Overview

Investment banking includes a wide variety of activities, including

underwriting, selling, and trading securities, providing financial advisory services,
and managing assets. Investment banks cater to a diverse group of stakeholders –
companies, governments, non-profit institutions, and individuals – and help them
raise funds on the capital market. They perform the following major functions for
their customers:
 Serve as trading intermediaries for clients
 Lend and invest banks’ assets
 Provide advice on mergers, acquisitions, and other financial transactions
 Research and develop opinions on securities, markets, and economies
 Issue, buy, sell, and trade stocks and bonds
 Manage investment portfolios
Investment banks once contrasted sharply with commercial banks, where
people mainly deposited their money and sought commercial and retail loans. In
recent years, though, the two types of structures have become increasingly similar;
commercial banks now offer more investment banking services as they attempt to
corner the market by presenting themselves as one-stop shops.
Investment banks do differ from brokerages and broker-dealers, though,
even though those three entities are often thought of as one and the same. A
brokerage firm takes a commission for assisting in the purchase and sale of stocks,
bonds, and mutual funds. A broker-dealer executes similar functions, but it also
trades for its own account. An investment bank actually is a broker-dealer that
provides corporations with financial services, such as assistance with initial public
offerings, merger and acquisitions advice, and strategic planning.
Introduction:
Investment banking is a particular form of banking which finances capital
requirements of an enterprise. Investment banking assists as it performs IPOs,
private placement and bond offerings, acts as broker and carries through mergers
and acquisitions. Investment banking is a field of banking that aids companies in
acquiring funds. In addition to the acquisition of new funds, investment banking
also offers advice for a wide range of transactions a company might engage in.

Traditionally, banks either engaged in commercial banking or investment

banking. In commercial banking, the institution collects deposits from clients and
gives direct loans to businesses and individuals.

Through investment banking, an institution generates funds in two

different ways. They may draw on public funds through the capital market by
selling stock in their company, and they may also seek out venture capital or
private equity in exchange for a stake in their company.

An investment banking firm also does a large amount of consulting.

Investment bankers give companies advice on mergers and acquisitions, for
example. They also track the market in order to give advice on when to make
public offerings and how best to manage the business' public assets. Some of the
consultative activities investment banking firms engage in overlap with those of a
private brokerage, as they will often give buy-and-sell advice to the companies
they represent.
 The line between investment banking and other forms of banking has
blurred in recent years, as deregulation allows banking institutions to take on more
and more sectors. With the advent of mega-banks which operate at a number of
levels, many of the services often associated with investment banking are being
made available to clients who would otherwise be too small to make their business
profitable.

At a very macro level, ‘Investment Banking’ as term suggests, is concerned

with the primary function of assisting the capital market in its function of
capital intermediation, i.e., the movement of financial resources from those
who have them (the Investors), to those who need to make use of them for
generating GDP (the Issuers). Banking and financial institution on the one
hand and the capital market on the other are the two broad platforms of institutional
that investment for capital flows in economy. Therefore, it could be inferred that
investment banks are those institutions that are counterparts of banks in the capital
markets in the function of intermediation in the resource allocation.

Nevertheless, it would be unfair to conclude so, as that would confine

investment banking to very narrow sphere of its activities in the modern world of high
finance. Over the decades, backed by evolution and also fuelled by recent technologies
developments, an investment banking has transformed repeatedly to suit the needs of
the finance community and thus become one of the most vibrant and exciting segment
of financial services. Investment bankers have always enjoyed celebrity
status, but at times, they have paid the price for the price for excessive flamboyance as
well.
 In the words of John F. Marshall and M.E. Eills, “investment banking is what
investment banks do”. This definition can be explained in the context of how
investment banks have evolved in their functionality and how history and regulatory
intervention have shaped such an evolution. Much of investment banking in its present
form, thus owes its origins to the financial markets in USA, due o which,
American investment banks have banks have been leaders in the American
and Euro markets as well. Therefore, the term ‘investment banking’ can
arguably be said to be of American origin.

What is Investment Banking?

