The excitement is palpable; so too the anxiety. The second-year economics student is about to begin his 10-week internship at the investment banking division of one of the top-tier banks in the City of London.
Schooled in Singapore, the 20-year-old had a taste of what is in store in his first year as an undergraduate at a leading British university. While most of his peers were adjusting to their surroundings, he was applying for a “Spring Week”: work experience at a bank to gain exposure to trading, dealmaking and risk.
The sector’s toxic image is no deterrent. Nor is the prospect of all-nighters. Long hours, he insists, are the product of a “culture of excellence”. It is the “dynamism” that appeals to him. “I like the idea of being involved with the biggest market movers in the industry.” There is also the money.
Hundreds of undergraduatesare starting internships at banks this summer, typically eight to 10 weeks with a salary equivalent to £45,000 a year. Soon follow the graduates, starting their careers as banking analysts, earning about £45,000 plus bonus. The median salary reported by university-leavers last year was £20,500.
This is the first wave of summer recruits after Moritz Erhardt, a 21-year-old Bank of America Merrill Lynch intern, died last year of an epileptic seizure after working long hours. Concerns over conditions for juniors have prompted the industry to re-evaluate working practices. Edicts were issued, requiring them to take time off.
The changes come at a key moment for banks. Under pressure from the public and politicians, they must overhaul their short-term, high-rewards culture. So who are these young bankers who will determine whether their sector transforms into something more socially acceptable?
Sabine Chappard, Credit Suisse’s co-head of investment banking department recruitment for Europe, the Middle East and Africa, believes this generation is savvier than predecessors. “They certainly know much more about banking than I did when I started but the competition is fierce. Graduates have to work very hard now to get an offer.”
The precocity only goes so far. In an era of reputational repair, banks do not deem junior bankers and interns savvy enough to talk to journalists. Those interviewed for this piece asked that their identity be concealed.
The typical way in is via an economics degree (or some variant) at a top university. Of those going into investment banking and wealth management in the UK, 20 per cent came from Oxford and Cambridge alone, according to the Sutton Trust, an education charity.
Yet graduating from an elite university is not enough. Aspiring bankers are expected to do a Spring Week in the first year, and secure a seat on their university finance or investment banking committee, followed by an internship at the end of the second year. Billed as an opportunity for students to discover the industry, internships are also a summer-long job interview.
Many hopefuls are formulating career plans in their last year of school, says Martin Birchall of High Fliers, an education research group. One 20-year-old Cambridge undergraduate doing a banking internship, describes his work experience to date: a gap-year at one of the Big Four auditors followed by two Spring Weeks at investment banks. He wanted to work in finance as a schoolboy: “My personality seemed suited to the fast-paced, competitive world.”
One of the reasons for such early commitment is student debt. One mid-level banker in his early 40s observes an earnestness among graduates that was lacking in his own generation. “The university system is geared towards money. Students are more serious and boring. They have to get as much out of university as possible to maximise their chances of getting a well-paid job. They are more driven.”
Add to this international competition. Graduates entering the City are no longer plucked from England’s shires but are increasingly likely to come from Shanghai or Kolkata. Banks are one of the few graduate employers to sponsor visas. As in the English football Premier League, locals may find it harder to get a game.
But overseas students have their own burden to bear in the form of higher UK tuition fees. The Singaporean intern says they “feel the pressure of getting a good job” even more than their British counterparts.
Despite the scandals, interest among graduates for banking jobs remains strong. Elizabeth Darlington, a careers consultant who used to be a graduate recruitment manager at the investment banking arm of Barclays, says the big banks retain “glamour”. Others are less sure. Kevin Roose, in his book Young Money, which tracks eight graduates entering Wall Street after the financial crisis, suggests they are “losing their grip”.
For those clamouring to get in, the toxicity is no deterrent. “I’m sceptical of the images of banks presented by external parties,” says the Cambridge intern. Most see the pay as a reward for ability. The intern explains: “The main attraction of pay for me is less on a consumption side and more as a reward for hard work. I don’t have a great desire to live lavishly but rather to live comfortably without ever having any financial worry.”
At the banks, there is a concern they might not meet the younger generation’s expectations. Bruce Tulgan, author of Not Everyone Gets a Trophy, characterises this cohort as worldly, precocious and needy. Used to instant feedback and hands-on parenting, they are less likely to toil away quietly, paying their dues.
Not yet teenagers on 9/11, they entered university in a recession that made many suspicious of institutions. One graduate had this to say to Mr Tulgan about financiers: “I know they think they are masters of the universe, but the Soviet Union disappeared overnight. So could they.”
For high-achieving young financiers the grunt work can be disappointing. “You’re just doing monkey work . . . in the end you don’t even know what it’s for,” one reflects. One intern studying at Oxford suggests banking has become more boring since the financial crisis, “with tighter compliance processes and more bureaucracy”.
The image of analysts and interns slaving away in the early hours over spreadsheets is one that banks are keen to change. Rival sectors hunting the same talent, such as consultancy, have capitalised on this perception.
The generational attitudinal shift is putting banks under pressure to change working conditions. Much time has been spent, as one former bank human resources manager puts it, “head-scratching about how to adapt” to this generation. Whether they succeed depends on the old guard’s willingness to adapt.
Further reading: Fee-paying schools entrench their advantage
The banks’ demand for precocious professionalism may impede social mobility. Sutton Trust research found that more than half of senior staff in financial services were independently educated compared with 7 per cent of the school population, Emma Jacobs writes.
For students lacking connections to the City it can prove a huge shock to find out they need to apply for a Spring Week – a recruiting ground for internships – in their first term of university. As one intern, from a state school, notes: “Most of us didn’t know about Spring Weeks until it was too late.” He only secured a place because he was on a four-year degree programme and so could reapply.
One analyst who went to a private school adds: “Those from private school are well prepared, they know to say that they’ve been interested in banking since they were five. State schools are not so focused and on-message.”
Read the second part of this two-part series, ‘Banks try to protect their young’
This article has been amended to make it clear some reforms were being examined before the death of Moritz Erhardt and to correct Sabine Chappard’s job title
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