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SEO-London Application Information Packet 2007

Applications will be received between 16th Oct 2006 – 15th Jan 2007. Applicants are encouraged to apply as early as possible due to the rolling admissions policy.

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Introduction Thank you for your interest in SEO-London and the Investment Banking Industry. If you think you would enjoy working in a fast-paced, challenging, global environment in one of the most competitive and highly paid professions in the world, then the investment banking industry might be for you. SEO offers talented ethnic-minority students in their penultimate year of university an opportunity to prove themselves during a 10-week front-office internship in an investment bank. Over 80% of SEO interns obtain a full-time job offer in the Investment Banking industry by the end of summer 2006. SEO is here to make sure that talented people like you gain access to the Investment Banking Industry. To ensure that everyone with the desire, drive, and willingness to prepare will have a good chance of making a successful application and performing well at interview, we have put together this application packet. Please read this packet in its entirety. Read it carefully. If there is something that you do not understand, please take the initiative to dig deeper and find out more. This packet is the introductory set of materials. Towards the end is a list of resources that you should also read just as carefully (each and every link!) as they will help you make a strong application and prepare for interviews. Preparation and practice. Once you have made your way through the materials, we advise that you and some peers get together to review each other’s CVs and practice interview questions. We have also provided resources in this packet to help you do this. Where possible, we will try to match you with SEO alumni to help you revise the material.

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Careers in the Investment Banking Industry What is SEO London? The SEO London Internship Programme provides outstanding penultimate year undergraduates from ethnic minority groups under-represented in the City, specifically those from Black and Asian backgrounds, the unparalleled opportunity to gain summer internships at some of the most prestigious investment banks in the UK financial services sector. SEO also provides students with extensive training, mentoring and networking services, linking students not only to the firms they work with, but to opportunities and experienced professionals throughout the industry. By doing so, SEO London equally serves the diversity recruitment policies of its sponsor firms, as well as training a future generation of business and community leaders.

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What do you get from SEO London? •

10 week well paid summer internship (between £500 and £850 per week) with one of the world’s leading investment banks

Gateway to one of the most coveted and highly-paid financial services careers

Access to full-time employment opportunities at all of SEO’s partner firms

Comprehensive training programme led by senior industry specialists prior to commencement of internship

One-to-one relationship with a mentor who is him/herself a leader within the industry

Summer-long seminars at each of the partner investment banks that provides exposure to industry leaders, including partners and CEOs, senior managers and recruitment officers

Life-time membership to a global alumni network representing over 35 countries

Approximately 75% of eligible SEO interns receive full-time job offers following their internships (Over 80% reveived offers in 2006)

More than 150 front office & technology internships will be offered for the Summer of 2007

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What kind of internships are offered through SEO? • • • • • • •

All internships offered through SEO are dynamic client facing roles in one of the following business areas Corporate Finance / Mergers & Acquisitions (M&A) Sales (across both Fixed Income and Equities) Trading (across both Fixed Income and Equities) Research (across both Fixed Income and Equities) Asset Management Technology (for summer & industrial placements)

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An Overview of Investment Bank Fee Generating Divisions The following pages describe the client-interfacing (sometimes called “front-office” or “fee-generating”) businesses in the Investment Banking industry. Please note that these pages are only an introduction. When you make your application, you will need to do your homework to figure out which business most interests you, and prepare your CV and for your interviews accordingly. At the end of this section, we provide a list of resources to help you with this endeavour.

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Generally, the breakdown of an investment bank includes the following areas: 1. Investment Banking Corporate Finance (equity) Corporate Finance (debt) Mergers & Acquisitions (M&A) 2. Sales Equity Sales Fixed Income Sales 3. Trading Equity Trading Fixed Income Trading 4. Research Equity Research Fixed Income Research 5. Asset Management 6. Syndicate Syndicate (equity) Syndicate (debt)

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1. Investment Banking/Corporate Finance The bread and butter of a traditional investment bank, corporate finance generally performs two different functions: Mergers and acquisitions advisory, and Underwriting. On the mergers and acquisitions (M&A) advising side of corporate finance, bankers assist in negotiating and structuring a merger between two companies. If, for example, a company wants to buy another firm, then an investment bank will help finalize the purchase price, structure the deal, and generally ensure a smooth transaction. The underwriting function within corporate finance involves shepherding the process of raising capital for a company. In the investment banking world, capital can be raised by selling either stocks or bonds (as well as some more exotic securities) to investors. 2. Sales Sales is another core component of any investment bank. Salespeople take the form of the: classic retail broker, institutional salesperson, or private client service (PCS) representative.