 A person or organization sometimes acts as an underwriter or mediator for
corporations and municipalities issuing securities.
 Most of them also preserve broker-dealer operations to maintain markets for
formerly issued securities and suggest advisory services to investors.
 Investment banking also has a large role in facilitating mergers and acquisition,
private equity placements and corporate restructuring.
Few facts about Investment
Banking
 Unlike traditional banks, investment banks do not accept deposits from and
provide loans to individuals also called investment banker.
 Investment banks help companies and governments (or their agencies) raise
money by issuing and selling securities in the capital market (both equity and
debt).
 Almost all investment banks also offer strategic advisory services for mergers,
acquisition, divestiture or other financial services for clients, such as:
 trading of derivatives
 fixed income
 foreign exchange
 commodity
 Equity security.
 Trading securities for hard cash or securities (i.e., facilitating dealings, market-
making), or the endorsement of securities (i.e., underwriting, research, etc.) is
referred to as the "sell side".
 On the other hand the "buy side" constitutes :
 the pension fund,
 mutual funds,
 hedge funds,
 The investing public who use the goods and services of the sell-side with
the intention of make best use of their return on investment.
 Many firms have both buy and sell side mechanism.
Functions of Investment
Banking:
Investment banks have multilateral functions to perform. Some of the most
important functions of investment banking can be jot down as follows:

 Investment banking help public and private corporations in issuing securities

in the primary market, guarantee by standby underwriting or best efforts
selling and foreign exchange management. Other services include acting as
intermediaries in trading for clients.
 Investment banking provides financial advice to investors and serves them
by assisting in purchasing securities, managing financial assets and trading
securities.
 Investment banking differs from commercial banking in the sense that they
don't accept deposits and grant retail loans. However the dividing line
between the two fraternal twins has become flimsy with loans and securities
becoming almost substitutable ways of raising funds.
 Small firms providing services of investment banking are called boutiques.
These mainly specialize in bond trading, advising for mergers and
acquisitions, providing technical analysis or program trading.
Basics of Investment Banking:
The banking sector is one of the biggest contributors to a nation's
economy, provided it is managed in an innovative and professional environment.
Investment banking is one rapidly growing form of banking.

An investment bank is a type of financial intermediary that performs a

variety of functions such as underwriting, facilitating mergers and acquisitions or
brokerage services for institutions. The work of an investment bank begins right
from the counseling before the underwriting sessions, and stretches right till the
securities are properly handled and distributed. Investment banks play a very
crucial role in market transactions on behalf of, or for private and public investors,
government and corporations. There are a number of investment banks that also
provide highly professional services in assisting their clients with industrial know-
how on various parameters.

Industries from diverse sectors like media and telecommunications, real

estate, industry, finance, health care, consumer products and various such segments
are provided assistance by investment banking services. Along with these, an
investment bank also deals in the securities, trading services, credit counseling,
financial engineering and merchant banking. The primary source of income for
investment bankers is the commissions, fees and gain margins on transactions
provided for the above mentioned institutions.

The role of an investment bank as a mediator is to directly familiarize

the nature of the investment and the entity being invested in. In case of
conventional banking, people deposit finances in the form of cash, assets and so on
with a bank. The bank in turn can lend to a borrower under some standard norms to
utilize in his own way. In the case of investment banking, there is a direct
familiarization of both the investor and the borrower. This means that an individual
or institutional investor has an option to choose his type of investment or division
of investment into any given entity looking out for funds. An investment bank can
also assist investment in the financial market.

Investment banks provide companies with expert guidance and formulate

strategies on their behalf for disinvestment, and also to merge or acquire new
entities. Good investment banking involves procedures to maintain and upgrade the
quality of services and keep a close watch on the emerging trends in the market,
where their customer's money can be invested. It also incorporates risk
management services in order to streamline the flow of capital, check its overuse,
and come up with a detailed analysis of credit risks.

The investment banking market was increasing leaps and bounds, until
the present recession struck. Banks all over the world are trying to recoup the
losses. The US is the biggest market for investment banks, followed by Europe,
Middle East, Africa and Asia. The global hubs of investment banking are a few
economically sound centers like London, New York and Tokyo. However,
investment banking is not restricted in its scope to a few regions of the world. It
caters to a global community which makes it highly sensitive to global ups and
downs, along with innovative fluctuations.
Investment Banks:
An investment bank is a financial institution that assists corporations and
governments in raising capital by underwriting and acting as the agent in the
issuance of securities. An investment bank also assists companies involved in
mergers and acquisitions, divestitures, etc. Further it provides ancillary services
such as market making and the trading of derivatives, fixed income instruments,
foreign exchange, commodity, and equity securities.
Unlike commercial banks and retail banks, investment banks do not take
deposits. Trading securities for cash or securities (i.e., facilitating transactions,
market-making), or the promotion of securities (i.e., underwriting, research, etc.)
was referred to as the "sell side". Dealing with the pension funds, mutual funds,
hedge funds, and the investing public who consumed the products and services of
the sell-side in order to maximize their return on investment constitutes the "buy
side". Many firms have buy and sell side components.
Investment banks help companies and governments and their agencies to raise
money by issuing and selling securities in the primary market. They assist public and
private corporations in raising funds in the capital markets (both equity and debt).

