AN INTRODUCTION TO INVESTMENT BANKING

Investment banking

History beckons the fact that banks have been present from a long time.  It would be evident that the same kind terminology might not have been used to describe the same.  Banks are one of the most important functions that support a country’s financial prospects.  There are many kinds of banks that have evolved or a period of time like advising bank, global bank, credit union, merchant bank, savings bank, Swiss bank and many more. One of the most important kinds of bank that we have is Investment banks that not only raises the funds but also trades securities for giving funds and manages acquisitions and mergers which are related to corporate firms. Investment banking can also be called as corporate finance.

Organizational structure

An investment bank is no different than an ordinary bank. There is a front office, middle office and a back office that make up the structure of an investment bank.  An investment bank issues securities to organizations and even to individual investors who buy securities from the investment bank. The advantage to an organization by going to an investment bank is that it need not require people having knowledge regarding this instead use the resources from the banks to help them in knowing the information regarding securities for the organization.

Core investment banking activities

Investment banking is the major and core activity in an investment bank with research and sales and training making the other major contributors to the core activities that are performed in an investment bank. Global transaction banking, investment management, merchant banking & commercial banking also sometimes may be involved in the core activities that take place in an investment bank. Investment banking helps customers to increase their funds through mergers and acquisitions. The primary function of a bank is to sell and buy which is the same in an investment bank. The buying and selling of financial products are done by the traders in order to gain some profit from the transactions on each trade.  Research involves studying and writing reviews on companies which are their customers and advise them to sell or buy respectively. This is a section in an investment bank that doesn’t  generate any kind of revenue to the bank but provides very vital information about their clients which help to enhance the business of the investment bank.