what is investment banking definition

If a client needs money, an investment banker will find organizations with money to invest and advise their clients to do one of two things. An investment bank is a financial institution that helps companies take new bond or stock issues to market, usually acting as the intermediary between the. What do investment banking job titles really mean? If someone tells you they're a vice president in an investment bank, for example, you might think.

What is investment banking definition -

Back to Divisions

The Global Markets Division enables our clients to buy and sell financial products, raise funding and manage risk. We make markets and facilitate client transactions in fixed income, equity, currency and commodity products.

What We Do

We make markets in and clear client transactions on major stock, options and futures exchanges worldwide. Through our global sales force, we maintain relationships with our clients, receiving orders and distributing investment research, trading ideas, market information and analysis.

How We’re Organized

Prime Services

Prime Services is responsible for managing the platform serving hedge fund clients within the Global Markets Division. The team works closely with clients, service providers and internal stakeholders like Sales, Client Services, Trading desks, Treasury, Technology, Operations, Legal and Compliance to define strategy and direction for the Prime Services platform.

Equities

Equities teams transact in stocks and other equity-related products, including convertible securities, options and futures. Their work includes financing, securities lending and other services for institutional investors.

 

Fixed Income, Currency and Commodities

Fixed income, currency and commodities teams transact in a variety of assets, including interest rate products (such as government bonds, treasury bills and other highly liquid instruments), credit products, mortgages, currencies and commodities.

Product Management (Marquee)

In partnership with Marquee's Design, Engineering, Sales and Marketing teams – the Marquee Product Management team delivers innovative, industry-changing products and experiences to Goldman Sachs' institutional clients. Marquee Product Managers define complex product strategies and guide interdisciplinary teams to expertly deliver them to the market.

Operations

Our operations professionals are core to Securities (Sales and Trading) and enable business to flow –  read more.

Engineering

Engineering is at the critical center of our businesses. Our engineers are solving challenging problems using innovative strategic thinking and the latest technologies – read more.

Who We Look For

Ideal candidates for Global Markets are dynamic, quick-thinking self-starters who have a real passion for the markets. The ability to communicate effectively and build strong relationships with clients and colleagues from a diversity of backgrounds and experiences is crucial.

We Invest in Our People

Learning

We created Goldman Sachs University to help our people grow professionally – starting with their orientation and integration into the firm and continuing with ongoing development over the course of their careers.

Development

From ongoing feedback to diverse talent programs, we’re committed to empowering our people to drive their own development and expand their horizons.

Apprenticeship

We emphasize an apprenticeship culture in which our junior team members learn by working closely with seasoned professionals. We believe this is critical to developing the next generation of Goldman Sachs leaders.

Источник: https://www.goldmansachs.com/careers/divisions/global-markets/

What Is Investment Banking and What Should You Know?

It seems as if there is a special niche for everything in finance - and banking is no exception. If a company, corporation, or the government has special banking needs, why not have an entire sect of banking dedicated to them? Well, that seems to be the rationale behind investment banking. But what exactly is investment banking? And how is it different from regular banking?

Investment Banking Definition

Put simply, investment banking is dedicated to helping large companies or institutions manage their money - whether that be by helping them create capital, underwriting debt or equity securities, or helping with mergers and acquisitions. Investment banks can also help with issuing stock and other transactions a corporation may need help with.

Often, investment banks are part of a larger banking infrastructure, such as Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report or JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report .

Investment banks operate as a way for large entities (which could either be companies, corporations, governments, or other such institutions) to make big financial transactions with a little extra help. Along those lines, investment banks will often help facilitate the finances surrounded mergers and acquisitions, and, perhaps most importantly, help connect corporations to investors through the issuing of bonds or stocks. To that extent, investment banks often help companies issue their initial public offerings, IPOs. In these cases, the investment bank will sell the shares on behalf of the company on the market.

Among other things, investment banks work as financial advisors to large companies or entities, especially in advising sales and trading between buyers and sellers of companies, and recently began offering commercial banking services (since the repeal of Glass-Steagall in 1999).

Investment banks operate on two different groups: Product groups and industry groups. 

Investment Bank Product Groups

As part of their structure, investment banks offer different product groups. While the three main product groups investment banks offer are mergers and acquisitions, restructuring and leveraged finance, they encompass a bit more than that. The typical main product groups reportedly are:

  • Mergers and Acquisitions, M&A: The investment bank will advise or facilitate the mergers of companies with one another.
  • Leveraged Finance, LevFin: Investment banks will finance corporate activities through issuing high-yield debt.
  • Equity Capital Markets, ECM: The investment bank will advise companies or corporations on the release and management of IPOs, stocks, bonds and shares, as well as raises and other equity concerns.
  • Restructuring: Investment banks will often help restructure companies or corporations in order to increase profitability and economy within the entity.

Investment Bank Industry Groups

Additionally, investment banks offer what are called industry groups, which cover different industries like financial sectors, healthcare sectors, etc. Some of the principle industry groups reportedly include: 

  • Financial Institutions Group, FIG 
  • Healthcare
  • Industrials
  • Technology, Media & Telecommunications, TMT
  • Real Estate Investment Banking

Although investment banks cover more areas than the aforementioned, they generally focus around these principle sectors. Investment bankers working in industry groups generally have more of a marketing bent when working with different sectors compared to their advising-heavy counterparts in product groups. 

Investment Banking vs. Commercial Banking

The main difference between investment banking and commercial banking is that investment banking typically deals with purchasing and selling bonds and stocks for companies, and also helping them issue IPOs, while commercial banks primarily deal with deposits or loans for companies or individuals.

So, basically, investment banks deal with trading securities, whereas commercial banks do not.

However, there are still several other key differences between investment banking and commercial banking that have to do with regulation, risk level, and benefits.

Glass-Steagall Act

During the Great Depression, both investment and commercial aspects of banks were combined, which was seen as a negative thing that may have contributed to the depression itself. Once the Glass-Steagall Act was instituted in 1933 as part of the Banking Act to separate the two sides of banking (investment and deposit management), the divide was created.

However, when the Glass-Steagall Act was repealed in 1999 by the Gramm-Leach-Bliley Act, banks were once again given the freedom to merge the investment and commercial sides together. However, despite this newfound leeway, many large banks have decided to keep their investment and commercial banks separate.

Risk and Regulation

Another big difference is that commercial banks have stricter regulation. Commercial banks must be regulated by several government entities to include the Federal Deposit Insurance Corporation, or FDIC, whereas investment banks only need be regulated by the Securities and Exchange Commission, SEC - the latter of which allows for more freedom in making decisions and investments.

Because of this difference in regulation, commercial banks are often less risky than investment banks (because they are backed by the federal government) - but, on the flip side, investment banks provide more room to maneuver strategic decisions than commercial banks do.

Still, the banks who have decided to combine have several pros.

Combination Benefits

While not many large banks combine their divisions, some of the benefits of combination include banks being able to issue companies IPOs (using its investment bank capabilities) and then extend lines of credit to them (using the commercial bank side) - which would allow the banks to then receive benefits from doling out a hefty sum and in return, get higher commissions and trading revenue from the stock.

By having both the issuing securities and extending lines of credit sides covered, combination banks are able to bolster the growth of companies and reap the rewards.

However, concerns still remain over the temptation of combination banks to keep undeserving companies afloat - which was a major aspect of the bubble/burst cycle seen during the depression.

What Do Investment Bankers Do?

As the title would suggest, an investment banker helps raise capital for companies or other large entities who are clients of the bank. The bankers often work in the investment arms of larger banks like JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report and Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report .

As part of their duties, managing companies' securities, investment bankers are responsible for advising companies on several fronts, including pricing and helping the company navigate various regulations.

Investment bankers will also often help facilitate the bank's purchase of all or some of the company's shares when an IPO is released - but, if the financial analysts at the investment bank overvalue the stock, the bank can take heavy losses.

History of Investment Banking

Investment banking had its inception after the Wall Street Crash of 1929, when banks and investors alike suffered devastating losses. As one of his first acts as president, Franklin D. Roosevelt instituted the Glass-Steagall Act of 1933 as part of his New Deal. This act separated investment banking from deposit banking, and sought to restore faith in the American banking system, detailed in the act's Article 20. 

Under the blanket of the Banking Act, President Roosevelt sought to curtail the previously all-powerful banks by ensuring they managed risk and protected their depositor's money. However, following the boom that occurred post-1933, banks began bending the rules of the Glass-Steagall Act and started blending commercial and investment banking activities - leading President Clinton to repeal the act in 1999 via the Gramm-Leach-Bliley Law. 

This repeal led to the acquisition of JP Morgan (a mega investment bank of the time) by Chase Manhattan (a major commercial bank) in 2000. 

However, this was seemingly the beginning of the end for investment banks.

Controversies in Investment Banking 

In 2008, the banking industry loomed on the edge of total collapse as the United States economy plummeted into the Great Recession. 

After banks made too many risky loans, Bear Stearns, one of the largest investment banks at the time, fell to the financial crisis - forcing the Federal Reserve to sell it to J.P. Morgan. Others followed, as more banks declared bankruptcy (including long-time staple of the financial sector Lehman Brothers). 

Then-president Barack Obama put precautions in place to attempt to revive the economy - namely, the Dodd-Frank Law in 2010. The bill limited banks' sizes and laid out more precautions to keep investment and commercial banking more separate. 

However, many banks still have investment bank branches alongside commercial branches. 

Best Investment Banking Options

There are dozens of good investment banks available, but many of the most revered ones come from the top banks in general. 

Among others, Goldman Sachs, JPMorgan Chase, Bank of America (BAC) - Get Bank of America Corp Report , Barclays (BCS) - Get Barclays PLC Sponsored ADR Report , Morgan Stanley (MS) - Get Morgan Stanley (MS) Report , Citigroup (C) - Get Citigroup Inc. Report , Credit Suisse (DHY) - Get Credit Suisse High Yield Bond Fund Report  and UBS Group AG (UBS) - Get UBS Group AG Report are some of the most popular investment banking options. 

Additionally, check out TheStreet's take on the best investment bank stocks to buy right now. 

