Investment Banking Recruiting in Europe: London vs. Frankfurt vs. Milan
Will you really have to go through assessment centers and similar interviews in each place?
Are they only looking for locals or can you break in as a foreigner? What about language requirements and that all-important summer internship to full-time offer conversion rate?
Today a reader who has recruited across Europe – and won 2 internship offers – will share his experiences and answer all those questions, plus a whole lot more.
Q: Can you walk us through your background and how you first got interested in finance?
A: Sure. I was born and raised in Italy, and after high school I studied business administration and completed a BSc in Finance from a non-target Italian university.
During my 3rd year there, I took a few classes in corporate banking and first learned about investment banking, M&A, PE, and VC.
The professor was great and we had several financiers as guest speakers – I was most interested in private equity and how they look for small and mid-sized enterprises (SMEs) to invest in. There are so many SMEs here that I knew there would be a lot of opportunity if I could break into PE.
Q: So you tried to get into PE coming from a non-target university with no full-time experience?
A: No, not yet. I looked for information online and spoke with the guest speakers in our class and learned that most people in PE had MBAs, that you had to know accounting very well, and that you had to do investment banking, consulting, or auditing first to break in.
I knew I needed better access to recruiters and more accounting knowledge, so I looked for a 2-year MSc program in Accounting and applied to the only “target” university in Italy.
I moved to Milan to complete the MSc program and then found out about summer internships in investment banking – but my chances weren’t good since I was from a non-target university, hadn’t studied abroad, had no relevant work experience, and didn’t speak a 3rd language.
But I applied to all the banks anyway and ended up getting several interviews and assessment centers, and then won a back office internship in London – which I accepted, since I had no better options. I also figured that having a bulge bracket name on my CV would at least help me with recruiting in the future.
After finishing that internship, I applied to both full-time jobs and internships (internships work a bit differently here) in investment banking in the UK and continental Europe, and went through recruiting in London, Milan, and Frankfurt, finally winning 2 internship offers.
M&I Note: The audit to PE path is more common in Europe. It does happen in the US and other regions as well, but your chances are not as good unless you’ve done something like audit to Big 4 TAS first.
M&I Note 2: While I’ve been critical of the back office in the past, it’s not the end of the world if you accept a back office internship. It’s more difficult to move from the back office to the front office if you’ve already accepted a full-time offer.
Q: That’s quite a story – you must have had a great strategy for winning those offers, or at least something that made you stand out.
A: In high school I wanted to play football full-time at first, and I had also worked as a sports journalist for a local newspaper before.
That wasn’t prestigious, but it did give me something to talk about in interviews for my “interesting fact” – and I could reference that when they asked about leadership, managing stressful situations, and so on.
This story helped me get my first back office internship – I think the 2 IB internship offers were more about solid technical preparation, since I had focused on my corporate finance studies over the past year.
Q: That’s a good one – much better than those interviewees who tell you that their “hobbies” are learning Excel or doing statistical analysis.
So what was the recruiting process in these different cities like?
A: I always started by applying to London first – usually applications from continental Europe are checked by local offices first, even if you apply to London. Sometimes they’ll even call you and say, “There are no spots left in London – are you interested in Milan?”
Then, if you pass the initial CV / cover letter / competency question screen, you’ll get a first round in the local office (Milan in this case) and then the 2nd round in London, or maybe a phone interview and then the AC in London.
With one bank I did the 1st and 2nd rounds in London and was then sent to Milan for the 3rd round since they ran out of spots in London, but that was the exception and not the rule.
My overall experience looked like this:
- Bank A: Applied for the graduate program in London, did a phone interview, and then an assessment center in London (group work, then 3 interviews with 4 VPs).
- Bank B: Applied for the graduate program in London, did a 1st round interview there with 2 associates, and then also did the AC in London (business case and presentation to Director, then another 2 interviews with 2 other Directors). But then I was sent to Milan for 3 interviews with the local Directors there and also had to complete an Excel test as well.
- Bank C: Applied for summer internship in London and was then called and asked if I was interested in Milan – I did the 1st round in Milan with 1 analyst and 1 associate and then the 2nd round in Milan with 2 associates.
- Bank D: Applied for a 3-month internship in Frankfurt via email – they responded shortly after that, and I then completed 3 interviews in Frankfurt on the same day (with 2 associates and 1 analyst).
Q: Awesome, thanks for sharing that information – I’m sure everyone’s recruiting experience is different but it’s good to have data on what to expect in different places.
