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What Is Investment Banking?

Learn: Free Seminars and The Basics

Companies in need of acquiring additional funding often go to an investment bank as opposed to offering more shares on the stock market and diluting their existing shareholders' share positions which often causes the company's share prices to fall.

Investment banking also provides extensive advice to corporations on a variety of additional business dealings a company might engage in.

Commonly banks are performing services in three areas: consumer banking, commercial banking, investment banking or some form of combination of the above through various divisions within their company.

Consumer banking is literally dealing with the general public who use the bank to pay bills, save money, sometimes invest in vehicles such as RSPs, GICs, T-Bills, Bonds, Mutual Funds or other savings plans.

Commercial or Investment Banking institutions commonly collect deposits from their clients then use that money to offer loans to individuals or companies for myriad reasons.

Globally this type of acquiring funds by the banks and offering the same funds to companies and individuals has always been an accepted practice with the exception of the United States. It was not until 1999 that the U.S. Government legalized this practice by passing the Gramm-Leach-Bliley Act thereby allowing banks to offer investment and commercial banking in this fashion.

Investment banks raise funds in two distinct ways: 1. They will sell stock in their company through various stock exchanges generating the money they need for lending purposes from public funds (individual or corporate investors). 2. They may accumulate the funds via private equity or from venture capitalists and sell a percentage of their actual company in exchange for the funding.

Investment bankers also provide massive amounts of consultation to their clients. They will offer advice about acquiring complementary companies to advance the client's growth or mergers to assist the client in better market positions, both of which are intended to increase the value and bottom line of the company.

Investment bankers will also provide management services to their clients on everything from new public share offers to how to manage their assets in order to get best value for their dollar (what to buy, what to sell and when). By offering such a wide breadth of services the investment banking firms' assistance often protrude into the vertical markets of private brokerage houses.

Over the years, as legislation changed allowing banks to enter additional markets and offer additional services, banking in general has become blurred. Are they consumer banks, brokerage houses, insurance companies, mutual fund managers, etc?

As investment banks expanded their service offerings it allowed them to position themselves to enter additional lending and consulting markets providing assistance to smaller sized companies and still allow room in their management charges and fees to make it profitable for all involved.

In the currency industry investment banking careers can be very lucrative and are some of the most sought job positions in the industry. Being an investment banker though requires a high level of financial education, travel, long working hours, and a dog-eat-dog attitude. The banks in exchange though offer lucrative salaries, many perks, and a lifestyle that is both exciting and stressful at the same time.

Take a look at our list of some of the largest full-service investment banks and financial conglomerates on the right hand side of this page.


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Largest full-service investment banks:

The list compiled here is based on investment banking revenues and assets. As with any corporation their value and size fluctuates and by no means is this list up-to-the-moment at all times:

Bank of America (Bank of America Merrill Lynch)
BNP Paribas (BNP Paribas CIB)
Citigroup (Citi Institutional Clients Group)
Credit Suisse (Credit Suisse Switzerland)
Barclays Capital
Deutsche Bank
Jefferies & Co.
Goldman Sachs
HSBC
JPMorgan Chase (J.P. Morgan Investment Bank)
Macquarie Group
Morgan Stanley
UBS (UBS Investment Bank)
Royal Bank of Scotland

Financial conglomerates:

Large financial-services conglomerates combine commercial banking and investment banking and sometimes insurance. The following are large investment banking firms affiliated with large financial institutions (not listed above). The name of the investment banking affiliate is in parentheses, if distinct from the name of the parent bank.

ABN Amro
Commerzbank (Dresdner Kleinwort, Eurohypo)
BBVA Group
Banco Santander
BBT (BBT Capital Markets)
Bank of Montreal (BMO Capital Markets)
BBH (Brown Brothers Harriman Foreign Exchange)
Canadian Imperial Bank of Commerce (CIBC World Markets)
Crédit Agricole (Crédit Agricole CIB)
Daiwa Securities
ING Group
KBC Bank
KeyCorp (KeyBanc Capital Markets)
Kotak Mahindra Group
Lloyds Banking Group
Macquarie Group
Mizuho Financial Group (Mizuho Corporate Bank)
Monte dei Paschi di Siena (MPS Capital Services)
M and T Bank (M and T Investment Banking Group)
National Australia Bank
Natixis (Natixis CIB)
Rabobank
Scotiabank (Scotia Capital)
Société Générale (SG CIB)
Standard Bank
Standard Chartered Bank
Sun Trust (Robinson Humphrey)
Toronto-Dominion Bank (TD Securities)
UniCredit

For detailed information and overviews of these and other banks try visiting the Investment Banks Guide.

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