investment banking

Investment Banking : A Segment Of Banking Having Multiple Services

Investment Bankers act as intermediaries between issuers of securities such as shares, stock and investors and help new firms to go public and also for further public issues. Investment banking is the most complex financial mechanisms in the world. They serve multiple purposes and also to different entities. Investment banking provides various types of financial services, such as proprietary trading or trading securities for their own accounts, mergers and acquisitions advisory which involves advising organizations in Mergers and Acquisitions; leveraged finance that involves lending money to firms to purchase assets and settle acquisitions, restructuring that involves improving structures of companies to make a business more efficient and help it make maximum profit.  
investment banking
Source : money-informer.com

Bank of America, Citigroup Investment Banking, Deutsche Bank, Barclays Capital and JP Morgan are some of the largest investment banks in India.

Also Read : Most Popular Investment Banking Products

What Do Investment Banks Do?

investment banking

Source : poetsandquants.com

There are sometimes confusion between an investment bank and the investment banking division (IBD) of a bank. Investment banks offer a wide range of services that include M&A, sales and trading, underwriting, asset management, commercial banking, equity research, and retail banking. The investment banking divisions provides Merger and Acquisitions, underwriting as well as asset management advisory services.

Skills required for investment banking

investment banking

Source : cdn2.itpro.co.uk

Financial modeling – the important thing considered in the investment banking is financial modeling, some of the activities are such as building 3-statement models, LBO models and many more.

Business valuation – Using wide range of valuation method, investment bankers are able to provide advisory services. Thus skill such as business valuation ability is helpful for investment banking.

Pitchbooks and presentations – Building pitchbooks and PPT presentations provides graphical as well as analytical view of the data available which can help bankers to take decisions related to different investment banking products.

investment banking

Source : salpo.com

Relationship management – Communicating efficiently with the existing clients and having convincing capacity to work with new client is very much important.

Sales and business development – Constantly meeting new clients and to pitch them with new business ideas and to assist them with their business marketing skills are required.

Negotiation – As the investment banker acts as an intermediary between buyers and sellers, negotiation capabilities are must to keep the business going and also to come up with new business ideas negotiation is must to collaborate new clients.

Full-service banks offer the following services:

Underwriting 

investment banking

Source : s3.amazonaws.com

Underwriting services includes services of underwriting the issue of securities by the companies. These services are provided on commission basis. The commission charged by the bank is on Gross Liability undertaken by bank.

Mergers and Acquisitions

investment banking

Source : dev.rodpub.com

Mergers and acquisitions requires strategic level decision making and for this investment banker must possess specialized skills. The future benefits of these decisions should also be analyzed by going to each and every detail.

Venture Capital

investment banking

Source : cdn-images-1.medium.com

Venture capital needs investment in new ventures thus estimations regarding future demands should be proper and accurate. Thus investment banking is that segment of banking services which requires specialized skills and knowledge.