Overcoming cultural barriers in the investment banking sector: Training and development in Germany and Switzerland

Contents

B List of tables in the appendix

C List of figures in the appendix

D List of abbreviations

0 Preface

1 Definition of the investment banking sector
1.1 Term and systematization of investment banking
1.2 Fields of activity in the investment banking sector
1.3 Traded securities in the investment banking sector

2 The banking system in Germany and Switzerland
2.1 Germany
2.1.1 History and development of the banks
2.1.2 Outline of the profession Bankkaufmann/-frau and Bankfachwirt/-in
2.1.3 Training and development
2.1.3.1 By the example of Deutsche Morgan Grenfell 12
2.1.3.2 By the example of Commerzbank AG 15
2.2 Switzerland
2.2.1 History and development of the banks
2.2.2 Training and development by the example of SBC Warburg

3 The cultural and organizational factor in investment banking
3.1 Dimensions of cultural differences in the investment banking sector
3.2 Organizational change in the investment banking sector
3.2.1 The present organizational forms of investment banks
3.2.2 Changes in the organization of investment banks
3.2.2.1 The strategy
3.2.2.2 The culture
3.2.2.3 The structure
3.2.3 A new network approach in investment banking
3.2.3.1 Characteristics of investment banking
3.2.3.2 Elements of organizational design
3.2.3.3 A critical remark on this network approach
3.3 The power of advising in the investment banking sector

4 The determinants of national strengths and advantages in competition
4.1 The diamond concept of Porter 40
4.1.1 Factor conditions
4.1.2 Demand conditions
4.1.3 Related industries and suppliers
4.1.4 Strategy, structure, and competition
4.1.5 Environmental complexity as additional determinant
4.2 International competitiveness of the Swiss investment banking sector concern- ing the diamond concept
4.2.1 Swiss strengths and weaknesses in factor conditions
4.2.2 Swiss strengths and weaknesses in demand conditions
4.2.3 Swiss strengths and weaknesses in related industries and suppliers
4.2.4 Swiss strengths and weaknesses in strategy, structure, and competition
4.2.5 Swiss strengths and weaknesses in environmental complexity
4.3 The German investment banking sector in the diamond concept
4.3.1 Factor conditions
4.3.1.1 Strengths and weaknesses
4.3.1.2 Solutions to strengthen the factor conditions
4.3.2 Demand conditions
4.3.2.1 Strengths and weaknesses
4.3.2.2 Solutions to strengthen the demand conditions
4.3.3 Related industries and suppliers
4.3.3.1 Strengths and weaknesses
4.3.3.2 Solutions to influence the related industries and suppliers
4.3.4 Strategy, structure, and competition
4.3.4.1 Strengths and weaknesses
4.3.4.2 Solutions to improve the strategy, structure, and competition
4.3.5 Environmental complexity
4.3.5.1 Strengths and weaknesses
4.3.5.2 Solutions to manage environmental complexity

5 Conclusion

E Appendix
E.1 Tables
E.2 Figures

F References

G Ehrenwörtliche Erklärung

B List of tables in the appendix

Table 1: Zahlenmäßige Entwicklung der Kreditinstitute in Deutschland

Table 2: Anteile der Bankengruppen gemessen am Geschäftsvolumen der Banken in Prozent in Deutschland

Table 3: Verteilung der Bankengruppen nach Größenklassen in Deutschland (Stand 1989)

Table 4: Die führenden Finanzzentren 1994

Table 5: Indikatoren der internationalen Wettbewerbsfähigkeit verschiedener schweizer Branchen

Table 6: Entwicklung der Marktanteile im schweizerischen Bankenwesen (Maßstab: aggregierte Bilanzsumme)

Table 7: Abbreviations for Figure 17, 18, and 19

Table 8: Bedeutung der Determinanten für die Entstehung und Entwicklung der einzelnen Wirtschaftszweige

C List of figures in the appendix

Figure 1: Elemente des Investment Banking i. w. S.