Investment banks also act as intermediaries in trading for clients. Investment

banks differ from commercial banks, which take deposits and make
commercial and retail loans. In recent years, however, the lines between the two types
of structures have blurred, especially as commercial banks have
offered more investment banking services. Investment banks may also differ from
brokerages, which in general assist in the purchase and sale of stocks, bonds, and
mutual funds. However some firms operate as both brokerages and investment banks;
this includes some of the best known financial services firms in the world.
Definition:
“An individual or institution, which acts as an underwriter or
agent for corporations and municipalities issuing securities. Most
also maintain broker/dealer operations, maintain markets for
previously issued securities, and offer advisory services to
investors. Investment banks also have a large role in facilitating
mergers and acquisitions, private equity placements and corporate
restructuring. Unlike traditional banks, investment banks do not
accept deposits from and provide loans to individuals. Also called
investment banker.”

Concept of Investment Bank:

The banking scenario in India is itself huge, covering the different facets of
the economy. By and large, investment banks in India are itself an institution
which generates funds in two different ways. The first manner in which it works is
by drawing public funds via the capital market by way of selling stock in their
company. The other way in which it operates is to seek for venture capital or
private equity, as a substitute for a stake in their company.
Role of an Investment Bank:
The major work of investment banks includes a lot of consulting. For
instance, they offer advices on mergers and acquisitions to companies. The role
that an investment bank plays sometimes gets overlapped with that of a private
brokerage house. The usual advice of buying and selling is also given by
investment banks.

There is no demarcating line between the investment banking and other

forms of banking in India. This has been observed majorly of late. All banks
nowadays want to provide their customers the best of services and create a niche
for themselves and that is why apart from investment banks, all other banks too are
aiming at making it big.

At the macro level, investment banking is related with the primary function
of assisting the capital market in its function of capital intermediation, i.e., the
movement of financial resources from those who have them (the investors), to
those who need to make use of them for producing GDP (the issuers). Over the
decades, investment banks have always suited the needs of the finance community
and thus become one of the most vibrant and exciting segment of financial
services.

Globally investment banks handle significant fund-based business of their

own in the capital market along with their non-fund service portfolio which is
offered to the clients. All these activities are broadly segmented across three
platforms - equity market activity, debt market activity and merger and
acquisitions (M&A) activity.
Who needs an Investment
Bank?
Any firm contemplating a significant transaction can benefit from the advice
of an investment bank. Although large corporations often have sophisticated
finance and corporate development departments provide objectivity, a valuable contact
network, allows for efficient use of client personnel, and is vitally interested in
seeing the transaction close.

Most small to medium sized companies do not have a large in-house staff,
and in a financial transaction may be at a disadvantage versus larger
competitors. A quality investment banking firm can provide the services
required to initiate and execute a major transaction, thereby empowering
small to medium sized companies with financial and transaction experience
without the addition of permanent overhead, an investment bank provides
objectivity, a valuable contact network, allows for efficient use of client
personnel, and is vitally interested in seeing the transaction close.

Most small to medium sized companies do not have a large in-house staff,
and in a financial transaction may be at a disadvantage versus larger
competitors. A quality investment-banking firm can provide the services.
What to Look For In an
Investment Bank:
Investment banking is a service business, and the client should expect top-
notch service from the investment banking firm. Generally only large client firms
will get this type of service from the major Wall Street investment banks;
companies with less than about $100 million in revenues are better served by
smaller investment banks. Some criteria to consider include:

 Services Offered:
For all functions except sales and trading, the services should go well
beyond simply making introductions, or "brokering" a transaction. For example,
most projects will include detailed industry and financial analysis, preparation of
relevant documentation such as an offering memorandum or presentation to the
Board of Directors, assistance with due diligence, negotiating the terms of the
transaction, coordinating legal, accounting, and other advisors, and generally
assisting in all phases of the project to ensure successful completion.

 Experience:
It extremely important to make sure that experienced, senior members
of the investment banking firm will be active in the project on a day-to-day basis.
Depending on the type of transaction, it may be preferable to work with an
investment bank that has some background in your specific industry segment. The
investment bank should have a wide network of relevant contacts, such as potential
investors or companies that could be approached for acquisition.

 Record of Success:
Although no reputable investment bank will guarantee success, the
firm must have a demonstrated record of closing transactions.

 Ability to Work Quickly:

Often, investment banking projects have very specific deadlines, for
example when bidding on a company that is for sale. The investment bank must be
willing and able to put the right people on the project and work diligently to meet
critical deadlines.

 Fee Structure:
Generally, an investment bank will charge an initial retainer fee, which
may be one-time or monthly, with the majority of the fee contingent upon
successful completion of the transaction. It is important to utilize a fee structure
that aligns the investment bank's incentive with your own.