Источник: https://www.thestreet.com

Long Term Finance

Back to Key Terms Explained

Long Term Finance

Definition

Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments. Maturity refers to the length of time between origination of a financial claim (loan, bond, or other financial instrument) and the final payment date, at which point the remaining principal and interest are due to be paid. Equity, which has no final repayment date of a principal, can be seen as an instrument with nonfinite maturity. The one year cut-off maturity corresponds to the definition of fixed investment in national accounts. The Group of 20, by comparison, uses a maturity of five years more adapted to investment horizons in financial markets (G-20 2013). Depending on data availability and the focus, the report uses one of these two definitions to characterize the extent of long-term finance. Moreover, because there is no consensus on the precise definition of long-term finance, wherever possible, rather than use a specific definition of long-term finance, the report provides granular data showing as many maturity buckets and comparisons as possible.

Importance of long-term finance

Extending the maturity structure of finance is often considered to be at the core of sustainable financial development. Long-term finance contributes to faster growth, greater welfare, shared prosperity, and enduring stability in two important ways: by reducing rollover risks for borrowers, thereby lengthening the horizon of investments and improving performance, and by increasing the availability of long-term financial instruments, thereby allowing households and firms to address their life-cycle challenges (Demirgüç-Kunt and Maksimovic 1998, 1999; Caprio and Demirgüç-Kunt 1998; de la Torre, Ize, and Schmukler, 2012).

The term of the financing reflects the risk-sharing contract between providers and users of finance. Long-term finance shifts risk to the providers because they have to bear the fluctuations in the probability of default and other changing conditions in financial markets, such as interest rate risk. Often providers require a premium as part of the compensation for the higher risk this type of financing implies.  On the other hand, short-term finance shifts risk to users as it forces them to roll over financing constantly.

The amount of long-term finance that is optimal for the economy as a whole is not clear.  In well-functioning markets, borrowers and lenders will enter short- or long-term contracts depending on their financing needs and how they agree to share the risk involved at different maturities. What matters for the economic efficiency of the financing arrangements is that borrowers have access to financial instruments that allow them to match the time horizons of their investment opportunities with the time horizons of their financing, conditional on economic risks and volatility in the economy (for which long-term financing may provide a partial insurance mechanism). At the same time, savers would need to be compensated for the extra risk they might take.

Where it exists, the bulk of long-term finance is provided by banks; use of equity, including private equity, is limited for firms of all sizes. As financial systems develop, the maturity of external finance also lengthens. Banks’ share of lending that is long term increases with a country’s income and the development of banking, capital markets, and institutional investors. Long-term finance for firms through issuances of equity, bonds, and syndicated loans has also grown significantly over the past decades, but only very few large firms access long-term finance through equity or bond markets. The promotion of nonbank intermediaries (pension funds and mutual funds) in developing countries such as Chile has not always guaranteed an increased demand for long-term assets (Opazo, Raddatz and Schmukler, 2015; Stewart, 2014).

Policy challenge

Attempts to actively promote long-term finance have proved both challenging and controversialThe prevalent view is that financial markets in developing economies are imperfect, resulting in a considerable scarcity of long-term finance, which impedes investment and growth. Indeed, a significant part of lending by multilateral development banks (including World Bank Group lending and guarantees) has aimed at compensating for the perceived lack of long-term credit. At the same time, research shows that weak institutions, poor contract enforcement, and macroeconomic instability naturally lead to shorter maturities on financial instruments. Indeed, these shorter maturities are an optimal response to poorly functioning institutions and property rights systems as well as to instability.

From this perspective, the policy focus should be on fixing these fundamentals, not on directly boosting the term-structure of credit. Indeed, some argue that attempts to promote long-term credit in developing economies without addressing the fundamental institutional and policy problems have often turned out to be costly for development. For example, efforts to jump-start long-term credit through development financial institutions in the 1970s and 1980s led to substantial costs for taxpayers and in extreme cases to failures (Siraj 1983; World Bank 1989). In response, the World Bank reduced this type of long-term lending in the 1990s and the 2000s. On the other hand, well-designed private-public risk-sharing arrangements – such as Public Private Partnerships for large infrastructure projects, or credit guarantee schemes –  may hold promise for mobilizing financing for long-term projects, and allow governments to mitigate political and regulatory risks and mobilize funding for private investment.

Suggested reading:

G-20 (Group of 20). 2013. “Long-Term Investment Financing for Growth and Development: Umbrella Paper.” Found at:https://g20.org/wpcontent/uploads/2014/12/Long_Term_Financing_for_Growth_and_Development_February_2013_FINAL.pdf

Caprio, Gerard, and Asli Demirgüç-Kunt. 1998. “The Role of Long-Term Finance: Theory and Evidence.” World Bank Research Observer 13 (2): 171–89.

 

Demirgüç-Kunt, Asli, and Vojislav Maksimovic. 1998. “Law, Finance, and Firm Growth.”  Journal of Finance 53 (6): 2107–37.

Demirgüç-Kunt, Asli, and Vojislav Maksimovic. 1999. “Institutions, Financial Markets and Firm Debt Maturity.” Journal of Financial Economics 54 (3): 295–336.

de la Torre, Augusto, Alain Ize, and Sergio L. Schmukler. 2012. “Financial Development in Latin America and the Caribbean: The Road Ahead.” Policy Research Working Paper 2380, World Bank, Washington, DC.

Opazo, Luis, Claudio Raddatz, and Sergio Schmukler. 2015. “Institutional Investors and Long-Term Investment: Evidence from Chile.” Word Bank Economic Review 29 (2).

Siraj, Khalid. 1983. “Report of the Task Force on Portfolio Problems on Development Finance Companies." World Bank, Washington, D.C.

Stewart, Fiona. 2014. “The Use of Outcome-Based Benchmarks: Proving Incentives for Long-Term Investment by Pension Funds.” Policy Research Working Paper 6885, World Bank, Washington, DC.

World Bank. 1989. Report of the Task Force on Financial Sector Operations. Financial Sector Development Department. World Bank, Washington, DC.

Источник: https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/long-term-finance

The purpose of Investment Banking is to put in touch, through the financial markets, buyers (both private and institutional) who have savings and businesses in need of resources to finance their investments.
This brief definition, which sees investment banks acting as financial intermediaries, no longer seems able to include all of the activities that have been developed over time by these operators.
From their traditional activity of underwriting (assistance in the issuing of stocks and in finding buyers, which will be explained further on), investment banks have through time developed and diversified their business and they now also offer a vast range of other services. These include finding funds within the capital markets, financial advice regarding mergers and acquisitions, assistance in refinancing for businesses and in dealing with rights issues, and even financial services such as project financing, administrating funds, stock market trading, wealth management, brokerage etc.
From this picture, it is clear that it is difficult to define a clear limit to the activities carried out by investment banks. They can even choose to offer only a few of these services and in different ways.
We can try to resolve these difficulties by classifying the activities of investment banks according to the entities to which they are offered; namely businesses and private investors.
Therefore, we can distinguish between:
- services offered to public and private sectors (underwriting, corporate finance and merchant banking);
- trading in stocks for themselves or on behalf of others.

1. Underwriting

This is the traditional business of investment banks and is part of their core-business. It consists mainly of giving advice to companies that want to offer shares and bonds to the public.
The advice can regard the entire offering process, by setting out the terms and conditions of a future emission and even the public placing. An investment bank offers its experience in determining the technical characteristics and organisation of the public offering. The placing of stocks on a market, however, is far more difficult. A primary consideration is the prestige of the bank that is dealing with the public offering: the less well-known a bank is in the market in which it wants to issue stocks, the greater the notoriety effect of the bank dealing with the floatage. Often the big names of the financial world give the best guarantee, or at least this is how it is perceived by investors. Another important consideration is the strength of the relationship the bank already has with the market. Choosing a bank with a low level of visibility and experience instead of another one with a shady reputation can undermine the public floatation. The big players in investment banking often have a strong and consolidated relationship with market investors (both private and institutional) and potential subscribers. The investment bank does not normally have any obligations towards the nominal amount that is offered and remains unrequested, except perhaps to agree to sell at the best possible price any unwanted stocks.
On other occasions, the investment bank agrees to buy unsold stocks at a pre-established price. In this case, the bank in question can decide to undertake the public offering together with other banks to reduce any price risk in the public offering. Alternatively, the issuer can resort to floatation through an auction system. Here, once the general conditions of the stocks are made known, the bank considers all the offers and accepts those with the best price/quantity combination.

2. Corporate Finance

With the general term "corporate finance", we refer to the counselling and assistance service that investment banks offer to businesses involved in mergers and acquisitions and in the restructuring of debt. Some of the emissions that investment banks deal with for companies are carried out simply to create financial resources in view of a future merger and acquisition with other companies. Here investment banks are not only responsible for finding capital but, more importantly, also for providing assistance to a company involved in a Merger & Acquisition deal by helping it to search for potential target companies by outlining the terms and conditions of the operation and by preventing possible future takeovers. As for debt refinancing, the aim of this activity is to re-stabilise the financial situation of the company. Investment banks assist businesses with operations that improve their financial position, with the goal of optimizing business or, in some cases, helping them to make a recovery. They can do this by issuing new shares, consolidating or increasing a company’s debt, or by converting its credit into other asset classes.

3. Negotiating stocks

Stock trading represents a major source of revenue for investment banks. As mentioned at the beginning, this service differs from others discussed up to now in that it is not entirely directed to private businesses, but to the market as a whole. The bank can either trade in stocks and shares for itself (dealing), and therefore for its own portfolio, or for third parties (brokerage). The profit from such transactions comes mainly from the difference between the bid/ask prices or from the increase in value of the stocks held in portfolio.

© 2009 ASSONEBB

Источник: https://www.bankpedia.org/termine.php?c_id=23262

What do analysts, associates, VPs, and MDs actually do in investment banks?

What do investment banking job titles really signify? Do analysts really analyze? Are vice presidents (VPs) in charge of whole divisions? And do managing directors run the entire bank? No, no, and no again.

Banking job titles aren't what they seem. If you haven't come across them before you need to know that they often make people sound more grand than they actually are. If someone tells you they're a vice president in an investment bank, for example, you might think they're something very fancy. They're not: Goldman Sachs has over 10,000 vice presidents (VPs) and that Goldman VP you meet is just one of many. The same applies to managing directors (MDs): most banks have several thousand of them.