Figure 2: Bestimmungsfaktoren der Wertpapieranlage

Figure 3: Traded securities in the investment banking sector

Figure 4: Entwicklungsprozeß der Großbanken in Deutschland

Figure 5: Ziele der Geldpolitik in Deutschland

Figure 6: Geldpolitische Instrumente der Deutschen Bundesbank

Figure 7: Der Bankensektor der DDR

Figure 8: Das Geschäftsbankensystem in Deutschland (Stand 1991)

Figure 9: Training and career development at Deutsche Morgan Grenfell

Figure 10: COMMIT - Gesamtübersicht

Figure 11: COMMIT - Vom Azubi zum Privatkundenberater

Figure 12: Ablauf eines Trainee-Programms

Figure 13: Influence of culture on behavior

Figure 14: Managerial attitudes and employee behavior: a self-fulfilling prophecy

Figure 15: Position of forty countries on power distance and individualism

Figure 16: Position of forty countries on power distance and uncertainty avoidance

Figure 17: Position of forty countries on uncertainty avoidance and masculinity versus feminity

Figure 18: Strategie, Struktur und Unternehmenskultur im Rahmen der Unter-nehmenspolitik

Figure 19: Unternehmenskultur ist Führungskultur

Figure 20: Erscheinungsformen des Strukturwandels

Figure 21: Network nature of investment banking

Figure 22: Debt, equity, and trade linkages in the vertical and intermarket keiretsu

Figure 23: Schema for how an individual deals with organizational events

Figure 24: Conditions created by various configurations of three-party needs

Figure 25: The determinants of national competitve advantage

Figure 26: Advantages in competition due to the internal demand conditions

Figure 27: Stärken-/Schwächenprofil der schweizer Rahmenbedingungen

D List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

0 Preface

The German banking sector, as in most Western European countries, is confronted with drastic changes which deeply affect the conditions of the financial service market and the characteristics of populations in banks. In the last few years, the isolation of the national financial markets decreased due to the increasing of foreign trade, international competition, and further developments of new financial products, like futures for example. Therefore, all banks have to think globally and have to establish branches in all financial centers to be available for their clients and stay competitive; like in New York City, London, Tokyo, Zurich, and Frankfurt am Main, cities in which the financial market plays an important role. As it is widely known, Switzerland has an outstanding international position in the investment banking sector. This condition was taken as an opportunity to examine the diamond concept of Porter related to the Swiss and German human resources.

The thesis is divided into five chapters, of which the first chapter gives a general overview of the investment banking sector, which is the definition, the fields of activity, and the traded securities in the investment banking sector.

The German and Swiss bank system is exemplified in the second chapter. Furthermore, this chapter gives a short overview of the banks´ history in Germany and Switzerland as well as examples of training programs of the German Deutsche Morgan Grenfell and Commerzbank AG and of the Swiss SBC Warburg. In addition, the training profession Bankkaufmann/-frau which exists in Germany as well as in Switzerland is explained in this chapter.

The third chapter deals with the cultural and organizational factor in the investment banking sector. The German and Swiss culture is investigated by the example of Hofstede´s dimensions of cultural differences. Furthermore, the organizational changes, a new network approach in investment banking, and a brief outlook of Culbert´s mind-set management of the power of advising are expounded in the third chapter.

The fourth chapter deals with the main focus of this thesis which is the description of the Swiss and German advantages and disadvantages in the field of human resources within the investment banking sector. A comparison between German´s and Switzerland´s human factor is followed by proposals and solutions to strengthen the German human factor of investment banks, so that the German banking business become more competitive against other financial metropolises.

The fifth chapter, the conclusion, summarizes this thesis and describes the essential outcomes of the chapters. Furthermore, a preview of changing situations in the investment banking sector is given.

Notes:

- The term ´bank´ is often used simultaneously for the term ´investment bank´.
- German words and proper names are typed in italic letters in the text of the thesis. It is not distinguished between German and English words within the figures, tables, and references.

1 Definition of the investment banking sector

This thesis deals with the investment banking sector, and more specifically with the human resource part. The following three chapters will give information about how the term ´investment banking´ came into existence, and what products are traded within the investment banking sector, and what tasks have to be executed by the investment banks´ employees, so that one acquires a general overview of this comprehensive business field.

1.1 Term and systematization of investment banking

The term investment banking goes back to the US-American separated banking system. The Glass-Steagall Act^[1] of 1933, which was one of many banking reforms under Franklin Roosevelt, bounded the business fields of banks. They had to decide, whether they wanted to be banks with general banking tasks, also referred to as ´Commercial Banks´. Or deal primarily with securities, also known as ´Investment Banks´^[2]. In contrast to the US-American banking sector, the German universal banks defined investment banking as the traditional business with all kinds of securities, specifically stocks and bonds. However, they differentiate between client and own business. The client business department of a bank acts for and helps clients with e. g. issuing, buying, selling, depositing, and administrating of securities for example. Securities are traded and issued with the own bank´s capital in the own-business department with the purpose of making a profit. An investment bank is a purposeful sociotechnical system of the banking sector. It receives payments for production factors and their usage, or it offers solutions with the combination of production factors, which are synonymous with Gutenberg´s production factors: labor, natural resources, and manufacturing facilities^[3]. Investment banks must provide many safety measures against embezzlement and employee errors because money, securities, or information are traded with the distinctive feature of speed.^[4] The fields of activity of an investment bank and the traded securities within the investment banking sector are explained in the following two chapters.

