Investment Banking: Australia Edition
I get a lot of questions on investment banking in different parts of the world. Since I based this site on my experience working in the US, there has been a North American bias in most of the articles so far.
As I traveled through Asia, though, I met readers who have worked in different regions of the world and I learned more about their experiences elsewhere.
Australia might not be the first place that pops into your mind when you think of finance, but I heard some very interesting insights from a reader recently, and figured they would be worth sharing – especially since some of these points apply to other countries in the Asia-Pacific region.
Here’s an informal “interview” I conducted with one reader who works at a boutique/middle-market firm in Australia.
Q: We all know about the hours and culture of banking, especially in places like New York – what’s it like in Australia?
Keep in mind that I’m at a smaller firm so it’s different from working at a bulge bracket down here. That said, the culture is definitely more relaxed and laid back than what you’d find in the US and Europe.
Bankers may be a bit older on average, and that may explain part of it – they’re not as interested in killing you with work all the time.
Sometimes we have holidays where everything just shuts down as well – I don’t think that’s too common in other regions.
At the junior level, it’s definitely not a 9-5 job but it’s also not 100+ hours per week like bigger firms are known for.
I’ve heard some horror stories about bulge brackets down here so it might just be specific to my firm, but overall I’d say the hours are better on average.
Q: In terms of culture, does everyone get along with everyone else? Do people hang out outside of work?
Our office is split between people with families / in serious relationships and the young, single people. A lot of Analysts and younger Associates hang out with each other, but outside of work you might only see the older bankers at holiday parties and other company events. It’s unlikely that you’d go for drinks with your MD out of the blue.
Q: What about the types of deals you work on? Is there a focus on any particular industry?
Most companies we work with are in the Asia-Pac region, so there’s definitely a geography bias. We do a fair bit of work with China as well, or at least we did before the meltdown – but we liaise with the closest office for cross-border deals.
My group focuses primarily on M&A, so that’s what I’ve spent most of my time on. Since natural resources and energy are huge industries in Australia, we do a lot of deals in those markets.
However, we are a smaller firm so we tend to be generalists and have exposure to a variety of industries and even at the higher levels we don’t specialize too much. While MDs have their niches, they tend to work across industries quite often and leverage our global offices for more targeted industry expertise.
Q: In the US, the recruitment process is focused squarely on resumes, first-round interviews and then final rounds / Superdays, at least if you’re applying through on-campus recruiting at a “target” school.
In Europe and Asia there’s more emphasis on assessment centers, case studies, online tests, and sometimes written competency questions.
What is the process like in Australia?
Similar to Asia and Europe, most banks do all of the above here. You have to go through online tests on written and quantitative subjects, and there are assessment days where you have to present case studies on transactions and hypothetical scenarios to bankers.
And then you also have to go through standard interviews as well – overall the process is more rigorous.
Q: That sounds intense. Any tips for case studies or presentations at assessment centers? I get a lot of questions on that, but I’m not an expert since most US offices do not require it.
Keep it simple and don’t over-think the questions. More importantly, be honest! If you don’t know something, don’t waste bankers’ time by trying to ‘fake’ your way through it. They’ll see through it and you’ll lose all respect.
You have a very limited amount of time to read up on the scenario, get together your materials, and present – so focus on 3-4 key points and don’t waste time creating complicated models or doing lots of math.
First and foremost, the bankers listening to your presentation are interested in your communication abilities – not whether you can build a perfect LBO model. Presenting a succinct case without over-complicating it helps you the most.
Q: If the recruiting process is so much more rigorous, how do people typically break into the industry? Is the “path” more structured than in other regions?
Most people in banking in Australia have been in finance for a long time, and have studied it in university as well. It’s less common to be a “career changer” here, and you rarely see people from other backgrounds jump into the field. This becomes more pronounced as you move away from bulge bracket firms and into boutiques.
Partially, this is because the industry is just much smaller compared to other regions, but it’s also just a cultural point in Australia/Asia, where you tend to follow more of a set path.
Q: Ok, so the industry is smaller and recruiting sounds like it’s more intense as well. How many people are actually interested in investment banking in Australia?
There’s less interest overall. Outside the top few universities, most students don’t even think about formal internships during the summer.
The general culture is far different from the US where students are almost expected to do internships during their summers.
This doesn’t mean that it’s easier to get in, though – the industry is smaller overall and recruiting is more rigorous.
Q: What about exit opportunities? Does everyone jump to private equity or hedge funds after 2 years?
It’s less common to make the jump to the buy-side – the notion of only staying for 2 years and using it as a steppingstone is not as prevalent here. It’s more likely for an analyst to switch to another bank due to fit/pay considerations as opposed to moving into private equity / hedge funds.
That’s because it’s less common to change careers in Australian culture, but it’s also a function of how small the PE / HF industry is here – even compared to banking.
Q: Right, that makes sense. But what about moving outside Australia to other regions? Have any of your friends done that?
You can do it, but it’s more difficult than starting in New York or London and then moving to different regions. Experience in a region like Australia doesn’t translate quite as well to other parts of the world, and if you want to move to the US or Europe, you may not get “full credit” for the work you did here.
The opportunity to move outside Australia is probably better if you make the move within your firm through an internal transfer. Another possibility would be to move into Southeast Asia, although knowledge of a local language would definitely be a plus.
Q: What about the pay / bonuses as compared to the US and other regions?
Is anyone actually getting a bonus this year?
You’ll have to ask me again when I finish up my first year – I’m not 100% certain, but I imagine they’d be a bit lower than New York / London bonuses. Again, this depends on where you’re at – boutiques tend to start with a higher base and a lower bonus while the bulge bracket firms start with lower bases and higher bonuses.
Q: Great, thanks for your time.
Sure thing – just don’t post this with a photo of a kangaroo or anything!
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