Why do banks give people such fancy job titles? Ex-Goldman banker turned academic Alexandra Michel suggests it's because banking careers were historically short. In the past, the average career in an investment banking division (IBD - including M&A and equity or debt capital markets) lasted less than a decade. Banks are trying to change this, but it's still the case that most of banks' junior hires leave voluntarily in the first three years after they've been hired. Banks use big job titles to persuade people to stick around.

What analysts really do in investment banks:

If you leave university after a first degree (or a Masters), you will enter an investment bank as an analyst. In an investment banking division, or in sales and trading, the analyst is simply the junior at the bottom of the banking hierarchy.

What do analysts do? If you work in an investment banking division (IBD), you usually will research companies that might be involved in a deal, you will build the financial models which value the companies you're looking at. And you will assemble your findings into a Powerpoint presentation.

"Junior bankers are experts on financial modeling," says Michel. They are also experts in Excel and VBA. And they are experts in building the PowerPoint presentations that banks use to communicate their ideas to clients. "The more junior you are in M&A, the more time you will spend working on Excel models and PowerPoint Presentations," another former Goldman analyst.

A current M&A analyst at a European bank says analysts usually do what they're told: "The analyst is the person who does all the administration work necessary in the deal process. As the most junior person, you might work on research, you might create the materials for the pitch-book which presents banks' ideas to clients, and you might work on the financial models - but what you do will be quite basic." Some analysts complain that their work is very boring and repetitive:  “As an analyst, you spend 75% of your time on PowerPoint, making presentations,” says one. JPMorgan analyst Mani, says that in the course of one day he worked on "maybe 10 different Excel files and maybe four or five different presentations," for clients. Analysts are notorious for getting, "Please Fix," requests - after putting the presentations together, they'll often be asked to make correction by the bankers above them in the hierarchy. These requests can come through at all hours of the day or night. 

How long will you be an analyst for?

Traditionally, people were analysts in investment banks for three years. However, this has changed. Analyst programs at most banks have been cut by six to 12 months and now last between 2.0 and 2.5 years. 

How much are you paid as an analyst?

Despite being at the bottom of the pile, analysts in investment banks are paid pretty well. In your first year as an analyst in M&A in America you can now expect to earn a salary of $100k at most big banks. In London you can expect between £60k and £65k. Bonuses are paid on top, bringing "total compensation" for first year bankers to between £125k and £130k in London and around $180k in America.

How many hours do you work as analyst? 

The downside to being an analyst in an investment banking division (IBD) has always been the working hours. These were thrown into sharp relief by the 'Goldman Sachs working conditions survey', which leaked out in early 2021 after 13 Goldman Sachs analysts complained of 120 hour weeks. 

Most banks have got subsequently moved to try limiting working hours, at weekends, but 80 or 90 hour weeks are still common. Morgan Stanley analyst Florian Koelliker studied junior bankers for his 2021 dissertation. He found that both analysts and associates typically work between 80 and 90 hours a week. One analyst told Koelliker that leaving at 2am is "ok" and that leaving at 4am is "late."

Why do analysts work so hard? One reason is that they typically amend PowerPoint decks and Excel models at night when the senior bankers have stopped working. "In the day it's quite hard to sort of focus on one task at a time because you'll have all these inbounds of random requests and tasks so you never really get to focus on long project work," says Mani. "But in the evenings when most your clients and seniors are no longer at their desk it's kind of nice to be able to work on things at your own speed and own time."

Sometimes senior bankers are also accused of dumping work on juniors on Friday nights or in the evenings so that juniors have to work all weekends. Efforts are being made to stop this, but it can be unavoidable if clients want a quick turnaround.

What associates really do in investment banks:

Associates are one notch up from analysts. After you've done your two or two and a half years as an analyst, you should get promoted to an associate. However, you can also enter a bank as an associate after studying an MBA (although there are complaints that MBA associates tend ot be inept), particularly at first. Associates are like analysts, except more important. Associates' immediate purpose to manage the analysts below them and to communicate the wishes of the vice presidents (VPs) above them.

"As an associate you're still working on the PowerPoint slides, still managing the presentation," says the M&A analyst, "- But you also work more on the [financial] models."

The associate's role is partly to, "guide the analyst in preparing the presentation and doing the research," he says. The analyst does the work and the associate checks it. "The associate's still an important part of the process. If you have a 50 page presentation, the analyst will usually do 30-40 pages and the associate will check them and do the rest." Nowadays, these presentations are (theoretically) shorter as banks are trying to cut down on unnecessary work.

Associates are still expected to do analyst-type work, says one former associates, although she says that, "analysts are technically the "producers" of all the work and the associates are the "checkers" of it."

How long will you be an associate for?

If you last the course, you'll usually be an associate for around three years.

How much are you paid as an associate?

Banks have hiked salaries for both analysts and associates in 2021. On average, first year associates now earn salaries of $150k+ on Wall Street. JPMorgan associates are now paid $175k. This is just salary - you'll earn a bonus too. The highest paid associates are on total compensation of $400k, or more. 

How many hours do you work as an associate?

Associates usually - but not always - work a few hours less each week than analysts. "You'll often see the associates going home at 11pm instead of midnight," says one analyst. "But that kind of depends upon the person and how good the analyst is. If you're a lazy associate with a good analyst, you can leave early. If you're an ambitious associate with a bad analyst, you'll still be working at 2am."

What vice presidents (VPs) really do in investment banks

It's when you get to vice president (VP) level, that things start to get interesting. Suddenly, you're more outward facing - you actually get to talk to clients. However, you also have to manage the team and oversee the process of putting the client presentations together and this can be stressful. "Being a VP requires more “ownership” in the team and well-established client relationships," says one associate at an international bank.

Vice presidents help to manage clients on a daily basis, says Michel. They also manage the associates and (by default)  the analysts and make sure the necessary financial models and Powerpoint presentations are being built. "VPs lead the layout of the presentations," says a Goldman banker. "They're responsible for making sure the pitch documents are put together and they will also have an active daily role in executing any deals that go ahead."

"The VPs guide the analysts and associates," says the analyst in M&A. "They're running the deal process on a daily basis. - They're the ones saying which materials need to be created. However, they're also the ones who speak on the calls to the clients. They help keep the clients up to date with how things are progressing."

How long will you be a VP for?

Once you get to VP-level, the process of rising up through the investment banking ranks suddenly becomes more erratic. In theory, you're supposed to be a VP for three years but sometimes people get stuck at vice president forever (and ever) - particularly in non-front office (ie. non-revenue earning) areas like technology. Most banks are trying to cut the number of expensive people they have at the top of their pyramids, and this is making it harder to get promoted. Goldman Sachs, for example, only promotes 500-650 people to MD every two years, but has around 12,000 vice presidents (it promotes around 1,500 people to VP a year). On the other hand, talented VPs are being more responsibility (for the same pay) under a process known as "juniorization." 

How much will you be paid as a VP?

Because VPs can vary wildly in terms of experience, their pay often varies widely too. In London, Arkesden Partners says your VP years will be spent earning total compensation of between £249k and £342k ($455k). 

How many hours do you work as a VP?

As a rule of thumb, you should work fewer hours as a VP than as an analyst or associate. "The associate is running the process for the VP, so the VP gets to leave earlier," says the analyst. This doesn't mean they leave early, however. "Our VP goes home around 10pm," he adds. 

Koelliker found that VPs work between 60 and 80 hours each week. 

What directors and managing directors really do in investment banks:

Some banks have an intermediate level of directors (Ds) between VPs and managing directors (MDs).

And what do Ds and MDs do exactly? Michel points out that their main responsibility is bringing in new business. There's a lot of travelling. It's not really as glamorous as people think. MDs also oversee everyone further down the hierarchy and make sure their treasured clients are happy.

"As a director, you'll speak a lot with the clients," says the analyst. "Your role is to act as the interface between the client and the rest of the team."

Managing directors are at the top of the investment banking pile. "They talk to the clients, meet the clients, bring in the revenues and build the business for the bank," says the analyst. "They're the connectors - the relationship builders - they're out there, finding out what's going on with their clients in their industry."

How long will you be a D or MD for?

Although some people are VPs forever, you're usually promoted to director after about three years in a VP position. Once you're a director, Michel says it should (ideally) take only another two years before you make managing director. This may be wishful thinking, however. - Research suggests most people only become MDs after 15 years in banking, and even then only 20% of those who are eligible for an MD promotion will make it. Some say that being a director is the most risky job in a bank – you’re expensive, but you don’t own the client relationships. Others say being a director is less risky than being an MD: directors are cheaper and can step-up to replace MDs when costs are being cut.

Once you make MD, the pressure will be on to bring in revenues. At UBS, managing directors were recently a target of 300 client meetings a year. If you don't deliver you'll be out. If you do deliver, you can expect to last a while. The average tenure of managing directors and partners at Goldman Sachs, for example, is thought to be around eight years.  

How much are you paid as a D or MD?

Pay for directors and managing directors varies wildly from person to person. As an MD in IBD on Wall Street your salary alone will be between $400k and $500k and you will almost certainly earn in excess of $600k in total compensation when bonuses are added. In London, MD salaries are often over £500k.

How many hours will you work as a D or MD?

As a director, you'll typically work fewer hours than a VP. - You might go home at 8 or 9pm. Koelliker found that directors work between 45 and 70 hours a week and have much more control over their time.

However, as an MD, your hours will assume a life of their own. "Sometimes we don't see the MDs in the office much," says the analyst. "- Their jobs are a bit more freestyle and flexible. They might be out of the office for a week, meeting clients. They might have a lunch with a client, and then a coffee, and then a meal with another client. They might go and meet a COO who's also a personal friend." If you're an MD in investment banking, you want to work for a bank that's happy to let you build relationships, and which accepts that this can take time. At Goldman Sachs, for example, ex-COO Harvey Schwartz said it could take seven years for client relationships to generate fees. Even so, banks like to know what their MDs are up to while they're flying around schmoozing clients: HSBC introduced a system for tracking how its senior M&A bankers use their time and how many deals they bring in.  

Although banks are hierarchical, Michel says they can also be fairly egalitarian. If you perform well, you can progress through the hierarchy (at least to VP level) fairly quickly. In IBD, she says most people actually do get promoted up to the next level. This makes banks less competitive places than people expect. Power differentials are minimized and everyone (according to Michel) works for common purpose. Unfortunately, she also concludes that this can lead to overwork and burnout.

