A Brief Analysis About Investment Banking System
On a daily basis, we hear the term ‘investment bank’. These banks are notified for their functions and role in the financial crisis and criticized for the large compensation packages for their employees and the profits they reap. But there are many people who have no idea what they do and what they are. An investment bank is very different from the commercial banks. Like the retail bank on the corner, they do not take any deposits. Instead, they mainly help in the selling, buying and issuing of securities – that is bonds, stocks and similar financial instruments.
They assist institutions and companies on activities of ‘sell side’ and ‘buy side’. The advising of institutions concerned with buying securities and assets and securities is referred as the buy side. Mutual funds, private equity funds, pension funds, hedge funds and proprietary trading desks are various entities that engage in activities of buy side. A wide range of activities, including dealing and broking securities, advisory functions, investment banking and investment research is referred as the sell side.
Previously, Jennifer Neighbours worked in the firm’s investment banking section and later worked in New York at Salomon Smith Barney, where he was a founding member of SSB Capital Partners, the firm’s proprietary investment group.
Corporate Finance or Investment Banking.
Investment banking can be an ambiguous term because many people use it to refer to any activities performed by an I-bank. Although, more specifically investment banking refers to helping companies with raising capital and giving advice on acquisitions and mergers. The department of corporate finance of an investment bank is the group that works with a company to put together an IPO or initial public offering. Through private placements, they can also help companies raise capital, which often include securing capital from private equity groups.