Investment banking


Traditionally, it is detached from traditional commercial banking as it has different social objectives, while traditional commercial banking focuses on small savers and those in need of financing, investment banking focuses on large corporations.

Investment banking, also called business banking, is the one whose main purpose is to negotiate with large companies and strategic sectors in search of profitability for their clients and shareholders.

Investment banking functions

Its action lines are in particular:

  • It is responsible for issuing and marketing securities.
  • Helps to carry out operations such as capital increases, loans, shares and corporate bonds.
  • Your main job is to advise and manage the process of stock distribution, which you do for large companies.
  • Investment banks can also buy stocks or bonds of companies they consider attractive and strategic. Either because of its current situation (profits or dividends) or because of its future increase in value.
  • You create investment products.

In addition, investment banks have created their own investment products, placing them through the financial markets or traded directly through their own units. 

Structure of an investment bank

Investment banks have different departments to carry out their activities:

  • Front office : Beginning with the front office (the people with whom the customer comes into direct contact and who manage the pre-sales, sales and post-sales services). The front office is in turn supported by the middle office.
  • Middle Office: The Middle Office is the part responsible for evaluating the risk of the client and the environment, deciding on the possibilities of carrying out the operation and other matters of great importance.
  • Back office: finally, there is a back office for recording transactions and linking to other areas of the bank.

In general, North American investment banking and, to a lesser extent, U.K. investment banking have been the most recognized and widely used "investment banks," making them major players in commercial banking worldwide.

In this way, national investment banking was eclipsed in various countries and became a multinational like Merrill Lynch, Goldman Sachs, Morgan Stanley and the now defunct Lehman Brothers.

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