Why it's still worth applying to an investment bank this year

2012 is shaping up to be an unfortunate year to graduate if you want to work in an investment bank.

Three disruptive forces are at work. First, banks have made comparatively few offers to last year's interns. Second, some (but not all) banks have filled all their front office graduate places with the interns they did make offers to. And third, uncertainty about the markets in 2012 is making banks wary about next year's full time graduate hiring.

Nevertheless, it is worth making the effort to apply. Not all banks are full. Some are even still looking to recruit.

What happened to interns' offers?

In the ideal world, investment banks source as many of their graduate recruits as possible from interns who've worked with them over the previous summer. Those interns are typically second year university students, who leave the internship safe in the knowledge that they've secured a job for when they graduate.

"Most banks try to convert at least 60% of their interns into full time hires," says the head of graduate recruitment at one leading European investment bank. "If anything this year, we're slightly higher."

That bank may, however, be an exception. University careers services and recruiters for other banks say a lot of banking interns didn't receive an offer last summer.

"My impression is that a lot of organizations have converted much smaller numbers of interns this year," says Guy Ballantine, who runs graduate recruitment for various boutiques and mid-sized investment banks through the Cornell Partnership. "We've had a lot of calls from people who've done internships, had excellent feedback and then been told they didn't get an offer because the bank they were with just didn't have the headcount."

Rumor has it that one bank made offers to only 23% of its interns. The global head of recruitment at an international bank based in London says they made offers to 50% of their summer interns and are playing it safe. "Ideally we'd like to have converted 75% of our interns," he says, "but the way the market is now you can only make so much commitment."

Instead of making offers to all the excellent interns they had last year, he says banks are making offers to a select few and keep the rest warm. "If the market recovers a bit, we can draw on these kids who want to be in the business. If we make them an offer in six months' from now, they'll still be around," he points out.

What happened to this year's front office graduate jobs?

So, what if you didn't get an offer on the back of a summer internship (or didn't even do a summer internship) and you now want to apply for a full time graduate role when you leave university?

Bad luck.

"There's going to be very limited additional graduate recruiting this year," says the head of graduate recruitment at the European bank. "We're not hiring many people beyond those we've recruited from our internship and our rivals are saying the same."

A quick look at banks' graduate recruitment websites confirms this to be the case. At several houses, front office positions appear to have been filled already. For example, JPMorgan is only advertising full time graduate positions in quant research, private banking, risk, technology, finance, operations and equity derivatives; there are no positions on offer in M&A, capital markets, or on other sales and trading desks.

Similarly, Deutsche is only advertising for full time graduates in finance, HR, wealth management, technology, corporate finance and transaction banking. All sales and trading positions appear to have been filled already.

However, it's not that bad. Several banks we looked at (Goldman Sachs, UBS, Barclays Capital) are still advertising a full complement of graduate jobs, across the front and the back office, suggesting they still have places post-internship offers.

Is graduate hiring being cut in 2012?

Anecdotally, banks are having second thoughts about their hiring intentions for 2012, with many of them now cutting back. Banks' graduate recruiters meet regularly to exchange information and the head of recruitment at one bank says the mood at these meetings has been gloomy. "All my counterparts are reducing their hiring," he says. Our research suggests cuts are in the region of 15-30%.

Nevertheless, reductions in graduate hiring are not universal. Guy Ballantine says the boutiques and mid-market investment banks Cornell Partnership works with haven't trimmed graduate recruitment figures yet: "At the moment, many of our clients seem to be on track to hire as many people as in previous years - if not one or two more," he says.

Similarly, Paul Murphy, head of recruitment for RBC Capital Markets, stresses that RBC in London is still hiring the same number of students in 2012 as in 2011. " We're still looking to fill a number of direct entry positions in front office investment banking and IT for next

year," he adds

Yes, you SHOULD apply anyway

Given 2012 definitely doesn't look like the greatest year for getting into investment banking,

should you give up and apply to management consultants or accountancy firms (which still seem to be hiring in huge numbers) instead?

No.

Malcolm Horton, head of recruitment for Nomura, points out that students who want to work in investment banking should always apply regardless of the economic climate: they have nothing to lose.

"Taking yourself out of the game is very shortsighted," says Horton. "No one knows what's going to happen in 2012 or 2013. You lose nothing by trying. If you believe yourself to be good and you want to work in banking, you should still apply. If nothing else, you will learn from the interview and application process."