What is Investment banking? This comprises of three main sections, which are investment banking division, asset management and Sales and trading. Most leading banks in the world offer all these services while small banks lay a lot of emphasis on investment banking division. Here, they offer advisory services together with mergers and acquisition for companies. In some cases, the investment banking division is known as corporate finance and is widely divided into products and industries. The presence of the two is paramount especially in offering counsel on transactions and mergers and acquisitions.
Investment banks can be classified into bulge bracket bank or regional bank. Larger banks belong to the bulge bracket and have full services for their clients. This category is made up of nine top performing banks, which are Bank of America, Morgan Stanley, JP Morgan Chase, Citigroup, Deutsche Bank, Credit Suisse, UBS, Barclays and Goldman Sachs. Regional banks are also called boutique banks and vary in size. These banks may be a one man’s shop to large enterprises. Unlike the bulge bracket banks, boutique deal with a specific industry and offer specialized products to customers at all times. Oftentimes, boutiques are started by bankers who have the interest of owning a company. Leading boutiques in the world include Lazard, Evercore, Moelis, Piper Jaffray and Jeffries & Co.
Companies usually look for banks that can become financial partners and offer guidance through turbulent conditions of asset management and business financing. For example, investment bankers advise their clients on strategic planning. This mainly targets banking executives. They advise executives on pertinent issues like the best time to have a public offer or how to handle matters relating to asset management.
Investment banking products can be divided into various groups. Firstly, banks offer advisory on merger and acquisition. Here, individual companies get advice on how to make sales and how merge and purchase other companies. Secondly is leveraging finance. Banks are known to issue high-yield debts to companies to support the acquisition of other firms or boost their corporate activities.
Thirdly, Equity Capital Markets give relevant guidance on equity and equity derived products. These include shares, secondary offerings, IPOs, and capital raises. Through Debt Capital Markets, Investment banks give guidance to companies on how to raise and structure debts to finance acquisitions and various activities. They also offer restructuring services to make companies more lucrative and proficient.
It is also important to create a link with investment banks for liaisons. In cases of an established bank, its clients are likely to benefit from such relationships. One of the core functions of an investment bank is to create a link between lending institutions and clients who are in need of capital. Oftentimes, investment banks achieve this by getting in touch with private and venture capitalists. These banks aloes have hierarchy and compensation schemes, which are usually well defined. Even though the names and roles of different individuals may differ, there is always a general pattern to follow. The ranks include Analysts, Associate, Vice President, Senior Vice President and Managing Director.
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