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Investment Banking All Around the World

Investment Banking Regions

Interested in working abroad? Thinking about leaving the “old world” behind and heading to those shiny emerging markets?

I’ve gotten hundreds of questions on what finance is like in different countries.

So, a while back, I started an interview series with readers working all over the world – from Asia to Africa to the Middle East and Europe (and a few more I’m forgetting right now).

You’re going to learn all about that right now – and how recruiting, the job itself, and investment banks differ throughout the world.

Developed Markets vs. Emerging Markets

The biggest differences are between developed markets – the U.S., Japan, and Western Europe – and emerging markets, such as China, Russia, India, and Brazil.

That’s not to say that working in New York is “the same” as working in London – but those markets are well-developed, and recruiters look for similar qualities (even though the processes differ significantly).

So we’re going to focus on banking in emerging markets and how it’s different.

Banking Itself

First, “pure-play” investment banks may not be as common in emerging markets – for example, in India there are lots of Knowledge Process Outsourcing (KPO) firms that do bank-like work but are not real banks.

In markets like China, many firms are actually combined banks and PE firms – they’re known as merchant banks in the U.S.

The People

Do not assume that you can just “show up” in another country and get a job there.

I get emails all the time saying, “I don’t know the language or culture, it’s not an English-speaking country, and I have no connections there. How can I break in?”

You can’t.

Banks would much rather hire from the local student and professional population unless you have amazing connections – e.g., your father is the Prime Minister or the CEO of the largest oil company in your country.

If you really want to work abroad but have little to no background in the country, you’re better off working at home and then transferring once you’ve built up a reputation.

That’s how one reader moved from the U.K. to Saudi Arabia without knowing the language or having connections – he established himself and then leapt at the opportunity when it came.

And if you’re still in school, do a summer internship in the country you’re interested in, learn something about the language and culture, and build your network.

Breaking In

Recruiting is still recruiting, but there are some differences:

  • Some countries value certifications like the CFA and CA (Chartered Accountant) more than the U.S. and other developed markets.
  • Sometimes recruiting is more formal, so it’s harder to go around official channels via networking. Networking strategies still work, but bankers may not be as willing to hear your case.
  • Interviews may be more technical since many banks in emerging markets desperately need analysts and associates with a solid grounding in finance.

Deal Types & Industries

Clients in emerging markets are smaller and less sophisticated than the Fortune 500 companies of the world.

You see a lot of family-run businesses and people without formal business backgrounds running companies – they may not even know how an IPO or M&A deal works.

So you have to educate them, and if you’re an analyst or associate, you’ll often get direct contact with C-level executives at companies.

The specific industries and deal types depend on the region – for example, in Hong Kongequity capital markets deals such as IPOs are more common than M&A deals, especially when working with companies in mainland China.

In the Middle East, oil & gas is the biggest industry and you work with sovereign wealth funds and “families” that own conglomerates.

In Canada and Australia, the mining industry is huge – so you work with mostly natural resource companies.

Attention to Detail?

Since clients are less sophisticated, you don’t do as much “nitty-gritty” work like adjusting for non-recurring charges on the financial statements and hunting for off-balance sheet items.

That’s both good and bad: in banking that work can be a waste of time that makes a difference of 0.01% when all is said and done, but you do learn accounting and finance at a deeper level if you have to do it.

Sometimes regional offices handle client relationships, and then major offices like London do more of the financial modeling and technical work – that’s common to see in the Middle East, for example.

Pay & Hours

In cities like London, the pay is virtually identical to New York and other regions of the U.S.: Salaries and bonuses are high, but you lose over 50% to taxes, and you don’t save much due to the high cost of living.

Hours are also very similar: you will spend most of your life in your cubicle staring at the computer.

In emerging markets, pay is lower on an absolute scale but higher relative to the cost of living.

And sometimes – see the Middle East – pay is actually the same on an absolute scale and is therefore much higher compared to the cost of living.

Other regions often have far lower tax rates – whether they’re 10% in Hong Kong, or 0% in Dubai and Saudi Arabia.

You may also get a hefty housing allowance, which means you can actually save up a nice pile of cash.

Hours also tend to be lower because you don’t go through 500 revisions of a single pitch book as you might in New York or London – you might expect to work 60-70 hours per week rather than 90-100.

Exit Opps

Here’s where I tell you the bad news: exit opportunities can be significantly more limited if you start working in another region rather than a financial center like NYC or London.

For example, if you work in Australia, it’s difficult to interview for positions in the U.K. because of the time zone difference and the need to fly halfway around the world.

It’s much easier to move from a major financial center to a regional office rather than the other way around.

In other countries, there’s also less of an obsession with “exit opportunities” – in fact, only the U.S. seems to have a love affair with these beloved exit opps.

So a lot of bankers simply stay in banking in other countries, and are happy with reduced hours and increased pay as they advance.

Especially in emerging markets, advancement can be rapid if you’re a top performer – there’s much less hierarchy than in large offices.

Traditional exit opportunities may not exist in other regions, eitherin Dubai, you’re more likely to go to a sovereign wealth fund rather than a PE firm or hedge fund, and in Saudi Arabia you’re more likely to go work for a “family” (no, not the mafia – the families that control major corporations there).

Finally, pay and hours may not be significantly better at these buy-side firms (“buy-side” meaning they invest their own money rather than advising companies and earning fees as banks do).

That’s what attracts students to the promised land of private equity and hedge funds in the U.S., but it’s not so shiny a lure in other regions.

The Whole Set

Check out the dozens of interviews we’ve done on investment banking in other regions right here.

For private equity around the world, see this list.

-Brian

Mergers & Inquisitions
Breaking Into Wall Street

P.S. Get here from an email forward, a friend’s link, or a random Google search?

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