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Saturday, 25 July 2015

What do you mean by Investment Banking?

A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations. Investment banks also provide guidance to issuers regarding the issue and placement of stock.

Raising Capital & Security Underwriting. 
Banks are middlemen between a company that wants to issue new securities and the buying public.

Mergers & Acquisitions. 
Banks advise buyers and sellers on business valuation, negotiation, pricing and structuring of transactions, as well as procedure and implementation.

Sales & Trading and Equity Research. 
Banks match up buyers and sellers as well as buy and sell securities out of their own account to facilitate the trading of securities

Retail and Commercial Banking. 
After the repeal of Glass-Steagall in 1999, investment banks now offer traditionally off-limits services like commercial banking.

Front office v/s back office. 
While the sexier functions like M&A advisory are “front office,” other functions like risk management, financial control, corporate treasury, corporate strategy, compliance, operations and technology are critical back-office functions.

History of the industry. 
The industry has changed dramatically since John Pierpont Morgan had to personally bail out the United States from the Panic of 1907. We survey the important evolution in this section.

After the 2008 financial crisis. 
The industry has not fully recovered from the financial crisis that gripped the world in 2008. How has the industry changed and where is it going?