Bank of England
The model on which most modern central banks are based, the Bank of England is responsible for promoting economic growth by maintaining price stability and supporting the economic policies of the British Government. With a monopoly on the issue of banknotes in England and Wales, the Bank of England also acts as the bankers’ bank, especially in its capacity as a lender of last resort.
- Looks great on your CV
- Flexible work arrangements
- Family-friendly firm
- Working on stimulating economic growth
- Salary isn’t as competitive as other City banks
- Red tape – due to the governmental relationship
- Difficult to advance to managerial roles
The model on which most modern central banks are based, the Bank of England is responsible for promoting economic growth by maintaining price stability and supporting the economic policies of the British Government. The Bank of England acts as both the Government’s banker and the bankers’ bank. For the former, it manages the country’s foreign exchange and gold reserves; for the latter, it carries out a number of functions especially in its capacity as lender of the last resort. Known by the metonym The Old Lady of Threadneedle Street, the Bank of England is headquartered in the heart of the City’s financial district. In addition to its London office, the Bank has secondary sites in Leeds.
A Bit of History
During a series of naval engagements culminating in the 1690 Battle of Beachy Head, France crushed the English navy without suffering the loss of a single vessel. Following this defeat, England had no option but build a powerful navy if it was to re-establish itself as the dominant global power. However, the coffers were dry. The dearth of public funds led to a private institution being established by Charles Montagu, 1st Earl of Halifax, to supply money to King William III. The Bank of England raised £1.2 million for the monarch in its first 12 days; half of which was used to rebuild the navy. Consequently, this huge industrial effort stimulated the economy. The combination of a formidable navy and a transformed economy made Britain the dominant world power in the 18th and early 19th centuries.
Since being founded in 1694, the Bank of England had been privately owned, before being subordinated to the Treasury after 1931 and then nationalised in 1946. In 1997, it became an independent public organisation, owned by the Treasury Solicitor on behalf of the Government. The 1844 Bank Charter gave the Bank of England sole rights for the issue of banknotes, a monopoly it retains today in England and Wales. The Bank used to regulate and supervise the banking industry, but responsibility for this was reassigned to the Financial Services Authority (FSA) in 1998.
The Bank of England is still accountable for both monetary and financial stability. For the former, the key is to maintain stable prices and confidence in the currency. The Bank keeps prices stable by adjusting the base interest rate to ensure prices meet the Government’s inflation target. To maintain financial stability, The Old Lady has to be vigilant to threats to the whole financial system. Such threats are detected by the Bank’s surveillance and market intelligence functions, and in extenuating circumstances it may act as the lender of the last resort – extending credit when no other institution will. So when the credit crunch hit the UK in 2008, The Bank of England had to put its financial stability measures to force and, through the economically bleak years that were to follow, tried to keep inflation low through quantitative easing – a £200bn programme of asset purchases.
A Closer Look at Divisions & Departments
The Bank of England is divided into four main business areas – these are monetary analysis (MA) and statistics, markets, financial stability and banking services. The firm’s current structure has been in place since 1998.
The company’s MA division publishes and briefs on financial statistics while the main functions of the markets department involve providing liquidity insurance to the banking system, managing the bank’s balance sheets and the UK’s foreign exchange reserves, as well as delivering financial market analysis. The markets division also works closely with the risk management division, which is responsible for managing risk from financial operations.
The financial stability division does what it says on the label: securing the bank’s financial stability functions (such as managing a financial crisis) by working with HMTreasury and the FSA. Last but not least, the firm’s customer banking division offers banking services to customers, including the Government, financial institutions and other central banks.
On top of these main operating areas, The Bank of England also boasts a Central Services Division which supports the bank’s activities. This is mainly made up of IT, business continuity, the Governors’ private offices, and legal services.
There are opportunities for both graduates and experienced professionals at this English institution. The graduate programme is open to those armed with first degrees, regardless of the discipline; while postgrad placements are available for individuals with a Master’s in either economics or finance. All grads join the bank’s Analyst Career Training (ACT), lasting for three years and comprising a range of challenging roles. PhD economists either join the Monetary Analysis or Financial Stability areas of the Bank. The work carried out in these areas contributes to real-world policy making.
The Hiring Process
With only a few places on offer, the hiring process at The Bank of England is tough. The company is only after highflying grads so academic excellence and strong analytical skills are definite musts. When you apply, you’ll have to fill in an application form which will ask you about your education, your work experience and skills. There will also be scheme-specific questions to answer so make sure you prepare well for these. As part of the application process, you will also have to fill in a psychometric questionnaire that will check out the core competencies the bank is looking for (Practice Watson Glaser Tests).
The next round consists of a written analytical exercise for which you’ll have 90 minutes. Those with a finance degree will specifically be asked about their technical knowledge, whereas non-economic grads will be tested on their understanding of the bank and its responsibilities. The analytical exercise could well take the shape of a case study so, for instance, you may be asked to make a sound analytical decision about approving or rejecting a project for which you are given sufficient information to read (such as budget report). In the past, candidates also had to come up with ideas on how to raise more money for a specific project in this context.
Next up is an assessment centre, which will have your adrenaline levels going as you’ll have to master an interview, a psychometric test and a group exercise. The interviewers are particularly keen to find out more about your life outside university and questions will be heavily competency-based (especially in regard to your management, team, organisational and interpersonal skills). Also make sure you know everything there is to know about The Bank of England as you will be grilled about the bank’s core purposes and divisions. Those from a non-finance degree can expect some more general questions while economics grads will have to get their textbooks out to prepare since you’ll be asked some very specific and highly technical questions. For the group exercise remember to actively participate in the conversation as assessors will monitor your interaction closely. The psychometric tests will probe your problem solving ability in a finance-related context.
The Graduate Scheme
The Bank of England only hires 20 graduates a year so you if you’re one of the lucky ones, you can expect the graduate scheme to kick off with a three-week induction. This will give you an opportunity to gain a detailed understanding of the organisation’s structure whilst also providing you with business training. There will also be a focus on teaching you some soft skills so it’s not all too technical. After this initial induction, you’ll move straight into your division which includes monetary analysis, monetary and financial statistics, markets, financial stability, banking services, special resolution unit or IT. Expect lots of on-the-job training with your line manager, coach and the graduate recruitment manager guiding you through your career.
Then, after 18 months, all graduates get together in a three-day professional development workshop. This is crunch time: your entire progress will be examined and, depending on your performance during the graduate scheme, the bank will look into promoting you to the next level or not.
The Bank also offers a number of different gap year placements and internships. The sponsorship scheme is available for graduates looking to embark on postgraduate study in either economics or finance while the PhD internship scheme provides the opportunity for PhD students to make their mark. The Bank annually recruits undergrads for a 13-month work placement with shorter 6 to 8-week undergraduate internships running during the summer for penultimate year students. Additionally, the central bank also offers a gap year programme which is open to students on completion of their A-Levels.
Graduate Recruitment Info
Tel: 020 7601 5115
Governor: Sir Mervyn King
Number of Graduate roles: 35-50
Graduate Salary: £29,000
Monetary Analysis and Statistics