Placement Experience

Bank of England

Name: Phil Butler

Email: abcb099@city.ac.uk

Degree: BIF

Job Role: Research assistant

Duration: 30/06/08 - 11/09/09

2008/09 industrial placement information: The application close date is the 23^th of October 2009 at 5 PM, apply at www.bankofenglandjobs.co.uk/

Why do a Professional Placement "Year Out"? (Summary)

For those who are unsure on whether to take a year out, or, more formally, a professional placement, I have summarised a few key reasons as to why it will benefit you and your future prospects.

• It gives priceless "hands on" experience at a financial (or other) institution. This is beneficial two-fold as it can be added to your CV, standing you apart from other applicants, but it also increases your knowledge ready for the final year of your degree.
• During the year out you will also develop very useful skills. Using programs like Microsoft Excel and financial programs like Bloomberg are essential when doing your dissertation and can also be added to your CV. Dissertation ideas can also come from your placement and the wide range of information resources can be taken advantage of. Very important attributes such as team work, time management and organisation are accumulated throughout the year. Dealing with pressure on a daily basis becomes natural leading to an increase in maturity and ability.
• The money earned from the year out can also help with tuition fees and loans in the concluding years, removing pressures and worries from the final year.
• Some placements provide opportunities to take courses to develop skills in programs used at university and in future jobs. So it is a great way to gain further knowledge and stand apart in your job applications.
• Possibly the most important part of a professional placement is the possibility of actually gaining a graduate job directly from the placement year.
• It appears that the economy is headed for a prolonged downturn, with fewer jobs. A year out will give you the edge over other applicants and delay your entry to the job market which is a big plus in the current climate.

Please continue reading for a more in-depth description of professional placements and more specifically my experience at the Bank of England.

Application Process: The application deadline for the Bank of England, is the 23rd October and can be accessed via the link at the top of the page. I would certainly recommend the placement if you enjoy/have a good understanding of economics and if you want to develop skills that you are going to use throughout your financial career.

The process itself has the online application before you have an interview, testing your soft and technical skills, and includes a timed excel spreadsheet test. Preparation in your economics understanding and awareness of basic spreadsheet skills will give you a solid platform to build upon throughout the day. During your day at the Bank, you will also meet for lunch with the current placement students allowing you to ask further questions.

Job Background: All job opportunities at the Bank of England are located at the Bank itself in Threadneedle street, not far from Cass. There are around fifteen placement jobs, each in a different area of the Bank, where around 10 are suited to degrees offered at Cass. Pay is a reasonable £11.22 per hour where contracted hours are 35 hours per week, equating to a basic annual salary of £18,866. Any extra hours can be taken as overtime, which is paid at 1.5 times the standard hourly rate. This is the same for every position, but this is where the similarities end.

I am situated in Monetary Analysis (MA), which focuses on developments in financial markets. Based on a monthly average, I work around 45 hours per week, but any given week can vary. In a standard month, I have two busy weeks and two quieter weeks. This is specific to my particular role, there are other roles where 35 hours are standard but it all depends on the department you are located. In general, positions in Monetary Analysis and Markets are the more time consuming and fast moving.

I work as a research assistant and have constant interaction with analysts not only in my division but also in other MA divisions and across other areas. I also do more specific requests for the Monetary Policy Committee (MPC) where I provide more specific information on my division's key areas.

The Bank is split in to three main sections, MA, Financial Stability (FS) and Markets, each has different roles within the Bank. MA's main role is to provide economic information for the Bank to apply monetary policy responsibilities. FS concentrates on the financial side of the economy working closely with the FSA (Financial Services Authority) and HMT (Her Majesty's Treasury) to implement financial stability. Markets conduct operations in the sterling money markets to execute the MPC interest rate decisions. They have regular contact with the financial market and provide market information to the Bank as another key responsibility. Within these three main groups there are more sub-divisions such as Banking services, Central Services and centre of Central Banking Studies, all of which could be potential placement positions for students from Cass. By next year, there may be a new section because of a bill going through parliament which will restore some of the Bank's regulatory/supervisory functions which it lost when it was granted independence in 1998. These positions will mainly look at bank liquidity and other complex areas rather than the consumer based practises which the FSA will maintain.

Key Responsibilities: So you can get an idea of what the job entails I shall provide a brief overview of the roles and responsibilities that, as an RA in Div 2, I have (remember other areas will differ). My work can be split in to three sub categories, morning process, monthly process and add hoc requests.