 Ongoing Support:
Having worked on a transaction for your company, the investment
bank will be intimately familiar with your business. After the transaction, a good
investment bank should become a trusted business advisor that can be called upon
informally for advice and support on an ongoing basis.
 Because investment banks are intermediaries, and generally not
providers of capital, some executives elect to execute transactions without an
investment bank in order to avoid the fees. However, an experienced, quality
investment bank adds significant cant value to a transaction and can pay for its fee
many times over.

The investment banker has a vested interest in making sure the

transaction closes, that the project is completed in an efficient time frame, and with
terms that provide maximum value to the client. At the same time, the client is able
to focus on running the business, rather than on the day-to-day details of the
transaction, knowing that the transaction is being handled by individuals with
experience in executing similar projects.
What are the different types
of groups within an
investment bank?
Broadly speaking, there are two types of groups within a typical
investment bank (or investment banking division): product groups and industry
groups (also called sector groups or domains). The three most well known product
groups are mergers and acquisitions (M&A), leveraged finance (lev fin) and
restructuring. Bankers in product groups have product knowledge and tend to
execute transactions (respectively, M&A transactions, leveraged buyouts (LBO’s)
and restructuring transactions/bankruptcies).

Bankers in industry groups cover specific industries and tend to do more

marketing activity (pitching). Industry bankers tend also to have more of the
relationships with companies’ senior management than do product bankers (though
some senior product bankers have excellent relationships as well). Examples of
common industry groups include FIG (Financial Institutions Group), Healthcare,
Consumer/Retail, Industrials, Energy and Utilities, Natural Resources, TMT
(Telecom, Media and Technology), Gaming and Lodging and Real Estate. Often
subgroups exist within the broader group. For example, a Healthcare group may
be segregated into biotechnology, medical devices, managed care, pharma, etc.
Though not covering a specific industry, one other group that falls under the
category of “industry” groups is Financial Sponsors. Bankers in a Financial
Sponsors group cover (have relationships with and market their services to) private
equity firms.
The Typical
Hierarchy/Ladder within an
Investment Bank?
Just about all investment banks have the same strict hierarchy or
ladder of professionals. From junior to senior, the typical hierarchy is (1) Analyst,
(2) Associate, (3) Vice President, (4) Senior Vice President/Director and (5)
Managing Director. Some banks deviate from this hierarchy a bit, for example
having the Senior Vice President and Director be separate positions. Other banks,
especially non-U.S. banks, have the same hierarchy but with somewhat different
names for each position (Associate Director for Associate, Director for Vice
President and Executive Director for SVP). One exception for U.S. banks is that
Bear Stearns calls the Senior Vice President/Director position a Managing
Director, and calls Managing Directors, Senior Managing Directors. However,
regardless of the names, the general job functions of each relative position tend to
be consistent bank to bank.

Role of the Analyst:

Analysts are typically men and women directly out of undergraduate
institutions who join an investment bank for a two-year program.  Top
performing Analysts are often offered the chance to stay for a third year, and the
most successful Analysts can be promoted after three years to the Associate level.
 As Analysts are the bottom rung on the investment banking ladder, they do
the bulk of the work.  Broadly speaking there are three types of work that Analysts
do:  presentations, analysis and administrative tasks.  Presentation work involves
the putting together and writing of various PowerPoint presentations including
marketing documents and documents for live transactions.

The second main task of an analyst is analytical work.  Pretty much

anything done in Excel is considered “analytical work.”  Examples include
entering historic company data from public documents, analyzing such data for
valuation purposes and projecting a company’s financial statements.
Administrative work, being the third type of task, involves things like scheduling
and setting up conference calls and meetings, making travel arrangements and
keeping a list of deal team members up to date.  While on live transactions,
Analysts often refer to themselves as “glorified admins,” given all of the
administrative work for which they are responsible.

Role of the Associate:

Associates are typically either folks directly out of top MBA programs or
Analysts that have been promoted.  Typically, bankers will be at the Associate
level for three and a half years before they are promoted to Vice President. 
Associates are also categorized into class years In addition to overseeing
the Analyst’s work, the Associate will often help write the text for the
presentations as well as do much of the modeling work. 

Role of the Vice President (VP):

 The primary role of the Vice President is to be the “project
manager,” whether for marketing activities or on a transaction.  It is the VP that
typically decides the structure of the presentation. On live engagements, the VP is
typically the banker “running the deal.”  The VP must manage the client, manage
the senior bankers and manage the Analysts and Associates that are actually doing
the work.  It is often at the VP level that bankers begin to form valuable
relationships with clients.  Depending on the individual and also the bank, some
VPs will start to play a role in client development and marketing.