Photo by Marcus Lenk on Unsplash

Contact: [email protected] in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

Источник: https://www.efinancialcareers.sg/news/finance/banks-weird-hierarchies-analysts-associates-vps-mds-really

Banking, Capital Markets and Advisory

Our mission is to be the best financial services partner to our clients to help them achieve their goals of economic growth and progress. We do so by providing strategic, financing and operational insight and by executing tailored product and service solutions both across borders and domestically.

The Institutional Clients Group (ICG) responds to clients' changing needs through its long-established relationship coverage approach by providing client solutions that use all of Citi's relevant capabilities including the broadest possible access to financial markets globally. No other institution can match our combination of global insights, client relationship management services, geographic reach and local and cross-border product expertise.

The ICG includes six main business lines: Banking, Capital Markets and Advisory; Commercial Banking; Markets; Securities Services; Private Banking (part of Citi Wealth Management), and Treasury and Trade Solutions (TTS). Working as one, we provide innovative solutions to meet the complex needs of corporations, financial institutions, public sector entities, investment managers and ultra-high-net-worth clients. With a physical presence in 96 countries, local trading desks in 77 markets and a custody network in 63 markets, we facilitate approximately $4 trillion in financial flows daily. We support 90% of global Fortune 500 companies in their daily operations and help them to hire, grow and succeed.

Our network-driven strategy allows us to offer an integrated suite of wholesale banking products and services to clients who value our unmatched country presence and who require a financial services partner that can help them grow in any country where they do business. This includes multinationals that are expanding globally, particularly in the emerging markets, and emerging markets companies that are growing beyond their home market/region. We are uniquely positioned to take advantage of important, evolving global trends, including mobility, fintech, healthcare, wellness and sustainability.

Learn More

Banking, Capital Markets and Advisory listens, collaborates and problem solves, working tirelessly on behalf of our corporate, financial institution, public sector and sponsor clients to deliver a range of strategic corporate finance and advisory solutions that meet their needs, no matter how complex.

Dedicating ourselves to these relationships and ensuring our client experience stands above all else, we leverage the breadth of our unmatched global network to provide debt capital raising, equity-related strategic financing, and merger and acquisition solutions, as well as issuer services. By serving these companies, we help them grow, creating jobs and economic value at home and in communities worldwide.

Following the market dislocation last spring, Citi was integral in reopening both the debt and equity markets, leading on several large transactions. In 2020, Citi led, as a bookrunning manager, over half of the record $1.7 trillion investment grade and $435 billion high-yield issuance volume. The issuance environment was very dynamic, with a rush to source liquidity during the first three months of the pandemic, turning to a more opportunistic and acquisition financing environment as the year progressed with markets steadily improving and ultimately rallying by year end. Citi was an early leader, providing significant balance sheet support for clients and guiding issuers that raised record amounts of liquidity from fixed income investors at the peak of the pandemic. As markets improved, Citi helped countless clients achieve record-low coupons. Citi served as a bookrunner on a number of landmark investment grade financings, including raising $25 billion in April for Boeing, $8.5 billion in March and $9.5 billion in April for ExxonMobil, $4.1 billion and €2.6 billion in September for Coca-Cola, and $8.9 billion secured financing in June for PG&E. Citi advised and executed on behalf of COVID-19-affected and opportunistic high-yield clients, including $8 billion in April for Ford, $4.7 billion in June for American Airlines, $2.0 billion in June for Occidental Petroleum and $2.8 billion in December for Community Health.

In equity capital markets, historic volatility drove waves of equity issuance. Citi served as underwriter on a number of successful initial public offerings (IPO) in 2020, including Snowflake's $3.4 billion offering in September and Royalty Pharma's $2.2 billion IPO in June. We saw record issuance particularly in the special purpose acquisition company (SPAC) space, with nearly $100 billion issued in 2020. Most notably among 2020 SPACs was the $4.0 billion blank check company sponsored by Pershing Square Capital Management whereby Citi served as left lead on the transaction. In addition to being the largest SPAC raised globally, the transaction garnered significant praise for the use of minority broker-dealers as co-leads on the deal. Citi was left lead underwriter for both Dragoneer SPAC offerings for a combined total of $966 million and sole underwriter for the first ESG-linked SPAC in May. Citi was also selected as left lead for Shopify's two secondary equity offerings, including its $1.5 billion follow-on offering in May, representing the largest internet overnight follow-on to date.

Citi’s Global Mergers & Acquisitions Group advised on landmark transactions signed and negotiated during the peak of the COVID-19 crisis, demonstrating how our clients turn to us to provide trusted advice and to offer innovative strategic solutions. Citi advised Unilever on its transformational restructuring to create a simpler company with greater strategic flexibility and better positioning for future success. This transaction removes complexity and strengthens corporate governance by uniting its dual UK PLC and Dutch N.V. legal and listing structure resulting in a single parent company: Unilever PLC, which will have a market capitalization of approximately £110 billion. Citi was sole financial advisor to Telefóica on its joint venture with Liberty Global for its U.K. businesses (O2 and Virgin Media), valued at $38 billion. Citi served as a financial advisor to S&P Global on its announced merger with IHS Markit, an all-stock transaction implying an enterprise value for IHS Markit of $44 billion. This was one of the largest transactions of 2020, bringing together two world-class organizations with unique and highly complementary products and cutting-edge innovation and technology.

Citi Public Sector Group worked closely with governments and the public sector to find liquidity alternatives and advised on the issuance of social bonds to support countries in the emerging markets throughout the pandemic. In November, we announced our selection as financial advisor to Gavi, the Vaccine Alliance, for its COVAX Facility. In this capacity, a team consisting of more than two dozen senior bankers across multiple business units, spearheaded by the Public Sector Group, is providing Gavi with expert advice on structures to mitigate sovereign, credit and operational risk as the COVAX Facility seeks to facilitate pooled procurement and equitable distribution of safe and effective COVID-19 vaccines globally.

In addition, drawing on Citi's global reach with physical presence in nearly 100 countries and territories and the capability to serve nearly 60 additional countries, Citi's Corporate Bank served as a critical partner to large multinationals in COVID-19-affected industries throughout 2020, providing new lines of credit and shoring up balance sheets for many blue-chip corporations. In 2020, Citi syndicated 500+ loans with volumes in excess of $895 billion.

Learn More

Citi Commercial Bank puts 200 years of experience to work for midsized, globally oriented companies by delivering actionable insights and ideas, comprehensive banking solutions and a truly global network.

We provide high-quality financial advice, helping businesses prosper and grow in domestic markets, as well as internationally. Our distinctive approach puts the client at the center of everything we do. By understanding their industries and learning their business priorities, our Relationship Managers bring our clients insights designed to help them succeed. Whether providing capital to fund growth or refinancing debt, Citi Commercial Bank offers solutions that support the right capital structure to meet companies' short- and long-term financing needs. With the full spectrum of Citi's capabilities and access to our global network, we are able to deliver tailored solutions to meet our clients' unique goals and objectives.

In the past year, Citi Commercial Bank enhanced our core client and internal applications and significantly improved our processes, reducing client friction and digitizing more of the client experience. We continue our digital transformation with the redesign and expansion of CitiBusiness® Online features and a new Gateway portal in the U.S. for account onboarding, Know Your Customer and product setup activities and continued to build a world-class experience by facilitating a fully digital onboarding journey through Gateway and CitiDirect BE® Digital Onboarding.

Citi Commercial Bank worked together with the Global Consumer Bank in the U.S. to support clients adversely affected by the COVID-19 pandemic by providing loans and participating in the PPP programs administered by the U.S. government. We also participated in a number of other government-supported programs outside the U.S. and developed solutions to assist clients in need throughout the crisis.

Learn More

World-class solutions that are as diverse as the needs of our clients. With trading floors located in over 80 countries across America, Asia, Europe, the Middle East, we work around the clock to enrich the relationships, products, and technology that define our market-making presence. We partner with our clients to provide solutions, insights, liquidity and risk management support when and where they need it.

In 2020, Citi retained our ranking as the World's Largest Fixed Income Dealer for the fifth straight year, according to Greenwich Associates' Annual Benchmark Survey, which polled more than 3,500 fixed income investors around the world. Citi's leading market position is driven by our strength in both Rates and Emerging Markets, ranked #1, respectively, along with the top spot in Municipal Bonds. In addition to the distinction of being overall share leader, Citi ranked #1 in Overall Quality, Sales Quality, Trading Quality and e-Trading market penetration. Citi was also named Largest Affordable Housing Lender in the country for the 11th year in a row in Affordable Housing Finance magazine's annual survey of affordable housing lenders. Partnering with developers, nonprofits and local governments, Citi has helped create or preserve nearly 488,000 affordable housing units over the past decade. In 2020, Citi Community Capital, the bank unit through which Citi works to finance all types of affordable housing and community development projects, reported more than $7 billion of lending to finance affordable rental housing projects.

Citi Velocity®, Citi's #1 ranked digital content platform for Institutional Clients, delivers electronic access to Citi's capital markets services across equities, futures, FX, emerging markets, rates, credit, commodities, securitized products, municipals, securities services and research spanning thousands of content creators and apps. Nearly 100,000 Institutional Clients spread over almost 150 countries use Citi Velocity on a regular basis across all asset classes. 2020 was the Citi Velocity platform's strongest year since its 2011 launch. In addition to pricing millions of derivative instruments and supporting half a billion data interactions, Citi Velocity made a big push into the audiovisual content and mobile space. We hosted 1,850 webcasts that were attended by more than 100,000 clients, an increase of 200% year-over-year. We produced over 3,100 videos and podcasts, 28% more than in prior years. The platform saw mobile growth soar 57%, while the number of unique client users grew 9%. While Citi Velocity was laser focused on being the best digital product for our clients, it was also used to offer clients and colleagues some respite from the year's events. Citi Velocity streamed two concert series in 2020, in partnership with the London Philharmonia, which became the most popular video content of the year.