So it sounds like you didn’t do much networking to get any of these interviews?
A: That’s correct – I did not do much networking. I already knew one of the VPs that interviewed me at Bank A because I met him during my previous summer internship, so I spoke with him in advance and asked about recruiting, how to best position myself, and so on.
But then another guy won the offer from Bank A, so it wasn’t too effective for me.
Q: What about CV differences? Is there anything that banks in Milan and Frankfurt care about but which offices in London do not?
A: The overall structure of CVs is not that much different, but in local offices they tend to care more about your grades.
In Milan and Frankfurt they asked me specifically for my GPA, while in London HR just scanned it quickly when screening CVs.
Another difference is that for full-time recruiting, they pretty much expect you to have had a previous internship in investment banking – whereas for internships you can get in just by having strong technical knowledge and some kind of previous experience even if it isn’t directly related.
All the candidates that received full-time offers in my final round interviews were former summer interns who had worked in IB at other banks.
Q: Right, so standards tend to be higher for full-time interviews and it’s tougher to break in if you haven’t had that IB internship before.
What about the type of people who recruit in each place? How is that different, and what are the language requirements in those cities?
A: Overall there’s the least amount of diversity in Milan because you must be fluent in Italian. So it’s mostly Italian students who end up there – either voluntarily or because they didn’t get into the London office.
Most of these students are coming from schools such as Bocconi University, LUISS, Politecnico, or ESCP.
In Frankfurt, they didn’t care about language abilities for internships. I don’t speak German but still won the offer there – but for full-time positions it’s different and I was told that you must be fluent in German to do investment banking there.
In London you see the most diversity – people from all countries throughout Europe, Asia, and North/South America.
Obviously there’s no language requirement there except for English, but language skills are still viewed very highly and you’d be at a disadvantage if you don’t speak other European languages.
Q: What about differences with interviews? Did you find a different ratio of “fit” to technical questions, or were the questions themselves any different?
A: Overall, I had the most technical interviews in Frankfurt. They asked pretty much everything you could ask: standard questions about EPS, accretion/dilution, synergies, the control premium, the liquidity discount, what happens post-merger, how to value startup and bio-tech firms, how to adjust for pension plans, leasing and IAS 17, stock options, derivatives, and more.
They asked me to explain how a PE firm works, what the average debt-to-equity ratio in LBOs was, how to value a company, and then how to write down and change all the main items of a P&L, balance sheet, and cash flow statement.
In Milan they also asked a fair amount of technical questions (Beta, WACC, DCF, multiples, etc.) but they didn’t go nearly as in-depth as they did in Frankfurt. They also asked a lot of questions about consolidated statements – what the financial statements for a parent company plus its subsidiaries look like and how to combine them.
In London, the technical questions were the easiest – everything was pretty standard and consisted of questions you can find in most interview guides. They focused more on your background and how well you fit in with the rest of the team there.
Q: Interesting – I’m sure we’ll get a lot of comments from readers there who experienced slightly different (or maybe significantly different?) interviews.
Earlier you mentioned that you won several internship offers even though you’re set to graduate shortly and you said that internships in Italy are “a bit different.” How does that work exactly?
A: In Italy we don’t have structured summer internships like you see in other countries.
You might find them at a bulge bracket bank with local offices in Italy, but local banks here don’t have such programs.
So 6 months before you graduate, when you’re writing your thesis and exams are over, you can apply for off-cycle internships. If you’re good enough to get in and do well there, they’ll just ask you to keep working after the internship, effectively turning it into a full-time offer.
That’s much different from London, where you usually do the internship just before your final year and then you start full-time one year later.
I don’t know what the exact “conversion rate” is in these 2 places, but your chances might actually be higher in Milan since pretty much all full-time bankers at local banks started out by completing post-graduation internships first.
Another difference here is that some banks only want students who have already graduated when they search for interns – and the internships themselves last 6 months rather than 10-12 weeks.
Since banks don’t have structured programs, they just post job openings on their website or on the business school careers page and you submit your CV and cover letter without completing competency questions or numerical tests or anything like that.
You also see that for some international boutiques with offices in Milan, but it’s more common at local banks.
Q: You mentioned before that you applied to both full-time jobs and internships but ended up with the 2 internship offers – do you think it’s harder to get full-time offers in Europe?
A: I think in general it’s more difficult to get full-time offers because people with previous IB internships have a huge advantage, so Europe is no different in that respect.
Q: I see; it’s definitely getting more competitive every year. 10 years ago the people applying to banks for full-time roles had far less internship experience.