Role of the Director/Senior Vice President

(SVP):
Depending on the person (and sometimes the bank), the Director or SVP
may either act more like a Managing Director or more like the VP.  Sometimes, the
Director/SVP’s role will depend also on the specific situation and/or other deal
team members.  Ultimately, for Director/SVPs to be promoted to Managing
Director, they will have to demonstrate that they can form client relationships
and have the ability to market and to bring in new business.

Role of the Managing Director:

As the senior level banker, the role of the Managing Director (”MD”) is
mostly one of client development.  The MD will likely be the one with the senior
level company relationships and is typically responsible for spearheading
marketing efforts.  On a live transaction, the MD often plays only a minor role,
getting involved when difficulties arise in the deal and during high level
negotiations.
Investment Bankers:
Investment bankers are regarded as those persons who generally give
consultation to their valued clients in order to sort out any of their high level issues
that may have taken place in their financial organization.

Functions of Investment Bankers:

Apart from advising the investment bankers also performs various
functions such as:

 Investment bankers administer the bonds-issuance.

 Control the selling of the stock of their organization to the general public.
 They also play the role of strategists in order to solve out financial problems
of their clients
 They also help the clients to develop their financial policies and also apply
them.
 Since all the works are time consuming investment bankers also work for
prolong hours.
 Investment bankers also emerge new innovative ideas and schemes for
developing strategies to pitch to clients
 Prepare pecuniary analyses and documents
 An investment banker should not accept deposits or make commercial loans.
 Even Investment bankers do the grunt work for IPO's and bond issues.
Attributes of Investment Bankers:
 As the work also involves various fiscal analyses so a well-built background
in finance and economics is the prime necessity.
 Not only this but also personal and strategic skills are significant for
investment bankers.
 Need to work for at least 70 hours a week or more and all night sessions
before deals close are treated as the norms rather than the exception.
 Investment Banker must be efficient and tactful enough to manage all the
operation at a single point of time.

Qualification for Investment Bankers

 A Masters in Business Administration with 2 years of post-graduate study is
essential to grow up in this particular area.
 Jobs in entry-level for analyst programs are obtainable to those graduate
undergoes who require experience in investment banking profession.
 Analysts are essential in making proposals in finance and travel in order to
sit with the clients during meetings and sessions where senior bankers
discuss ideas to potential customers.
 After this comes the requirement of MBA degree holder investment banker.
Organizational Structure of
an Investment Bank :
Main Activities and Units
The primary function of an investment bank is buying and selling products
both on behalf of the bank's clients and also for the bank itself. Banks
undertake risk through proprietary trading, done by a special set of traders
who do not interface with clients and through Principal Risk, risk
undertaken by a trader after he or she buys or sells a product to a client and
does not hedge his or her total exposure. Banks seek to maximize
profitability for a given amount of risk on their balance sheet.

An investment bank is split into the so-called front office, middle office, and
back office. While large full-service investment banks offer all of the lines of
businesses, both sell side and buy side, smaller sell side investment firms such as
boutique investment banks and small broker-dealers will focus on investment
banking and sales/trading/research, respectively.
Investment banks offer services to both corporations issuing securities and
investors buying securities. For corporations investment bankers offer information
on when and how to place their securities in the market. The corporations do not
have to spend on resources with which it is not equipped. To the investor, the
responsible investment banker offers protection against unsafe securities. The
offering of a few bad issues can cause serious loss to its reputation, and hence loss
of business. Therefore, investment bankers play a very important role in issuing
new security offerings.
Core Investment Banking
Activities:
Front Office:

 Investment banking is the traditional aspect of the investment banks which

also involves helping customers raise funds in the capital markets and giving
advice on M&A's aka mergers and acquisitions. Investment banking may
involve subscribing investors to a security issuance, coordinating with
bidders, or negotiating with a merger target. Another term for the investment
banking division is corporate finance, and its advisory group is often termed
mergers and acquisitions (M&A). The investment banking division (IBD) is
generally divided into industry coverage and product coverage groups.
Industry coverage groups focus on a specific industry such as healthcare,
industrials, or technology, and maintain relationships with corporations
within the industry to bring in business for a bank.
 Sales and trading: On behalf of the bank and its clients, the primary
function of a large investment bank is buying and selling products. In market
making, traders will buy and sell financial products with the goal of making
an incremental amount of money on each trade. Sales is the term for the
investment banks sales force, whose primary job is to call on institutional
and high-net-worth investors to suggest trading ideas and take orders.
Strategists advise external as well as internal clients on the strategies that
can be adopted in various markets. Ranging from derivatives to specific
 industries, strategists place companies and industries in a quantitative
framework with full consideration of the macroeconomic scene. This
strategy often affects the way the firm will operate in the market, the
direction it would like to take in terms of its proprietary and flow positions,
the suggestions salespersons give to clients, as well as the way structures
create new products.
 Research is the division which reviews companies and writes reports about
their prospects, often with "buy" or "sell" ratings. While the research
division may or may not generate revenue, its resources are used to assist
traders in trading, the sales force in suggesting ideas to customers, and
investment bankers by covering their clients. Research also serves outside
clients with investment advice in the hopes that these clients will execute
suggested trade ideas through the Sales & Trading division of the bank,
thereby bringing in revenue for the firm. There is a potential conflict of
interest between the investment bank and its analysis in that published
analysis can affect the profits of the bank.

