If you want to be a graduate trainee, the best way in is to be an intern
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
"We plan to focus more and more on internships as a source of new recruits",
says Karen Paginton, head of recruitment at Citigroup. "Internships are a
good way of getting a feel for the quality of candidates. In current market
conditions this is doubly important."
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
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.
"We have 60% more more applicants than last year", 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. "We do not plan to reduce the size of our internship
programme because of the economic climate", says Plant. "It remains
the best way of identifying good candidates."
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, "The ball is in our court."
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
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.