25 questions to ask at contemporary banking interviews, by J.P. Morgan
As we reported earlier this week, banks are still doing a lot of interviewing, they're just not doing a huge amount of hiring on the back of those interviews.
So, how can you impress banking interviewers without many jobs to fill with your knowledge of the issues of the moment? The latest report from J.P. Morgan's team of European banking analysts offers some pointers.
Overall, J.P. Morgan's analysts are more optimistic about the future than they were before. They now expect fixed income revenues to be up 26% year-on-year in the third quarter (led by rates businesses) and for revenues across investment banks to be up by 2%. However, longer-term revenue issues persist and individual banks still face big strategy questions.
We've pulled out J.P. Morgan's sector revenue forecasts in the chart below. And below that, we've listed a series of questions based upon the bank-by-bank issues J.P. Morgan's analysts highlight in their report. You probably won't make any friends if you phrase your questions as bluntly as we have, but these are some of the things you might want to clarify before joining any of the banks on the list.
Questions to ask when you're interviewing at Credit Suisse:
1. How do you plan to deal with the issues presented by Brexit? What happens to your London office if the UK loses the ability to passport into the EU?
2. How do you expect Basel IV to impact your risk weighted assets? What implications would you say this has for your strategy?
3. How do you expect the changing macro environment to influence the allocation of assets in your private bank? How is this likely to impact your margins and earnings?
4. You're highly geared towards the Asian market. Do you see investment banking activity there stabilizing in future?
5. Following Deutsche Bank's large proposed fine from the U.S. Department of Justice, are you apprehensive about the potential for future fines at Credit Suisse? What implications would a large fine have for your investment bank?
Questions to ask when you're interviewing at UBS:
6. How do you plan to deal with passporting, Basel IV and the potential for a large DOJ fine (see questions for Credit Suisse)?
7. Do you expect to make further markdowns on your legacy assets? Does this have any implications for your capital ratio?
Questions to ask when you're interviewing at Deutsche Bank:
8. How optimistic are you of reducing the size of the fine from the DOJ? What happens to the strategy for your investment bank if the reduction in the fine is not substantial?
9. How does Deutsche Bank plan to increase its capital ratio to the required level of 12.25% by 2018? - J.P. Morgan estimates that your current Basel III core equity tier one ratio is just 11.0%.
10. You've said that Postbank should be ready for an IPO by the first half of 2016. How optimistic are you about this going ahead?
11. You've given flat year-on-year cost guidance of around €26.5bn for 2016. To what extent do you expect costs to fall next year?
12. Analysts at J.P. Morgan are predicting that your return on equity will be just 2.1% this year. Are you optimistic this will increase in future? Why?
13. How optimistic are you that Deutsche's Strategy 2020 will go to plan? What would you say the main execution risks are with the strategy?
14. J.P. Morgan's banking analysts expect fixed income sales and trading revenues to fall by 3% this year and to grow by just 1% and 2% in the two subsequent years. Deutsche is highly exposed to fixed income sales and trading. How do you plan to overcome slow FICC growth?
15. Should I be worried about mark-to-market writedowns in Deutsche's legacy assets across structured credit, leveraged finance, mortgaged back securities and CDOs? Why not?
Questions to ask when you're interviewing at Goldman Sachs:
16. How concerned are you about a sustained downturn in the fixed income sales and trading business?
17. Your investing and lending division has struggled in recent quarters. What are the implications for this business if equity or debt markets lose value?
Questions to ask when you're interviewing at BNP Paribas:
18. How do you plan to achieve your cost cutting intentions when regulatory costs keep rising?
19. How do you expect to reach your required capital ratios under Basel III and Basel IV? Do you anticipate further reductions in your risk weighted assets? How will this impact your fixed income trading business?
20. Your last strategic plan (2014-2016) emphasized growth (particularly in the U.S. investment bank). How is this likely to change in 2017?
Questions to ask when you're interviewing at Barclays:
21. How is Brexit and the probable end of EU passporting rules likely to impact your investment bank in the UK?
22. How concerned are you about UK macro and political uncertainty after the EU referendum? To what extent will slowing UK economic growth and falling asset prices create problems for Barclays' UK and U.S.-focused investment bank?
23. Would you say that it's accurate to describe your strategy for the investment bank as optimising the cost base rather than the capital base (as described by J.P. Morgan's analysts) in order to improve returns? If so, which costs do you expect to take out in 2017?
24. You're very geared to the fixed income cycle. How worried are you about a prolonged downturn in fixed income sales and trading?
25. To what extent are you concerned about margins across the bank falling if the Bank of England cuts rates again?