Most banks have very similar cultures - people are nice but competitive and driven, and there's the expectation that you can do endless amounts of work for the firm.
And that's why focusing on people and anecdotes works much better than giving generic answers.
Other variants of this question include why you want to move to a larger or smaller firm. You can get away with more generic responses in those cases, but if you have a good story you should definitely bring it up.
1. You spent this last summer working at Morgan Stanley's investment banking division. It seems like you'd be crazy not to go back - why would you want to work for a smaller firm in our M&A group?
You're most likely to get this one if you didn't get a return offer - let's be honest, who really goes from Morgan Stanley to a boutique? It's a tough sell, but you'll have to emphasize how you like the smaller environment where you get more responsibility and work more closely with clients. The banker probably won't believe you, but it's better than outright admitting you didn't get an offer.
If the topic does arise, just say your lack of offer was because they were not hiring, because the group did poorly or because of the general economic climate.
2. Since you worked at Bank of America this past year, you probably have the chance to go to a lot of different large banks - why are you interested in us specifically?
There's rarely a "great" way to answer this question, so I would recommend either referencing someone you've spoken with at the bank and what they've told you OR if you don't have any kind of experience like that, you can just give the usual generic reasons given for each bank. This question often reflects a lazy interviewer more than anything else - the real reason you're interviewing with any bank is because they've given you an interview!
3. When you were working at that boutique this past summer, you mentioned how you liked the smaller team and more hands-on environment. Why not just go back there? Why do you want to move to a large bank?
It's always good to be positive about your experience, but at the same time you also want to give a good reason as to why you're moving elsewhere. If you're moving from a smaller bank to larger one, you want to emphasize learning about how larger / major deals happen, how you want to learn from the best and perhaps even how bankers at your old firm recommended that you go somewhere bigger at the beginning of your career.
4. Why are you interested in our M&A division rather than our industry groups? Our Tech, Healthcare and Energy teams have been really successful this year.
Say that you want to gain solid technical and modeling skills and be exposed to a wide variety of industries and different markets. Depending on the interviewer, it may also be appropriate to mention your interest in private equity (if you're planning to go that route) and how M&A will get you there.
M&A bankers love to think they're superior to others because of their "in-depth technical knowledge and negotiation skills," so you should play off that and use it to your advantage.
5. Why do you want to work in Capital Markets? There's hardly any market activity these days.
With this type of question - whenever a certain area is depressed at the moment or is not doing well - you want to highlight your long-term view of the market and how things recover in time.
For Capital Markets specifically, you can talk about your interest in the markets since you were much younger and how you've always been fascinated by IPOs, secondary offerings and such - as always, specific examples are the key to success.
6. What do you think our bank's greatest weaknesses are?
This is a silly question, but I can't say I've never heard it before. In a normal "weaknesses" question it's best to say something real and then indicate how you've improved on it, but in this case it's better to say something more innocuous and maybe point to a "weakness" like not being strong in Europe/Asia, or not having as much experience in one industry as another bank - but then indicate how it doesn't matter to you because you're more concerned with other aspects of the firm.
7. Which of our competitors do you admire the most?
This is another silly question that is designed to test your knowledge of the industry more than anything else. The best way to answer: briefly point to a competitor and state a widely known trait about them that you admire and then explain how the bank you're interviewing with also has that quality and might even be better at it.
For example, Goldman Sachs is known for its "one firm" culture and emphasis on teamwork, while the former Bear Stearns was known for its more "entrepreneurial" environment.
You could reference these types of qualities and then state how they're also seen in the bank you're interviewing with.