Investment Banking: Types, Functions, All You Need to Know

What is Investment Banking?

Investment banking is a particular section of the banking system which operates in the way to provide advice based on the financial transactions on the behalf of corporations, governments, and individuals. The advice can be like assisting in the company’s capital gain by acting as the financial agent to provide the securities.

The investment bank involved in the assisting to M&A (mergers and acquisitions) and provide few more services like helping in the making of the market, trading of derivative and equity securities etc. Investment banking also assisting as a mediator between investors and companies or corporations.

Types of Investment Banking in India

Types of Investment Banking in India

Full Service Firms

The investment bank which has a presence in all types of areas like distribution, M&A (Mergers and acquisitions), brokerage, underwriting, asset management, and structured instrument etc. These type of investments bank work with all types of corporation and individuals.

Commercial Banks

Commercial banks are serving in limited investment banking services. These commercial banks are allowed to work under section 20, which is a part of the subsidiaries forms under 20of the Glass – Steagall Act.

Boutique Firms

These types of firms are also limited to particular types of investments services. Boutique Firms are allowed to serve in some specific types of investments services.

Brokerage Firms

Brokerage firms are limited to provide investment services related to the trading for retail investors’ as well as institutional clients. They have a large base of investors they are supposed to offer their services.

Assets Management Firms

Asset management firms are functioning in the investment services which includes the investment services like wealth management, fund management, cash management, and portfolio etc. These firms also help in assisting the retail and corporate investors to choose types of investment, the tenure of the corpus, types of the instrument and purpose of the investments.

Investment Banking Companies in India

There are so many investment banking companies operating in India, here are the few of them which are top best investment bank in India.

Bank of America:

Bank of America is one of the best and leading investment banking company in the world operating in India. Banking of America operating in India as an investment bank since 1964 and has branches. This bank provides so many types of financial services in India like corporates and multinational financial institution etc.

Barclays Capital:

Barclays Capital is also one of the investment bank operating in India. This investment bank is best for the small & medium enterprise and also serving the Indian corporates. Companies which need the fund to grow their business in the overseas Barclays Capital is the best fit.

B. N. P. Paribas:

B. N. P. Paribas investment bank is one of the leading investment banking in India operating in the country since 1860. This investment bank offers its services within the country and abroad to the financial institutions.

Citi Bank:

Citi Bank operating in India for more than 100 years. This is also one of the best investment bank in India offering different types of investment services. Some of the services provided by the Citi bank are banking services, capital investment. This is an international investment banking.

J. P. Morgan:

J. P. Morgan is one of the leading investment banks in the world and operating in India since 1930. J. P. Morgan provides services like business investment advice and investment banking facilities.

Kotak Mahindra Bank Limited:

Kotak Mahindra Bank is one of the famous banks in India also providing investment services like investment banking in India. Kotak Mahindra Bank Limited provides a different kind of high-quality investment services.

Yes Bank Limited:

Yes Bank Limited is one of the banks in India offering banking services and investment banking services as well. Yes, Bank Limited operating in India since 2004.

Main Functions of Investment Banking

There is so many roles that investment baking plays and some of the important functions of the investment bank listed below:

Investment Management:

This is one of the services or functions of investment banking. They help the investors to buy, manage and invest money in different kind of bonds and mutual funds etc. There is the separate banking department in the investment banking namely private wealth management.

Merchant Banking

It is the type of functions of investment banking like private equity of the investment.

Research

One of the best services of investment banking is research. This investment bank reviews the company’s and prepare the report based on the buy and sell rating. Based on the information investment bank guide investors and companies to their financial needs.

Risk Management

This is done by the investment bank to determine the risk capacity of the investors based on their daily investment needs and let them know the capacity of risk so that it can avoid the loss if the investment turns into the bad investment.

Structuring of Derivatives

The new types of services offered by the investment bank by using the latest technology and provide the service so that there are greater returns on the investment made by them.

IPOs

IPOs (Initial Public Offering) is one of the services offered by the investment bank by providing underwriting services. The investment bank also functions as a mediator and foreign exchange management.

Investment Banking Vs. Commercial Banking

There is much difference between Investment banking and commercial banking. Both the carrier opportunity is good to choose both have their own advantages. You can become the investment banker or works as a commercial banker it’s totally up to you. Here are some of the difference between investment banking and commercial banking.

Criteria Investment Banking Commercial Banking
Education MBA (Master of Business Administration) required to work as an investment banker Degree in finance, mathematics, account and similar courses required to work in the commercial banking field
Skills Communication skills should be good to get succeed in the investment banking field Professional and analytical skills are required to work in the commercial field
Salary Best paid professional in the business world Depends on the position and country
Work-Life Balance Investment bankers work throughout the busy hours and long time Commercial banking professional works in the banking hours there are some exceptions
Services The investment banks provide service like investment management and other different types of service to the investors and corporations Provide services to a standard level and help people to make investment
Clients Government, Individuals & corporations. All the citizen of the country
Income Income through the fees and the commissions form the trading services Mostly from fees and the interest on money