The Financial investment bank is the banks which helps the federal governments, corporations and the people in raising the capital by acting or underwriting as the representative of the client in issuance of securities. The financial investment bank can also help the companies which are associated with acquisitions and mergers, and deal ancillary services like the trading of the derivatives, market making, forexes, instruments of the set earnings, equity securities and products.
Unlike the retail banks and commercial banks, the financial investment banks do not take the deposits.
There are typically 2 main channels in the procedure of financial investment banking. Trading the cash for securities like market making, facilitating transactions or for money or for the promotion of the securities like research, underwriting is called the sell side, while correlate with the shared funds, hedge funds, pension funds and investment public consists of the buy side. Numerous business have sell and buy side components.
What are the primary activities of the investment banking?
The financial investment banking is generally divided into back workplace, middle office and front office activities.
While the big service financial investment banks provide all the channels of the organisation both purchase side and sell side. The little sell side financial investment companies like as the small broker dealers and the shop financial investment banks concentrate on the trading/sales/research and investment banking respectively.
The Investment banks likewise provide services to both the investors buying securities and the corporations issuing securities. For the corporations, the financial investment banking provide details on how and when to position the securities on the free market, this activity is quite crucial to the credibility of any financial investment bank.
Therefore, the financial investment lenders play an essential function in releasing the brand-new offerings of the securities.
Other activities of the investment banking:
Apart from the main activities, there are some additional activities, in which the process of investment banking is involved. These are: • Global transaction banking: This part is the division of investment banking which offers custody services, cash management, security brokerage and lending services to various institutions. Hedge funds with Prime brokerage is especially a risky as well as profitable business.
• Merchant banking: This process is also known as the “very personal banking”. The merchant banks provide capitals in exchange for the share ownerships and also provide information on strategy and management. The term merchant banking is also used to define the private equity part of any company.
• Investment management: This service offers professional management of several securities like bonds, shares and of other assets like real estate to meet with certain goals of investment for the profit of the investors. These investors can be institutions like pension funds, insurance companies, corporations and many more or the private investors.
• The investment management division of an investment bank is generally divided into separate groups, often known as Private Wealth Management and Private Client Services.
• Merchant banking is also a name used to describe the private equity side of a firm.Merchant Banking: Past and Present Current examples include Defoe Fournier & Cie. and JPMorgan’s One Equity Partners and the original J.P. Morgan & Co. Rothschilds, Barings, Warburgs and Morgans were all merchant banks. (Originally, “merchant bank” was the British English term for an investment bank.)
Reference:
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