Investment Banking
Learn what investment banking is, what the divisions and roles involve, what it pays, and how students can prepare for internships and analyst roles.
Introduction
What is investment banking?
Investment banking is a specialised part of finance that helps large companies, institutions and governments raise money and carry out major financial transactions. Unlike an ordinary bank, an investment bank does not take deposits: it acts as an adviser and intermediary, for example by guiding a company through a stock market listing, a bond issue or a merger.
Investment banks are usually split into front office, middle office and back office. The front office, which covers M&A, ECM and DCM, generates revenue by working directly with clients. The middle office monitors risk and compliance, and the back office processes and administers the transactions. When people talk about a career in investment banking, they almost always mean the front office: that is where the analysts, associates and managing directors who advise on and execute deals sit.
Not every bulge bracket is a pure investment bank. Firms such as Goldman Sachs and Morgan Stanley focus primarily on investment banking and wealth management, while universal banks such as J.P. Morgan also run large retail and commercial banking operations. For a student that mainly matters for culture, and for how much weight the investment banking division carries within the bank as a whole.
The market
Three tiers of investment banks
The tier mainly says something about the scale and breadth of the clients a bank serves, not about the quality of the work. A boutique with twenty bankers can be just as relevant on a specific deal as a bulge bracket with thousands of staff worldwide, and boutiques are often hired precisely because they give independent advice without the conflict of interest that can arise when a bank also offers financing to the same client.
Within the boutique world there is also a distinction between small, sector-specific advisory firms and the so-called elite boutiques: firms that come close to the bulge bracket in terms of involvement in large deals, but focus purely on advice and do not use their own balance sheet to finance deals. That last point is exactly why some clients deliberately choose a boutique for a sensitive transaction, such as a sale where independence from financing interests matters.
What they do
What investment bankers do
The work differs by division, but the building blocks below come back in almost every deal. At any given time an analyst or associate is usually running several projects in parallel, from an early exploratory pitch to a deal that is already in execution.
Divisions
The main investment banking divisions
Banks are usually organised along two axes: product groups such as M&A, ECM and DCM, which supply the technical expertise for a deal, and industry coverage teams, which maintain the client relationship and know the sector inside out. On a deal the two often work together: the coverage team brings in the mandate and knows the client, while the product group handles the specific execution and documentation.
Step by step
How a transaction comes together
Most deals move through a similar path, from winning the mandate to closing. Junior bankers do much of the analysis and the materials along the way.
Who does which step depends heavily on seniority. Analysts and associates sit deep in the analysis, the models and the materials. Vice presidents oversee quality and manage the team day to day, while directors and managing directors mainly decide which mandate gets won and manage the client relationship during the negotiation.
A team on a mid-sized deal typically consists of a couple of analysts and an associate doing the day-to-day work, a vice president overseeing progress, and a director or managing director who owns the client relationship. On a large, complex transaction, specialists from other divisions often join, such as leveraged finance for the funding or an industry team for deep market knowledge.
Roles
Investment banking roles
Each step up the ladder shifts the emphasis further from producing analysis to managing people and clients. An analyst who has been in the seat for a few years can in theory progress to associate without an MBA, a route banks increasingly offer to people who have proven on the desk that they can handle the work.
Analyst
Does the models, research and materials for the team.
Associate
Guides analysts and manages the day-to-day of a deal.
Vice President
Leads execution and manages client contact.
Director / Executive Director
Structures deals and helps win new business.
Managing Director
Wins clients, leads deals and sets strategy.
Career timeline
How long each step takes
Investment banking has one of the clearest ladders in finance. Most people start as an analyst straight from university, or join as an associate after an MBA. Progress depends on performance, and the hours are long, especially in the early years.
From vice president upward the focus shifts from doing the analysis to managing clients and winning deals. Reaching managing director, the top of the bank, usually takes well over a decade in the industry.
The structure is competitive: at every level part of the cohort moves up to the next step, and part leaves for private equity, an in-house corporate finance role, or another industry. That so-called up-or-out pattern is less rigid than it used to be, especially at senior levels, but the pace of promotion still depends heavily on the reviews that follow each deal.
| Level | Typical time in the role |
|---|---|
| Analyst | 2 to 3 years |
| Associate | 3 to 4 years |
| Vice President | 4 to 5 years |
| Director / Executive Director | several years |
| Managing Director | top level, 10+ years total |
Compensation
Investment banking compensation
Investment banking is well known for high pay, made up of a base salary and a bonus that grows quickly with seniority. The trade-off is the hours, which are long, often seventy to eighty a week for juniors, with late nights and weekends during live deals.
The figures below are a rough guide for large banks in the United States, where pay is highest. In Europe, including the Netherlands, it is typically lower, and part of the bonus is often deferred at senior levels. Treat them as an illustration, not a promise.
The make-up of the pay also changes with seniority. For analysts and associates the bonus is almost entirely cash, paid out at the end of the year. From vice president upward, and especially for managing directors, a larger share is often deferred or paid in bank shares, sometimes with conditions tied to performance over several years. That is one way banks retain senior bankers for longer and discourage short-term thinking.
| Level | Total compensation |
|---|---|
| Analyst | $180,000 to $220,000 |
| Associate | $285,000 to $500,000 |
| Vice President | $525,000 to $800,000 |
| Managing Director | $800,000 and up |
Figures are illustrative, in US dollars, for large US banks, and include base plus bonus. European pay is generally lower.