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Sales (continued) Retail brokers develop relationships with individual investors and sell stocks and stock advice to the average customer. Institutional salespeople develop business relationships with large institutional investors. Institutional investors are those who manage large groups of assets, for example pension funds, mutual funds, or large corporations. Private Client Service (PCS) representatives lie somewhere between retail brokers and institutional salespeople, providing brokerage and money management services for extremely wealthy individuals. Salespeople make money through commissions on trades made through their firms or, increasingly, as a percentage of their clients' assets with the firm. 3. Trading Traders also provide a vital role for the investment bank. In general, traders facilitate the buying and selling of stocks, bonds, and other securities such as currencies and futures, either by carrying an inventory of securities for sale or by executing a given trade for a client. A trader plays two distinct roles for an investment bank:

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Providing liquidity: Traders provide liquidity to the firm's clients (that is, providing clients with the ability to buy or sell a security on demand). Traders do this by standing ready to immediately buy the client's securities (or sell securities to the client) if the client needs to place a trade quickly. This is also called making a market, or acting as a market maker. Traders performing this function make money for the firm by selling securities at a slightly higher price than they pay for them. This price differential is known as the bid-ask spread. (The bid price at any given time is the price at which customers can sell a security, which is usually slightly lower than the ask price, which is the price at which customers can buy the same security.) Proprietary trading: In addition to providing liquidity and executing trades for the firm's customers, traders also may take their own trading positions on behalf of the firm, using the firm's capital hoping to benefit from the rise or fall in the price of securities. This is called proprietary trading. Typically, the market-making function and the proprietary trading function is performed by the same trader for any given security. For example, Morgan Stanley's Five Year Treasury Note trader will typically make both a market in the 5-Year Note as well as take trading positions in the 5-Year Note for Morgan Stanley's own account.

4. Research Research analysts follow stocks and bonds and make recommendations on whether to buy, sell, or hold those securities.

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Research (Continued) They also forecast companies' future earnings. Stock analysts (known as equity analysts) typically focus on one industry and will cover up to 20 companies' stocks at any given time. Some research analysts work on the fixed income side and will cover a particular segment, such as a particular industry's high yield bonds. Salespeople within the I-bank utilize research published by analysts to convince their clients to buy or sell securities through their firm. Corporate finance bankers rely on research analysts to be experts in the industry in which they are working. Reputable research analysts can generate substantial corporate finance business for their firm as well as substantial trading activity, and thus are an integral part of any investment bank. 5. Asset Management Asset management is pretty much what it sounds like: a client gives money to an asset manager, who then invests it to meet the client's objectives. The potential clients of an asset manager can vary widely. Asset managers at investment banks often invest money for institutional investors like companies or municipalities (often for pools of money like pension funds) or mutual funds. Asset managers can also work for hedge funds, which combine outside capital with capital contributed by the partners of the fund, and invest the money using complex and sometimes risky techniques, with the goal of receiving extraordinary gains. Asset managers buy their stocks, bonds, and other financial products from salespeople at investment banks, who are on what is called the "sell-side." (Asset managers are on the "buy-side"). Because of this most bank asset management divisions stand apart from the rest of the bank. Due to the commissions on every trade they facilitate, salespeople provide information (research, ideas) to asset managers, in an effort to get the asset managers to trade through them. Asset management basically boils down to this: researching and analyzing potential investments and deciding where exactly to allocate funds.

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6. Syndicate The hub of the investment banking wheel, the syndicate group provides a vital link between salespeople and corporate finance. Syndicate exists to facilitate the placing of securities in a public offering, a knock-down drag-out affair between and among buyers of offerings and the investment banks managing the process. In a corporate or municipal debt deal, syndicate also determines the allocation of bonds.