So what’s next for you? When do your internships start?
A: Originally I was planning to complete one of my internships over the summer and then start the next one in September, before graduating in December or May.
Recently, though, some personal problems arose and because of those I couldn’t join one of the banks in the summer – so I’m going to focus on my thesis for now.
That would at least give me the option to move back into academia if I decide that I don’t want to do investment banking or can’t stand the hours.
Q: Great. Thanks for sharing your story – I learned a lot!
A: No problem, hope you enjoyed it.
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How to Break Into Asset Management in Germany – from a Part-Time, Non-Target, Distance Learning MBA Program
So, what about those part-time MBA programs? Do banks and finance firms take them seriously, even if they’re online? What about continental Europe recruiting vs. the UK?
Today you’ll learn about those and other topics from a reader who recently broke into the finance industry in Germany.
This reader also did an internship at a Fund of Funds (FoF) so as an added bonus you’ll get a crash-course in all things FoF as well.
That’s quite a lot to cover in one interview, so let’s get started.
Walk Me Through Your CV
Q: You mentioned before we started that you had a unique history.
Can you tell us about your background and where you were coming from before getting into finance?
A: Sure. I started out doing engineering at a non-target university in the UK – finance firms ignored it, but engineering and technical companies and even the government recruited there.
It was right after the dot-com bust when I graduated and the job market back then wasn’t great for IT people – so I went to the UK Government and worked there for around 8-9 years as an engineering project manager.
A few years ago I had the opportunity to go work for the government in Germany – around that time I had realized that engineering wasn’t for me and that I wanted to move into finance instead.
Toward the end of my contract working for the government, I started a part-time (2.5 – 3 years) distance learning MBA program from a university in the UK. The goal was to re-brand myself and get a business background in the process, and then to use the degree to move into finance.
I did a lot of networking to find contacts while in Germany, and finally found a private equity fund of funds that was looking for English-speaking interns.
I worked there for half a year, and recently landed a full-time offer at the German office of a US-based asset management firm.
Q: That’s quite a story. Before we jump into recruiting and how you got your current role, let’s take a step back: why did you like Germany so much and what made you want to stay there? I’m just curious personally.
A: It was quite random – I was just placed there by the UK government and happened to like it quite a bit. I had also spent 3-4 months there previously, so I jumped on the chance to move back.
Q: And you managed to get the internship and the full-time role without being from Germany originally and without knowing the language?
A: I do speak German conversationally, but I’m not quite good enough to use it for business. So if I were applying for an M&A role at an investment bank, I would never get in (see: more on investment banking in Germany).
They are looking for native-speakers there because you’re working with domestic German companies all the time and for the times they do deal with English-speaking companies in Germany, the level of English of most German graduates is of a very high standard, so they have little reason to recruit a non-native speaker.
A lot of HR departments here list the German language as a requirement, but outside of IB/M&A-type roles it’s rarely required to do the job.
When I applied to the asset management firm I just joined, I went through a recruiter – the original ad I saw asked for a native German speaker, but then when I spoke with the recruiter they indicated that it wasn’t really necessary.
You can get away with this because in fields like trading, asset management, and so on you’re dealing with global investors where English is the standard language.
Recruiting and Breaking In
Q: Right, that makes sense. I think in most countries for traditional IB/PE roles you need to know the local language but outside of that you can get away without being a native.
So what were the key steps to breaking into finance in Germany? Did the part-time distance learning MBA program actually help you to re-brand yourself?
A: It helped a bit and allowed me to meet people who worked in the industry, but overall it wasn’t terribly helpful in terms of actually getting interviews through the degree. My program was not very consulting or finance-centric so there wasn’t much of a benefit for those fields.
Networking also proved to be quite difficult – I reached out to a lot of contacts via LinkedIn and similar online databases, and made plenty of cold calls and cold emails, but most people were simply confused as it is not as common here.
That is a big cultural difference and traditional networking is not accepted like it is in the US / UK. I made some good connections for the future, but wasn’t able to find anyone who could directly help me to get a job.
I found both my positions and won interviews by looking at job postings and ads online and then contacting the recruiters directly – you’ve mentioned before that that’s not a good use of time in the US / UK, but unless you’re currently a student at a well-known university here, that’s about all you can do to get in.
Q: I’m surprised that the degree didn’t help you at least in terms of being taken more seriously when you contacted people in the industry. Did they just not respect distance learning programs?
A: Actually, the main issue was that MBAs are not viewed the same way here as they are in the UK and US.