The morning process is a procedure I share with the other permanent RA, swapping its two parts on a weekly basis. The first part is known as the 'Yield Curve process', and requires data to be collected from Reuters before running Excel spreadsheets that compare yield curves from UK, US and Euro area. The aim of this process is to see the day by day changes of the yield curves to see whether there are any abnormal kinks in the curves, caused either by mispriced bonds or the fact bonds are coming to maturity and therefore have a more volatile price. By removing these abnormal kinks the ultimate aim is to make the analysts models run with a higher rate of accuracy. Once this has been done an excel macro is run so the Banks external yield curve webpage can be updated. This is used by a lot of city analysts, and is available to the general public, on a daily basis so it is crucial to get this uploaded with the latest data as promptly as possible. The second half of the morning process is where option data is collected and processed. Data is collected from Bloomberg, the Chicago Mercantile exchange, LIFFE, RBS, BARCAP and the New York Mercantile exchange, before it is run in a program called MATLAB to get it in to a data format that can be entered into our FAME database. All output files have to be monitored and examined to notice irregularities, so it requires knowledge of options and swaptions. Once these have been verified another excel macro is run so the external PDF webpage can be updated with options data, again available to the general public.

The monthly process has many different features. The most important is the updating of the presentation charts packs, MPC chart packs and the pre-MPC presentation. All chart packs are split in to three areas, Equities, Foreign Exchange (FX) and Interest rates. The difference between the three types of chart packs is that the presentation chart packs go to the analysts in the division, who use them to decide stories which they want in the pre-MPC presentation. The MPC chart packs go to the MPC when they meet up, both for the pre-MPC presentation and the MPC meeting itself. The chart packs contain 90% of the same content but do differ slightly. Data collected for the chart packs come from many different sources but mainly from FAME, Merrill Lynch and Global Financial Data. To update the chart packs, which are excel based, data needs to be collected then the formulae updated before the graph is modified to show the latest data, prior to being analysed to check that what they are showing is correct and relevant.

The pre-MPC presentation is presented to the MPC the Friday before the interest rates are decided. It is when all MA departments from the Bank put together a presentation to illustrate to the members what has happened in the financial world since the previous MPC. It is also a time where analysts can put forward ideas to the committee about other trends which are more specialised and further forward or backward looking. Within a three month cycle the MPC round changes from a light to a medium to a maxi. The maxi is the pinnacle all rounds and is where analysts put in the most work and when MPC members are more open to innovative ideas. It is also the round where I am responsible for putting together the whole pre-MPC presentation.

Other monthly processes that need to be completed are the collections of new bond series', to keep our databases up to date. We run monthly yield curve checks, update the division's intranet site and update yield and PDF macros. These take less priority but are still required to be completed in quiet periods at work. These represent a huge variety of skills needed, varying from analysing economics to understanding program codes.

Ad-hoc jobs come both internally and externally of the division. Internal requests are generally where the analysts will require specific data or certain spreadsheets. External requests normally require set data which they do not have access too, we therefore have to collate the data and forward it on to them. The ad-hoc jobs are where the more extensive analytical work takes place so it is very rare that additional ad-hoc work is turned down as it is a great time to impress and develop further.

Skills developed: First and foremost are the Excel spreadsheet skills. I believe this is an important and unique opportunity, because all aspects of Excel are used extensively. This is important for two reasons. One is that this will help when it comes to the dissertation in the final year, being able to collate all your data, present it and then use analytical techniques. This will be essential, and is exactly what you learn on a day to day basis. Secondly, there are skills that you will use throughout the rest of your life all the time you are in a finance related job. They are such important and fundamental skills employers will hold these in high regard. Whilst at the Bank you will also be put in for your ECDL, European Computer Driving License, giving you a qualification to add to the CV as proof to future employees of your IT skills. The advanced ECDL is also an option depending on your development whilst at the Bank.

Here is an outline of the skills developed in Excel to give you a flavour of what is used in the Bank. Simple functions such as SUM, AVERAGE, STDEV, SKEW and PERCENTILE are common in most, if not all spreadsheets. More advanced functions like IF, WORKDAY, STRING, TRANSPOSE, HLOOKUP, VLOOKUP are also used on a fairly regular basis, hopefully showing a wide variety and a slight step up from functions used in university courses. The most complex part of these functions is combining them.

PowerPoint skills are also extensively developed whilst at the Bank. The standards the Bank set are so high and specific, detail becomes very important. Hence the use of grid lines, extensive chart and text formatting, hiding slides, slide statistics and master slides, something which I have developed, all are used.

The other main skill developed is a greater understanding of economics. Sub consciously analysis of economic terms, series or data is undertaken around 80% of the time, this obviously does depend on where you are located. In my division I have to analyse yield curves on a daily basis and look for movements or shifts in the curves. By understanding curves I am then expected to find reasons for abnormal changes and then promote my case to an analyst to decide on whether mispriced bonds need to be removed from models. This aims to decrease errors in models by removing volatile bonds, which normally become erratic when approaching maturity. Analysis of options data also needs to be undertaken everyday, where I am expected to spot anomalies in data sets and check these back with our sources.

On a monthly basis when the chart-packs are produced, data from Equities, Foreign Exchange, and Interest rates needs to be analysed before given to either MA as a whole or the MPC. This combines the knowledge from many different areas so uses a broad range of economics, most of which, as a Cass student, has been covered at some point during the first two years of our degree. This part of the job is most important of the whole position. Firstly analysts rely on us to provide them with accurate and more importantly correct information. Secondly the Governor of Bank will read the data you produce. A very critical point indeed but with pressure brings skills of time management and organisation, skills essential to succeed.

