Functions of Investment Banking

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In this post, we'll briefly break down the various divisions of an investment bank and the services they perform, including the changes that have shaped the investment banking industry in the aftermath of the 2008 financial crisis.



Investment Banking Functions

Investment Bank: Compilation of Learning Resources

Interested in learning about the functions of an investment bank? Click on each link to view an informative article on the various tasks performed by an investment bank.

Investment Banking Primer: A comprehensive guide to learn about the investment banking industry and the role of an investment banker.

Raising Capital & Security Underwriting: Investment banks act as intermediaries between companies that want 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 procedures and implementation.

Product Groups vs. Industry Groups: The front-office functions of banks are separated into "buckets," with the most common classification being product groups and industry coverage groups.

Sales & Trading and Equity Research: Investment banks match buyers and sellers, and buy and sell securities out of their own account to facilitate the trading of securities.

Retail and Commercial Banking: Following the repeal of the Glass-Steagall Act in 1999, investment banks now offer services that were traditionally off-limits, such as commercial banking.

Front Office vs. Back Office: While high-profile functions like M&A advisory are considered "front office," other crucial functions like risk management, financial control, corporate treasury, corporate strategy, compliance, operations, and technology are critical "back-office" functions.

History of the Investment Banking Industry: The industry has undergone significant changes since John Pierpont Morgan personally bailed out the United States during the Panic of 1907. This section surveys important developments over time.

Post-2008 Financial Crisis: The investment banking industry was fundamentally altered during and after the financial crisis of 2008. This section explores how the industry has changed and where it is headed.

Disclaimer: The information provided in this blog post is for educational purposes only and should not be considered as financial advice. Investment banking services and structures can vary widely between institutions, and readers should consult professional advisors before making any financial decisions.

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