1.2 Fields of activity in the investment banking sector

The fields of activity of the investment banking sector are divided into two main businesses: service and own-business. The own-business sector covers almost every banking activity, which are foreign exchange trading, depot business, issuing business, security trading, own active security business, own passive security business, and the pension business. The service business includes foreign exchange trading, the depot and issuing business, the security trading, and M & A. The fields of activity of an investment bank are briefly explained in the following paragraphs and Figure 1 allows a clear view of the investment activities.^[5]

The issuing business deals with the issuing of securities for a corporation and their direct selling to private and corporate customers or via the stock exchange. "The security issued by a corporation can be either a debt instrument (such as a bond) or a share of the company represented by an issue of stock."^[6] There are two kinds of issuing securities: the self issue and the external issue. However, one does not often find the self issue of securities because the issuing company has to have knowledge about the issuance of the securities. Furthermore, the company has to have the possibility to publish their issue to sell all securities that are offered to public and private investors. Due to these reasons, most issuing companies prefer the external issue. Consequently, the banks take over the three functions of issuing: the placing function, the selling function, and the dealing function. The placing function is the offering of securities to the public. The selling function gives the company a guarantee that all securities will be sold, because the bank is obliged to buy all securities which are not sold to the public. The dealing function is the work up to that point of the first trading day within the stock exchange.^[7]

All tasks of administration and storing securities or valuables belong to the depot business. The banks rent safe-deposit boxes in their safes to customers for storing valuable objects. Most customers do not store the physical stock or bond certificates in their safe-deposit boxes or at home. The bank administrates the figure of securities which their clients hold in the account. This storing method is more cost efficient and requires a smaller deal of work for the clients than storing the original certificates of stocks and bonds.^[8]

Security trading means the buying and selling of all different kinds of securities which are traded within the stock exchange or OTC. One must differentiate between commission and own transactions. Own transactions are buying or selling of securities in the name and of the bill of the bank, with the intention of making a profit, which will be distributed afterwards to the stock owners of the bank. Commission transactions are the selling or buying of securities in the bank´s name but of a strange bill. A strange bill means, the bank buys securities for their clients and sells securities of their clients. The reason being that the clients cannot buy or sell securities by themselves within the stock exchange.^[9]

Cheques, bills of exchange, and all currencies are traded in the foreign exchange market. These products are traded in two different markets: the spot market and the future market. All contracts without a certain delivery date are spot contracts. The delivery of a product, e. g. US-currency, has to be done at once or in two days at the latest. The settlement date is a special arrangement of a future contract, which will be agreed upon in the future market. Therefore, all future contracts are traded outside the stock exchange due to their uniqueness.^[10]

The own active security business deals primarily with the investment in securities for the own bank. The investment has different reasons, the reinvestment of the bank´s profit or the acquisition of new corporations. Other incentives of investing in the own active security business are shown in Figure 2.^[11] In difference to the own active security business, the own passive security business deals with the issue and repurchase of the bank´s own debenture bonds or stocks.^[12]

Pension business is defined as a corporation or a private person who sells the ownership of valuable assets, for instance payments, to a bank. However, one usually has the right to repurchase the asset. The price, and other agreements of the repurchase, are fixed in a contract.^[13]

Mergers and acquisitions are a classical American banking service. A transaction is called a merger, when all assets and debts are transferred from one company to another. After the merger there is just one company and one name. A company buys another company in an acquisition and takes over the controlling interest. The newly acquired company becomes a subsidiary. Acquisitions can be seen as diversification into different industries to strengthen the market position. There are some special mergers and acquisitions, like the management buy-out, where the managers buy or take over their own company to prevent, for example a hostile take over. All employees buy the stocks of their company when they want to have the majority in the shareholder´s meeting. This special M & A is called an employee stock ownership plan. A management buy-in is a hostile take over by external managers.^[14]

1.3 Traded securities in the investment banking sector

One divides the securities, which are traded in the investment banking sector, into three different categories. The first category is the traded securities with two subcategories: the classical forms, for example stocks; and financial innovations, like floating-rate notes. The second category is similar security investment and has three subcategories: the issuing facilities, like revolving underwriting facilities; placing investments, for example euronotes; and transferable loan facilities, like transferable loan certificates. Other financial instruments is the third category of securities, which are traded in the investment banking sector. They are divided into three subcategories: financial swaps, e. g. currency swaps; financial options, like calls and puts; and financial futures, for instance financial futures of concrete basis. The traded securities are roughly outlined in Figure 1. Figure 3 shows a comprehensive diagram of the traded securities in the investment banking sector.^[15]

2 The banking system in Germany and Switzerland

The second chapter provides information about the German and Swiss banking system. It is divided into two subchapters, the first represents the German and the second the Swiss history and development of banks. Moreover, German and Swiss training models of some banks are expounded.