Other businesses that an investment bank may be

involved in:
 Global transaction banking is the division which provides cash
management, custody services, lending, and securities brokerage
services to institutions. Prime brokerage with hedge funds has been an
especially profitable business.

 Investment management is the professional management of various

securities (shares, bonds, etc.) and other assets (e.g. real estate), to meet
 specified investment goals for the benefit of the investors. Investors may
be institutions (insurance companies, pension funds, corporations etc.) or
private investors (both directly via investment contracts and more
commonly via collective investment schemes e.g. mutual funds). The
investment management division of an investment bank is generally
divided into separate groups, often known as Private Wealth
Management and Private Client Services.

 Merchant banking is a private equity activity of investment banks.

 Commercial banking sees article commercial bank.

Middle Office:

 Risk management involves analyzing the market and credit risk that
traders are taking onto the balance sheet in conducting their daily trades,
and setting limits on the amount of capital that they are able to trade in
order to prevent 'bad' trades having a detrimental effect to a desk overall.
Another key Middle Office role is to ensure that the above mentioned
economic risks are captured accurately, correctly and on time. In recent
years the risk of errors has become known as "operational risk" and the
assurance Middle Offices provide now includes measures to address this
risk.
 Corporate treasury is responsible for an investment bank's funding,
capital structure management, and liquidity risk monitoring.
 Financial control tracks and analyzes the capital flows of the firm; the
Finance division is the principal adviser to senior management on
 essential areas such as controlling the firm's global risk exposure and the
profitability and structure of the firm's various businesses.
 Corporate strategy, along with risk, treasury, and controllers, often falls
under the finance division as well.
 Compliance areas are responsible for an investment bank's daily
operations' compliance with government regulations and internal
regulations. Often also considered a back-office division.

Back Office:

 Operations involve data-checking trades that have been conducted, ensuring

that they are not erroneous, and transacting the required transfers. While
some believe that operations provide the greatest job security and the
bleakest career prospects of any division within an investment bank, many
banks have outsourced operations. It is, however, a critical part of the bank.

 Technology refers to the information technology department. Every major

investment bank has considerable amounts of in-house software, created by
the technology team, who are also responsible for technical support.
Technology has changed considerably in the last few years as more sales and
trading desks are using electronic trading.
Investment Banks Provide
Four Primary Services:
Raising capital, advising in mergers and acquisitions, executing securities
sales and trading, and performing general advisory services. Smaller
investment banks may specialize in two or three of these categories.

1.Raising Capital:
An investment bank can assist a firm in raising funds to achieve a variety
of objectives, such as to acquire another company, reduce its debt load, expand
existing operations, or for specific project financing. Capital can include
some combination of debt, common equity, preferred equity, and hybrid
securities such as convertible debt or debt with warrants. Although many
people associate raising capital with public stock offerings, a great deal of
capital is actually raised through private placements with institutions,
specialized investment funds, and private individuals. The investment bank will
work with the client to structure the transaction to meet specific
objectives while being attractive to investors.
2.Mergers and Acquisitions:
Investment banks often represent firms in mergers, acquisitions, and
divestitures. Example projects include the acquisition of a specific firm, the
sale of a company or a subsidiary of the company, and assistance in
identifying, structuring, and executing a merger or joint venture. In each
case, the investment bank should provide a thorough analysis of the entity
bought or sold, as well as a valuation range and recommended structure.

3.Sales and Trading:

These services are primarily relevant only to publicly traded firms, or
firms, which plan to go public in the near future. Specific functions include making
a market in a stock, placing new offerings, and publishing research reports.

4.General Advisory Services:

Advisory services include assignments such as strategic planning, business
valuations, assisting in financial restructurings, and providing an opinion as to the
fairness of a proposed transaction.
Corporate Finance:
The bread and butter of a traditional investment bank, corporate finance
generally performs two different functions: 1) mergers and acquisitions advisory,
and 2) underwriting. On the mergers and acquisitions (M&A) advising side of
corporate finance, bankers assist in negotiating and structuring a merger between
two companies. If, for example, a company wants to buy another firm, then an
investment bank will help finalize the purchase price, structure the deal and
generally ensure a smooth transaction. The underwriting function within corporate
finance involves shepherding the process of raising capital for a company. In the
investment banking world, capital can be raised by selling stocks or bonds (and
some more exotic securities) to investors.

