What Is Investment Banking?
Investment banking is a particular division of banking associated to the creation of capital for different corporations, governments and different entities. Investment banks underwrite new debt and equity securities for every type of firms, support within the sale of securities, and assist to facilitate mergers and acquisitions, reorganizations and dealer trades for each establishments and private investors. Investment banks additionally present steerage to issuers concerning the problem and placement of stock.
What Do Investment Banks Do?
There can sometimes be confusion between an investment bank and the investment banking division (IBD) of a bank. Full-service investment banks offer a wide range of services that include underwriting, M&A, sales and trading, equity research, asset management, commercial banking, and retail banking. The investment banking division of a bank provides only the underwriting and M&A advisory services.
Full-service banks offer the following services:
- Underwriting – Capital raising and underwriting groups work between investors and companies that want to raise money or go public via the IPO process. This function serves the primary market or “new capital”.
- Mergers & Acquisitions (M&A) – Advisory roles for both buyers and sellers of businesses, managing the M&A process start to finish.
- Sales & Trading – Matching up buyers and sellers of securities in the secondary market. Sales and trading groups in investment banking act as agents for clients and also can trade the firm’s own capital.
- Equity Research – The equity research group research, or “coverage”, of securities helps investors make investment decisions and supports trading of stocks.
- Asset Management – Managing investments for a wide range of investors including institutions and individuals, across a wide range of investment styles.