The university system in Germany is much different and you complete the equivalent of Master’s-level study at the undergraduate level – so getting an MBA won’t necessarily get you more points.
The other factor working against me was that I had an engineering degree from undergraduate – many places here won’t even consider you unless you’ve studied accounting or finance in undergraduate.
Q: Wow. I guess I should add a clarification to that “Your major doesn’t matter that much” advice.
What about the recruiting process itself? Is it similar to the UK with assessment centers and competency questions?
A: First off, since I wasn’t going through standard graduate recruitment, I had no assessment centers.
Beyond that, it was quite different for the Fund of Funds and for the asset management firm – the FoF process was relaxed since it was an internship, and most of the interview questions were “fit”-focused.
The investment managers sat down and spoke with me for 30-60 minutes each, and chatted about my background and knowledge of finance – but they never went in-depth into advanced technical questions or anything. A few weeks later I received an offer there.
Since the asset management firm was US-based, interviews were very similar to what you see at banks and asset management firms in the US – several rounds of interviews with people from different groups, with more technical questions thrown in and a more diverse set of questions overall.
This one was also not for a graduate-level position, so I imagine it would be somewhat different if you were just out of school or in school and interviewing for the same role.
Q: What types of people were they looking for? Were many of your co-workers also foreigners?
A: It varies, but at the Fund of Funds the investment team was mostly German with a few others from Europe and further afield. They wanted people who knew a bit of German and who had the technical skills to analyze investments – it was very small, so they were much more focused on fit there.
At the asset management firm, as I mentioned, the technical bar was higher and they were looking for people to spend more time at the firm and not just hop to the first exit opportunity that comes their way.
As with most other countries outside the US, there is not as much of an obsession with exit opportunities and hopping around constantly, so people actually stay at the same company for more time on average.
Q: Any other differences with recruiting in Germany that we should know about?
A: Oh yes, I could probably write a book about that one:
- You need to include your photo on your CV here. Technically firms are no longer able to discriminate against you, but you’re at a huge disadvantage without a photo as everyone includes them.
- CVs are usually at least 2 pages and emphasize Education over everything else – it’s at the top even if you have years and years of work experience. Sometimes CVs go on for 3-4 pages and list every single academic achievement.
- If you’re a non-native German speaker, you should include your language skills in the Personal Information section; you also list your Date of Birth and Marital Status at the top.
Q: I think requiring that information in the US or UK would result in lawsuits.
A: Yeah, the culture is quite a bit different here.
In terms of language skills, if you see an advertisement from a multi-national company in English, you can assume it’s OK to apply in English and work there without knowing the language – but if it’s all in German then the language is probably required.
Job references are also very important here. After every job you’ve been at, you receive 1-2 pages of written references stating how well you’ve done there and what your achievements were.
Even at US-based and other foreign companies here they still expect to see these references, and you’re at a big disadvantage if you don’t have them or if they say anything negative.
Q: More lawsuit material if you requested those in the US / UK – and it’s written evidence, too.
What about CV review and interview selection?
A: In general, it’s difficult to get the first interview here but once you’re in you have a high chance of moving forward. They spend a lot of time reviewing CVs and selecting first round candidates based on those, sometimes inviting only 1-2 people to interviews.
That’s the opposite of what you see in the US / UK where they might invite dozens to interview, only intending to hire a few.
Finally, some advice for you if you’re not a native and you’re interested in working in Germany: going through recruiters can work to your advantage. They are actually helpful here and can get you past HR staff when you don’t meet the officially stated language requirements.
And as I’ve mentioned, go for asset management or trading rather than M&A.
All About Funds of Funds
Q: OK, that was quite a download of recruiting-in-Germany information.
Moving on, I’ve gotten a lot of questions about Funds of Funds, what they are, what you do there, and how you get in – can you explain briefly what a Fund of Funds is and the work you do there?
A: Sure. A Fund of Funds is simply an investment firm that invests in private equity funds rather than buying companies directly.
To give an analogy, it would be like an index fund that invests in other index funds in the stock market as opposed to the original index fund that picks individual stocks to invest in.
Funds of Funds may invest in anything from venture capital firms to small and large buyout firms to anything else within the world of private equity.
Most of the day-to-day work consists of due diligence – analyzing existing funds, seeing what kinds of investments they’ve made, and whether or not they would be a good fit for us.
You make 2 main types of investments at a FoF: primary and secondary.
- Primary: You invest in a PE firm as it’s doing a round of fund-raising and looking for new investors.