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Traits that a Successful Candidate will Demonstrate Do I like you? Do you have a personality, opinions? Will I want to spend 15 hour work days with you? Are you serious about your work, and dependable, but also relaxed enough to be good company? Are you confident enough to show your true personality during an interview? Would I trust you with a client to build rapport and relationships? Are you prepared? Can you explain why you are (a) interested in working in a particular I-B business and (b) why you think you will be successful in that business? Before applying, you should read up on the various front-office roles in investment banking, and think, honestly and self-critically, about the business that best suits you. Study the characteristics that each business requires, and think about what your strengths are. Be able to paint a clear picture to interviewers about how your strengths would be suited for that role. Use examples from your life (in student organisations, in your family, in your education) so that interviewers can see your strengths in action and see you fitting into the business to which you are applying. Are you bright? Do you have sound analytic and quantitative skills? Do you demonstrate good decision making skills? Be prepared for the numeracy test and case study. You should be able to practice these and improve. In an interview, during the case study, be able to describe your line of thinking, your logic, which, during an interview, is often more important than reaching a conclusion. Learn how to think out loud in such a way that helps your interviewers follow your train of thought. They are looking to know if you are a logical thinker, that you are thoughtful about multiple factors before making a judgment, and that with the best available information you are able to be decisive.

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Are you someone who is action orientated? Do you have drive? Are you willing to go that extra yard? Show interviewer these traits through concise and compelling stories that show you in action. Help the interviewers see you on a team, in a group, working on your own. Think about the traits you want to communicate to your interviewers and prepare how you will get this message across in you answers. Are you a team player? Can you listen and can you persuade? Will you network? Remember that interns are at the bottom of the barrel, so team work means listening, writing tasks and advice down so that you can get it right the first time. Be proactive by anticipating your manager’s needs and be the . You may be a leader at university, but success as an intern depends on getting work done quickly, thoroughly, correctly and proactively. Build the ability to persuade by building a reputation for excellent work and dependability. When people trust you, they will begin to listen to you. Do you show an interest in the business world and current affairs? If you have not done so already, start reading the Financial Times (FT). Don’t start reading it the week of your interview, but well before so that you will be able to cite business-relevant examples during your interview. Also, get in the habit of tuning into the world around you by following global affairs. Investment banking is a global industry that is linked with world events. Reading as much as you can will help you feel comfortable chatting about the markets. Investment bankers want to know that you have a passion for markets and a hunger to be in the industry.

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Will you give back? SEO London is a non-profit (a charity) organisation. SEO’s small staff depends on a large team of volunteers to help interview, mentor, coach, prepare and support current SEO interns. We want to recruit not only the best and the brightest, but also those who believe in SEO’s mission, will be devoted to creating opportunities for and supporting future SEO interns, and will actively participate in the alumni community. Please give some thought to whether you can be counted on to help those who come behind you, and make it clear in your interview that you will give back.

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10 Best Resources to Prepare for a applying for and being ready for a Summer Internship in Investment Banking 1. Resources to Prepare for Corporate Finance Interviews: • Overview of Corporate Finance Internships: http://www.seo-london.com/Investment_Banking.pdf • What you should be able to talk about from the Financial Times: http://www.seo-london.com/IBD_FT.html • Samples questions that you should prepare for: http://www.seo-london.com/IBD_Sample_Interview_Questions.html • Preparing for Interviews and working in Corporate Finance and M&A: http://www.seo-london.com/Recruitment/Preparing_interviews.pdf • 28 Questions asked at Corporate Finance Interviews: http://www.seo-london.com/Recruitment/28_qs_interview_analyst_cf.pdf 2. Resources to Prepare Markets Interviews (Sales, Trading & Research): • Overview of Equities Research: http://www.seo-london.com/Equities_Research.pdf • Overview of Fixed Income Derivatives & Equities: http://www.seo-london.com/Fixed Income_Derivatives_&_Equities.pdf • Overview of Sales: http://www.seo-london.com/Introduction_to_Capital_Markets.pdf • What you should be able to talk about from the Financial Times: http://www.seo-london.com/Markets_FT.html • Sample questions that you should expect in an interview: http://www.seo-london.com/Markets_Sample_Interview_Questions.html 3. Resources to Prepare for a Private Wealth Management or Asset Management Interview; • Introduction to Asset Management and Private Wealth Management Internships: http://www.seo-london.com/Overview_of_Asset_Management.pdf • Sample questions that you should expect in an interview: http://www.seo-london.com/Private_Wealth_Management_Interview_Q's.html 4. Guides to doing practice interviews with your peers/ mock interviews (highly recommended)!: • Guidance for the case study section of the interview: http://www.seo-london.com/presentation_of_business_case.pdf • Feedback form to use for peer-to-peer Mock interviews (let this guide your interview preparation & practice) : http://www.seo-london.com/Mock_Interview_Feedback_Form.pdf 5. An Online Comprehensive Financial Glossary for when you are reading about finance-related matters and are stumped about a term: • http://www.investorwords.com/ • www.investopedia.com 6.Online assessment practices (numeracy, verbal reasoning, case studies) that are similar to the ones that SEO and investment banks frequently require as part of the candidate screening process • Practice Numeracy Tests: http://www.shl.com/SHL/en-int/CandidateHelpline/CandidateHelpline.htm • JP Morgan’s Online Practice Test: http://www.cubiks.ltd.uk/jpmorganbizskills/dynanavchase.htm (this is JP Morgan’s online practice test). • More on Numeracy Tests: http://www.profilingforsuccess.com/kogan-page/ • McKinsey’s Online Practice Case Study: http://www.mckinsey.com/aboutus/careers/undergraduates/apply.asp (McKinsey’s online practice case study) 7. A resource on etiquette for calling professional (HR and SEO) offices and/or leaving messages. • http://seo-london.com/calling-hr-and-voicemail-etiqutte.html 8. A Resource on making the most of mentors and networks http://www.seo-london.com/good-networking.html • 9. SEO CV & Cover Letter Tips: • A pack of tips put together by SEO Staff and Alumni: http://www.seo-london.com/SEO_London_CV&Coverletters.pdf • Sample CVs http://www.seo-london.com/sample_CVs.pdf • An Exercise to prepare for the “what are your strengths?” Question: http://www.seo-london.com/strongest-self.html.

