Merchant Bankers in India – Career Perspectives

Merchant Bankers in India

The word merchant bank does not have a fixed definition as this term is used differently in different countries. In United States these are called as “Investment Banks” and in UK they are called as “accepting and issuing houses”. The notification of Ministry Of Finance in India defines Merchant Banker as “any person who is engaged in the business of issue management either by making arrangements regarding selling, buying, or subscribing to the securities as manager, consultant, adviser in relation to such an issue management”.

In general the merchant banks are the financial institution which provides financial services, solutions, & advice to corporate houses. Some of the world famous merchant banks are Goldman Sachs, Credit Suisse & Morgan Stanley etc. In India there are many banks which are into the field of merchant banking some of the banks are ICICI, State Bank Of India, Punjab National Bank etc.

Citibank Setup its merchant banking division in Indian in 1970.

Indian banks Started banking Services from 1972.

State bank of India started the merchant banking division in 1972 After that there were many banks which set up the merchant bank division such as;

  • ICICI
  • Bank of India
  • Bank of Baroda
  • Canara Bank
  • Punjab National Bank
  • UCO Bank

The Merchant Bank got more importance in the year 1983 when there was a huge boom in the primary market where the companies were going for new issue. Merchant banking activities are organized and undertaken in several forms. Commercial banks and foreign development finance institutions have organized them through formation divisions, nationalized banks have formed subsidiary companies, share brokers and consultancies constituted themselves into public limited companies or registered themselves as private limited Companies. Some merchant banking companies have entered into collaboration with merchant bankers of foreign countries abroad with several branches.

Merchant Bankers in India

As of now there are 135 Merchant bankers who are registered with SEBI in India. It includes Public Sector, Private Sector and foreign players some of them are –

  • Public Sector Merchant Bankers
  • SBI capital markets ltd
  • Punjab national bank
  • Bank of Maharashtra
  • IFCI financial services ltd
  • Karur Vysya bank ltd,
  • State Bank of Bikaner and Jaipur
  • Private Sector Merchant Bankers
  • ICICI Securities Ltd
  • Axis Bank Ltd (Formerly UTI Bank Ltd.)
  • Bajaj Capital Ltd
  • Tata Capital Markets Ltd
  • ICICI Bank Ltd
  • Reliance Securities Limited
  • Kotak Mahindra Capital Company Ltd
  • Yes Bank Ltd.
  • Foreign Players in Merchant Banking
  • Goldman Sachs (India) Securities Pvt. Ltd.
  • Morgan Stanley India Company Pvt. Ltd
  • Barclays Securities (India) Pvt. Ltd
  • Bank Of America, N.A
  • Deutsche Bank
  • Deutsche Equities India Private Limited
  • Barclays Bank Plc
  • Citigroup Global Markets India Pvt. Ltd.
  • DSP Merrill Lynch Ltd
  • FEDEX Securities Ltd

 

 

Career in Merchant Banker

Typical Day

Investment bankers at associate level spend a lot of time traveling to various clients to present ideas and work on developing financial plans i.e proposing and negotiating deals etc and strategies for clients. Also the analysts and associates are required to work a lot on presentation material. All this work can appear to be very time consuming. A typical day for an investment banker is to start at nine in the morning and he needs to work fairly consistently until midnight. Though it may be a five day workweek but you must be prepared to work on the weekends as well. When the deal is on you may be required to work all nights, sometimes a couple of nights on a go. Working up to 2 or 3 a.m. is quite usual. Thus the schedule is demanding and work comes before the personal life.

Who hires a Merchant Banker?

The major firms in investment banking like Goldman Sachs, JP Morgan Chase and Morgan Stanley to name a few. Goldman Sachs is considered to be the best I-bank and its rigorous recruitment process which involves more than 9-10 interview rounds.

What do the interviewers look for in the candidate?

For mainstream banking positions these firms hire at both undergraduate as well as graduate level and a few Ph.D. holders as well. Undergrads are typically from Engineering or law background. Most of the hires are from top schools. Large number of people are hired from top MBA programs. Thus, a degree from a top school is a must with extraordinary academic achievement and excellence in communication skills.

Moreover, you should have a track record of proven leadership qualities and ability for great team work. People are also tested for their ability handle stress during the several rounds of interviews. The interviews also focus on high level of analytical ability.

The awareness about equity markets and stocks is a must. Fluency in foreign languages is always an asset. Firms generally looks for creative and highly energetic people, who can fit into the culture of company. Certifications like CFA and FRM are a huge plus. Summer internship is almost a must these days and candidates who have interned with the firm are almost sure of getting a permanent position at the firm. Ethics are also put to test during the interview since you would be handling somebody else’s money.

Salary and Bonus

The investment banking career is highly paying. The starting salaries can differ among investment banks and the working day is often long. However, candidates with the necessary skills and abilities can rise quickly to positions carrying considerable responsibility, where they will be rewarded accordingly. Increasingly a major element of remuneration is related to performance or profits and paid as an annual bonus. The starting salary on an average for an analyst is about 6 Lakhs per annum. But a huge component of compensation comes from the bonuses which may be as high as 100% of the base salary.

Positives

Huge salaries. Opportunity to work with top management of the client company. Opportunities to travel during road shows.

Negatives

Very long working hours specially during the time of the deal, work pressure, personal life suffers.

Career Progression

  1. Analyst: Generally undergraduates are recruited at this level. Typically they work mainly on analytical work and do a fair amount of writing, and on the job training. Most of the work involves relaying orders among dealers, clients and traders. Researching new financial products and market trends. reviewing financial statements of issuing companies, developing valuation and financial models. Tracking client’s portfolio, preparing presentation material etc.
  2. Junior associate: Job of supervising the analytical work done by an analyst. Their job includes running computer analyses, preparing the financial reports which accompany stock issues, and putting together the documents used by senior bankers to pitch ideas. Employees with more than 2 years of work experience as analyst are recruited for this position. Mostly this post is filled by MBA graduates.
  3. Senior associate: Depending on the investment firm’s structure, their work involves overseeing the preparation of documents that leave the firm, and they are involved in the more creative side of business, working with senior bankers and clients to develop financial strategies. Senior associates are basically more specialized in a specific type of transaction, and they should have established banking skills that will help them in the future. Approximately it takes 4 years to reach next level.
  4. Managing directors and Vice President: They have the ownership interests in the firm he or she works at. To become a senior banker it usually takes about ten years of experience and a lot of hard work and then another 6 years or so to reach the next level.

So what do you think, Are you ready to take up a job that has a designation of Merchant Banker? Tell us in the comments box below.

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