Short answer
Most investment banking work is not permitted in the mainstream Hanafi view, because so much of it arranges, sells or trades interest-bearing debt and derivatives. Roles in Islamic finance, and some advisory work on halal deals for halal clients, can be permissible. Each role should be checked with a mufti.
Work that directly arranges, underwrites, sells or trades interest-bearing loans, bonds or derivatives is haram, since the hadith curses the writer and witnesses of riba too. Advisory work on halal transactions is a permitted service in itself, but in a conventional investment bank it is rarely free of interest, so muftis advise leaving such jobs where possible.
The four schools agree on this.
Explanation
Investment banks do several kinds of work, and the ruling follows the work:
- Debt capital markets and leveraged finance: arranging and selling bonds and loans with interest. Haram, as it is writing and promoting riba.
- Sales and trading: trading bonds, derivatives, options and short positions. Haram for the same reasons, plus gharar.
- Equity capital markets: helping companies issue shares. The service can be lawful when the company is halal, but deals usually come bundled with debt.
- Mergers and acquisitions advisory: advice is a service you are paid for. It is permissible in principle when the deal and the client are halal. In practice many deals are financed with interest-bearing loans, which the team structures.
- Islamic finance desks: structuring sukuk and Shariah-compliant deals under a proper Shariah board is permissible.
- Support roles such as IT or compliance are treated like other indirect bank jobs: some muftis permit them with dislike, while others advise leaving them.
The reason for the strictness is the hadith that curses not only the one who takes riba but the one who writes it and its witnesses. Building a loan or bond deal is writing it. The bonus pool of a conventional investment bank also comes largely from interest and trading income.
If you are already in such a job, do not quit in a way that leaves your family without support. Look actively for halal work, and ask a mufti about your exact role. For general bank jobs, see Is it haram to work in a bank? and Which jobs are haram?
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah Al-Maaida 5:2
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تُحِلُّوا۟ شَعَٰٓئِرَ ٱللَّهِ وَلَا ٱلشَّهْرَ ٱلْحَرَامَ وَلَا ٱلْهَدْىَ وَلَا ٱلْقَلَٰٓئِدَ وَلَآ ءَآمِّينَ ٱلْبَيْتَ ٱلْحَرَامَ يَبْتَغُونَ فَضْلًۭا مِّن رَّبِّهِمْ وَرِضْوَٰنًۭا ۚ وَإِذَا حَلَلْتُمْ فَٱصْطَادُوا۟ ۚ وَلَا يَجْرِمَنَّكُمْ شَنَـَٔانُ قَوْمٍ أَن صَدُّوكُمْ عَنِ ٱلْمَسْجِدِ ٱلْحَرَامِ أَن تَعْتَدُوا۟ ۘ وَتَعَاوَنُوا۟ عَلَى ٱلْبِرِّ وَٱلتَّقْوَىٰ ۖ وَلَا تَعَاوَنُوا۟ عَلَى ٱلْإِثْمِ وَٱلْعُدْوَٰنِ ۚ وَٱتَّقُوا۟ ٱللَّهَ ۖ إِنَّ ٱللَّهَ شَدِيدُ ٱلْعِقَابِ ﴿٢﴾
O you who have believed, do not violate the rites of Allah or [the sanctity of] the sacred month or [neglect the marking of] the sacrificial animals and garlanding [them] or [violate the safety of] those coming to the Sacred House seeking bounty from their Lord and [His] approval. But when you come out of ihram, then [you may] hunt. And do not let the hatred of a people for having obstructed you from al-Masjid al-Haram lead you to transgress. And cooperate in righteousness and piety, but do not cooperate in sin and aggression. And fear Allah; indeed, Allah is severe in penalty.
Arranging interest deals is direct help in riba.
Quran, Surah Al-Baqara 2:278
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ ٱتَّقُوا۟ ٱللَّهَ وَذَرُوا۟ مَا بَقِىَ مِنَ ٱلرِّبَوٰٓا۟ إِن كُنتُم مُّؤْمِنِينَ ﴿٢٧٨﴾
O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.
Believers are told to leave riba completely.
Sahih Muslim 1598
Sahih... آكل الربا وموكله وكاتبه وشاهديه وقال هم سواء ...
"He cursed the one who consumes riba, the one who pays it, the one who writes it and its two witnesses, and said: they are all the same."
Those who structure interest deals share in the sin.
Where the ruling is recorded
- Fatawa Mahmudiyya, Chapter on employment (ijarah) in banks. Direct work in interest dealings is not permitted.
- Mufti Taqi Usmani, An Introduction to Islamic Finance, Chapters on interest and on bonds. Why interest-bearing bonds are riba.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.