Investment Bank

Satisfactory Essays
Topics: Bank, Finance
INVESTMENT
BANKING:
AN OVERVIEW

INVESTMENT BANKING

WHAT DO
THEY REALLY
DO?

WHAT DO THESE PROJECTS HAVE IN
COMMON?
Affordable housing

Small businesses

ISAW

Bridges

Big corporations

SM

GE

GS

ISAW

BIG OR SMALL,
THEY ALL NEED
CAPITAL.

WHAT DO INVESTMENT BANKERS DO?

Traditional role: assisting clients

client

WHAT DO INVESTMENT BANKERS DO?

Traditional role
A) Raising Capital:
“Underwriting”
B) Buying or merging with other businesses:
“Financial Advisory”

WHAT DO INVESTMENT BANKERS DO?

Over time I.B. has evolved and engaged in different activities
1920s

2000s

A) Trading, Brokerage, and “market making”
B) Asset Management
C) Investment

WHAT DO INVESTMENT BANKERS DO?

Clients
Big corporations

SM

Government

Indiividuals

PNOY

GE

GS

Investment banks do not engage in retail banking

DIFFERENCES
WITH
COMMERCIAL
BANKING

DIFFERENCES WITH COMMERCIAL BANKING

DEPOSITS
LOANS

DIFFERENCES WITH COMMERCIAL BANKING
1933 Glass-Steagall Act
In the US, Investment and Commercial banking activities were separated
- I.B.’s were no longer allowed to receive customer deposits and offer retail banking services.
- Comm. Banks no longer allowed to underwrite securities.
Glass-Steagall Act repealed in 1999.

Today
Today, large US banks (e.g., Bank of America, Citigroup, JP Morgan-Chase) perform both type of activities, like other large international banks (e.g.,
Deutsche Bank, HSBC, UBS)
Only a few large “pure play” investment banks remain: Goldman Sachs &
Morgan Stanley

ORIGINS OF
INVESTMENT
BANKING

ORIGINS OF INVESTMENT BANKING
Merchant Banking
Merchants offering credit to their clients by accepting commercial “bills of exchange” e.g. Common in Middle Ages’ Europe

War Financing
Bankers loaned their coins and money to finance the whims and wishes of the kings and princes e.g. wars, invasions, etc.

Repurchase agreements
Banning of interests in loans by the Catholic Church which led to the creation of new financial instruments e.g. paper money, bond

You May Also Find These Documents Helpful

  • Good Essays

    Investments Banks

    • 871 Words
    • 4 Pages

    I. Six major investment banks: The principal purpose of an investment bank (and of investment banking in general) is the underwriting of new securities issued by an investment bank's clients. An investment bank may also provide other services, such as professional advice, working with mergers & acquisitions, and private wealth management. Traditional "investment banking" refers to financial advisory work. For example, a big corporation might ask for the bank's help if it wants to borrow money…

    • 871 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Investment Banks

    • 507 Words
    • 3 Pages

    INVESTMENT BANKS As with commercial banks, investment banks are highly leveraged entities that play important roles in both the primary and secondary markets. Investment banking activities include: • Raising funds through public offerings and private placement of securities. • Trading of securities. • Mergers, acquisitions, and financial restructuring advising. • Merchant banking. • Securities finance and prime brokerage services. The first role is assisting in the raising of funds by…

    • 507 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Investment bank Vs. Commercial banks Many factors directly and indirectly caused the ongoing 2007–2012 global financial crisis which started with the US subprime mortgage crisis. One of the main culprits that is often pointed to as one of the main triggers of the global financial crisis are the mortgage derivative products, where risky mortgages were packaged with more traditionally secure mortgages and sold to corporate investors and other banks as secure investment products. This packaging of…

    • 719 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Nepal Investment Bank

    • 2098 Words
    • 9 Pages

    Practice of an Organization” referred to Nepal Investment Bank Limited. It has been a gratifying and knowledgeable for us to prepare this report. We are grateful to Lecturer Mr. Anul Joshi and Professor Mr. Shyam Krishna Joshi of Organization and management, Advance college of Engineering and management for his encouragement and valuable suggestion. We are especially indebted to Mrs.Arpana Giri(Relationship Manager) and all the staffs of Nepal Investment Bank Putalisadak Branch who provided with necessary…

    • 2098 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    “Global reach and local know how ' investment banks and globalization.” “Investment banks are facing many challenges, not least the need to become global in scope and ambition, but local in understanding and execution”. (Comments on the article by Anshu Jain, head of Deutsche Bank's Global Markets Division). In the article the main though is represented by a statement that: “We cannot easily talk about alternatives to globalisation in investment banking; only of the different strategies…

    • 1000 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    investment system of Bank

    • 14884 Words
    • 60 Pages

    Federal Reserve Bank of New York Staff Reports Shadow Banking Zoltan Pozsar Tobias Adrian Adam Ashcraft Hayley Boesky Staff Report No. 458 July 2010 Revised February 2012 FRBNY Staff REPORTS This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in this paper are those of the authors and are not necessarily reflective of views at the Federal Reserve…

    • 14884 Words
    • 60 Pages
    Powerful Essays
  • Good Essays

    Introduction Internship is a system of on-the-job training for white-collar jobs. It is a work related learning experience for individuals who wish to develop hands on work experience in a certain occupational field. Most internship is temporary assignments. As such my intern too was temporary for a period of one month. My association with Goldman Sachs was during my semester vacation. To me internship is to combine theory with practical work experience. As such my intern period was…

    • 2062 Words
    • 9 Pages
    Good Essays
  • Better Essays

    and wholesale/investment banking activities has been the stability of a nation’s banking system. The experience of the US banking system has suggested that merge of commercial and investment banks is a better approach to achieving stability. After the global financial crisis, the American economy went into recession. The policy priority of American government was then to intervene into its banking system so as to mitigate the impact of the crisis. One advantage of the merger of banks is that it can…

    • 1319 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    requires the banking habit of the community as well as potentially strong lending opportunities. Simply, Bank is an institution whose main function is to accept deposit and invest it. Bank collects money from public by providing attractive sound interest and can earn profit by lending it on mainly in business organization, industrial, agricultural sectors etc. So, we can say the main task of commercial bank is to mobilize idle resources in productive areas by collecting it from scattered sources and generating…

    • 4312 Words
    • 18 Pages
    Powerful Essays
  • Powerful Essays

    crisis .................................................................................................... 2 II- Impact of the credit crisis on investment banks ................................. 2 1) Definition of Investment bank ................................................................... 2 2) Impact of the credit crisis on investment bank ..................................... 2 III- Lehman Brothers ....................................................................................…

    • 1815 Words
    • 8 Pages
    Powerful Essays