Investment banking for dummies

Ever heard about Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Jefferies & Co etc.? Ever thought what these guys do? Well...they make billions of dollars every year through investment banking. If you are a neophyte and new to the world of finance then you must have come across the term Investment banking. Investment banks assist public and private corporations in raising funds in the Capital Markets, as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.

An organization may generate funds in two different ways through investment banking:

• They may draw on public funds through the capital market by selling stock
• They may seek out venture capital/private equity in exchange for a stake in their company

Investment Banks also do a large amount of consulting. Advice on mergers and acquisitions, on when to make public offerings etc. is given to the companies. The line between investment banking and other forms of banking has blurred in recent years. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable. Large financial-services conglomerates combine commercial banking and investment banking. Prominent among these are ABN Amro, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Rabobank, UBS.

Careers in IB are lucrative and most sought after in the money-market world. A career in investment banking may involve extensive traveling, grueling hours and a cut-throat lifestyle. Although IB is highly competitive and time intensive, it also offers huge financial incentives ;-)