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10. Books & Websites • VAULT Guide to Finance Interviews: Your Single Best Resource for Conquering Finance Interviews. This is the best book available for preparing for interviews, as well as to prepare you to succeed in the industry. You can buy it, or you can hunt around on the internet and find some of the files in a downloadable format. The authors are D. Bhatawedekhar, Dan Jacobson, and the Vault Staff. Also see Vault.com • Heard on the Street by Timothy Falcon Crack. Section A of this book contains brainteasers that are frequently used in interviews. • www.Wetfeet.com - This is another website similar to Vault that publishes guides; it also includes articles on certain industrise such as investment management and investment banking, in addition to compact career profiles. Finally, this website also mentions add'l resources students can use to learn more (websites, organizations, etc.) • Wall Street Journal's Guide to Money and Investing by Kenneth and Virginia Morris - a good resource for those coming from arts majors especially. While it is focused on "Wall Street," it gives a great overview of the basics of asset classes (applicable to anyone interested in finance), and explains a number of basic macroeconomic concepts that could also be a great refresher for students. • www.Economist.com - It is a really good idea for students to read the Economist regularly to have a good understanding of what is happening all over the world. • www.FT.com - Read this every day for weeks/months leading up to their assessments. • www.Bloomberg.com - In lieu of a Bloomberg terminal which you will more than likely not have access to, you can at least be familiar with the data service. Bloomberg.com is another good resource for up-to-date markets information.

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SEO Preparation Study Groups We advise that you work together with others to prepare for SEO applications and interviews. To do this, we recommend breaking down this information packet into the following group sessions: •

Session I: Introduction to Investment Banking Internships and SEO led by the SEO Campus Captain. Discuss contents of this packet to clarify, answer questions, sign up for SEO University.

Session II: Overview of Markets Internships (Review Materials from #2 on previous page)

Session III: Overview of Investment Banking Division Internships (Review materials from #1 on previous page)

Session IV: Overview of Private Wealth Management/Asset Management Internships (Review materials from # 3 on the previous page).

Session IV: CV & Cover Letter Preparation Workshop Review SEO’s CV Tips Workshop each other’s CVs

Session V: Peer-to-Peer Interview Preparation

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Are you interested in revising this material with an SEO alumnus? •

We would like to ensure that you are well-prepared to apply to the Investment Banking industry.

To do this we will connect you with someone who has successfully completed the SEO internship and attained a full-time role in the investment banking industry.

If you are interested, please fill out a quick preparation application (not the full application) so that we can put you in touch with the right person.

Whilst we would like very much to match you with an alumnus and will do our best, we cannot guarantee that we will be able to match everyone.

You can sign up to be assisted by an alumnus at your university by registering on the link below. Please note that this is NOT the APPLICATION TO THE SEO PROGRAMME – IT IS A REQUEST FOR SUPPORT TO BE GIVEN BY AN SEO ALUMNUS. http://www.seo-london.com/SEO_University_Signup.html

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