Have you ever thought about investment banking in Australia? Yes, it may be negligible compared to the revenue and market share in USA and Europe, but does Australia still have hope?
In this article, we will explore all aspects of investment banking in Australia and will understand how much potential Australia has in making it big in investment banking.
Let’s look at the sequence of the article –
- Investment Banking Market in Australia
- Investment Banking in Australia – Services Offered
- Top Investment Banks in Australia
- Investment Banking in Australia – Recruitment process
- Investment Banking Culture in Australia
- Investment Banking Salaries in Australia
- Investment Banking in Australia – Exit Opportunities
Investment Banking Market in Australia
Australia may not be the most attractive place for investment banking, but still, it has been showing promise of growth. Many investment banks have seen the potential and started exploring Australian market. For example, we can talk about Macquarie Group which has 6 offices in Australia and they are number 1 in Australian investment banking market.
Moreover, youth in Australia has still been very positive about the investment banking career. Even if Australia has been losing its ground in investment banking after the global crash, still students and would be professionals are still preparing and giving interviews for investment banking domain.
And these are all good news. And Australia is an emerging market which can show a lot of potential in near future. The investment banks just need to tap into the opportunities.
Investment Banking in Australia – Services Offered
To understand what sort of services Australian investment banks offer, we will pick one of the top most investment banks in Australia and peep within their services. This will help us understand the essence of what Australian investment banks offer to its customers.
- Advisory & Capital Markets: Even if Australia has been doing poorly in investment banking, still the approach of top-notch investment bankers is always customer-centric. The advisers are trained in such a way that they serve their customers first, think about profit, second. And when it comes down to their corporate finance capabilities, they have great expertise which has still helped Australian market to float.
- Asset Finance: The investment banks in Australia are experts in providing various finance and asset management solutions. From aircraft to mining, from rail to technology, they provide every possible asset finance services customers would like to get the assistance of.
- Financing: Australian market has one benefit – it is an emergent market. Thus, the opportunities are limitless. And investment bankers all over in Australia have been utilizing this advantage as much as they are able to. From lending & investing to commodities & energy/resources, they are everywhere.
- Asset Management: Australian investment banks are not only handling Australian assets, they are also well-equipped in handling the global demand. They have 100+ strategies and several teams to outgrow customers’ expectations. (also, have a look at Asset Management)
- Research: Equity Research is the holy grail of every business. And Australian investment banks are the centers of excellence at research. Looking at a business from various perspectives and having thoughtful processes are allowing the banks to transcend every limitation. From consumer, demographic, environment, energy to renewables, utilities, telecom & materials, their expertise knows no bound.
- Trading & Hedging: Australian investment banks are equally capable to handle the trading & capital market. They provide 24-hour access to their customers in terms of global market conditions, price making solutions and global trading. They also help their customers with market research and technical & fundamental analysis.
These are the services top-notch Australian investment banks provide to their customers. And they are constantly uplifting their games and providing cutting-edge solutions to their customers.
Top Investment Banks in Australia
Australia isn’t doing great in investment banking. In first half of 2016, investment bankers in Australia brought in lowest revenue since 2010, i.e. $591 million.
According to Dealogic, Australia’s investment banking revenue had been dropped by 23% to $678 million in the first six months of 2016.
But still, amid the clouds, few investment banks did exceptionally well.
We will look at the top 10 investment banks which did exceptionally well as of June 2016 according to Dealogic. Dealogic has ranked them as per the revenue and percentage of share during the first half of 2016.
- Macquarie Group: They had taken the first spot in terms of revenue and market share. The revenue of Macquarie Group was $119 million and the market share is 17.6%.
- UBS: UBS was at second position. They earned the revenue of $57 million and the percentage of share was 8.4%.
- Credit Suisse: At the third position, Credit Suisse had cemented their feet. They generated around $37 million and 5.5% of market share.
- Citi Bank: Citi Bank was at fourth position, producing around $34 million and capturing 5% of market share.
- JP. Morgan: J.P. Morgan had captured the fifth position. They had earned around $34 million and captured 5% of the market (as same as Credit Suisse).
- Goldman Sachs: At sixth, there was Goldman Sachs generating around $33 million and 4.9% of market share.
- National Australia Bank: National Australia Bank was at the seventh spot. They had generated over $29 million and around 4.3% of market share.
- Bank of America Merrill Lynch: Bank of America Merrill Lynch had cemented their position at 8. They had produced around $27 million and a market share of 4%.
- CBA: CBA had taken the ninth position, grossing around $27 million (slightly lesser than Bank of America Merrill Lynch) and capturing a market share of 3.9%.
- Morgan Stanley: At 10th, there was Morgan Stanley. They have generated around $26 million and a market share of 3.8%.