2.1 Germany

The training profession Bankkaufmann/-frau is described under this subchapter next to the history and development of German banks and training models of Deutsche Morgan Grenfell and Commerzbank AG.

2.1.1 History and development of the banks

The German banking sector has had a historic background. Due to religion, it was forbidden by Christians to deal with money, so Jewish people became famous money dealers. The first German private banker established his bank in Hamburg in 1590 and was called Joh. Berenberg, Gossler & Co. The number of private bankers declined from 1,406 in 1925, to 709 in 1933, to 145 in 1945, and to 81^[16] in 1990 owing to World War II and the internationalization of the global banking sector.^[17] Another reason was that the private bankers were not able to satisfy the demand of financing of industrialization. Therefore, many joint-stock banks were founded in the middle of the 19th century. Three of them were Deutsche Bank AG, Dresdner Bank AG, and Commerzbank AG. Figure 4 shows the important mergers and acquisitions of these banks from their foundation up to the middle of the 20th century.^[18] These banks are still called Berliner Großbanken because they were the biggest banks in Germany before the Second World War and they gained back their former strength inside the country and in the last few decades outside of Germany.^[19]

After World War II and the hidden inflation at the end of the 1940´s, the Deutsche Reichsbank was closed and a new two-stage central banking system, which was similar to the American model, was established. There were the Bank deutscher Länder as the central bank and eleven legal independent Landeszentralbanken for each state of Germany. On July 26th 1957, the Gesetz über die Deutsche Bundesbank (BBankG) gave the Bank deutscher Länder the new name Deutsche Bundesbank. The goals of money policy remained the same: support for general economy policy and the stabilization of the currency. Further goals of the money policy are shown in Figure 5.^[20] The Deutsche Bank can, for instance, change for instance different interest rates^[21] to reach these goals.^[22]

On October 3rd 1990, the reunification of the Federal Republic of Germany (FRG) with the German Democratic Republic (GDR) influenced quantitatively and qualitatively the German banking sector. Before the reunification, the GDR banks were a part of the planned economy. Despite the legal independence of the banks, all tasks were dependent upon the public plan commission and the department of finance. There was a governmental imposed allocation of duties among banks and banking groups. For instance, one was not able to apply for a credit at a bank of one´s own choice, but the credit was assigned concerning the plans of production. On the top of the GDR banking system was the Staatsbank, which was responsible for the interest rate, money volume, banking security, and so on. The Deutsche Bundesbank took over all tasks of the Staatsbank after the reunification in 1990. The other GDR banks^[23] now trade under different names, e. g. Bank für Landwirtschaft und Nahrungsgüterwirtschaft is called Genossenschaftsbank Berlin, only the Sparkassen and Volksbanken kept their names, but their tasks changed from a pure savings bank into a universal bank.^[24]

The universal bank is the most common bank in Germany. Universal banks offer a wide range of banking services, for example they grant credits, sell foreign money, manage accounts, buy securities for their clients and sell securities of their clients. There are only some special banks, which offer just one service, like the Bausparkassen. Their major task is to finance buildings.^[25] The different bank types and how many banks of each type exist are illustrated in Figure 8. Some interesting statistical data about the different bank types are shown in Table 2 and Table 3.^[26]

When one considers the leading financing centers, it is interesting to see that Germany has the fourth largest stock market behind New York, London, and Tokyo but Germany has the biggest bond trading market. Table 4 shows further specific data about finance centers.^[27]

Germany is a country with a high density of banks, or more specifically, there exists a strong competition in the field of banking. The complex operations in the German banking sector starts with investment advising of private customers and corporations and ends with analyzing foreign markets for their clients. Therefore, the professional training of employees is important for the competition of a bank.

