As an investment banker, what kind of problems should I expect?

Prepwise AnswersCategory: Finance CareersAs an investment banker, what kind of problems should I expect?
Career Dev Staff Staff asked 7 years ago
1 Answers
Kate McKeon Staff answered 6 years ago

First and foremost, prop book trading, namely the practice of leveraging on capital, can cause an entire investment bank’s profit and capital to disappear in a heartbeat. This, as it is very well known, was the case for the Lehman Brothers, which collapsed in 2008.

Other issues facing investment bankers include poor internal control processes; gambling the capital of a firm leading to catastrophic losses; selling options to clients, causing greater income premiums but opening firms up to liabilities concerning data and information; poor risk management; and a dependence on the strength of market capital and the market economy, over in-house capital.