Also, have a look at the following –
- Top Boutique Investment Banks
- Top 10 Bulge Bracket Investment Banks
- Top 10 Middle Market Investment Banks List
Investment Banking in Australia – Recruitment process
In Australia, the process of recruitment is the combination of both Europe-Asia & USA. Let’s go through the process of recruitment in investment banking –
- Online tests: The screening process in Australia is rigorous. Thus, if you want to break in, you need to go through a series of online tests on both verbal and quantitative subjects. Once you are through, you will go over to the next step.
- Assessment days: On assessment days, the whole scenario is different. You will be given a limited time to prepare a case study on a transaction or hypothetical situation. You will prepare the presentation and will present the case in front of the panel of interviewers. This is a tough screening method because it is pretty difficult to prepare a presentation within a short stint of time while concentrating both on the content and context of the presentation.
- Series of interviews: Usually, the interview panel gets their few best candidates after the assessment day. After the assessment day, it’s time to filter out the good from the great. For that, series of interviews are taken and the interview process is pretty harder compared to the interviews in USA & Europe-Asia.
There are few things that are different in the recruitment process in Australia –
- Usually, people don’t change careers in Australia. So whenever the recruitment process starts, only finance people apply. And that’s the reason the recruitment process needs to be more solid.
- People who apply for investment banking positions are on an average bit older and mostly they leave behind a long career in boutique banks or other financial institutions.
- As the investment banking industry is smaller in Australia and all the candidates seem to have a solid background, the interview process needs to be stricter to filter out the best from the pool of candidates.
Investment Banking Culture in Australia
In Australia, the culture for investment banking is quite different. People working there are a bit older on average. And they don’t work insanely long hours. They have holidays and often even banks get shut down which is almost impossible in USA & Europe. Investment bankers in Australia maintain a healthy work-life balance along with running their career smoothly. Even at a junior level, you will not need to work 100+ hours which is pretty hard to believe.
The offices are usually divided among two groups – married and single people. And unlike other regions (e.g. USA & Europe), people hang out a lot during work hours (whenever required) and not much after work.
Every organization has a separate team which works on a specific sort of deals. For example, a group of 10 people who are passionate about M&A works on closing more and more M&A deals.
Macquarie Capital provides global investment banking services in six industry groups: Infrastructure, Utilities and Renewables; Real Estate; Telecommunications, Media, Entertainment & Technology; Resources; Industrials; and Financial Institutions. Most other investment banks, in Australia, however, focus on two sectors i.e. energy and natural resources because Australia is known for it.
Investment banking in Australia is quite different as the industry and market are relatively smaller and investment banker specifically works on focused projects instead of trying to cram all of it.
Also, have a look at Investment Banking Lifestyle
Investment Banking Salaries in Australia
In Australia, the average salary for an investment banker is much lesser than the investment banker in the USA or Europe. And the range of salary is also very broad.
On an average, an investment banker in Australia earns around AU $98,471 per annum as per the data are shown by Payscale.com. Here’s the graph below –
Now, let’s go through another graph to understand the range of salary of investment bankers and also the bonus & profit-sharing part of the compensation –
- We note that the salary range of investment bankers in Australia is AU $51,521 to AU $207,128. This range proves one thing that you will not start at a higher level (in compensation) when you just start out your career in investment banking in Australia. But if you stick for 15-20 years, your salary would get quadrupled.
- We also get the range of bonus and profit sharing i.e. AU $5,000 to AU $100,000 & AU $986 to AU $19,866. These figures also emphasize the importance of experience in investment banking career in Australia.
- Experience highly affects the compensation in investment banking market. If you have more experience, chances are you will be getting much more compensation than the investment bankers who are now in the middle of their career. And at entry level, you need to start with the salary based on industry norms.
In the next graph, we will see the gender division in investment banking market in Australia –
- According to this, only 10% of all the people who work in investment banking are female. And remaining 90% are male. That means we can conclude that investment banking in Australia is a male-dominated industry.
Investment Banking in Australia – Exit Opportunities
As you already know, going from investment banking to buyer side of the business is a common thing; but in the case of Australian investment banking market, an exit is a big no-no for candidates.
Since the career change in Australia is a very uncommon thing, people who work in investment banking usually change jobs from one firm to another and also go for a smaller bank to bigger bank; but rarely from investment banking into private equity or hedge funds. Usually, people change jobs for more stability and better compensation, but not for exploration or because they don’t like their investment banking jobs.
So if you start your career in Australian investment banking market, an exit is not a good option. You may think of moving out of Australian market and going into the USA or Europe. It can be done, but the issue is the migration doesn’t yield any additional benefit. Having experience in Australian investment banking market doesn’t count in investment banking industry in the USA or Europe. As a result, the candidate who has migrated from Australia to the USA or Europe needs to start again from the bottom (which is not a good thing).
The Australian market is on the rise even if the figures don’t say so. However, if we look into the opportunities created by the foreign banks in the Australian market, we would say there is still hope that Australian market will come back strongly.
And we will wait to see whether in near future investment banking in Australia will be able to make a dent!
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