In May 2020, Proxymity, a digital investor communications platform developed within Citi's Institutional Clients Group, was spun off into a standalone entity that raised $20.5 million in a strategic round of investment led by Citi Ventures, with participation from a global industry consortium. Proxymity's services include a digital, real-time and fully transparent proxy voting platform, providing post-meeting vote confirmation and giving investors up to nine additional days per meeting to research and vote. Proxymity also offers a shareholder disclosure platform that automates shareholder ID requests and eliminates the need for any manual handling. The idea for Proxymity was formulated in 2017 by two Markets and Securities Services colleagues as a way for issuers to better communicate with investors. As the idea for the platform evolved, D10X, an internal strategic growth model that enables employees to take new business ideas from concept to launch, helped Proxymity iterate and evaluate its vision to improve the proxy voting system. From there, the Citi Innovation Lab in Tel Aviv developed Proxymity into a market-ready offering in less than two years using a Lean team model and rapid, agile development. Citi is incredibly proud of what Proxymity has been able to achieve thus far and looks forward to continuing to support the platform as a member of the consortium.

Learn More

We provide a full suite of securities services in more than 100 markets, including our proprietary network of over 60 branches and across 23 fund domiciles. Our solutions include custody, clearing, asset servicing, fund administration, ETF services, middle office, agency securities lending, collateral management, transfer agency, and fiduciary services.

In 2020, Citi entered into an alliance with BlackRock, through its Aladdin® business, to enhance the delivery of securities services to Citi's clients who use the Aladdin end-to-end investment management platform. Connecting to Aladdin Provider, Citi will provide outsourced middle-office services directly on a client's instance of Aladdin for seamless integration with the front office, from trade confirmation to post-settlement reconciliation. This agreement expands Citi's relationship with BlackRock, to whom we provide custody, accounting and/or fiduciary services for certain BlackRock funds domiciled in Hong Kong, Mexico and Colombia. In addition to funds managed by BlackRock, Citi provides custody services to many asset managers on the Aladdin platform. Joining the Aladdin Provider network will allow Citi to optimize our operating model to support not only BlackRock's asset management business but to provide an enhanced level of service to members of the broader Aladdin community.

Learn More

The Private Bank is dedicated to helping the world's wealthiest individuals, families and law firms protect and responsibly grow their wealth.

From 50 locations worldwide, we serve more than 13,000 ultra-high net worth clients hailing from over 100 countries, including 25% of the world’s billionaires and more than 1,400 family offices. In 2020, total client business amounted to around $550 billion.

Our unique business model enables us to focus on fewer, larger and more sophisticated clients with an average net worth above $100 million. Clients enjoy a highly customized experience, with access to a comprehensive range of products and services spanning investments, banking, lending, custody, wealth planning, real estate, art, aircraft finance and lending, and more.

In everything we do, we emphasize personalized advice, competitive pricing and efficient execution. Citi Private Bank's close partnership with Citi's Institutional Clients Group means we can connect clients' businesses to banking, capital markets and advisory services, as well as to Citi's other institutional resources. A growing number of our clients seek to align their investments with their personal values. Investing with Purpose is what we call our approach to sustainable and impactful investing. We help clients articulate their sustainability goals and objectives, provide them with comprehensive advice and offer in-house investment management that incorporates environmental, social and corporate governance principles. We also partner with third-party asset managers to deliver relevant themes and strategies.

In 2020, we transformed our flagship annual Family Office Leadership Program—often described by participants as "the Davos for family offices"—into a virtual summit. Sessions this year covered vital topics that include sustainable investing, advances in family healthcare practices, future of energy and the building of resilient families. Nearly 6,000 participants from 100+ countries took part in the program. We also launched the Direct Private Investments business to identify opportunities for family offices and private investment company clients to actively invest in direct private deals.

Learn More

Treasury and Trade Solutions (TTS) provides integrated cash management, working capital and trade finance solutions to multinational corporations, financial institutions and public sector organizations around the globe. With the industry's most comprehensive suite of digitally enabled platforms, tools and analytics, TTS leads the way in delivering innovative and tailored solutions to clients. Based on the belief that client experience is the driver of sustainable differentiation, TTS has focused its efforts on transforming its business to deliver a seamless, end-to-end client experience through digital capabilities, client advocacy, network management and service delivery across the entire organization.

Our digital transformation accelerated in 2020 with increased momentum in client engagement and digital adoption as evidenced by strong growth in CitiDirect BE® users, API volumes and digital account openings. Digital Onboarding is now live in 50 countries, and CitiDirect BE users were up 9% versus the prior year. Additionally, we delivered to the market 83 live APIs that collectively reached 1 billion API calls since inception. Citi's digital channels remain pivotal in helping clients with operational resiliency while continuing to operate in remote or continuity-of-business modes. Digital Onboarding enabled clients around the world to set up accounts using eSignatures and overcome major obstacles due to the pandemic.

With Instant Payments becoming a new norm, enabling our clients to disrupt their business model and shift toward a 24/7, always-on environment, we continue to invest in building a globally consistent Instant Payments proposition, having launched the capability in six additional markets in 2020, taking our global presence to 26 markets. Our global volumes have seen a growth of more than 70% year-over-year and are rapidly approaching the million daily transaction mark. With an ambitious road map to continue to expand our footprint and capabilities, we are very well positioned for another exciting and successful year in 2021.

In October 2020, in support of U.S.- based suppliers affected by COVID-19, we worked with the U.S. EXIM Bank to create facilities, including the guarantee of a $500 million facility by EXIM that allows Citi to finance accounts receivable from The Boeing Company to its U.S.-based suppliers. The agreement also includes the preliminary approval of a $327 million facility for the purchase of Boeing aircraft by Copa Airlines, exported from Renton, Washington.

Learn More

Источник: https://www.citigroup.com/citi/about/institutional_business.html

: What is investment banking definition

How to sell gift cards for cash online
Ameris online banking personal
CALL NYSEG TO PAY BILL
Fidelity 401k account number online
MOVE OUT INSPECTION CALIFORNIA

What to know about investment banking and the professionals driving the biggest deals on Wall Street

  • Investment banking is a specific kind of ameren illinois power outage that helps companies, governments, and institutions raise funds and execute financial transactions.
  • Unlike retail banks, which can focus on transactions for individual consumers, investment banks help with transactions such as mergers and acquisitions and the issuance of securities. 
  • Investment bankers conduct research, manage projects, and provide strategic advice, and their salaries can be among the highest in the world. 
  • Visit Insider's Investing Reference library for more stories.

Unlike retail banks, which can work with individual consumers on offerings like deposits and loans, investment banks are a special kind of financial institution that help companies, governments, and institutions raise capital. 

"If you want to borrow money for a home purchase, when you go to the bank, they're connecting people who have savings in the bank [with] borrowers," explains Emil N. Siriwardane, Finnegan Family Associate Professor of Business Administration at Harvard Business School. As he notes, investment banking basically does that function for companies.

These banks have been around for a while. Early investment bankers have been said to begin as merchants trading commodities like spices and cotton. These merchants then could facilitate product production and transportation. 

Speeding forward a few centuries, into the 19th to be exact, the term "investment bank" became more popular. Global firm JPMorgan Chase & Co. even traces its roots back to 1799 in New York City, pointing to what it calls "heritage firms." And early investment banks raised capital through actions like selling railroad stock and organizing company buyouts.

What do investment banks do?

To raise capital, investment banks act as advisors and intermediaries between corporations, other entities, and investors. These banks can specialize in areas like mergers and acquisitions, underwriting, private equity, and venture capital. 

Bankers even san jose weather yesterday focus on specific sectors, like health care and tech, as well as sectors according to size, notes David Erickson, a senior fellow and lecturer in the Finance Department at The Wharton School and co-director of the Stevens Center for Innovation in Finance.

Quick tip: Just remember, investment banks act as intermediaries between entities that want to raise money and the individuals and entities that offer it. 

When it comes to classification, so-called "boutique banks," including regional boutique banks, can be smaller and more independent. They also can focus on specific sectors of investment banking, notes Erickson. Meanwhile, "bulge banks" include large global firms with easily recognizable names. Think Goldman Sachs, JPMorgan Chase & Co, Morgan Stanley, and more.

Also know: An investment bank is not the same thing as an investment banking division. Full-service investment banks can offer a wide range of offerings that include underwriting, M&A, sales and trading, and equity research. Meanwhile, an investment banking division of a bank provides underwriting and M&A advisory services.

The role of investment bankers

Investment banks can employ a variety of people, and there is a hierarchy. Employees can include investment banking analysts, investment banking associates, vice presidents, directors or senior vice presidents, and managing directors. 

These staff members work on a variety of projects and deals and can work long hours. But these professionals also are highly paid for their skills, with annual rates in the six figures possible for junior staff and into the millions for senior staff. And the work can be rewarding both personally and professionally, notes Erikson. 

Investment bankers also can work on different kinds of projects. "Banks help companies that need money get it," says Siriwardane, noting that, within that structure, there are different ways banks will raise money. 

"A typical investment banker will have a group of companies that they work with," Erickson adds. And then they'll figure out what companies need and consider potential funding sources.

Quick tip: Investment banks can use a variety of strategies to raise capital, and they may even combine strategies to get the best results. 

These financial professionals can provide many different services:

Equity financing. This capital-raising process can include private equity, which is private financing, such as capital from a high-net worth investor or firm. Venture capital investments, which can be popular for start-ups, are another way to secure equity financing, as shareholders finance companies in exchange for an equity stake. Investment banks can serve as intermediaries to connect companies to private investors or venture capital, or to oversee the process of offering shares to the public in an initial public offering, or IPO. If you've ever bought stocks or been interested in the stock market, you may remember how companies like Facebook and Google raised billions of dollars in capital via IPOs. With this kind of financing, companies can share their profits with investors and consult them on decisions.

Underwriting. For this function, investment banks can work between investors and companies that want to raise money or go public. This process involves doing research and assessing risk, and then the investment bank prices, underwrites, and sells the new securities. Investment banks can profit on the difference between the price paid for the securities and what securities are then sold for. Underwriting can involve a bank taking a financial risk in the project as well, for a piece of the pie. For instance, when investment banks offer underwriting, says Siriwardane, they can, in some cases, arrange for debt to be picked up by investors but keep a bit of the debt themselves to have "skin in the game," typically for a very specific kind of debt. 

Debt financing. For this process, investment banks will help companies borrow money, such as a loan. Then companies agree what is investment banking definition pay back the money over time, with interest. This process is different from equity financing because the lender has no ownership of the company it is funding and, thus, does not typically have a say in business decisions. When the debt is repaid, the business relationship can end. That said, this process can create certain restrictions while the company is repaying the debt. 

