Investment Banking Salary In India – A Comprehensive Analysis
Investment bankers have a very important role to play in businesses, including but not limited to advising firms on mergers and acquisitions and fundraising activities. In other words, an investment banker is a kind of broker responsible for facilitating such transactions along with connecting investors with companies. Glassdoor claims an investment banker analyst can earn more than 12 lakh in a year. It is without the additional compensation of more than 3.2 lakh per annum. The cash compensation can go up to 5.6 lakh in a year. Therefore, you have enough reasons to hop on this domain. this article will provide you with a detailed Analysis of Investment Banking Salary In India.
Along with Investment Banking Salary In India, we will provide you with other pertinent details on Investment banks and Investment Banking. I just found out that between 2018 and 2023, the investment banking sector seems to grow at a compounded annual growth rate of 1.2, which means in 2023, it may be worth 78,000 million dollars. This industry is sitting on money. There is a lot more in this blog article that you may want to know before going to an investment banking class.
Investment Banking Salary In India: An Overview
The salaries of investment bankers in India depend upon the category of instruments. So, to understand this, we have divided Investment Banks into four categories. Category number one is the front tank bulge bracket Investment Bank like Goldman Sachs, Morgan Stanley, UPS, Damura, etc. In this category, the salary of an analyst falls in the range of 20 lakhs to 40 lakh rupees per annum.
That is a fixed path plus a yearly bonus of 20 to 80 percent of your fixed salary. Category number two is in captive units of Bulge Packet Investment Bank. In the captive unit of Bulge Packet Investment Banks, the average salary of an analyst falls in the range of 15 lakh Rupees to 20 lakh rupees fixed plus a yearly bonus of 20 to 50 of your fixed salary.
Category number three is the mid-size investment Banks category of Investment Bank. Investment Banks like GM Financials, IDBI Capital, etc. In this category, the average salary of analysts falls in the range of 7 lakh Rupees to 15 lakh rupees fixed, plus a yearly bonus of 20 to 50 percent of your fixed salary. Category number four is Boutique investment banks.
In this category, we have small investment Banks like Veda Capital, O3 Capital, and all, so this list is quite long. In this category, the average salary of analysts falls in the range of 4 lakh Rupees to 12 lakh rupees plus a yearly bonus of 20 to 50 percent of your fixed salary. So, I hope this analysis will give you a good idea about the pay scale of investor banks in India.
Investment Banking Salary Example: Goldman Sachs
Investment bankers have a vital role to play in businesses, including but not limited to advising firms on mergers and acquisitions and fundraising activities. In other words, an investment banker is a kind of broker responsible for facilitating such transactions along with connecting investors with companies. Goldman Sachs pays high salaries not only to those who are on the high rank but also pay handsome salary to lower-grade executives. Just for example, a summer intern can earn 50% more than the average Indian household.
Starting with which department exists and how much they pay, as you can see, there are some broad departments, including corporate management, research and development engineering, retail IT, and financial administration. Although employees at Goldman Sachs earn an average of 24.1 lakhs, mostly ranging from 19 to 51.7 lakhs depending on the departments.
Based on internal analysis, the highest-paying department at Goldman Sachs is corporate management, with yearly earnings averaging around 33.6 lakhs per annum. What was the next thing you guys wanted to know? Yeah! The designations and the roles with salary growth in management, but before we get there, always remember that not everyone who works at an investment bank is an investment banker.
With the corporate management department steering the direction of Goldman Sachs’s operation, it has responsibility for working with corporations, institutions, and government. Member that not everyone who works at an investment bank is an investment banker.
Investment Banking salary in India as per designation:
Goldman Sachs’s corporate department has a hierarchical structure from associates to MDs. Let’s start with the IB analyst. The job of an investment banking analyst is to provide those who have recently completed their graduation or post-graduation degree. The primary responsibility of these analysts is to perform research and analysis tasks for various Investment Banking projects.
A fresher analyst can earn 1.25 to 1.42 lakh per month, but as his or her experience grows, he or she will earn 1.7 to 2 lakh in a month. Next, we come to an associate; an associate is an analyst with an MBA & CFN. But she or he needs to perform their duty as an analyst for three to five years. They are also employed to bridge the gap between the senior and the novice analysts.
The responsibilities include work done from analysis finalizing their work and providing a helping hand to senior Bankers like VP and above. The salary ranges from 22 to 27 lakhs on average. The role of the VP is to finalize pitch books and IMS created by the analysts and the associates and use them in client meetings—their salary ranges from 35 to 50 lakhs on average.
The last position is the MD or the highest rank in an investment banking role. Not all Investment Banking candidates Reach this designation, as it requires a great deal of skill and experience to reach. Those MDs are directly responsible for companies’ profitability, keeping track of the markets and how deals are happening. They may be involved in deal execution sometimes.
The highest paying job in Goldman Sachs is MD, which is a salary of 1.5 to 2 crores per annum, depending upon their experience. The role of investment is actually to run money flow and finance banking or other sectors that are related to Investment Banking; however, as you can see, Goldman Sachs in different countries has different client laws and standards of living, so the salary packages of investment bankers have to differ from place to place which is within India or abroad.
