Investment Banking

So what does an investment bank actually do? Several things, actually. Below we break down each of the major functions of the investment bank, and provide a brief review of the changes that have shaped the investment banking industry through the aftermath of the 2008 financial crisis.

An investment bank is a financial institution that assists individuals, corporations, and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).

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.