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Investment banks' valuations teams have tripled in size. This is what's required to get a job in one

Nick Stevens, CEO of recruitment firm Eximius Group, says the big growth area in investment banks right now is valuations teams.

This is Nick:

Nick-Stevens-Eximiussmall

This is what he has told us about the nature of and growth in valuations roles in investment banks...

eFINANCIALCAREERS: What do valuations people do exactly?

NICK:

Valuations teams in investment banks vary in terms of their responsibilities. Some teams are focused on accounting for the fair value of trades and ensuring trades are marked to market.

Others focus on the production and reporting of the monthly mark review to ensure trading positions are marked correctly in the firm's records. And others own the model validation and model methodology part of the controls.

All valuations teams are absolutely critical in delivering Independent Price Verification (IPV) numbers to both front office and finance and ensure the banks are aware of the level of risk on their positions.

eFINANCIALCAREERS: What are the standard qualifications and types of experience for valuations professionals?

NICK:

This will vary depending on the focus of the valuation team and complexity of product.

Historically, valuation teams were staffed by the banks' most technically minded product controllers. This means they usually had a mathematical or highly numerate degree coupled with an ACA qualification followed by several years' experience in a highly technical product area of controlling such as structured credit/correlation or structured LIBOR/exotic rates.

More recently, this has changed. As banks' need for valuations professionals has increased, they've sought to train people for the roles. To this end, they now hire newly qualified ACAs for valuations roles - although they still need to have exceptionally strong mathematical backgrounds.

In recent years, banks have also hired MSc or even PhD graduates into valuations roles. People with this kind of quantitative background have become more popular for their ability to face off to front office quant professionals who might previously have been able to evade controls on complex products which valuations professionals didn't understand.

If you want to go into valuations, it will also help to have a CFA or a CQF (Certificate in Quantitative Finance). And you'll need good communications skills so that you can deal effectively with the wide ranging group of stakeholders interested in valuation teams' work.

eFINANCIALCAREERS: How are valuations jobs different to product control?

NICK:

For candidates who have a very technical mind set, a move into valuations offers the opportunity to develop a more technical skill set.

eFINANCIALCAREERS: Is it any easier to move into the front office from valuations?

NICK

This usually depends upon the individual. We've seen people who've worked in valuations move into a broad range of technical front office roles, including quant positions, structuring, exotics trading, and product development. For technically strong people, valuations offers an early opportunity to focus on deep, technical product knowledge.

eFINANCIALCAREERS: How big are valuations teams now vs. before the crisis?

NICK

It's hard to put a number on the size of these functions, but as a rough guide we'd say we've seen them triple in size.

eFINANCIALCAREERS: Why do you think this is?

NICK:

There's increased pressure from financial regulators to value products correctly, the complexity of products has increased and banks need to understand in a lot more detail the potential risks they're holding on their balance sheets.

eFINANCIALCAREERS: How much can a valuations professional earn in terms of base and bonus?

NICK:

Earnings vary massively depending on experience. The highest package we've seen offered for a valuations role in 2011 has been 170k basic plus bonus and bens.

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AUTHORSarah Butcher Global Editor
  • VE
    VERYVERYBORED
    13 June 2011

    Does this guy have any idea what he is talking about???

  • Ja
    Jack
    9 June 2011

    I imagine prior comments must be from anonymous disgruntled losers who were turned down when they applied for these roles. The article gives a fairly accurate insight into the current state of play and what real valuation roles are really about (sure the spreadsheet stuff should be off shored to cheap as chips places like Bombay but you have no real comfort as to confidentiality of your data out there....believe me)

  • R
    R
    8 June 2011

    I love it when recruiters say take the CFA or the CQF - they are two completely different qualifications! The CFA is heavy on the accounting and finance, and the CQF is heavy on the pricing of derivatives and the maths behind it...are recuiters really that dumb, not to know the difference? I was once told by a recruiter that I should do the following:-
    1) either "get a PhD in Quants" - a PhD in Quants, I didn't know there was such a thing!
    2) get the CFA
    3) get the IMC
    4) get the CQF

    I mean come on!!!! I obviously did ONLY one thing, tell where the recruiter where to go ....... (by the way his comments made even less sense by the fact that he knew I had a PhD in Finance!)

  • To
    Tommy3
    7 June 2011

    been there, done that. Basically you're an administrator of multiple spreadsheets. The job is dead boring, it's like a factory line - endless workload divided into constant deadlines.
    These jobs will be (actually they currently are) easily transfered to emerging markets, for example State Streets have already outsourced significant part of valuations from Ireland, UK, Scotland to Poland

  • in
    insider
    7 June 2011

    you are completely out of market, and become spreadsheet master.

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