Investment banks
Investment banks help the companies, government sectors and agencies to raise money by selling the issued securities in the capital markets. Advisory services are offered by all Institutional investors including Banks, Trusts and Credit Union to offer strategic investment and security advices for,
Mergers and acquisitions, helping in the buying, selling and combining different companies in order to increase the financial growth of the company.
Divestiture, helping in accelerated financial growth of a company that decides to sell off a particular business unit to focus it's amenities to a particular more profitable unit. Apart from these investment banking issues the Investment banks also deal in the trading derivatives, fixed income trades, commodity and equity security portfolios and foreign exchange dealings.
The dealings of the Institutional investors in the Investment banks involve two principal lines of business.
The sell side comprises of the promotion and trading of the securities. Trading is organized both for the cash and the securities. These facilitate transactions and market making. The promotion side includes underwriting which refers to the process used by an Investment bank to receive the products like capital, equity, insurance and credit to the clients.
The buy side comprises of the pension funds, mutual and hedge funds. These involve dealings with the interested investing clientиle consuming the products and packages of the sell side thereby increasing their investment returns.
The organized set up of the Investment banks like any corporate house comprises of Front Office, Middle and the Back Offices. The duties followed by the front office includes:
1.Investment banking
2.Investment management
3.Sales and Trading
4.Research
5.Structuring
The middle office however, deals with Risk Management and Operations. The back office includes the duties centered around Finance and Technology.
As for the size of the industry revenues for the Global Investment banks have increased to more than 50 billion dollars by 2005. The merger and acquisitions activity is the main reason for the increase in the trading limit of the Investment banks in the recent years. Commercialization of the investment products and services offered by these institutional investors, according to some Investment banking theorists, is an excellent way to improve in trading and the revenue standards. The trading bond and equities for customers involve commodity business that is now reaching it's peak. Similarly related profitable lines of business by the Investment banks include:
Business lines dealing with structuring and the trading based derivatives.
Propriety trading is also looked at as a profitable venture adopted.
Besides these the listed contractual options traded through Chicago Board Options Exchange,or, the CBOE and similar major exchange hubs are theoretically designated as lines to improve trading providing better and speculative guidance to the clients.
The Investment banks have shown another improvement in the field of vertical integration dealing with debt securitization. Nowadays investment related institutions are all about Financial Conglomerates that combine commercialized banking with investment banking, insurance and other issues. Some of the important Investment banks through out the world are:
ABN Amro
Citigroup
CIBC World Markets
Bank of America
Alliance Investment bank Berhad