Sales and trading. This work involves acting as an intermediary between buyers and sellers of securities in the secondary market. For this function, banks can work with mutual funds, hedge funds, and more, the Corporate Finance Institute confirms, noting that these trading groups "act as agents for clients and also can trade the firm's own capital."

Leveraged buyouts. In this kind of transaction, a company can be acquired using mostly borrowed money, explains Siriwardane. In this way, the buyer — like a private equity firm — can put in some money and borrow the balance to finance the acquisition. Sidwardane likens this company move to when a consumer buys a home using a down payment and best free budget app not linked to bank account loan. This model can be layered, creates debt, and also has its own risks.

Mergers and acquisitions (M&A). When it comes to this well-known project area, investment bankers can advise buyers and sellers of companies and manage the M&A process from beginning to end. In a merger, two firms combine into a new legal entity. And in an acquisition, one firm buys — or otherwise acquires — another. 

"[The M&A process] can get complex quickly," Siriwardane says. As part of this process, an investment bank "will help you figure out what price to pay for a firm," he adds, noting that the bank must research and understand what drives a company's profits, how to evaluate costs and general industries, and more. 

There can be various ways to structure these transactions, and financing can happen using cash, stocks, or even when one company assumes the debt of another. Depending on the deal, this process can last for months or even years.

When it comes to the work of investment bankers, there's a lot at stake. As Erickson notes, these bankers need to do their due diligence and help their clients understand the risks taken on with financial transactions. And bankers need to understand and manage the risks their banks are taking on.

Quick tip: Investment bankers must understand the potential risks and benefits of deals for both their banks and their clients. 

Plus, relationships matter. "You have to have a very, I would say, consultative approach . Make sure you're a good listener to understand what the company's looking to achieve," adds Erickson. "And think about different potential solutions that can help them achieve those things," he says, as well as doing the work to present pros and cons. 

The financial takeaway

Investment banking is a type of banking that focuses on raising or creating capital for companies, governments, and other entities. Investment bankers are responsible for analyzing trends, assessing risks, providing strategic advice, and managing projects. 

If you're interested in working in this field, it's important to understand the responsibilities of these banks and the work required to meet business goals. And if you're interested in raising capital for your own company or entity, it's important to understand how an investment bank may be able to advise and help manage your project.

Источник: https://www.businessinsider.com/investment-banking

What Is Investment Banking and What Should You Know?

It seems as if there is a special niche for everything in finance - and banking is no exception. If a company, corporation, or the government has special banking needs, why not have an entire sect of banking dedicated to them? Well, that seems to be the rationale behind investment banking. But what exactly is investment banking? And how is it different from regular banking?

Investment Banking Definition

Put simply, investment banking is dedicated to helping large companies or institutions manage their money - whether that be by helping them create capital, underwriting debt or equity securities, or helping with mergers and acquisitions. Investment banks can also help with issuing stock and other transactions a corporation may need help with.

Often, investment banks are part of a larger banking infrastructure, such as Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report or JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report .

Investment banks operate as a way for large entities (which could either be companies, corporations, governments, or other such institutions) to make big financial transactions with a little extra help. Along those lines, investment banks will often help facilitate the finances surrounded mergers and acquisitions, and, perhaps most importantly, help connect corporations to investors through the issuing of bonds or stocks. To that extent, investment banks often help companies issue their initial public offerings, IPOs. In these cases, the investment bank will sell the shares on behalf of the company on the market.

Among other things, investment banks work as financial advisors to large companies or entities, especially in advising sales and trading between buyers and sellers of companies, and recently began offering commercial banking services (since the repeal of Glass-Steagall in 1999).

Investment banks operate on two different groups: Product groups and industry groups. 

Investment Bank Product Groups

As part of their structure, investment banks offer different product groups. While the three main product groups investment banks offer are mergers and acquisitions, restructuring and leveraged finance, they encompass a bit more than that. The typical main product groups reportedly are:

  • Mergers and Acquisitions, M&A: The investment bank will advise or facilitate the mergers of companies with one another.
  • Leveraged Finance, LevFin: Investment banks will finance corporate activities through issuing high-yield debt.
  • Equity Capital Markets, ECM: The investment bank will advise companies or corporations on the release and management of IPOs, stocks, bonds and shares, as well as raises and other equity concerns.
  • Restructuring: Investment banks will often help restructure companies or corporations in order to increase profitability and economy within the entity.

Investment Bank Industry Groups

Additionally, investment banks offer what are called industry groups, which cover different industries like financial sectors, healthcare sectors, etc. Some of the principle industry groups reportedly include: 

  • Financial Institutions Group, FIG 
  • Healthcare
  • Industrials
  • Technology, Media & Telecommunications, TMT
  • Real Estate Investment Banking

Although investment banks cover more areas than the aforementioned, they generally focus around these principle sectors. Investment bankers working in industry groups generally have more of a marketing bent when working with different sectors compared to their advising-heavy counterparts in product groups. 

Investment Banking vs. Commercial Banking

The main difference between investment banking and commercial banking is that investment banking typically deals with purchasing and selling bonds and stocks for companies, and also helping them issue IPOs, while commercial banks primarily deal with deposits or loans for companies or individuals.

So, basically, investment banks deal with trading securities, whereas commercial banks do not.

However, there are still several other key differences between investment banking and commercial banking that have to do with regulation, risk level, and benefits.

Glass-Steagall Act

During the Great Depression, both investment and commercial aspects of banks were combined, which was seen as a negative thing that may have contributed to the depression itself. Once the Glass-Steagall Act was instituted in 1933 as part of the Banking Act to separate the two sides of banking (investment and deposit management), the divide was created.

However, when the Glass-Steagall Act was repealed in 1999 by the Gramm-Leach-Bliley Act, banks were once again given the freedom to merge the investment and commercial sides together. However, despite this newfound leeway, many large banks have decided to keep their investment and commercial banks separate.

Risk and Regulation

Another big difference is that commercial banks have stricter regulation. Commercial banks must be regulated by several government entities to include the Federal Deposit Insurance Corporation, or FDIC, whereas investment banks only need be regulated by the Securities and Exchange Commission, SEC - the latter of which allows for more freedom in making decisions and investments.

Because of this difference in regulation, commercial banks are often less risky than investment banks (because they are backed by the federal government) - but, on the flip side, investment banks provide more room to maneuver strategic decisions than commercial banks do.

Still, the banks who have decided to combine have several pros.

Combination Benefits

While not many large banks combine their divisions, some of the benefits of combination include banks being able to issue companies IPOs (using its investment bank capabilities) and then extend lines of credit to them (using the commercial bank side) - which would allow the banks to then receive benefits from doling out a hefty sum and in return, get higher commissions and trading revenue from the stock.

By having both the issuing securities and extending lines of credit sides covered, combination banks are able to bolster the growth of companies and reap the rewards.

However, concerns still remain over the temptation of combination banks to keep undeserving companies afloat - which was a major aspect of the bubble/burst cycle seen during the depression.

What Do Investment Bankers Do?

As the title would suggest, an investment banker helps raise capital for companies or other large entities who are clients of the bank. The bankers often work in the investment arms of larger banks like JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report and Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report .

As part of their duties, managing companies' securities, investment bankers are responsible for advising companies on several fronts, including pricing and helping the company navigate various regulations.

Investment bankers will also often help facilitate accounts key com login bank's purchase of all or some of the company's shares when an IPO is released - but, if the financial analysts at the investment bank overvalue the stock, the bank can take heavy losses.

History of Investment Banking

Investment banking had its inception after the Wall Street Crash of 1929, when banks and investors alike suffered devastating losses. As one of his first acts as president, Franklin D. Roosevelt instituted the Glass-Steagall Act of 1933 as part of his New Deal. This act separated investment banking from deposit banking, and sought to restore faith in the American banking system, detailed in the act's Article 20. 

Under the blanket of the Banking Act, President Roosevelt sought to curtail the previously all-powerful banks by ensuring they managed risk and protected their depositor's money. However, following the boom that occurred post-1933, banks began bending the rules of the Glass-Steagall Act and started blending commercial and investment banking activities - leading President Clinton to repeal the act in 1999 via the Gramm-Leach-Bliley Law. 

This repeal led to the acquisition of JP Morgan (a mega investment bank of the time) by Chase Manhattan (a major commercial bank) in 2000. 

However, this was seemingly the beginning of the end for investment banks.

Controversies in Investment Banking 

In 2008, the banking industry loomed on the edge of total collapse as the United States economy plummeted into the Great Recession. 

After banks made too many regions stock ticker loans, Bear Stearns, one of the largest investment banks at the time, fell to the financial crisis - forcing the Federal Reserve to sell it to J.P. Morgan. Others followed, as more banks declared bankruptcy (including long-time staple of the financial sector Lehman Brothers). 

Then-president Barack Obama put precautions in place to attempt to revive the economy - namely, the Dodd-Frank Law in 2010. The bill limited banks' sizes and laid out more precautions to keep investment and commercial banking more separate. 

However, many banks still have investment bank branches alongside commercial branches. 

Best Investment Banking Options

There are dozens of good investment banks available, but many of the most revered ones come from the top banks in general. 

Among others, Goldman Sachs, JPMorgan Chase, Bank of America (BAC) - Get Bank of America Corp ReportBarclays (BCS) - Get Barclays PLC Sponsored ADR ReportMorgan Stanley (MS) - Get Morgan Stanley (MS) ReportCitigroup (C) - Get Citigroup Inc. ReportCredit Suisse (DHY) - Get Credit Suisse High Yield Bond Fund Report  and UBS Group AG (UBS) - Get UBS Group AG Report are some of the most popular investment banking options. 

Additionally, check out TheStreet's take on the best investment bank stocks to buy right now. 

Источник: https://www.thestreet.com

What do analysts, associates, VPs, and MDs actually do in investment banks?

What do investment banking job titles pnc bank virtual wallet sign in signify? Do analysts really analyze? Are vice presidents (VPs) in charge of whole divisions? And do managing directors run the entire bank? No, no, and no again.

Banking job titles aren't what they seem. If you haven't come what is investment banking definition them before you need to know that they often make people sound more grand than they actually are. If someone tells you they're a vice president in an investment bank, for example, you might think they're something very fancy. They're not: Goldman Sachs has over 10,000 vice presidents (VPs) and that Goldman VP you meet is just one of many. The same applies to managing directors (MDs): most banks have several thousand of them.