Syndicate
The hub of the investment banking wheel, the syndicate group is a vital link
between salespeople and corporate finance. Syndicate exists to facilitate the
placing of securities in a public offering, a knockdown, drag-out affair between
and among buyers of offerings and the investment banks managing the process. In
a corporate or municipal debt deal, syndicate also determines the allocation of
bonds. The most comprehensive and convenient job board for finance
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Multinational Investment
Banking:
 A multinational investment banker has banking teams which are led by senior
partners who have influence in their clients all over the world, experience and
associations with many of the most important market players, regulators and top
industry bodies. All listen to their firms' clients and comprehend.
 The outcome is the generation of the center of attention on the issues that really
matter.
 These approaches provide the firm clients with a well established service in their
markets.
 These give them access to specialized assistance which is characterized by
obligation to national markets, and a perceptive of the commercial and cultural
differences between countries.
Policies of Firm:
The firms have different policies to overview the following aspects:

 Growth:
The investment banks are freshly enjoying an almost extraordinary stage
of strong economic conditions and growth, which has enabled them to bring record
gain. The industry has greatly stabilized in current years around a handful number
of major players, and there have been few latest mergers and acquisitions.
 Performance:
The prime attention in the investment banking industry has always been
on top-line growth, rather than decreasing cost and efficiency. Focus on people and
cost control in the current has a very positive phase that suggests that investment
banks are learning to control through good times and bad.
 Governance:
Good quality governance, domestic controls, and reporting are decisive
in an industry that thrives on risk. Although there continues to be examples of
disastrous breakdowns in controls, leading to major trading sufferings, these tend
to turn up more in the hedge funds, as new entities to the market. Many of the more
veteran players have implemented policies and initiatives that guard against these
losses. The control device continues to claim high values of governance and
control.
Recent Scenario of
Investment Banking:
 Struggle for investment banking jobs is severe. Investment banks and
financial services firms are hiring, but competition for jobs is fierce.
 Knowledge & financial skills are crucial. In particular, greater financial
skills and experience are essential for potential applicants to attain an
aggressive circumference in the interview and hiring process.
List of Top 10 Investment
Banks in India:
The top 10 Investment Banks in India offers large number of financial
advisory services by tracking the economic trends, besides providing financial
assistance to corporate and retail customers. Some of them are:

1. Avendus Capital:
An investment bank providing mergers and acquisitions, fixed returns,
controlled finance, calculated advisory facilities and Private Equity Syndication to
its customers ranging from investors to corporates. The bank has a powerful
research competence which it utilizes to close business deals in hostile
circumstances. It presently concentrates on sectors where Indian firms have
strategic expansion advantage namely Healthcare, Pharmaceuticals, IT Services,
Consumer goods, manufacturing, etc.

2. Bajaj Capital
The Bajaj Capital Group is one of the renowned Investment consultant and
Financial Planning firms in India. It is certified under the Category I of Merchant
Bankers by SEBI. Bajaj Capital provides custom-made Fiscal Planning facilities
and investment consultation to the investors, organizational investors, corporates,
high income patrons and Non-Resident Indians (NRIs).
 Being one of the biggest distributors of economic goods, Bajaj provides an
extensive range of investment schemes such as general insurance, life insurance,
mutual funds, etc to both public and private institutions.

3. Cholamandalam Investment & Finance

Company
A combined fiscal service provider of three firms namely Cholamandalam
DBS Finance Limited (CDFL), DBS Cholamandalam Distribution Limited and
DBS Cholamandalam Securities Limited, Cholamandalam DBS operates in 16
international markets. DBS provides an extensive range of facilities to small and
medium sized enterprise, corporates, customers and comprehensive banking
activities across Middle East and Asia.

4. ICICI Securities Ltd

India's biggest equity house, ICICI Securities Ltd provide back-to-back
banking solutions through its extensive distribution network to cater to the varied
needs of its retail and corporate clients. The firm is listed under the Monetary
Authority of Singapore (MAS) and Financial Services Authority, UK and has an
authoritative place in the core divisions of its functional areas such as consultant
services, fiscal good distribution, Equity Capital Markets Advisory Services, etc.

5. IDFC
Initiated in 1997 in Chennai, IDFC undertook the responsibility of providing
financial support to 332 projects accruing a profit of upto Rs 2, 20, 400 million.
The sectors under IDFC's financial assistance are infrastructure, agri related
business, transportation, healthcare, tourism and others.