Programs used: The list of programs I use at the Bank is extensive so I will highlight the most relevant and try to summarise their use and importance.

• Microsoft Outlook - Email platform which is the central communication to other people in the Bank. A basic program but is the pivotal point in my day to day job.
• Filesite - (In-house program) A giant database that holds every document in the whole Bank. It allows sharing of documents, reduces duplication and allows every member of the Bank to access files even if produced by different division, an inherent problem in the past. This has been a huge focus of the Banks aim to improve availability of information.
• Microsoft Excel - Spreadsheets are involved in my job on a daily basis, everything from formulae, functions, graphs and even as download interfaces to Bloomberg and Reuters.
• Microsoft PowerPoint - Used for at least one week every month, PowerPoint is used to create the Pre-MPC presentation which is shown to MPC members the Friday before MPC week. Formatting of text and charts in the presentation is the key aspect, making sure nothing catches the attention of the MPC except what they are meant to see.
• Bloomberg - Bloomberg itself does not need explaining but what I use it for does. On a daily basis I collect options and bond data from Bloomberg which is used in my divisions various models. More periodically I may need to search for a bond, index or equity information, sometimes I even need to collect specific data snapped at a certain time for important documents which go to the MPC and Governor Mervyn King.
• Reuters - Essentially used in the same way as Bloomberg but on a smaller scale. Inherently we get risk reversal data on a daily basis but can get a wider variety of data on a more ad-hoc basis.
• DataStream - Not used as often as the Bloomberg and Reuters. It is used more as a specialised data source. DataStream has extensive data on equity indices, especially where I need subcategory splits so that comparisons can be made. The Bank is very keen on seeing trends between Financial, Energy and Construction sectors as these are very topical in the current financial climate.
• MATLAB - A mathematical program where codes have been formed by analysts to first and foremost convert data taken from sources like Bloomberg and put it in a format that the Banks database, FAME, can store and process. It has additional features which allow models and graphs to be run from it. I use this program to transfer data in to the FAME, using basic codes and functions.
• FAME - (In-house program) The Banks database where almost all data is stored. The aim is to provide a central location where analysts/RA's can access data series or points that they require. FAME is an important segment in the Banks operation and it is my responsibility to make sure that not only is the data up to date data but also correct.
• TSV - (In-house program) Another piece of Bank software aiming to make data comparisons and chart creation simpler, quicker and easier. In essence it is just a different user interface from programs like Excel.
• Other data sources - The Bank has a huge network of data sources. I would estimate at around 30 different data sources for collecting data on a regular basis. It collects data from Barclays Capital to Goldman Sachs and the Federal Reserve to Global Financial data (a 400 year historic price database).

Future Opportunities: Unlike other professional placements the Bank of England does not offer graduate placements based directly on your year in the Bank. Their graduate placements scheme is a lot more competitive than the year out with applications coming in from Oxford, Cambridge and LSE. With over 1500 applicants applying for 50 interview places and the final 24-30 job offers over the whole year, showing its popularity and competitiveness. The placement year does stand you in good stead though. Not only will you have a portfolio of work from your year at the Bank and a list of analysts who can provide personal recommendations, but if you are of the right calibre then you automatically receive a place in the interview stage. A year spent at the BoE will also open other doors - key banks, the FSA, etc.

Probably the greatest reason for wanting a graduate placement at the Bank is its desire to develop staff. The Bank pro-actively promotes opportunities for its staff to go back to university and attain a Masters or PhD and the Bank will normally fund the course.

The professional placement means you return to your final year of studies with a much better idea of how the financial sector works, which will enhance performance in the final year.

Social Opportunities: The Bank is quite a unique place for social opportunities whilst on your year out. There the other placements students, the division you are assigned to and the 1500 people who work at the Bank itself. There is the usual Christmas and summer parties, each division plans something different, and then there are the team events where teams meet up out of work to socialise. The biggest event of the year though is a day called 'Governors day', in short an adults sports day. It takes place at the Banks Roehampton sports club and has various competitions including 5-a-side football, mixed netball, cricket and tennis. The whole day is provided free by the Bank and is quite simply a great way to get to know people from the Bank, usually takes place about a month into the placement. As mentioned above the Roehampton sports club is the Banks sport ground and gives placement students free membership for their year at the Bank, usual membership is over £1000. The standard of the facilities is next to none and is where the lawn tennis association is situated, a great opportunity to brush up on your sports skills or just to socialise and relax in the bar. There are also other opportunities to get involved by joining clubs or societies ran by people who work at the Bank. Something more community based are the literacy and numeracy programs that the Bank is part of, where employees give an hour and a half a week to help out at local schools. No doubt an extensive and varied list.