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Best Languages to Learn for Investment Banking – Part I

This is a three part series on language for business use in Finance.

Part II – Chinese
Part III – French, Arabic, Spanish

Executive Summary for Languages in Investment Banking

  1. Being bilingual is becoming a pre-requisite in finance in some areas and is at the very least an excellent asset
  2. The most beneficial languages to learn in today’s global environment are:
    1. Chinese
    2. French
    3. Arabic
    4. Spanish/Portuguese
    5. Russian

Why Bilingual Bankers Are Desired

The world is getting smaller and business is becoming increasingly global. Gone are the days of investment banking being purely an old boy’s club requiring English – both domestically as well as in ex-pat havens such as Hong Kong or Singapore.

Being bilingual (or trilingual) is now, if not a pre-requisite, a very powerful asset in emerging market investment banks and increasingly traditional markets as well (New York/London). Pre-Brexit, London jobs often advertised for candidates who also possessed fluency in one or more European languages.

Right now, even without any sort of language requirement in getting a job – an additional language can be excellent job security. For some banks, there are Chinese staff who will be pulled out to meetings for other industry teams despite zero knowledge of the field because they are dealing with potential Chinese buyers.

Choosing the Right Language to Learn for Business

Choosing a language is strategic. Although we have provided a list of useful languages, the first language to learn or master is the one that provides the least resistance and the highest benefit.

Assuming mastery of English, the first option should be the language you have the deepest connection with provided that it is widely used. For instance, even though we do not rate Japanese as one of the most advantageous languages to learn, if you are Japanese and have casual fluency, time is best spent getting it to a business level.

The next consideration is time – although certain languages are more useful than others, it is prudent to learn a language that you can achieve fluency in quickly. Chinese is the most versatile additional language for business but requires 64 weeks of intensive studying to get to a conversationally fluent level. If you are a student, this may be a worthwhile endeavor. If you are already working a corporate job with long hours, the time commitment may be too great of an addition to your already compromised social life/CFA studying.

For someone who only knows English and has no connection to any other language, French or Spanish will be much easier because of the shared alphabet, similar grammatical patterns (to some extent), loanwords – especially in French due to the Norman invasion, and most importantly the phonetic nature of the language where you can sound out words.

Language Considerations for Industry and Location

Depending on fluency, your mileage will vary greatly. Conversational or intermediate comprehension may breed familiarity and foster amicable working relationships, but will not help you drive business nor be perceived as an asset – this will rarely get you a job in an offshore market unless there is a dearth of talent and a booming economy (Brazil before its recession).

Native fluency will help you land jobs and be part of a relationship team if you are in a developed market dealing with inbound M&A (you speak Chinese in Australia and a Chinese company is looking to purchase a mine). However, you will be unable to manage relationships in Asia unless you are business fluent – which for all intents and purposes implies an understanding of cultural norms and nuance. Although documentation is mostly in English, especially when deals follow legal frameworks set up in Hong Kong, unofficial exchanges and other files are increasingly in Chinese.

Location preference is also important for making a decision – if you plan on staying in a mature market (US/UK/Canada/Australia), you will have to consider what sort of buyers frequently tap into inbound M&A activity. In US and the UK, multinational corporations and private equity players across a variety of industries will conduct business in English irrespective of domicile. The one exception is purchases by Asian buyers (predominantly East Asian), where they may appreciate someone on the other side with language capabilities. As such, for most sectors, bilingual bankers are a nice to have as opposed to a need to have.

For these sectors, foreign state-owned and private investment is rife: infrastructure, oil and gas, agriculture and mining. For these industries, language is very important due to the buyer mix that weighs heavily towards the Middle East and Asia (both South Asia and East Asia) – especially as these players may have very different investment criteria and a focus on long-term relationships. Banks will often have Asian bankers either on the ground in the mature market or operating out of Hong Kong (Asia ex-Japan) or Singapore (Southeast Asia) – possibly a smaller team or just a relationship manager for smaller or mid-market banks.

There are numerous differences: views on valuation are much longer term than what would be expected in a mature market and hurdles/required return on investment can be much lower. Also, there may be other considerations beyond NPV as deals can be sought for energy security and technological know-how.

Outside of mature markets, language is much more important.

This is not an endorsement for everyone to learn a new language for business purposes – learning a language even to conversational fluency requires dedication and regular practical experience.  Expect to spend as much time on language as you would preparing for any of the CFA exams – with the additional task of 1) finding people to practice with; and 2) practicing without structured checkpoints that would be present in university (exams, regular dialogue).

The Most Important Language for Investment Banking

The most important language for any finance job is… English. English is still the Lingua Franca for business and is likely to remain so for a period of time even after the US hegemon declines or collapses. Someone with a 4.0 GPA in a rigorous quantitative subject, excellent extracurriculars and multilingual in French, Italian, Spanish, German, Swiss German and Portuguese without at least an intermediate grasp of English is not going to get a job.

The most common iteration of this is for Chinese nationals with excellent math, finance and accounting marks who cannot write a grammatically correct cover letter. There is no point learning another language for the purposes of employment unless fluency in English is achieved.

Any marketing materials and presentations that the investment bank produces must be free of spelling, punctuation and grammatical errors – anything else would compromise the professionalism of the firm. In addition to this, a strong grasp of English is required to convey ideas effectively. This may be difficult even for native English speakers, so anyone perceived to have less than stellar proficiency in English will not be considered.

Less Useful Languages to Learn for Business

Despite India’s favorable demographics and the transitivity to Urdu and Punjabi, we do not rate Hindi as a language for business because of the wide use of English for the subcontinent as a whole – especially at the corporate level.

German is used in Germany, Austria and Switzerland (Swiss German). All Germans speak English and do not need you to speak German for them to trust you. Austria does not have a big business community and the Swiss will not let you into their circle, so learning German is not that useful in this context.

Japanese is not recommended despite the relative wealth of the country as secular demographic trends are unfavorable in terms of declining population and the difficulty of breaking in to a rigid and homogenous culture. Without a Japanese background, it is nearly impossible to succeed outside of an ex-pat role (in which case only English is required).

Korean is similarly not recommended, although Korea (possibly Koreas, who knows in 10 years) has much more favorable demographic trends and is more innovative, it is also a closed and homogenous country and will be much more competitive than Japan to break into due to the saturation of talented Koreans and Korean-Americans who are business and culturally fluent with excellent credentials.

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Matt
ex investment banking associate
https://www.linkedin.com/in/matt-walker-ssh/

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