client.

Corporate Finance Analyst: A Corporate Finance Analyst provides his services related to Budgeting, Restructuring, and various financing decisions. He is also responsible for analyzing financial statements such as profit and loss statements, Balance sheets, and cash flow statements as well as performing ratio analysis.

Salaries and Perks

As a detailed guide to what is an investment banking course, it would be incomplete without mentioning the salaries and perks for IB Professionals, which are indeed attractive however, it will also depend on factors such as where you acquired your degree or diploma and the size of the organization you are working for.

The entry-level salaries for the investment banking profession typically range from 8-12 Lakhs per annum. The Bonus element is also quite decent and goes up 3-4 lakhs per annum for an entry-level professional. There is generally a substantial proportion of variable income in the form of incentives for high-performing employees. Entrepreneurs who start their own portfolio management services can earn a great deal of income from commission.

FAQs

1. Does completing an IB degree provide you with a guarantee of a job?

IB courses are in high demand and if you complete your course at a good institute and acquire relevant skills. You are most likely to land a decent job.

2. What are the Growth Prospects in the field of IB?

Growth Prospects in IB are very attractive, high-performing Investment bankers can easily rise to CFO (Chief Financial Officer) or those apt in portfolio management can even start their own Hedge Fund.

3. I have an Arts Graduate. Can I make a career in Investment Banking?

However prior knowledge of finance and Economics is preferable but if you have good analytical skills and an eye for Numbers you can make a career in Investment Banking.

4. Are there any areas related to investment banking that are not covered by this article?

As a Detailed guide to what is an investment banking course we have tried to be as comprehensive as possible but it’s not possible to cover the whole information in one article, so we suggest doing further research if you want more details.

Conclusion

‘Greed is Good’ is a famous quote from the 1987 movie ‘Wall Street’, it beautifully summarizes the qualities that are required to make it big in the game which means that self-interest, the urge for more profits, willingness to put in long work hours and having a stomach to take risks are the qualities that are most sought after in this industry. If you have these qualities coupled with good analytical skills, we recommend you go on investment banking training. We hope that a detailed guide to what is an investment banking course was helpful in providing you with the information you were looking for.

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