Investment banks put more emphasis on internships

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If you want to be a graduate trainee, the best way in is to be an intern

first.

That is the message from investment banks to prospective graduate entrants as the

economic downturn makes them more selective about who they hire. But turning

a summer position into a permanent place is likely to prove harder than

before.

&quotWe plan to focus more and more on internships as a source of new recruits&quot,

says Karen Paginton, head of recruitment at Citigroup. &quotInternships are a

good way of getting a feel for the quality of candidates. In current market

conditions this is doubly important.&quot

Summer internships in investment banks are usually open to undergraduates in

the penultimate year of a degree course. Individuals who will graduate in 2003

and are feeling the first inclinations towards investment banking, therefore

need to apply right now for summer positions in 2002.

Although closing dates for internship applications are generally in February

or March, many places are offered on a first come, first served basis. So the

sooner an

application is in, the better.

Even at the head of the queue, gaining a place on an internship programme is

no easy matter. At Citigroup, only 5% of would-be interns made the grade

last summer. At JP Morgan the figure, at 3%, was even lower. Next year,

increased competition means that the percentage of successful applicants may

be even lower still.

Undaunted by job losses and reduced bonuses,

it seems that undergraduates want to be investment bankers more than ever.

&quotWe have 60% more more applicants than last year&quot, says Heidi Plant, head of

graduate recruitment at UBS Warburg. With more candidates to filter,

Plant says that the bank has plans to use an assessment centre instead of only interviews to

select its summer interns.

For undergraduates, the good news is that banks' need for interns is likely

to remain relatively static. &quotWe do not plan to reduce the size of our internship

programme because of the economic climate&quot, says Plant. &quotIt remains

the best way of identifying good candidates.&quot

However, turning a summer internship into a graduate offer is likely to be

tough. With graduate hiring in 2003 expected to be down, competition between

interns will be intense.

Many recruiters say they will be monitoring interns'

performance more closely. Two assessments with line managers and human resources, plus a

presentation on some relevant topic given by the intern, are increasingly to be expected.

Some banks are also starting to raise the academic threshold. The offer

of a graduate place following a successful internship is now more likely to

be made conditional upon exam results.

Last year, for example, Citigroup was prepared to honour its offer of a

graduate position even if candidates failed to achieve a 2.1. This year it

will not. As a human resources executive at another bank put it, &quotThe ball is in our court.&quot

It appears easier to progress from being an intern to a graduate

hire at some banks than others. Following the introduction of a rigorous new

assessment centre, only 30% of SSSB's investment banking

interns were converted into graduate offers last summer.

At JPMorgan, some 75% of 2001 interns were invited to become graduate trainees. At Deutsche

Bank the rate was 55%.

For those who do not progress from summer intern to full time hire, there

is one consolation: some banks at least pay their interns well. At US and

first tier European banks, the going rate in London is between 400 and 450

a week.

Second tier banks are less generous. Some smaller European firms are to pay

summer interns a mere 250 per week for their endeavours next summer. Unless

London rents fall, these unfortunates may find that money troubles supplant

concerns about converting summer work into a full time offer.

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