Financial Institutions Group or FIG is an industry group that focuses on providing advisory services to financial institutions.
Firms are usually divided up into:
- Banking
- Insurance
- Specialty Finance
- Financial Technology
Since these companies do notmake or sell any real, physical products,their income is quite differentfrom a 'normal' company. They are in the business of moving money around through loans, deposits, and money markets and all their income (and the majority of their expenses) are in the form of interest. The income statement of a deposit bank will have very little in the form of Cost of Goods Sold, Depreciation, Research & Development, etc., but will have huge values for Interest Income and Interest Expense.
The key metrics of a FIGcompany are:
- Book value
- Book value per share
These are both influenced by what value the market puts on the assets of a firm. For example, if a financial institution is trading below book value, this suggests that markets believe the assets (loans) are worth less than the company says they are. At the time of writing, Citigroup is trading at around 0.5x book value which implies that Citi are overvaluing their assets by a factor of 2.
Examples of services that banks will provide to FIG firms are:
- Mergers & Acquisitions
- Valuations
- Restructuring
- Debt Financing
Examples of typicalclients of an FIG team are:
- Insurance
- Banks
- Specialty Finance (REITs)
- Financial Technology (online brokers, market makers, etc.)
- Asset Management
FIG banker lifestyle
The typical lifestyle of a banker in this group variesfrom bank to bank. Hereare a couple of first hand experiences of bankers working in this industry, taken from our forums.
Here’s a fellow user’s positive experience:
[I was]staffed on one insurance deal that required a lot of reading about obscure insurance statutes, but the deal itself was a live M&A and super interesting. Ran the entire process within our group, other than a senior MD from M&A.It is also important to keep in mind that restructuring banking is also researching tons of very specific debt agreements and legal statutes. If getting in the weeds is a turn-off, you'll find investment banking (IB)tough in any group.
While hours in this group can certainly be difficult, the hours are typically reflective of how busy these groups are. For an analyst looking for Private Equity (PE)exits, Bulge Bracket (BB)FIG groups are usually well regarded within the bank and promise solid deal experience, even if they are pretty niche.
Here’s a fellow user’s negative experience:
I did my internship at a relatively strong FIG group on the street and hated it. The hours are long and the content is super dry but also very technical. Imagine reading pages and pages of regulatory info at 1 A.M.It honestly takes a special type of person to enjoy the work, especially on the depo and insurance side. I honestly don't know a single person in my class or group of friends that enjoyed it. I've also heard that this group is typically the worst group in terms of hours.
Unless you enjoy the work or are going to a top group like the one at Goldman Sachs for the exit opportunities, I would avoid it because it is very niche, difficult to understand (at least for me) and can be very sweaty depending on the bank.
While each of these responses isjust from the perspective of the respective persons, they do provide some insight into the lifestyle of a FIG banker. Here are some common characteristics shared between both perspectives:
- Reading through niche regulatory and insurance information
- Hours reflective of the number of live deals the group is receiving, i.e., the more deals the group has, the more hours there will be
- Private equity exit opportunities are possible, but typically are more common at Bulge Brackets
Work of FIG bankers
While many people think that the work of this group is niche and not as popular as the more traditional M&A group, FIG consistently represents the biggest revenue producers at all top investment banks. At bulge bracket banks, this group generates around 30% of investment banking fees.
Furthermore, the practice tends to be the most complicated, complex, and technical - whichmany people findintellectually stimulating.
A banker in this group will always be busy. Very busy in good markets with M&A; even busier in bad markets with capital raisings.
Also, it is a great training ground if you want to stay in finance. A lot of leadership in investment banks and other financial institutions come from this background.
One thing to note, FIG has some very distinct verticals, consisting of:
- Asset managers
- Insurance companies
- Banks/depositors
- Financial technology firms
- Specialty finance companies
Some firms like JP Morganhave a government vertical as well. If someone asks you "Why FIG? - they will most certainly also ask you "Which vertical are you interested in?"
Read more about the work of these bankers at this discussion.
Financial Institutions Group skill set
As this group tends to be the most technical out of all the other groups, there is no doubt that you will get to learn a lotabout a specific skill set.
Examples ofkey technical skills you will get to learn are:
- Key drivers behind businesses/line items
- Understanding of regulatory requirements
- Building a dividend discount model
Examples of key softskills you will learn are:
- Reading
- Attention to detail
- Analytical skills
- Communication Skills