2.1.2 Outline of the profession Bankkaufmann/-frau and Bankfachwirt/-in

The prerequisite for a career in the German banking sector is an apprenticeship as a Bankkaufmann/-frau, which is an accepted training profession concerning the Berufsbildungsgesetz. The training in the duale System ^[28] of Germany is held in the bank and in vocational school and usually lasts three years. The daily tasks of a Bankkaufmann/-frau are:

- to calculate interests and fees
- to keep track of the customer´s accounts and net worth
- to advise customers
- to carry out different paying methods
- to trade with money, metals, and securities
- to analyze balance sheets and profit and loss accounts for the credit department

Moreover, the nature of banking operations suggests three necessary characteristics which candidates for employment should possess: honesty, integrity, and discretion.^[29]

After some years of working as a Bankkaufmann/-frau, additional training in numerous banking fields, and a final examination of IHK ^[30] the candidate will become a qualified Bankfachwirt/-in. The Bankfachwirt/-in is a skilled employee with advanced banking knowledge and can fulfill business, economic, and legal tasks in a bank. Next to the special knowledge in the banking sector, the Bankfachwirt-/in has organizational and disposal proficiency to take leading positions in middle management.^[31]

The Bankakademie in Frankfurt am Main offers, as further education, additional and advanced courses in which one gets after two semesters the degree of Bankbetriebswirt/-in and after two further semesters the degree of Diplomierte/-r Bankbetriebswirt/-in. This private education can be seen as an alternative to university studies.^[32] Compared to the fees of a university, the Bankakademie is more expensive but the quality of education is excellent and has a very good reputation.

2.1.3 Training and development

The training and development of employees in two German banks is explained in the following two chapters. Contrary to Deutsche Morgan Grenfell, who train their trainees concerning their departments, Commerzbank AG developed a general training program, which will be customized for every new trainee.

2.1.3.1 By the example of Deutsche Morgan Grenfell

Deutsche Morgan Grenfell (DMG), which is a subsidiary of Deutsche Bank AG, is an investment bank. More than 77,000 employees in over 200 countries are employed in the Deutsche Bank Group, which is one of the world´s leading financial institutions.^[33] The training and development of DMG is expounded in the following paragraphs.

The Deutsche Morgan Grenfell´s training and career development is based on seven columns which are at the same time the departments of DMG. This training and development principle can also be clearly seen in the diagram of Figure 9^[34].

- Global Markets:

The global market activities of DMG are central to the products and services provided by the investment bank: foreign exchange, fixed income, debt capital markets, OTC derivatives, money markets, financial futures and options, metals and commodities, and research. Every trainee of this department gets a special training in international economics, global risk management, derivatives, and trading simulations. Furthermore, all employees of the global market department require the ability to analyze complex financial instruments and problems and they must be able to understand the underlying numerical structures. At the end of the training, the employee will begin to develop one´s own client relationships.^[35]

- Equities:

Deutsche Morgan Grenfell is present in all international equity markets. There are three types of careers available in the DMG product area: sales, trading, and research. For all of these careers exist good opportunities to prove oneself in one of the oversea branches. Employees receive further training or education in the fields of financial analysis, product awareness, selling and presentation, and company research.^[36]

- Structured Finance:

The structured finance activities are centered on the DMG´s leading position of project finance, leverage finance, syndicated loans, leasing and trade finance. As additional training employees acquire information about capital markets, technical banking programs, law of bankers, advanced credit training, and presentation skills. One will be immediately involved in major projects, which can sometimes last several years and are executed on the spot in the major emerging markets^[37], Europe, and America.^[38]

- Investment Banking Division:

The investment banking division consists of the three functional areas corporate advisory, equity capital markets, and origination. They will be initially supported by the first degree entrants of DMG. The corporate advisory subdepartment provides strategic advices to their clients around the world including takeovers, mergers and acquisitions, disposals, and financial restructurings. Funds are raised for clients through initial public offerings, right issues, and privatizations in the subdepartment of equity capital market. The subdepartment, origination, performs the client relationship function with responsibility for delivery for all investment banking services to their global client base. Their special training consists of international accounting, taxation and economic financial laws, cashflow analysis, presentation skills, and professional qualifications.^[39]

- Emerging Markets:

DMG is a leading global participant in the secondary market^[40] for developing country debts and bonds. Therefore, the employees of this department receive appropriate training in product knowledge, financial analysis, management development, and international economics. The additional changes of a highly specialized market place, which is frequently sensitive, volatile, and difficult, will test the strength of the trainee in expertise and character.^[41]

- Asset Management:

The personnel of the asset management department perform tasks like fund management for clients or invest capital in several stock and bond markets around the world. Therefore, the employees, and especially the trainees, receive special training in advanced financial analysis, theory of portfolio management, investment management certificate, personal skills, and seminars on managing the business.^[42]

