Commercial Or Investment

by Johana Hassan

Johana Hassan examines one of the oldest and most respected professions – banking.

Investment banking, corporate finance, merchant banking – whatever you call it, this branch of banking is often seen as the glamorous, high-flying one as it deals with big money – and, of course, pays big salaries.

When I was six years old, I told my father I wanted to be a bank manager when I grew up. He asked me why and I told him, “Because he owns a bank and has a lot of money.” My father laughed and told me that the bank manager didn’t own the money; he only managed the bank. Still, that didn’t dampen my childish enthusiasm (though I did eventually choose a different career path).

Banking can be divided into many different sectors. A check on Bank Negara’s website shows there are 22 commercial banks – nine local and 13 foreign – operating in Malaysia. There are also 16 Islamic banks, one international Islamic bank and 15 investment banks.

BACKGROUNDS UNLIMITED

The commercial banking sector provides services to individuals (the public), small businesses and large organisations. The skills that are required include: being excellent in oral and written communication; the ability to think creatively and work under pressure; creating and maintaining good interpersonal relationships; managerial, leadership and analytical skills; and, competence in IT.

Gone are the days when graduates had to have a Banking, Business or Finance degree before commercial banks would consider their applications. “We’re not only looking for Finance or Accounting graduates. Even those with Law, Engineering and Mass Communications degrees are encouraged to apply. What’s more important is that you have a passion for banking, and willingness to learn,” says Izwal Mazlan, Graduate Recruitment Manager, HSBC Bank Malaysia Berhad.

Like most banks, HSBC welcomes applicants from various academic backgrounds. Successful candidates are then channelled through a Management Development Programme (MDP) for fresh graduates, which provides practical experience, management training and wellbalanced development opportunities for future leadership roles in HSBC.

It is imperative that there is a right fit between HSBC’s organizational culture and values and that of the management trainees as they are recruited and groomed to be future leaders. “Of the 5,000 applications we receive each year, only about 35 are hired,” Izwal explains.

Once admitted into the MDP, trainees would be streamed into either commercial banking, operations support, personal financial services or Islamic banking. They are given the opportunity to express their preference, into which aspect of banking they would like to be involved in, however, this would only be confirmed by their performance in the Assessment Centre.

The MDP training lasts two-and-a-half years. “Normally, 9 months into the programme, they will assume the position of an assistant manager and will be posted to other branches around Malaysia,” says Izwal. Mobility is that other all-important requirement in a commercial

banking career because banks typically have branches all over the country. HSBC Bank Malaysia, for example, has 40 branches nationwide, so trainees can be sent to any location.

The programme then culminates in an intensive training course at the HSBC Group Training Centre in the United Kingdom and Hong Kong.

THE HIGH-FLIERS

Investment banking, corporate finance, merchant banking – whatever you call it, this branch of banking is often seen as the glamorous, high-flying one as it deals with big money – and, of course, pays big salaries. In Malaysia, investment banks include:

Aseambankers Malaysia, CIMB Investment Bank, ECM Libra Investment Bank, Public Investment Bank and RHB Investment Bank, among others. Investment banks provide governments and corporations with investment services, including buying, selling and trading of securities, managing assets and providing financial advice. It pays better than commercial banking, but only the toughest survive in this very demanding and stressful environment.

But before you get to fly first class, you will have to spend a few years being the ‘bag carrier’ – sometimes literally. The trainee investment banker spends 20 out of 24 hours (if you’re one of the lucky ones!) researching, analysing information and data, and preparing the documents for that multi-million ringgit deal. You will carry your boss’s laptop and set it up for his presentation to the client. And he will be the one to hand over the Mont Blanc pen to the client to sign the deal with.

Once the basic paperwork has been mastered, the fledging investment banker then learns the fine art and science of negotiation, marketing and handling clients. This requires strong inter-personal skills and a keen understanding of human psychology.

At the same time, you must develop your network of contacts who will feed your store of knowledge of what’s going on in the world around you – politics, macro-economic variables, market trends, etc – all of which can affect the outcome of a deal.

It’s never too early to start. If you’ve got an eye on investment banking as a career option, you need to begin creating contacts now. Attend conferences, hold informational interviews with companies and talk with your school’s alumni. Do what it takes to get a foot in the door, and remember that it takes time for networks to become established and start producing results. A good way to start if you are still young is to get accepted into a highly-rated MBA programme and focus on quantitative and analytical studies.

But if dealing with people leaves you cold, there are still well-paid and well-respected positions in investment banking for those who like to work with numbers. Mathematicians are very welcome, especially those who have studied advanced financial theory like bond valuation and options pricing

THE ROUTE TO THE TOP

Investment banking is a field that absorbs quite a mix of people, no matter what their initial training. Some lawyers and scientists have found their way into investment banking, especially after adding an MBA to their repertoire. However, the accepted route into investment banking is usually via an Accounting degree and a first job as a securities analyst with a broking house. Analysts generally go on to earn a Certified Financial Analyst qualification.

From securities analyst, some move to the trading floor. To be a successful trader, you must develop fast reflexes, market savvy, impeccable analytical abilities and poker-faced bargaining skills. Some traders stay in the field, while others move on into corporate finance and investment banking.