Investment Banking

Regular savings account in a banking facility that allows a customer to save and invest his/her money but in contrast investment banking helps clients (mostly corporate) to create wealth and funds.

Investment banking creates funds for companies in two ways. First is to help the companies float public offerings and raise the much needed money from public. Second way is to help venture capitalists or private equity guys get onto the shareholders list of the company by investing money in the company. Investment bankers act as underwriters in case the company floats IPO in market.

Investment bankers also act as consultants in the process of mergers and acquisitions. Strictly, this particular function of investment banking comes under corporate finance. The role of the investment bank begins with pre-underwriting counselling and continues after the distribution of securities in the form of advice.

In layman’s terms Investment banking does the task of bringing the corporate borrower and lender together. While regular banking, banks use the customers money, that is invested in regular savings account, to be borrowed and used to lend to other borrowers; investment banking facilitates the lender directly invest in the borrowers business. On behalf of companies, investment banks issue securities, trade securities in primary and secondary market, manage client portfolios and provide support services.

‘Full service investment bankers’ provide complete service in almost all areas with great expertise. The operation of ‘regional investment bankers’ are focused around a specific region or around a specific area. Finally, ‘boutiques’ are successful bankers who start their own venture.