- Private Equity:

The private equity department is a relatively new division of DMG. It provides equity capital to unlisted companies with a strong emphasis on management buy-outs and buy-ins.^[43] Robert Smith, the head of private equity, said that "It is likely that degree holders or MBA graduates would join the division later in their career having already gained practical experience in a related business ... but ... nothing is more exciting than helping a management team acquire a business and then working with them for several years towards a flotation."^[44]

Emphasis is placed on the training and development of managers´ negotiation and conflict resolution skills in the seven departments of DMG. It is important that managers learn how to effectively resolve the unexpected issues and problems inherent in joint venture arrangements. Third-party consultation and integrative negotiation are two techniques suggested to defuse conflict-laden situations. Furthermore, managers become acculturated in working with foreign partners.

2.1.3.2 By the example of Commerzbank AG

Commerzbank AG is one of the biggest banks in Germany and employs around 30,000 people in more than 30 countries.

Commerzbank AG developed a special training program, called COMMIT. It represents a unified structure in the internal training and shows career opportunities within the bank. This program starts with qualification for certain operations, like the first tasks as a leading manager and ends with all variants of external job filling.^[45] Furthermore, it defines detailed plans of training. These plans are called development profiles and have four development phases: training phase, experience phase, qualification phase, and management phase. Figure 10 represents the COMMIT training program in a graphical form.^[46] The development phases are dependent on the training goal, the background knowledge, and the experience of the employee. "Außer fachlichen Inhalten fördern wir Kommunikationsfähigkeit und Teamgeist. Beides ist notwendig, wenn wir als Bank und Sie als Mitarbeiter unserem Anspruch nach fairer, vertrauensvoller Partnerschaft gegenüber Kunden und Kollegen gerecht werden wollen." ^[47]

COMMIT is a matter of priority for Commerzbank employees and is aimed for all who want to make a career in the banking sector. At the moment Commerzbank offers two possibilities of completing an apprenticeship. One can learn the profession of Bankkaufmann/-frau and Kaufmann/-frau für Bürokommunikation. The following example represents the development of a trainee to a private adviser. After finishing the apprenticeship the trainee negotiates with the human resource department a schedule for private adviser training. After the successful training and experience phase, the prior trainee will get a job as a private adviser. Figure 11, in which the learning schedule of a private adviser is shown, makes this training example in Commerzbank AG clear.^[48] There is also the Trainee-Programm, in which graduated students plan an individuell training goal with their supervisors. The Trainees receive special training in all universal bank fields, attend seminars, and get practical on-the-job experience, to fulfill the requests of the training goal. Figure 12 shows the structure of the Trainee-Programm.^[49] Of course, the Commerzbank AG offers further possibilities of education after the training and experience phase to rise into the qualification phase and finally into the management phase, in which the trained manager leads a branch or department.

2.2 Switzerland

As it was discussed in the introduction of the second chapter, the 2nd subchapter describes the Swiss history and development of banks and the training model of SBC Warburg. Their training model is tailor-made for their individual departments.

2.2.1 History and development of the banks

The development of the Swiss banking sector had already began in the 17th century when Benedict Turrettini established the first Swiss bank in 1698. However, the first private bankers offered trade and transport services next to their banking business. The different bank areas are shown in Table 5, in which one can see when these areas came into existence and how important each area is for the Swiss economy.^[50] Due to the growing financial demand of industrialization; many joint-stock banks were founded. Switzerland has a very high bank density, 1,350 inhabitants per bank branch, compared with England, which has 3,900 or USA 6,000 inhabitants per branch. Therefore, there was and still is a strong competition between public and private banks. Swiss banks offer as universal banks all banking services due to the liberal legislation. The financial management and the gold trading are Switzerland´s oldest and most representative bank services. Switzerland administrates more than 1,200 billion CHF in the investment banking sector and has a market share of 40-50 % in gold trading.^[51]

The Schweizerische Nationalbank (SNB) was established as a joint-stock bank in 1906. It is responsible for the central functions of banks, for example the regulation of the money volume and variation of the interest rates. Its activities are regulated by legislation and its stocks are held by private people (39 %) and by public corporations (61 %), like cantons and Kantonalbanken.^[52]

Several bank groups compete in the universal banking system of Switzerland, most of them were regionally restricted in former times and still are nowadays, but after the Second World War, this situation changed to a certain degree. The importance of the Kantonalbanken was declining and the importance of the Großbanken increasing (counted on the balance sheet value), which can be seen in the Table 6^[53]. One reason for the decline of the Kantonalbanken was internationalization. The Großbanken had the possibility to establish branches all over the world and the Kantonalbanken were restricted to their canton so that the growth of the Kantonalbanken was limited.^[54]

