Commercial banks are where the average Canadian goes when they want to cash cheques, apply for loans or speak to financial advisors. But what happens when a big business needs a loan or the help of an advisor? That’s where investment banks come in.
Investment banking provides financial services for large, institutional clients with complex banking needs.
Gaining insight into the world of investment banking can help you better understand global financial news or decide if you want to pursue a career as an investment banker.
What is investment banking?
An investment bank specializes in banking services for corporations and governments. These services typically include helping companies issue their stock on public exchanges and facilitating company mergers and acquisitions.
In Canada, investment banking services are offered by BMO, CIBC, Desjardins, National Bank, RBC, Scotiabank, and TD Canada Trust, among others. There are also boutique banks that specialize in investment banking services, like Blair Franklin Capital Partners, Capital Canada Limited, and Evans & Evans, to name a few.
What do investment banks do?
Investment banks specialize in complex financial services. They may also offer everyday banking services like bank accounts and credit cards if they’re equipped with commercial and investment banking divisions. Many Canadian investment banks fall into this category.
Investment banking services vary, but some of the most common offerings include:
- Underwriting. When a company wants to sell its stock on a publicly-traded exchange, it needs to work with an investment bank. Investment banks assess the company that wants to go public, decide how much its stock is worth, ensure regulatory rules are followed and more.
- Mergers and acquisitions. The process of purchasing or merging with another company is complicated. Investment banks are hired to help facilitate and advise.
- Equity research. Investment bank equity research teams are responsible for analyzing stocks for institutional investors.
- Debt management. When companies need to borrow money or restructure existing debt, investment banks can provide insight and support to help them better manage their liability.
Investment banks vs. commercial banks
The biggest difference between a commercial bank and an investment bank is the clientele.
Commercial banks service the general public, providing bank accounts, credit cards, home loans — day-to-day banking products and services. In contrast, investment banks offer underwriting and advisory services specifically for companies, institutions and government entities.
The ‘Big Five’ are five major commercial banks in Canada:
- Bank of Montreal (BMO)
- Bank of Nova Scotia (Scotiabank)
- Canadian Imperial Bank of Commerce (CIBC)
- Royal Bank of Canada (RBC)
- Toronto-Dominion Bank (TD Bank)
In Canada, some commercial banks also offer investment banking services. Global investment banks include Goldman Sachs, Morgan Stanley, and JPMorgan, among others.
What is an investment banker?
Investment bankers are the financial advisors and analysts that provide investment banking services. The day-to-day responsibilities of an investment banker vary, but generally, investment bankers:
- Advise corporate mergers and acquisitions.
- Develop client proposals, presentations, marketing materials and financial models.
- Conduct industry research and analysis.
- Evaluate and develop business opportunities for corporate clients.
- Draft prospectuses.
- Conduct due diligence investigations.
Careers in investment banking
Investment bankers — also called analysts or associates — may work with a diverse spectrum of teams or may specialize in specific industries or market sectors. Strong analytical and communication skills are favoured, and some positions may require long hours in a fast-paced environment.
Investment banking associates may move up into senior consultant roles or account management. Others may opt to specialize in one of the many services offered by investment banks, like underwriting or advising company mergers and acquisitions.
Investment banker salary in Canada
The average base salary for an investment banking analyst employed by the Big Five banks in Canada is $85,000, according to Wall Street Prep, a provider of investment banking training programs. Investment banking associates are typically paid more — in the $100,000 to $120,000 range. Average annual cash bonuses for an investment banking associate may range from $130,000 to $200,000.
How to get an investment banking job
Many investment banker positions require a bachelor’s or master’s degree in Business, Finance, Math, Engineering, Economics, Science or Technology. Holding a Master of Business Association, or MBA, may also be beneficial. Some universities offer specialized Investment Banking programs through their graduate business schools, like the University of Toronto’s Rotman School of Management.
Once you fulfill the education requirements of the position, some additional skills and credentials may be required. Completing your certification as a Chartered Accountant or Chartered Financial Analyst may help.
Industry experience may not be a strict requirement but tends to be preferred and could help you get your foot in the door.
Financial courses for continued learning
In addition to obtaining a bachelor’s or master’s degree in a relevant field, completing one or more of the following financial courses may help give you an edge over competitors:
- The Canadian Securities Course is offered by the Canadian Securities Institute. This virtual course requires approximately 135 to 200 hours of study and covers Canadian investment regulations, financial instruments, market analysis and more.
- Cost: $1,200 to $1,600 CAD.
- The Wealth Management Essentials is offered by the Canadian Securities Institute. This virtual course requires approximately 110 to 160 hours of study and covers investment management, retirement planning, tax minimization strategies, investment portfolio monitoring and more.
- Cost: $1,570 to $1,670 CAD.
- The Certified Investment Management Analysts Course is offered by the Investment Management Consultants Association. This US course is offered virtually and in a virtual/in-person hybrid setting. Recognized by the Investment Industry Regulatory Organization of Canada as an accredited professional development course, it focuses on portfolio theory and construction, risk management, global capital markets and more.
- Cost: $2,995 to $5,995 USD for the course, plus a $999 USD application fee and $395 USD initial certification fee.