6. Kotak Mahindra Capital Company

Initiator and leader in equity capital markets, Kotak Investment Banking has
undertaken the developmental work of most ground breaking advances in the
Indian capital markets comprising the launch of book building and Qualified
Institutional Placements (QIPs) in India. The investment bank has an impressive
track record of controlling various sectors and has played a major role in the
government's milestone disinvestments.

7. SBI Capital Markets

SBICAPS is India's foremost investment bank and project consultant, aiding
local firms in capital enlistment endeavors for last many years. The firm started it
operations in 1986 and is an entirely owned subordinate of the State Bank of India.
Asian Development Bank (ADB) possesses 13.84% stakes in equity segment of
SBICAPS.

8. Tata Investment Corporation Limited (TICL)

A non-banking financial company (NBFC), TICL is listed with the Reserve
Bank of India under the group of 'Investment Company'. The firm's commercial
activities constitute mainly of endowing in long-standing investments in equity of
the firms in various sectors. The chief source of return for the firm entails income
on investment trading and income accrued on dividend.

9. Yes Bank
 This Investment Banking association is engaged in the classification,
arrangement and implementation of deals for their clients in varied sectors and
nations. Some of the archetypal transactions incorporate divestitures, private equity
syndication, mergers & acquisitions and IPO consultation.

10. UTI Securities Ltd

Endorsed as a self-regulating professional body in 1994, UTI Securities Ltd.,
is one of the renowned investment bank of India. After the termination of Unit
Trust of India (UTI) Act, the total share fund of UTISEL is now controlled by
superintendent of particular enterprise of UTI. The firm has been offering all sorts
of investment associated activities which incorporates investment banking and
corporate consultation facilities.
List of Top 10 Investment
Companies in India
Top 10 Investment Companies in India attract foreign direct investment
through tie ups with financial firms, investment markets, technical partnerships and
favored allocations. The Indian investment market is renowned for its massive
workforce and diverse sectors that generates better opportunities for both
expansion and earning competence.

1. Bajaj Allianz Collaboration between Bajaj Finserv and Allianz SE, Bajaj
Allianz Life Insurance Co. Ltd.
2. HSBC Asset Management India Pvt Ltd
3. SMC Investment Solution and Services
4. Shah Financial Group
5. Stanrose Mafatlal Investment and Finance Ltd
6. Tata Investment Corporation Ltd.
7. Toss Financial Services Pvt. Ltd.
8. Veronica Financial Services Ltd
9. Indian Investment Centre
10. J.M. Capital Management Private Ltd
Role of Investment Banking
Companies in India:
Investment banking companies generally help their clients to access
capital through equity, debt and other kinds of investment products. These firms
also trade in equities and derivative products and also help companies with merger
and acquisition deals.

About a couple of years back, when the world economy was reeling
under a recession, many investment banking firms either collapsed or were on the
brink of closure. Even a few firms in India were affected by this global downturn.
This led to many skeptics writing off the revival of these firms.
Challenges:
Investment banking is one of the most global industries and is hence
continuously challenged to respond to new developments and innovation in the
global financial markets. Throughout the history of investment banking, it is only
known that many have theorized that all investment banking products and services
would be commoditized. New products with higher margins are constantly
invented and manufactured by bankers in hopes of winning over clients and
developing trading know-how in new markets. However, since these can usually
not be patented or copyrighted, they are very often copied quickly by competing
banks, pushing down trading margins.
For example, trading bonds and equities for customers is now a commodity
business structuring and trading derivatives retains higher margins in good times -
and the risk of large losses in difficult market conditions, such as the credit crunch
that begin in 2007. Each over-the-counter contract has to be uniquely structured
and could involve complex pay-off and risk profiles.
In addition, while many products have been commoditized, an increasing
amount of profit within investment banks has come from proprietary trading,
where size creates a positive network benefit. The fastest growing segments of the
investment banking industry are private investments into public companies. Such
transactions are privately negotiated between companies and accredited investors.
The Future of Investment
Banking Services in India:
Investment banking India has always been very crucial for the smooth
flow of market transactions between various investors, companies, firms and the
government. These banks will have a role to play even in the future, irrespective of
the economic conditions in the country.
Conclusion:
Investment banking is a field of banking that aids companies in acquiring
funds. In addition to the acquisition of new funds, investment banking also offers
advice for a wide range of transactions a company might engage in.

Traditionally, banks either engaged in commercial banking or investment banking.

In commercial banking, the institution collects deposits from clients and gives
direct loans to businesses and individuals.

Investment banking is a particular form of banking which finances capital

requirements of an enterprise. Investment banking assists as it performs IPOs,
private placement and bond offerings, acts as broker and carries through mergers
and acquisitions.
Bibliography:

Books Referred:

Investment Banking and Securities Trading.

Internet Websites:

www.google.com

www.wikipedia.org