India vs. Abroad:
I can give you an overview of how much salaries can differ across countries like India, the USA, the UK, and Singapore. The cost of living is a subjective matter because it depends on the location you are presently residing. Suppose you are in Goa, where a cup of coffee may cost 150 INR, but if you live in Washington, then a cup of coffee would cost 1500 INR.
At the same time, not every city has an equal demand for investment bankers; in that case, salary also varies. Data shows that Goldman Sachs employees in New York get paid the most, which is where Grand Wall Street and its institutions are located. The most high-paying city regarding investment banking in India is Mumbai. One can earn 86% more than the nationally average salary in investment banking.
The next two towns are Pune and Delhi. It also offers a bit higher salary. Goldman Sachs employees with an MBA or PhD start with a base salary of 30,000 USD. Compare this to our starting base salary, which is 170000 USD. The bonuses for Goldman Sachs employees in India are also generally much lower than in the US, UK, and Singapore.
It is established that a career in Investment Banking from Top big IB firms like Goldman’s access surely rewards. They are paid for the services because banks are involved in high-value transactions with higher fees. It is expected that these individuals be hard-working, intelligent, and talented. For such an important job, as a result, they will be paid well, so is a career in Investment Banking at a top firm like Goldman Sachs. This field is typically only chosen for individuals with high energy and excellent analytics and communication skills.
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Investment Banks: Front Office Vs. Back Office
- The front office is the area of the investment bank where, first and foremost, they are clients. So in the front office, you’re going to be seeing a lot of clients, you’re going to have client interaction. You’re responsible for bringing money into the business, and as a result, your pay tends to be higher in the front of this than the back office, and that includes bonuses. On the flip side, you’ve got a back office, the back office doesn’t get to see clients as much as the front office, and back office functions are more about the smooth running of the investment bank.
- All of these front office roles tend to have worse work/life balance than the back office because you’re getting paid more. You’ve got more client interaction, you’re expected to work longer hours, and naturally, the work span is longer than back office roles. In the front office, hours can vary. You can do anywhere between 11 to 13 hours in the investment banking division. In the back office, you’re looking at a 9 to 5. when it’s busy in the back office or the front office, your hours tend to get longer.
- In the front office, you’ve got roles and divisions such as the investment banking division, the asset management division, the markets division, sales and trading, private wealth management, and research. Now, in the back office areas, you’ve got compliance, human resources, technology, and legal. In the middle, you’ve got risk treasury services. In asset management, you’re managing money for large companies, pension schemes, insurance companies, and sovereign wealth funds. They have lots of money, and they’re going to give it to you if your products that you can invest that money into are really good. You invest it over a long period, and you hope to get a return, and then you take a smooth fee from that.
- You’ve got market sales and trading. You’ve seen the movies, you’ve seen the photos of the trading floor with six seven eight screens per trader. The salespeople and the traders are working together to find the best opportunities in the financial markets to buy and sell financial securities on behalf of their clients. So, the traders are executing trades and finding good opportunities to make. Most of the salespeople are keeping in touch with the clients and managing that relationship, so the salespeople are talking to the traders. They’re executing trades and making money for themselves on the clients.
- The investment banking division is where they work the longest hours. So, if you’re an analyst in this division, you’re going to work anywhere between 9:00 a.m. and 2:00 a.m. every single day for your first two years. Now, in the investment banking division, you will be working on deals. For example, when Facebook wants to become a public company and offers the public the opportunity to buy its shares to raise money, it can invest that money. Facebook needs an investment bank or an investment banking team to facilitate that process. The investment banking division works on taking companies from private companies to public companies.
Different Types of Investment Banks
There are four types of investment banks in India. The biggest of the four is bulge bracket investment banks. They operate on a monstrous level as the deal sizes are millions and billions of dollars. Their clients are MNCs and governments. They provide each kind of service of any investment bank.
They operate globally. Examples will be Goldman Sachs, JP Morgan, Credit Suisse, and Barclays. Another type of investment bank is an elite boutique bank. They also provide all kinds of services but are stronger in a few areas. They operate in various countries in the world, but they dominate several regions. For example, they may be an expert in mergers and acquisitions, equity capital markets, and debt capital markets. Rothschild and PTJ Partners. The next type is a boutique investment bank.
It is the smallest of the four. They operate in very small geographic locations, like only one country or two to three countries. Examples of this type of investment banking are MAPE, Avendus Capital, O3 Capital, etc. The last of the type is the middle market investment bank. It falls in between the elite boutique investment bank and the boutique investment bank. It is not very small in size but not also very big. Their services are limited but more than two areas. They can operate on a multi-national level. Examples of this type will be Spark Capital and Equirus.
Structure of A Big Investment Bank
The bulge bracket investment bank is divided into four divisions, like the investment banking division. Traditionally, an investment bank offers two types of services such as capital market and merger and acquisition. It helps to raise money in the form of equity as equity capital market and debt as debt capital market to raise bonds and debentures. To proceed with any deal, you need to be sure of the foundation of the agreement. For that purpose, there is one due diligence division that works with the M&A and capital market divisions.