- Secondary: You buy an existing stake in a PE firm from someone else in the secondary market who’s looking to sell.
Most of the work on the primary side consists of due diligence, analyzing investment teams at PE firms, looking at previous deals, historical returns, and so on.
We did a lot of benchmarking of funds against the sector as a whole and against other funds within the geography we were looking at, and we discussed everything with General Partners. Most of my time there was spent writing up due diligence findings and there was a lot more qualitative work than quantitative work.
On the secondary side, there was more quantitative work since we were looking at funds that had already made a few investments. So there was some price modeling involved to see what was reasonable, what type of carry and management fees made sense, and so on; we also did some basic DCF analysis to verify the valuation but it wasn’t anything hardcore.
Q: So are Funds of Funds a big asset class in Germany? Is the industry there developed?
A: It’s not yet a big asset class here – there are quite a few buyout and VC firms, but only a handful of FoFs and most of them are part of bigger financial institutions here.
PE has been hit hard following the financial crisis and Funds of Funds suffered even more than normal PE firms – many institutional investors backed out or decided against investing, so firms never had a chance to grow properly.
Q: What about recruiting for FoF? What kinds of questions did they ask you?
A: They didn’t ask me much about investments, investment ideas, or which funds I would invest in – it was more about my motivations for wanting to move into finance, what my future goals were, and so on.
That was mostly because I was career changer – other interns received more technical questions about accounting and valuing companies, the economy, and the European debt crisis.
Overall I would say that FoF interviews are similar to investment banking overviews, but generally less technical even though they’ll still ask the normal accounting/valuation-type questions.
Q: What about the work culture there? I’m assuming it was quite a bit different from what you see in private equity / investment banking?
A: It was much more relaxed than what you see in banking or at direct investment funds (PE/VC).
There wasn’t much time pressure to do things because we weren’t competing for specific deals that banks were marketing to PE firms – so we had more time to discuss investment ideas internally and talk through things.
They delegated quite a lot of work to the interns, so we did many of the initial assessments and the screening, and then sat down with the investment managers to talk through ideas. They were quite receptive to well-thought out investment ideas, even though we were interns and had limited experience.
Q: And now I have to ask the obligatory hours / pay question…
A: Hours at the Fund of Funds were generally between 9 – 6 each day, with work sometimes extending a bit later depending on how busy we were at the time. Work came in peaks and troughs – if a lot of direct funds were fund-raising, we would have to analyze everything at once and make decisions quickly.
But during other times of the year (especially the summer months), things were very quiet because hardly any funds were fund-raising.
The investment managers themselves might work later due to internal investment committee meetings, but the latest was normally 8 or 9 PM, with weekend work extremely rare.
Base salaries were close to what you would earn starting out in IB or asset management, but maybe a bit less overall (possibly also due to being in Germany, which has a lower cost-of-living than the UK).
Bonuses were substantially less than IB and perhaps even other asset management firms – there’s just not as much money to go around since Funds of Funds don’t have the same levels of management fees and carry that you get in direct Funds.
Q: After working at the Fund of Funds, you moved onto asset management – but what do most people do? Is it possible to get into private equity from FoF?
A: Most people who start out in FoF stay there and build their careers there – you don’t really have the required skills (LBO modeling) to go into private equity.
If you do leave, the most common and obvious exit opportunity is moving into asset management – quite a few people from my firm actually left to move into larger asset management firms.
Q: So why did you make the move, personally, rather than staying in FoF?
A: I could have stayed there and had a comfortable lifestyle – but there were a few things I didn’t like:
- There wasn’t much career progression aside from becoming an Investment Manager and then a Partner – it’s not like banking, PE, or even trading where you have levels in between.
- I wanted faster-paced work because that suited my personality much better; I also wanted more of a front-office role where you make investments directly.
All along, I was actually more interested in trading but it was a long-shot where I live as the majority of trading desks are located in Frankfurt.
The job that I ended up with at the asset management firm was actually different from the original one the recruiter set me up for, so I would reiterate something that you have said before: that you are not necessarily interviewing for the job you think you are!
Q: So you’re planning to move into trading from there?
A: Yes – maybe stay here for a year or two, and then leverage my connections to move into a trading role.
That’s a very indirect path to trading, and it probably wouldn’t work as well for IB/PE – but luckily trading is one field in finance where they do care more about results than pedigree/work history.
Q: Right, well good luck with making the move – and thanks again for taking the time out to chat!
A: No problem – hope you learned a lot.
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