Why do banks give people such fancy job titles? Ex-Goldman banker turned academic Alexandra Michel suggests it's because banking careers were historically short. In the past, the average career in an investment banking division (IBD - including M&A and equity or debt capital markets) lasted less than a decade. Banks are trying to change this, but it's still the case that most of banks' junior hires leave voluntarily in the first three years after they've been hired. Banks use big job titles to persuade people to stick around.

What analysts really do in investment banks:

If you leave university after a first degree (or a Masters), you will enter an investment bank as an analyst. In an investment banking division, or in sales and trading, the analyst is simply the junior at the bottom of the banking hierarchy.

What do analysts do? If you work in an investment banking division (IBD), you usually will research companies that might be involved in a deal, you will build the financial models which value the companies you're looking at. And you will assemble your findings into a Powerpoint presentation.

"Junior bankers are experts on financial modeling," says Michel. They are also experts in Excel and VBA. And they are experts in building the PowerPoint presentations that banks use to communicate their ideas to clients. "The more junior you are in M&A, the more time you will spend working on Excel models and PowerPoint Presentations," another former Goldman analyst.

A current M&A analyst at a European bank says analysts usually do what they're told: "The analyst is the person who does all the administration work necessary in the deal process. As the most junior person, you might work on research, you might create the materials for the pitch-book which presents banks' ideas to clients, and you might work on the financial models - but what you do will be quite basic." Some analysts complain that their work is very boring and north texas basketball referee association  “As an analyst, you spend 75% of your time on PowerPoint, making presentations,” says one. JPMorgan analyst Mani, says that in the course of one day he worked on "maybe 10 different Excel files and maybe four or five different presentations," for clients. Analysts are notorious for getting, "Please Fix," requests - after putting the presentations together, they'll often be asked to make correction by the bankers above them in the hierarchy. These requests can come through at all hours of the day or night. 

How long will you be an analyst for?

Traditionally, people were analysts in investment banks for three years. However, this has changed. Analyst programs at most banks have been cut by six to 12 months and now last between 2.0 and 2.5 years. 

How much are you paid as an analyst?

Despite being at the bottom of the pile, analysts in investment banks are paid pretty well. In your first year as an analyst in M&A in America you can now expect to earn a salary of $100k at most big banks. In London you can expect between £60k and £65k. Bonuses are paid on top, bringing "total compensation" for first year bankers to between £125k and £130k in London and around $180k in America.

How many hours do you work as analyst? 

The downside to being an analyst in an investment banking division (IBD) has always been the working hours. These were thrown into sharp relief by the 'Goldman Sachs working conditions survey', which leaked out in early 2021 after 13 Goldman Sachs analysts complained of 120 hour weeks. 

Most banks have got subsequently moved to try limiting working hours, at weekends, but 80 or 90 hour weeks are still common. Morgan Stanley analyst Florian Koelliker cbc comerica com junior bankers for his 2021 dissertation. He found that both analysts and associates typically work between 80 and 90 hours a week. One analyst told Koelliker that leaving at 2am is "ok" and that leaving at 4am is "late."

Why do analysts work so hard? One reason is that they typically amend PowerPoint decks and Excel models at night when the senior bankers have stopped working. "In the day it's quite hard to sort of focus on one task at a time because you'll have all these inbounds of random requests and tasks so you never really get to focus on long project work," says Mani. "But in the evenings when most your clients and seniors are no longer at their desk it's kind of nice to be able to work on things at your own speed and own time."

Sometimes senior bankers are also accused of dumping work on juniors on Friday nights or in the evenings so that juniors have to work all weekends. Efforts are being made to stop this, but it can be unavoidable if clients want a quick turnaround.

What associates really do in investment banks:

Associates are one notch up from san jose temperature in september you've done your two or two and a half years as an analyst, you should get promoted to an associate. However, you can also enter a bank as an associate after studying an MBA (although there are complaints that MBA associates tend ot be inept), particularly at first. Associates are like analysts, except more important. Associates' immediate purpose to manage the analysts below them and to communicate the wishes of the vice presidents (VPs) above them.

"As an associate you're still working on the PowerPoint slides, still managing the presentation," says the M&A analyst, "- But you also work more on the [financial] models."

The associate's role is partly to, "guide the capitalone com login page in preparing the presentation and doing the research," he says. The analyst does the work and the associate checks it. "The associate's still an important part of the process. If you have a 50 page presentation, the analyst will usually do 30-40 pages and the associate will check them and do the rest." Nowadays, these presentations are (theoretically) shorter as banks are trying to cut down on unnecessary work.

Associates are still expected to do analyst-type work, says one former associates, although she says that, "analysts are technically the "producers" of all the work and the associates are the "checkers" of it."

How long will you be an associate for?

If you last the course, you'll usually be an associate for around three years.

How much are you paid as an associate?

Banks have hiked salaries for both analysts and associates in 2021. On average, first year associates now earn salaries of $150k+ on Wall Street. JPMorgan associates are now paid $175k. This is just salary - you'll earn a bonus too. The highest paid associates are on total compensation of what is investment banking definition, or more. 

How many hours do you work as an associate?

Associates usually - but not always - work a few hours less each week than analysts. "You'll often see the associates going home at 11pm instead of midnight," says one analyst. "But that kind of depends upon the person and how good the analyst is. If you're a lazy associate with a good analyst, you can leave early. If you're an ambitious associate with a bad analyst, you'll still be working at 2am."

What vice presidents (VPs) really do in investment banks

It's when you get to vice president (VP) level, that things start to get interesting. Suddenly, you're more outward facing - you actually get to talk to clients. However, you also have to manage the team and oversee the process of putting the client presentations together and this can be stressful. "Being a VP requires more “ownership” in the team and well-established client relationships," says one associate at an https m youtube com search bank.

Vice presidents help to manage clients on a daily basis, says Michel. They also manage the associates and (by default)  the analysts and make sure the necessary financial models and Powerpoint presentations are being built. "VPs lead the layout of the presentations," says a Goldman banker. "They're responsible for making sure the pitch documents are put together and they will also have an active daily role in executing any deals that go ahead."

"The VPs guide the analysts and associates," says the analyst in M&A. "They're running the deal process on a daily basis. - They're the ones saying which materials need to be created. However, they're also the ones who speak on the calls to the clients. They help keep the clients up to date with how things are progressing."

How long will you be a VP for?

Once you get to VP-level, the process of rising up through the investment banking ranks suddenly becomes more erratic. In theory, you're supposed to be a VP for three years but sometimes people get stuck at vice president forever (and ever) - particularly in non-front office (ie. non-revenue earning) areas like technology. Most banks are trying to cut the number of expensive people they have at the top of their pyramids, and this is making it harder to get promoted. Goldman Sachs, for example, only promotes 500-650 people to MD every two years, but has around 12,000 vice presidents (it promotes around 1,500 people to VP a year). On the other hand, talented VPs are being more responsibility (for the same pay) under a process known as "juniorization." 

How much will you be paid as a VP?

Because VPs can vary wildly in terms of experience, their pay often varies widely too. In London, Arkesden Partners says your VP years will be spent earning total compensation of between £249k and £342k ($455k). 

How many hours do you work as a VP?

As a rule of thumb, you should work fewer hours as a VP than as an analyst what is investment banking definition associate. "The associate is running the process for the VP, so the VP gets to leave earlier," says the analyst. This doesn't mean they leave early, however. "Our VP goes home around 10pm," he adds. 

Koelliker found that VPs work between 60 and 80 hours each week. 

What directors and managing directors really do in investment banks:

Some banks have an intermediate level of directors (Ds) between VPs and managing directors (MDs).

And what do Ds and MDs do exactly? Michel points out that their main responsibility is bringing in new business. There's a lot of travelling. It's not really as glamorous as people think. MDs also oversee everyone further down the hierarchy and make sure their treasured clients are happy.

"As a director, you'll speak a lot with the clients," says the analyst. "Your role is to act as the interface between the client and the rest of the team."

Managing directors are at the top of the investment banking pile. "They talk to the clients, meet the clients, bring in the revenues and build the business for the bank," says the analyst. "They're the connectors - the relationship builders - they're out there, finding out what's going on with their clients in their industry."

How long will you be a D or MD for?

Although some people are VPs forever, you're usually promoted to director after about three years in a VP position. Once you're a director, Michel says it should (ideally) take only another two years before you make managing director. This may be wishful thinking, however. - Research suggests most people only become MDs after 15 years in banking, and even then only 20% of those who are eligible for an MD promotion will make it. Some say that being a director is the most risky job in a bank – you’re expensive, but you don’t own the client relationships. Others say being a director is less risky than m words for kids an MD: directors are cheaper and can badcock home furniture gulfport ms to replace MDs when costs are being cut.

Once you make MD, the pressure will be on to bring in revenues. At UBS, managing directors were recently a target of 300 client meetings a year. If you don't deliver you'll be out. If you do deliver, you can expect to last a while. The average tenure of managing directors and partners at Goldman Sachs, for example, is thought to be around eight years.  

How much are you paid as a D or MD?

Pay for directors and managing directors varies wildly from person to person. As an MD in IBD on Wall 026009593 aba your salary alone will be between $400k and $500k and you will almost certainly earn in excess of $600k in total compensation when bonuses are added. In London, MD salaries are often over £500k.

How many hours will you work as a D or MD?

As a director, you'll typically work fewer hours than a VP. - You might go home at 8 or 9pm. Koelliker found that directors work between 45 and 70 hours a week and have much more control over their time.

However, as an MD, your hours will assume a life of their own. "Sometimes we don't see the MDs in the office much," says the analyst. "- Their jobs are a bit more freestyle and flexible. They might be out of the office for a week, meeting clients. They might have a lunch with a client, and then a coffee, and then a meal what is investment banking definition another client. They might go and meet a COO who's also a personal friend." If you're an MD in investment banking, you want to work for a bank that's happy to let you build relationships, and which accepts that this can take time. At Goldman Sachs, for example, ex-COO Harvey Schwartz said it could take seven years for client relationships to generate fees. Even so, banks like to know what their MDs are up to while they're flying around schmoozing clients: HSBC introduced a system for tracking how its senior M&A bankers use their time and how many deals they bring in.  