A day in the life
A typical day for a junior banker
The day often starts early, with a market update so the team knows what happened overnight. On deal days, juniors prepare pricing sheets, term sheets and client materials, and coordinate with lawyers and other teams. On quieter days, the work shifts to research, updating market slides and longer-term projects.
The pace can change quickly with the market and with client requests, and the work often stretches into the evening, especially near a deadline or when working across time zones. It is demanding, but it gives early exposure to high-profile deals and fast teamwork.
The nature of the work also changes with the phase of a deal. Early in a mandate the focus is mostly market research and building a valuation model. Once a deal moves into execution, the focus shifts to due diligence, coordinating with lawyers on contracts and responding to questions from the other side, often with shorter deadlines and less predictability.
Juniors
What analysts and associates do
Junior bankers carry much of the analytical work that a deal depends on.
- Building financial models
- Company and market research
- Valuation analysis
- Preparing pitchbooks
- Checking and validating data
- Supporting due diligence
- Drafting deal documents
- Responding to client comments
Much of this work is iterative: a model or pitchbook goes back and forth several times between analyst, associate and vice president before it goes to the client. That repetition is not inefficiency, it is how errors get caught before material reaches a client.
Skills
Skills you need
Technical skills get most of the attention in preparation, but the bankers who last longest are often set apart by judgement: knowing which assumption in a model actually matters, and which detail a client wants to hear and which one they do not.
Getting in
How to break into investment banking
Most routes run through a structured process at the bank itself, but the shortest path differs a lot between countries. In the UK and the US, recruiting revolves mainly around spring weeks and summer internships that start two years in advance. In continental Europe, including the Netherlands, off-cycle internships and direct applications play a bigger role, and hiring more often happens at master's level than at the start of a bachelor's degree.
Preparation
How to prepare as a student
Preparation works best when it starts well before the first application round opens. Banks test not just knowledge but also whether someone can reason clearly under time pressure and explain a technical answer as if talking to a client.
Compare
Investment banking versus other paths
These paths are often confused with each other because the skills overlap and many students apply to several of them at once. The distinction mainly lies in who the client is, where the money comes from, and whether the work is a one-off or ongoing.
Investment banking vs private equity
Banking advises clients on deals and raising capital. Private equity invests its own fund and owns the companies it buys.
Investment banking vs consulting
Consulting advises on strategy and operations. Banking focuses on financial transactions and raising money.
Investment banking vs corporate finance
Corporate finance sits inside a company and manages its funding. Banking advises many companies from the outside.
Investment banking vs asset management
Asset management invests money for clients over time. Banking arranges one-off transactions and deals.
Investment banking vs sales and trading
Sales and trading buys and sells securities in the market. Banking advises on and structures corporate deals.
Employers
Investment banks active in the Netherlands
A selection of well-known investment banks and advisory firms active in the Netherlands, grouped by type. We only list firms we have verified.
The exact division of roles differs by firm. Some run a fully local team that serves Dutch deals from start to finish, while others cover the Dutch market from London or Frankfurt with a smaller local point of contact for client relationships and origination.
Bulge bracket
Goldman Sachs
J.P. Morgan
Morgan Stanley
Deutsche BankGlobal advisory and boutiques
Dutch banks
ABN AMRO
ING
Rabobank
NIBCDutch merchant banks and boutiques
Van Lanschot KempenVacancies
Investment banking vacancies
We only show real, current openings with a link to the employer. Internships, spring weeks and analyst roles will appear here. In the meantime, browse all current vacancies.
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Recommended resources
FAQ
Frequently asked questions
What is investment banking?
Investment banking helps companies, institutions and governments raise money and carry out major deals, such as share issues, bond issues and mergers. The bank acts as an adviser and intermediary, not as a place to hold deposits.
How do investment banks make money?
Mainly through fees: for advising on deals such as mergers, and for arranging capital raises like IPOs and bond issues.
What does an analyst do?
Analysts build financial models, do research, prepare pitchbooks and support senior bankers on live deals. It is analytical, detail-heavy work with long hours.
How many hours do investment bankers work?
Junior bankers often work seventy to eighty hours a week, with late nights and weekends during live deals. Hours usually improve at more senior levels.
Do you need an MBA?
Not to start as an analyst, which is usually filled straight from university. An MBA is the classic route into the associate level and can speed up progression.
What is the difference between investment banking and private equity?
Banking advises clients on deals and raising capital and earns fees. Private equity invests its own fund, buys companies and earns from improving and selling them.
What skills do I need?
Strong analytical thinking, financial modelling and valuation, a solid grasp of accounting, attention to detail, clear communication and the ability to work under pressure.
How do I get an internship?
Apply early through spring weeks and summer internship programmes, recruit at target universities, network with bankers and alumni, and prepare hard for technical interviews.
Related
Related finance paths
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