The Core Functions of an Investment Bank

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Very different from the Commercial and Retail banks, the Investment Bank is a great help in the buying and selling of securities like shares, stocks and bonds.  The issuance of other financial instruments is carried out at these banks as well and they have proved to become an inextricable part of the process of investment.

Those interested in making investments in places other than the mere savings accounts in the banks are largely dependent on these investment banks, not just for investments but for getting their advice and suggestions on the matters of mergers and acquisitions also.

In contrast to the normal banks, the investment banks assist individuals in their ‘buy side’ and ‘sell side’ activities. The advice rendered regarding the buying of assets and securities, is what encompasses the “buy-side” activities. Mutual funds, hedge funds, private equity funds, proprietary trading desks and pension funds, are all the entities engaged in the “buy-side” activities.2

The core functions of an Investment Bank include – Investment banking, Sales, Trade and Research. Jennifer Neighbours is an individual who worked in the investment banking department of New York’s SSB Capital Partners, and was in fact one of the founding members of the same firm.

The investment banking is also known as Corporate Finance Department in an i-Bank. It is a term often mistaken to be the working of an investment bank. However, the real sense of investment banking refers to the assistance given to private and public companies in order to raise their capital, as also to solve their queries of acquisitions and mergers.

This department puts before the people an IPO or Initial Public Offering, or a follow-on offering when the company already has public stock outstanding. The private placements that this department helps in carrying out by securing capital from private equity groups proves to be of great help in raising the capital of a company.

If any company intends to sell off their complete enterprise, even then this investment banking sector can help them by lending advice about the entire merger and acquisition procedure. Jennifer Neighbours was the part of such a department in New York after which she was also given the responsibility of the firm’s proprietary investment group. The suggestions that an investment banking section offers is quite valuable as they do this only after a proper analysis of all the details of the transaction and tell you whether the quoted price is reasonable or not.

Sales and trading are among the other core functions of an i-bank. There are two major divisions of this function- institutional and retail. The institutional clients are transacted within the institutional division, while the retail investors are transacted with, in the retail section.

The research analysts form the research team in the i-bank. They analyse the performance of any particular company with regard to its stocks. Their analysis is followed by reports on their performance potential. Generally, there are a lot of conflicting issues between this research team and others of any investment bank.

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