The field of investment banking

Esteri Maina

Banking industry is diverse but in this particular article I want to highlight the field of investing banking only.

It has been defined as that field of banking that assists corporations in acquisitions of funds, offering instructions for varied business transactions they may carry out.

The instructions may those on mergers where a company on realizing that it can not balance its internal or external outfits joins with another to form a stronger financial base.

It could also be advice on acquisitions where a company on appreciating that it has grown weak to sustain its level of operations, is acquired by another one and thus cease to exist as an entity.

Additionally, the investment banks trail the happenings of the stock market to be capable of giving the right advice to the companies concerning when to make public offerings and how best to manage the business public assets.

An institution may generate finances by drawing on public funds via capital markets where stocks are traded in their company or may also seek out private equity for a stake in their company.

All this is not possible not unless the principle of investment banking is used to do the above. Today it not easy to assign these service are not exceptional to investment banks alone, deregulation measures has enable other forms of bank to include them in their operations.

This is an advantage though, because the small and medium business enterprises that were shunned away from benefiting from these services are now welcome in diversified banking services with options to choose from.

An investment bank is classified in to front, middle and back office.in the front office is investment banking home describing their key purpose for existence which is helping companies obtain funding in the capital markets, consultative roles on mergers and acquisition.

Investment banking may engage in subscribing investors to a security issuance, synchronizing with bidders, or negotiating with a merger target. Investment management is the next issue.

The management is divided generally into separate groups often called private wealth management and private client services.The former deals with the funds of those individuals with high net value while the later deals with administering assets of institutional investors.

Sales and trading is the process investment banks uses to create markets for their financial products to be bought and sold with the aim of making profits, all on- let the buyer be ware basis.Others involved are structuring of products which offer great margins and returns, merchant banking, research strategy are also components front office.

The middle office consists of risk management with the task of assessing the markets and the credit risks. Those involved ensure that these risks are tapped accurately in terms of commercial terms agreed upon, on time and correctly.Secondly, the part accountable for an investments bank’s capital management and monitoring of risks is the finance, by trailing and evaluating the capital flows of the firm, it becomes the chief adviser to the executive management.

The areas accountable for enforcement of its daily activities with government regulations and internal one is the compliance.

The back office is a critical one because this is where all operations are crosschecked for any omissions, errors and transaction processing as needed.

Therefore the information technology department obviously to technical support and software is hidden here in the structure of investment banks.

Other issues like careers in this field will be tackled in a different article.

An original article by Esteri Maina on investment banking

public investment bank