The Großbanken actually consist of three banks: the Schweizerische Bankgesellschaft (SBC or SBG), Schweizerischer Bankverein (SBV), and Schweizerische Kreditanstalt (SKA). These three Großbanken act world-wide and have branches in all important industrial nations. There are 29 Kantonalbanken, which has already been mentioned, are restricted to their canton and each canton has special laws for their bank. The private bankers are representative for the loyal banking reputation in Switzerland and have roots back to the 17th century. However, the number of private bankers declined from 180 in 1900 to 22 in 1988.^[55]

2.2.2 Training and development by the example of SBC Warburg

The Swiss Bank Corporation (SBC) is the parent company of SBC Warburg and is one of the world´s leading banking conglomerates with approximately 10,000 employees based in more than 40 countries and has total assets of over CHF 288 billion (US-$ 229 billion).^[56]

The guiding principle of the SBC Warburg´s human resource department is: "We choose not to hinder our people via the establishment of rigid hierarchies. To achieve the best solutions for our clients, we want to develop our people to their full potential - untroubled by bureaucracy and with maximum opportunity to succeed. Working as a member of a team, often with colleagues based in other offices around the world, you will be expected to make your contribution felt from the very earliest stage. ... SBC Warburg is not seeking stereotype people of stereotype jobs. Instead we are looking for exceptional individuals with the all-round potential to make a real impact."^[57]

The new employee will initially choose his working area, which is one of the following explained departments. Each provides its own distinctive challenges and rewards.

- Global Markets:

"SBC Warburg is an international leader in the three core businesses that form the global capital markets, which are equities, foreign exchange, and interest rates, whether in the relevant cash or derivative markets. While the products related to each of the markets are different, each business area calls on the same spread of professional roles."^[58] Therefore they need employees with the following working skills:^[59]

- Trading people must be quick-thinking, with excellent mathematical skills, plus the market sense must be matched by business sense.
- Sales personnel must have good communication skills and creativity, together with an interest in international politics and economics.
- Risk management advisers need statistical and analytical skills because they work in partnership with sales teams to engineer market client specific solutions based on the firm´s financial products.
- The research staff work on all aspects of the international equity, foreign exchange, interest rate, and derivatives markets.
- Information Technology (IT):

One needs programming skills, knowledge about computer science, or background knowledge of engineering in the IT department. The job of the IT group is to create a vital trading and financial modeling tool, which should be used world-wide.

[...]

^[1] "The Glass-Steagall Act, signed into law in June 1933, erected a barrier between investment and commercial banking. The Act had three objectives: discouragement of speculation, prevention of conflicts of interest, and promotion of bank soundness." Hayes; Spence; Praag Marks 1983: "Competition in the investment banking industry", p. 21.

^[2] The investment banks are called ´Merchant Banks´ in the Great Britain banking sector.

^[3] Com. w. a. 1992b: "Gabler-Wirtschafts-Lexikon L-So", p. 2657.

^[4] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 394, Kuhn; Keller 1994: "Organisation des Bankbetriebs", p. 14-15, w. a. 1997a: "Investment banks", and Frieden 1987: "Banking on the world", p. 52-57.

^[5] See Figure 1 on page 71 and com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 496.

^[6] Eccles; Crane 1987: "Managing through networks in investment banking", p. 177.

^[7] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 397-400.

^[8] Ibid., p. 400-403.

^[9] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 404-411 and Büschgen 1993a: "Bankbetriebslehre", p. 121-137.

^[10] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 411-415.

^[11] See Figure 2 on page 72.

^[12] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 416-420 and Süchting 1992: "Bankmanagement", p. 132-162.

^[13] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 421-422.

^[14] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 422-425 and Büschgen 1993a: "Bankbetriebslehre", p. 352, 505.

^[15] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 426-482, Büschgen 1993b: "Internationales Finanzmanagement", p. 79-199, and see Figure 1 on page 71, and also Figure 3 on page 73.

^[16] The quantitive change of other banking groups can be seen in the Table 1 on page 64.

^[17] Com. Gardener; Molyneux 1990: "Changes in Western European banking", p. 285-289 and Schierenbeck; Hölscher 1992: "Bank Assurance", p. 72.

^[18] See Figure 4 on page 74.

^[19] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 62-65.

^[20] See Figure 5 on page 75.

^[21] Further monetary instruments, which influence the volume of money, are mentioned in Figure 6 on page 75.

^[22] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 29-44.

