What is the Investment Banking Division (IBD)?
IBD is an acronym for the Investment Banking DivisionInvestment Banking Career PathInvestment banking career guide - plan your IB career path. Learn about investment banking salaries, how to get hired, and what to do after a career in IB. The investment banking division (IBD) helps governments, corporations, and institutions raise capital and complete mergers and acquisitions (M&A). Analysts work 100 within the overall investment bank. IBD has responsibility for working with corporations, institutions, and governments to carry out capital raising (underwriting in equity, debt, and hybrid markets) as well as for executing mergers and acquisitionsMergers Acquisitions M&A ProcessThis guide takes you through all the steps in the M&A process. Learn how mergers and acquisitions and deals are completed. In this guide, we'll outline the acquisition process from start to finish, the various types of acquirers (strategic vs. financial buys), the importance of synergies, and transaction costs and various types of advisory mandates.
Other divisions of an investment bank
Within an investment bank, there is a clear line between the Investment Banking Division (IBD) and other areas of the bank such as:
- Equity researchEquity Research OverviewEquity research professionals are responsible for producing analysis, recommendations, and reports on investment opportunities that investment banks, institutions, or their clients may be interested in. The Equity Research Division is a group of analysts and associates. This equity research overview guide
- Sales and tradingSales and Trading Career ProfileThe sales & trading division (S&T) of an investment bank helps mutual funds, hedge funds, pension funds, etc. facilitate equities transactions (buy/sell). A career in sales & trading can be extremely strenuous with a very fast paced environment. The competition for positions is intense, compensation can be very high,
- Commercial bankingCommercial Banking Career ProfileA Commercial Banking career path is providing clients with credit products, term loans, revolving lines of credit, syndicated facilities, cash management
- Asset managementBuy-SideInstitutional asset managers, known as the Buy Side offer a wide range of jobs including private equity, portfolio management, research. Learn about the job
- Retail banking, and other areas
All of the above jobs are considered “front office” (think: client facing) careers. In addition to front office careers at an investment bank, there are also careers in the “middle office” such as operations, technology, and human resources. Finally, there are also “back office” careers such as accounting, payroll, tech support, etc.
Not everyone who works at an investment bank is an investment banker
If someone says they “work in investment banking” they should be referring to the IBD within an investment bank, although people will often claim to work in investment banking when they don’t have work in that division.
For this reason, true investment bankers are clear about the fact that they work in IBD.
Not everyone who works at an investment bank is an investment banker.
To learn more about skills required in the investment banking division launch our investment banking courses!
Industry groups with IBD
The IBD is further subdivided into industry groups. The most common groups are:
- Technology Media & Telecommunication (TMTTMT Investment BankingTMT stands for Technology, Media, and Telecommunications, so the TMT investment banking group covers clients in those industries. Investment banking services provided to these clients include equity and debt capital raising, mergers, acquisitions, divestitures, risk management, and other advisory mandates.)
- Financial Institutions Group (FIG)
- Energy
- Mining
- Healthcare
- Industrials
- Real Estate
Job titles in the Investment Banking Division (IBD)
There is a standard hierarchy within the IBD that’s nearly the same at most banks. The titles and career path at most banks are as follows:
- Analyst – focused exclusively on financial modelingWhat is Financial ModelingFinancial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. A 3 statement model links income statement, balance sheet, and cash flow statement. More advanced types of financial models are built for valuation, plannnig, and, valuation workValuation MethodsWhen valuing a company as a going concern there are three main valuation methods used: DCF analysis, comparable companies, and precedent transactions. These methods of valuation are used in investment banking, equity research, private equity, corporate development, mergers & acquisitions, leveraged buyouts and finance, and pitch book support
- Associate – manages the Analysts, also does modeling and drafts pitch booksInvestment Banking Pitch BookHow to make an investment banking pitch book. This guide will teach you what's included, how to make an IB pitch book, and provides examples of slides
- Vice President – manages Associates, designs pitch books, goes to client meetings
- Director – meets with clients, structures deals, leads the team
- Managing Director – focused almost exclusively on winning new business/clients
To learn about compensation at each level check out our investment banking salary guideInvestment Banker SalaryAn investment banker salary is among the highest in the world. They are paid a base salary and a bonus for their compensation. Find out how much they make. An analyst straight out of university can expect to earn over USD $100,000, but per hour it could be as low as $20-35 when working 100 hr/wk.
Additional resources
This has been the CFI guide to how investment banks are structured and hopefully sheds some light on exactly what it means to be in the IBD. To keep learning and developing your career, we highly recommend these additional resources:
- What do investment bankers do?What do Investment Bankers do?What do Investment Bankers do? Investment bankers can work 100 hours a week performing research, financial modeling & building presentations. Although it features some of the most coveted and financially rewarding positions in the banking industry, investment banking is also one of the most challenging and difficult career paths, Guide to IB
- Investment banking interview questionsInterviewsAce your next interview! Check out CFI's interview guides with the most common questions and best answers for any corporate finance job position. Interview questions and answer for finance, accounting, investment banking, equity research, commercial banking, FP&A, more! Free guides and practice to ace your interview
- Equity research vs investment bankingJobsBrowse job descriptions: requirements and skills for job postings in investment banking, equity research, treasury, FP&A, corporate finance, accounting and other areas of finance. These job descriptions have been compiled by taking the most common lists of skills, requirement, education, experience and other
- Financial modeling guideFree Financial Modeling GuideThis financial modeling guide covers Excel tips and best practices on assumptions, drivers, forecasting, linking the three statements, DCF analysis, Excel modeling and much more. Designed to be the best free modeling guide for analysts by using examples and step by step instructions. Investment banking, FP&A, research
