FIG Investment Banking: The Group Guide
What FIG investment banking is: the financial institutions group, why bank and insurance valuation is specialized, and the unique technicals to know.
May 15, 2026 · 7 min read
FIG investment banking is the coverage group that advises financial institutions, commercial banks, insurance companies, asset managers, specialty lenders, and fintech firms, on M&A, capital raising, and restructuring. According to Mergers & Inquisitions, FIG bankers "advise commercial banks, insurance companies, specialty finance firms, brokerage/exchange companies, asset management firms, and financial technology companies on raising debt and equity and completing mergers and acquisitions." FIG is one of the most technical coverage groups because banks and insurers are valued differently from every other industry: enterprise value and EBITDA break down, free cash flow isn't meaningful, and regulatory capital constrains every decision. This guide covers what FIG does, why its valuation is specialized, and the unique technicals interviewers test.
TL;DR
- FIG covers banks, insurers, asset managers, specialty finance, and fintech, per Mergers & Inquisitions.
- Banks are valued on equity value, not enterprise value, because debt is raw material, not just funding.
- Banks use P/E, P/BV, and P/TBV multiples, plus the Dividend Discount Model instead of an unlevered DCF.
- Common Equity Tier 1 (CET1) ratio is the critical regulatory-capital metric for banks.
- US insurers often run Risk-Based Capital ratios between 300% and 400%, per M&I.
What is FIG investment banking?
FIG is the Financial Institutions Group, a coverage team that serves companies inside the financial system itself. CFI defines it as "a group of professionals that provide advisory services to financial institution clients," covering three main categories: banks that accept deposits and lend, insurance companies that earn premiums and investment income, and asset managers that invest client funds for fees. M&I extends the list to specialty finance, brokerages, exchanges, and fintech.
What makes FIG distinct is that its clients are the financial intermediaries, so their balance sheets work in reverse of a normal company. For a bank, debt (deposits and borrowings) is the raw material of the business, not just a financing choice. That single fact breaks most of the standard valuation toolkit and is why FIG is treated as a specialist group rather than a generalist one. For the broader desk structure and how coverage groups fit together, see our investment banking technical interview questions hub.
Why is bank and insurance valuation specialized?
Bank and insurance valuation is specialized because you can't separate operating from non-operating items the way you can for a normal company. M&I puts it directly: "Securities, investments, and debt are non-operational for normal companies, but they're more like raw materials for banks. So, you rely on Equity Value-based multiples." Because debt is core to the business, enterprise value, which strips out capital structure, has no meaning for a bank.
That's why FIG valuation is built on equity value. Banks and insurers are valued on P/E, P/BV (price-to-book value), and P/TBV (price-to-tangible book value) multiples, and analysts often regress P/BV against ROE because the two are highly correlated. This is the opposite of how most groups work, where enterprise-value multiples dominate. If you're fuzzy on why that distinction matters, our enterprise value vs equity value guide is the prerequisite for any FIG technical question.
Why don't EBITDA and DCF work for banks?
EBITDA and the standard DCF break down for banks because the metrics they rely on don't describe how a bank makes money. EBITDA adds back interest, but for a bank, net interest income is the core revenue, not a financing line you adjust away. Stripping interest out of a bank's earnings deletes the business itself.
The DCF fails for a related reason. M&I notes that "Free Cash Flow is not a useful metric for banks because CapEx and the Change in Working Capital do not represent reinvestment." A bank doesn't reinvest in factories; it holds capital against risk. So FIG bankers replace the unlevered DCF with the Dividend Discount Model (DDM), which values the bank on the dividends it can pay out while still meeting regulatory capital requirements. Insurers sometimes use an Embedded Value model instead. This is the single most-tested FIG concept, so be ready to explain it cleanly the way you would the standard walk me through a DCF answer for any other group.
What metrics matter most in FIG?