^[23] The names of the banks, which operated in the GDR, are listed in Figure 7 on page 76.

^[24] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p. 24-27.

^[25] Com. Gardener; Molyneux 1990: "Changes in Western European banking", p. 285-289.

^[26] See Figure 8 on page 76, Table 2 on page 65, and Table 3 on page 66.

^[27] Com. Ballay 1995: "Investment Banking-Metropole London", p. 725 and see Table 4 on page 67.

^[28] Due to the duale System of training in a company and in vocational school, the Berufsbildungsgesetz (BBiG) was issued in 1969. The training within the company is regulated by the BBiG and the different states of Germany are responsible for the training in the vocational school. Com. Avenarius 1991: "Kleines Rechtswörterbuch", p. 67 and Soskice 1994: "Reconiling markets and institutions: the German apprenticeship system", p. 26-29, in: Lynch 1994.

^[29] Com. Burgess 1969: "Banking & Investment", p. 2.

^[30] The IHK (Industrie- und Handelskammer) are corporations of the public law. All industry and trade companies are compulsory members of the IHK within the chamber district. Tasks of the IHK are: supporting the economy with expert opinions or investigations and they have partly a responsibility for the training during the apprenticeship for example. Com. Groh; Schröer 1990: "Sicher zum/zur Industriekaufmann/-frau", p. 168.

^[31] Com. w. a. 1990: "Rahmenplan Bankfachwirt", p. 3.

^[32] Com. w. a. 1997b: "Studienführer Bankbetriebswirt-Studium", p. 4.

^[33] Com. w. a. 1996a: "Career opportunities DMG", p. 1.

^[34] See Figure 9 on page 77.

^[35] Com. w. a. 1996a: "Career opportunities DMG", p. 8.

^[36] Ibid., p. 10.

^[37] Referred to the definition of Deutsche Morgan Grenfell, Eastern Europe, Asia, and Latin America belong to the major emerging markets.

^[38] Com. w. a. 1996a: "Career opportunities DMG", p. 13.

^[39] Com. w. a. 1996a: "Career opportunities DMG", p. 16.

^[40] Concerning the definition of DMG, Latin America, Eastern Europe, Russia, and the non-Tiger Asian countries belong to the secondary market.

^[41] Com. w. a. 1996a: "Career opportunities DMG", p. 18.

^[42] Ibid., p. 21.

^[43] Ibid., p. 26.

^[44] W. a. 1996a: "Carrer opportunities DMG", p. 26.

^[45] Com. Kirchbaum; Hübner; Schneider 1994: "Aus- und Weiterbildung in der Commerzbank", p. 6.

^[46] See Figure 10 on page 78.

^[47] Kirchbaum; Hübner; Schneider 1994: "Aus- und Weiterbildung in der Commerzbank", p. 8.

^[48] Com. Kirchbaum; Hübner; Schneider 1994: "Aus- und Weiterbildung in der Commerzbank", p. 11 and see Figure 11 on page 79.

^[49] Com. Kirchbaum; Hübner; Schneider 1994: "Aus- und Weiterbildung in der Commerzbank", p. 13 and see Figure 12 on page 80.

^[50] See Table 5 on page 68.

^[51] Com. Borner; Porter; a. m. 1991: "Internationale Wettbewerbsvorteile: Ein strategisches Konzept für die Schweiz", p. 134, Bulling 1972: "Die Hotelfinanzierung in der Schweiz aus der Sicht der Banken", p. 22, and Ilké 1970: "Die Schweiz als internationaler Bank- und Finanzplatz", p. 11.

All mentioned figures of this paragraph are from the year 1986.

^[52] Com. Schierenbeck; Hölscher 1992: "Bank Assurance", p 217.

^[53] See Table 6 on page 68.

^[54] Com. Schierenbeck, Hölscher 1992: "Bank Assurance", p. 218 and Gardener; Molyneux 1990: "Changes in the Western European banking", p. 276-279.

^[55] Com. Bulling 1972: "Die Hotelfinanzierung in der Schweiz aus der Sicht der Banken", p. 26-30, Gardener; Molyneux 1990: "Changes in the Western European banking", p. 276-279, and Schierenbeck; Hölscher 1992: "Bank Assurance", p. 217-219.

^[56] Com. w. a. 1996b: "Career opportunities SBC", p. 14.

^[57] W. a. 1996b: "Career opportunities SBC", p. 4-5.

^[58] W. a. 1996b: "Career opportunities SBC", p. 6.

^[59] Com. w. a. 1996b: "Career opportunities SBC", p. 6.