What is an Investment Bank

A financial institution that offers a diverse range of banking and financial planning services to their clients is called an investment bank. This type of financial entity assists their clients in raising capital through underwriting and acting as an agent for the issuance of securities.

The Scope of Investment Banks

Investment banks are financial institutions that allow individuals, business entities and governments to increase their capital and engage in the stock market by acting as a third party between investors and issuers. In comparison to commercial banks and other banking entities, investment banks do not offer retail banking services to their clients.

The following is a basic outline of services offered by investment banks:

  • Act as agent to raise capital by issuing securities
  • Offer underwriting services
  • Assist companies in merger and acquisitions
  • Provide ancillary services
  • Buy, sell, divide and combine companies to expand and redistribute business load
  • Build company prospectus for business entities
  • Collect statistics and figures regarding company activity

The two major business disciplines of investment banking are trading securities for cash or other securities and promotion of securities. They facilitate business transactions and encourage market-making, whilst underwriting and researching various funds for their clients.

It is highly advised to enlist the services of a professional consultancy firm when forming an investment bank. Through the advice and guidance of experienced consultants, you are able to complete the process of obtaining the relevant investment banking license and establish the financial entity in a professional and timely manner, and in line with the regulations of the chosen jurisdiction.