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"It's going to be a very difficult summer for banking interns"

There's a good reason why Morgan Stanley and JPMorgan have been cutting heads in May: June is when the summer interns arrive. If you're a 20-something student at the very start of your career in banking, the sight of people only a few years older than you losing their jobs is unlikely to make you optimistic about your future.

Unfortunately, though, banks can't do much to remedy the underlying issue. Heads have been rolling because revenues are down and costs are up, and something needs to be done about it.  This year's banking interns arrive at a time when investment banking fees earned from M&A and equity and debt capital markets issuance are at their lowest level in around a decade. Banks are still hiring people, but what they really want now are the sort of senior bankers who can bring in business and make a difference to revenues.

Banks' incoming interns aren't blind to the issues - most were selected for their interest in financial markets and are amply aware of what they're walking into. "I think it's going to be a very difficult summer for interns given the recent reductions in force," said one of those we spoke to for this article, who's due to join a European bank. "- Conversion rates will likely be lower than on average." An incoming JPMorgan intern agreed that this summer will be, "difficult" and worried that converting her internship will be harder than ever. 

It's not the first time banking interns have worried about their prospects. Last year's summer interns were similarly apprehensive, but one 2022 intern said 2023 is likely to be even more challenging. If you're interning in an investment banking division this year, he said the trick will be to find an industry sector team that's still comparatively active and will therefore have openings to hire new graduates. However, as the chart below from Dealogic shows, M&A was down in all sectors in the first quarter of this year. 2022 was bad, but year-to-date in 2023, global investment banking fees are down another 30% year-on-year.

Source: Dealogic

With few active deals, this year's interns are worried that they'll spend all their time working on pitches instead of deal execution. Working on live deals is one of the most interesting parts of the internship. Without them, one incoming intern fears he'll be stuck with "generalized" tasks and that it will be "harder to stand out."

Interns in sales and trading divisions will be equally exposed to the foibles of the hiring market. Some desks have done well this year (eg. rates). Others have not (eg. emerging markets and FX at JPMorgan). At banks like Goldman, markets internships involve rotating between desks and spending a few weeks at each - it's all about establishing which desks have actual vacancies and persuading them to hire you.

How to convert your 2023 banking internship 

Interning in a bank is never easy, and converting the internship is never a given. In poor markets, the proportion of interns who get return offers can be lower than 30%. In good markets, it can be higher than 80%. 

The 2022 intern says the best way to convert your banking internship into an offer is to use the tried and tested method: "Give 120% and network as hard as possible." It also helps to pull all the old tricks (fetch coffees when asked, ascertain who went to your school, don't outdo the MDs with a premature Rolex). Show initiative: the interns who get offers are often the ones who've spotted something that could be automated and who've done extra work to improve a process for the future. 

What to do if you don't convert

And if you don't get an offer? Have a plan B. One incoming intern said he expects to do a Masters in Finance if necessary. However, MiF courses are expensive. Another intern says he simply plans to apply for more finance internships: "It's a terrible market for students, but it's easier for interns than for people looking for full time jobs."

The good news is that even if you've completed a banking internship and failed to get a return offer, you will at least have a stronger CV than all the people who haven't completed any internships at all. And there's still hope that dealmaking will recover, soon... "This year will certainly be busier in the second half," one managing director at a US bank tells us. When it does, banks will need juniors. 

In the meantime, one former intern tells us it's all about staying focused and playing the long game. "If you're an excellent individual, what you need to be doing is getting into situations where you can prove that," he says. "Take on responsibilities and challenges that prove you belong in the industry. Keep going until you get where you want."

What you should probably not do is to take a job in an area of a bank you're not really interested in (probably the back office) in the anticipation that you'll be able to use that to move into a more desirable job (probably in the front office). This almost never happens, says the former intern. At US banks in particular, career paths are still surprisingly linear. 

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AUTHORSarah Butcher Global Editor

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