The metrics that matter in FIG are equity-based and regulatory, not the EV/EBITDA-style multiples of other groups. For banks, the core drivers are net interest margin (the spread between interest earned and interest paid), return on equity (ROE), and the loan-loss reserve, the Allowance for Loan Losses that flows through the income statement as a Provision for Credit Losses. Higher-ROE banks command premium P/BV multiples.
Regulatory capital sits on top of all of it. Banks must maintain a Common Equity Tier 1 (CET1) ratio, capital against risk-weighted assets, which directly limits loan growth, dividends, and buybacks. Insurers track the Risk-Based Capital (RBC) ratio instead, and M&I notes large US insurers "often maintain ratios between 300% and 400%." The table below contrasts FIG metrics with the standard-industry equivalents.
| Concept | Standard industry | FIG (banks/insurers) |
|---|---|---|
| Valuation basis | Enterprise value | Equity value |
| Core multiple | EV/EBITDA | P/E, P/BV, P/TBV |
| Cash flow model | Unlevered DCF | Dividend Discount Model |
| Capital constraint | Leverage covenants | CET1 / Risk-Based Capital |
What's different about FIG M&A deals?
FIG M&A has its own rules. Deals are usually structured with majority stock consideration because, as M&I notes, these firms "tend to have low Cash balances and are already highly leveraged," so cash buyouts are rare. Instead of an enterprise-value model, bankers run accretion/dilution on book value or tangible book value per share, plus contribution analysis, and EPS accretion is critical for commercial bank deals.
The defining feature, though, is regulatory approval. Bank mergers need sign-off from the Fed, OCC, FDIC, and state regulators, which adds months and can block a deal outright. Deposit market-share caps limit how big the biggest banks can get through M&A, which is why mega-mergers are rarer than the deal value would suggest. Core deposit intangibles appear on the balance sheet, and deposit divestitures are sometimes forced to win approval. Traditional LBOs are nearly nonexistent in FIG given the leverage and regulation, the same constraint our TMT investment banking guide notes for that group.
Frequently Asked Questions
What does FIG stand for in investment banking?
FIG stands for Financial Institutions Group. Per M&I, it advises "commercial banks, insurance companies, specialty finance firms, brokerage/exchange companies, asset management firms, and financial technology companies." It's an industry coverage group focused on the financial system itself.
Why can't you use enterprise value for a bank?
Because debt is raw material for a bank, not just capital structure. M&I explains that securities, investments, and debt are "non-operational for normal companies" but "raw materials for banks," so you can't separate operating from non-operating items. Banks are valued on equity value instead. See enterprise value vs equity value.
How do you value a bank?
You use equity-value multiples (P/E, P/BV, P/TBV) and the Dividend Discount Model instead of an unlevered DCF. ROE drives the P/BV multiple, and CET1 regulatory capital limits how much can be paid out. EBITDA and free cash flow are not meaningful for banks.
Is FIG a good group to work in?
Yes, especially if you like technical depth. FIG forces you to learn a non-standard valuation toolkit (DDM, P/TBV, regulatory capital) that few other bankers know, which is a strong differentiator. Exit options include FIG-focused private equity, hedge funds, and corporate development at financial firms.
What technical questions come up in a FIG interview?
Expect: why enterprise value doesn't apply to banks, how to value a bank, why EBITDA and DCF break down, what CET1 measures, and how net interest margin and ROE drive value. For insurers, expect questions on float, loss ratios, and embedded value. Master the core technicals first, then the FIG layer.
How is insurance valuation different from bank valuation?
Insurers are still valued on equity value but with their own metrics: the combined ratio and loss ratio for underwriting profitability, the float (premiums invested before payouts), and embedded value (common outside the US). They track the Risk-Based Capital ratio, which US insurers often keep between 300% and 400%, rather than CET1.
Sources
- Mergers & Inquisitions: Financial Institutions Group (FIG) (checked June 2026)
- Corporate Finance Institute: Financial Institutions Group (FIG) (checked June 2026)
- Wall Street Oasis: Financial Institutions Group (FIG) (checked June 2026)