Investment banks are recruiting again on fat salaries but don't expect an easy time

A turnaround in graduate prospects has started in recent weeks. Vacancies among leading graduate employers are rising by 11.8 per cent, according to High Fliers Research, which carries out an annual poll of top firms. The past few years have been an awful time to enter the job market but there are signs that this is changing – and it appears that investment banking, which suffered more than any other sector during the economic downturn, is leading the way.

Although recruitment dropped by one-half during the previous two years, top investment banks are now intending to hire one-third more graduates this year than last. Their remarkable resilience to the downturn, and this year's strong recovery in the financial markets, mean that opportunities still exist in banking for those with the skill and tenacity to get them.

The banking industry certainly has a daunting application procedure. Quite often the route in is via an internship, which banks use as their main talent pipeline, the term they use to describe their recruitment process. To get one of these, you have to go through an intensive three-stage process – two rounds of interviews followed by an assessment day. The internship itself is regarded by banks as a 10-week interview.

"Internships are very important in the industry in general," says Malcolm Horton, global head of recruiting and programmes at Nomura investment bank. "Joining banking is a huge commitment both personally and professionally. We need to know that applicants are committed.'

The banks have learnt lessons from previous downturns, according to Mike Hill, chief executive of Graduate Prospects, a careers advisory website. Rather than closing off their pipelines, as they did after the 2002 stock market crash, they kept them open while reducing their intake. Now that banks have recovered, they can start to expand their recruitment again. Nomura reports a 20 to 25 per cent growth in graduate recruitment, while Barclays Capital reports a 20 per cent growth.

In spite of these rises, the negative public perception of banking has affected recruitment, according to Hill. "Graduates who are considering investment banking are now thinking two things," he says. "First, I don't want to be a banker. Second, there aren't any jobs in banking anyway."

Banks are, however, not expected to have any trouble filling their places – the ratio of applicants to jobs at Nomura this year was roughly 20 to one, according to Horton. But Hill says that the smaller numbers of graduates applying means that investment banks are becoming concerned that they may not be attracting the very best talent.

Banks expect that recruitment will continue to grow in the near future. The average starting salary of £38,000 makes investment banking the best-rewarded sector, according to the High Fliers Research report. From the point of view of recruitment, the publicity about banker's bonuses has one advantage – it has at least drawn attention to the huge rewards on offer.

Banks are preparing to expand their pipelines in the expectation that the numbers of applicants will bounce back. Jane Clarke, head of campus recruitment at Barclays Capital Europe and Asia, says that Barclays Capital is planning to extend its first-year programmes and is increasingly active in talking to secondary school pupils to educate them about careers in banking.

As large as the rewards in the banking sector are, it is impossible to deny that bankers work extremely hard for them. Asked what the work-life balance was like, one former intern at a major investment bank, said "Crap. I didn't get a day off for the last three weeks at my internship. One evening, after a day's work, Human Resources made us all go out to a gallery and have dinner afterwards. Then I had to go back to the office and stay until 5.45 the next morning. I had to be back at work by 9.30am the same day."

Clearly the workload in banking is no picnic. The banks say that a successful application requires careful preparation and practice, as well as an excellent CV. And more still is needed: "One of the most important things we look for is the ability to sell yourself," says Horton. "We see a lot of people with great CVs but, when it comes to the interview, they cannot bring this to life. Being able to present yourself positively is essential if you are going to represent the business."