The due diligence department functions as an audit. Before signing any document, you need to be sure about the context of the deal. This is the division that verifies what is told and what is not in the deal. Next comes the wealth management division, which helps in the taxation of the client and states of the clients. It plans the will and trust of the client. Next comes the research division, which is very popular these days regarding equity research, fixed-income research, and commodity research.
These are the subdivisions of the research department. The last division is the trading and brokerage department. Under this investment bank, trade uses its fund called the proprietary fund. IB takes money from clients for trading on their behalf and generates commission from them.
Bulge Bracket Investment Bank vs Boutique Investment Bank
|In bulge bracket investment bank deals are billions of dollars||In boutique investment banks, deals are for millions of dollars|
|For the bulge bracket, the clients are governments and MNCs||For a boutique investment bank, the clients are local players|
|Its fees are very high because of the services||Its fees are comparatively lower|
|It offers services in all investment bank-related issues||It offers one or two types of services|
|It contains thousands of employees.||In boutique investment banks, the employee is below 250|
|Its operational area is global.||Boutique banks operate country-specific|
|It offers large exposure because of huge deals||It offers segmented exposure|
|It offers a higher salary but lower bonus compensation.||It offers lower salaries but higher bonuses as compensation.|
|The interview is highly difficult to crack||It offers easier interview|
|Here, job training is given.||No job training is given in boutique investment banks.|
|It demands up to 90 hours of work a week||It offers 60 hours of working|
|It has a high level of exit opportunities||It offers lower exit options|
|One can easily move to boutique investment banks from bulge bracket investment banks.||Moving to a bulge bracket investment bank is not so easy in this case.|
Investment Banking Salary in India With Hierarchy: Bulge Bracket Investment Bank and Boutique Investment Bank
Bulge Bracket (Salary)
|Intern||15000-25000 INR per month||40000-60000 INR per month|
|Analyst||4Lakh-5Lakh INR per year||12Lakh-20Lakh INR per year|
|Associate||8Lakh-12Lakh INR per year||15Lakh-25Lakh INR per year|
|Associate Director/Vice President||18lakh-25Lakh INR per year||35Lakh-60Lakh INR per year|
|Director/Senior Vice President||In 90% of the cases, most candidates are limited to the associate director or vice president level. Still, if you are fortunate enough to uplift yourself to these three levels, then as per earning potential, the sky is the limit for you. Your income will be limitless because you are the owner of the business. You don’t get a salary, and then you get compensation from every deal.|
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Investment Banking: A landscape
Now, as you can expect, most people are concerned with working at the best investment bank that they can. They want to work at a firm that will improve their career and give them lots of exit opportunities. But I think it depends on the constraints that you have in your career, whether that’s a particular geography you want to work in or a particular industry. The key people that are identified as the best firms might differ.
For example, if you want to work in a specific industry like healthcare or technology or if you want to move back home and then work in a specific geography, then there’s not always going to be every investment bank available. Investment banks are essentially financial advisors that advise companies on corporate finance decisions and financial transactions, so that can entail quite a few different things. Investment banks can help companies IPO if they’re private companies; they can help them do M&A.
If they want to acquire another business, they can also help them sell their business in a sell-side transaction. They’ll also do things like help your business raise debt or have equity research cover your company. They’re essentially there to help you with all matters related to corporate finance. So, that being said, when looking at the investment banking landscape, I would generally boil it down to four categories. So first, we have characteristics of the business model. Some businesses have balance sheets and, as such, can help you raise financing more easily. They can take on their own underwriting risk when they are doing deals. And that’s companies like Goldman Sachs and Morgan Stanley at the middle market level.
You might have Jeffries and RBC relatedly. You’ll find that a lot of these bulge bracket firms deal a lot with other parts of the business as well. Oftentimes, they’ll also have divisions devoted to personal wealth management equity research sales and trading more so on one side. We have these bulge brackets that kind of offer everything under the sun. So, if you’re in the investment banking division at one of these bulge brackets, you might theoretically be exposed to a broader range of deals. You might do an IPO or a certain kind of financing, and then an M&A deals with many different parts of the business.
FAQs on Investment Banking Salary in India
1. Are investment banking working- hours that bad?
No, it only depends if you are passionate enough and have the necessary skills in investment banking. If you don’t know how to work properly in investment banks, then your productivity will be much less, which translates into long working hours.
2. Are investment banking internships paid?
Yes, most of the time, you will get paid for an internship in investment banking. But you may get a non-paid internship also, and it depends on the institute you are studying.
3. Can investment banking be automated?
The short answer is no. You can’t make investment banking an automated task because it involves client interactions and paperwork of a deal.
Concluding Thoughts on Investment Banking Salary in India
In reality, you’ll find a lot of different kinds of businesses that sometimes only offer a specific function that investment banks might. For example, merchant banks and corporate banks might be involved in some of the lending or can help with the IPO but might not be able to advise on things like M&A. So the actual list of competitors and the mosaic of finance as a whole might depend on where you are in the industry. We hope that this article on Investment Banking Salary In India has helped you in getting an idea about the salary structure in a career in investment banking.
if you’re interested in learning more about the technical side of things you should check out investment banking courses online at iimskills.com.