An Overview of Investment Banking

Investment banking is the division of a bank or financial institution which serves the more specialized and larger institutions such as governments, corporations. This is done by providing underwriting (capital raising) and mergers and acquisitions (M&A) advisory services. The need of investment bankers in the country after completion of the relevant training in the bank training institute in Delhi is growing. Let us know more about what the investment bankers do.

What Do Investment Banks Do?

More often than not there is confusion with regard to the investment bank and the investment banking division (IBD) of a bank. It must be noted that there are many services that the full-scale investment banks offer. These include underwriting, M&A, sales and trading, equity research, asset management, commercial banking, and retail banking. The investment banking division of a bank provides only the underwriting and M&A advisory services.

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How do bank assist with M&A advisory services?

Mergers and acquisitions (M&A) advisory is the process of helping corporations and institutions find, evaluate, and complete acquisitions of businesses. This is a key function in banking. In order to bolster the process, the banks put in use their extensive networks and relationships to find opportunities and help negotiate on their client’s behalf. Bankers are capable of shifting the balance on both sides i.e. they can represent either the “buy side” or the “sell side” of the deal.

What are the other key components of investment bankings

As the students of short term banking courses in Delhi, it is equally important to know the other components which investment banking essentially deals with. These are:

  1. Debt finance- Any finance which is basically raised through borrowing is known as debt finance. The borrower must repay the full amount on an agreed timescale and must also pay interest (service the debt). Many companies choose to finance their businesses through debt because, unlike dividend payments to equity investors, the interest is tax-deductible (can be subtracted from tax payable).
  2. Equity finance- Equity is finance raised from investors in exchange for a share of the business. The major advantage of equity finance over debt finance is that, unlike with debt finance, companies are not required to make regular repayments to their investors. However, investors may be entitled to dividend payments.
  3. Bulge bracket banks- The term ‘bulge bracket’ was first used on Wall Street to denote the group of investment banks awarded top billing on the ‘tombstone’ – a financial advertisement used to notify the public of an important transaction like a share issue.
  4. Traditional trading- Traditional trading is the sale and purchase of actual securities (shares, currency, commodities, debt). Trading, in a financial context, usually refers to investments changing hands on the financial markets, these are regulated exchanges which enable buyers and sellers to interact and do business.

For pursuing a steady career in investment banking, get enrolled in the bank training academies in Delhi gain the advantage of moving ahead in your career in the banking sector.

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