Although banks are hierarchical, Michel says they can also be fairly egalitarian. If you perform well, you can progress through the hierarchy (at least to VP level) fairly quickly. In IBD, she says most people actually do get promoted up to the next level. This makes banks less competitive places than people expect. Power differentials are minimized and everyone (according to Michel) works for common purpose. Unfortunately, she also concludes that this can lead to overwork and burnout.

Photo by Marcus National weather service edmond ok on Unsplash

Contact: [email protected] in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

Источник: https://www.efinancialcareers.sg/news/finance/banks-weird-hierarchies-analysts-associates-vps-mds-really

Types of Investment Banks

The investment banking industry is often referred to as if it were homogenous. However, this is not true at all. There are many different types of investment banks around the world. These different investment banks can also be categorized in different ways.

However, these banks are most often categorized by the types of financial products that they sell, as well as the geographical location to which they belong. Also, they are routinely categorized by the size of the deals that they mediate. The function of investment banks varies greatly with the size of the deals.

In this article, we will have a look at the different types of investment banks based on their deal size. It must be noted that this is not an exhaustive list but rather an indicative one.

The different types of investment banks have been described below:

Bulge Bracket Investment Banks: Bulge bracket investment banks are some of the largest financial services brands in the world. These banks include companies such as Barclays, JP Morgan, Citibank, etc. These organizations already have large business interests in retail banking, mortgage lending, as well as other consumer and corporate banking domains. This is what gives them brand recognition. There is no accepted definition of the term bulge bracket. However, in most parts of the world, it is used to refer to famous multinational investment banks.

Bulge brackets are pretty choosy about who they do business with. They are generally only involved in deals if the deal size is over $1 billion. Another defining feature of bulge bracket investment banks is that they provide a lot of services that are associated with investment banking such as advisory and research.

It also needs to be understood that bulge bracket investment banks operate from various locations around the world. This allows them to develop a better global network and serve the needs of the clients who also happen to be other global behemoths and hence require services to be provided in different parts of the globe. Needless to say, bulge bracket investment banks are the biggest investment banks in the entire world.

Mid-Market Investment Banks: After the bulge bracket banks, the next category of investment banks is called the mid-market investment banks. As the name suggests, the target mid-market clients and deals. This means that their focus is on deals that are too big for boutique firms but too small for bulge brackets. Their deal sizes commonly hover around $500 million to $1 billion.

Mid-market investment banks are not famous household names. However, they often have significant experience in the investment banking domain and are well known amongst the financial community. The breadth of services that they offer is very similar to what the bulge bracket firms have to offer. However, they tend to have lesser geographical reach.

Mid-market investment banks are often concentrated in a particular geographical era. They might have several offices in the same country or region. However, they do not have a presence on the global stage. Fortune 500 companies and other global behemoths seldom use the services of mid-market banks. Their services are mostly used by medium scale enterprises.

Elite Boutique Investment Banks: Elite boutique investment banks tend to focus on fewer activities. They do not get engaged in every activity that bulge bracket firms have to offer. Some of these elite boutiques will be limited to one particular sector. For instance, there will be some elite boutique investment banks that will focus only on capital restructuring, whereas there will be others who will only focus on advisory services for mergers and acquisitions.

Sometimes, elite services investment banks tend to restrict their activities to a particular industry. This would mean that they only deal with clients in the oil and gas or the consumer goods sector. It needs to be understood that elite boutique investment banks are called elite for a reason. The deal sizes that they are engaged in are somewhat equivalent to the deal size of mid-market firms. In fact, sometimes, the deal sizes are as large as bulge bracket firms.

Regional Boutique Investment Banks: Regional boutique banks are the smallest type of investment banks. They often undertake deals with small local businesses. The typical deal size of the regional boutique investment bank is less the $10 million. However, it is not uncommon for them to be involved in deals of up to $50 million. Also, they tend to have limited geographical reach. Since they deal with smaller firms, they do not need to have capabilities such as management of public issues or mergers and acquisitions advisory. They generally help the companies raise debt. There aren’t many equity investors who want to invest in these small startup companies. Even if such investments happen, they happen via venture capitalists and angel investors. The services of regional boutique investment banks are generally not employed in such cases.

Information about regional boutique banks is not available in the public domain since they do not disclose much information.

Each different type of investment bank has its own pros and cons. Based on the deal size as well as the type of service which is metro vnb 83ba by the clients, the different types of investment banks can be chosen.



Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Источник: https://www.managementstudyguide.com/types-of-investment-banks.htm

Inside Careers

ABCDEFGHI J KLM N OPQRSTU V W X Y Z

A

Alternative Investment Market (AIM)
The second tier or junior market, established by the London Stock Exchange in 1995, to provide trading facilities in the shares of smaller companies.

Asset
Something that has earning potential or value, such as property.

B

Back Office
The settlement, processing and accounting departments of a bank or broking firm. Now more usually referred to as Operations.

BBA
British Bankers Association. A leading trade association for the UK banking and financial services sector.

Bond
A marketable debt instrument issued by a company or a government. An alternative name for fixed interest securities.

C

Capital markets
Markets in which companies trade stocks and bonds. These are used to raise funds.

Commodities

Goods which are exchanged during commerce, such as gold or grain. Commodities are interchangeable with other commodities of the same type, regardless of the producer. When traded on an exchange, commodities must meet minimum standards, known as a ‘basis grade’.

D

Dealer
An individual or a firm that acts as principal in all transactions, buying for his or its own account.

Derivative
A financial instrument whose value is dependent upon the value of an underlying asset.

Disclosures
The release of information about a company to the public. Full disclosure means to release both positive and negative information so as to not mislead potential investors.

Dividend
The distribution of profits made by a company to its shareholders, if it chooses to do so.

E

Equity
A common term to describe stocks or shares.

Equity Capital/Share capital
Money staked by the owners of a company by purchasing ordinary shares. This is used to get companies off the ground. The value of equity capital is calculated by the current market values of everything owned by the company.

European Central Bank
One of the world’s most important central banks, the European Central Bank (ECB) was established in 1998 and is based in Frankfurt, Germany. The ECB administers the monetary policy of the Eurozone member states with the aim of keeping inflation low and preventing deflation.

Exchange
A place where stocks and shares are bought or sold.

Exchange Rate

The rate at which one currency trades against another.

F

Financial Instrument

A document showing that money has been lent, borrowed or passed from one account to another.

Financial Services Authority (FSA)
A body created by the Financial Services and Markets Act 2000 to regulate the financial services industry in the UK. The FSA is appointed by the Treasury, but operates independently of government.

Fintech Challengers
Fast first premier cc login, new companies challenging large traditional banking organisations. These companies focus on customer experience; offering effective and fast solutions to their problems.

Fixed Income
A type of investment whereby issuers (borrowers) must make fixed payments on a fixed schedule. If an issuer misses a payment on a fixed income security, they are in default, and can be forced into bankruptcy. This can be contrasted with Equity securities, where there’s no obligation to pay dividends, and no default if a payment is missed.

Front Office
The term used for the trading or dealing room.

FTSE 100
The FTSE 100 index is a widely used measure of business prosperity. FTSE 100 companies are the top 100 companies listed on the London Stock Exchange with the highest total value of shares. 

Fund Manager
An individual or specialist company responsible for investing the assets of a fund in such a way as to maximise its value. The fund manager does this by following a strategy to buy and sell equities and other financial instruments.

Future
A contract which legally obliges the buyer to buy an asset at a set date in the future at a set price. These are used to hedge, by reducing the risk of an asset by locking in its price.

G

G-Sifi
Global Systemically Important Financial Institutions. A list pinnbank com login banks decided upon by international regulatory bodies ‘whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity’. In essence, this means they are  ‘too big to fail’.

Going concern
A company which is judged able to continue trading without the risk of insolvency in the foreseeable future.

H

Hedge Fund
An investment fund established to allow investors to transfer risk, either by offsetting it or taking an extra risk in return for expected higher returns. Hedge funds are not open to the public; only certain types of investors, such as institutions and pensions funds are deemed to have the necessary knowledge to undertake the risk.

Hybrid Product

Products are things that are sold within the financial services industry, such as services (like financial planning) shares, stocks or bonds. Hybrid products are a combination of two or more types of financial products – for example, combining annuities and long-term care insurance.

I

Inflation
A persistent rise in prices in an economy.

Interest Rate
The charge for money borrowed, calculated as a percentage of the capital that has been loaned.

Investment
Any product in which money is spent with the aim of receiving more money back at a later date. The Financial Services Market Act 2000 defines it in terms of specified activities, which are regulated by the Act.

Investment Trust
A company whose sole business is buying, selling and holding shares.

Investors Compensation Scheme
A scheme run by the FSA to compensate private customers in the event of the default of the authorised investment business through whom they invested.

IPO
Initial public offering – otherwise known as a Stock Market Launch, this is the first sale of stock by a private company to the public. IPOs are used to raise capital, often by small companies to fund expansion. All money invested in newly issues shares goes straight to the company.

K

Key indicators
Key indicators, or Key Performance Indicators (KPI) are the measures a company uses for determining if it’s reaching its goals- for example sales figures.

L

Libor
London Interbank Offered Rate. This is an interest rate at which banks can borrow from other banks in London. It’s fixed every day by the BBA, and is used as a benchmark for short-term interest rates.

Liquid Assets
Assets that can be quickly ‘liquidated’ or converted into cash without losing much value.

Lock-up Agreement
When a company issues stock, insiders from the company and underwriters agree on a lock-up agreement to prevent insiders from selling their stock for a specified period of time, normally six months. This ensures more stability for the issuing company.

M

Merchant Banking
Whilst traditionally separate from Investment Banking, there is often an overlap. Merchant banks deal in international finance, long-term loans and underwriting. Merchant banks place private equity – put money into companies that are not publicly traded, often in exchange for full or part ownership.

Mergers and Acquisitions (M&A)
A division of securities houses, merchant banks and investment banks responsible for advising on takeover activity. Usually it works with the corporate finance department and the two departments are often regarded internally as a single unit.

Moody’s Investors Services
One of the Big Three credit rating agencies alongside Standard & Poor’s upgrade my paypal account to business Fitch Group, Moody’s is a bond credit rating business, giving debt securities a h and m shop near me rating from ‘AAA’ to ‘C’ to indicate the level of credit risk.

O

Option
A contract offering the right to buy or sell a specific product at a specified fixed price. This is known as the strike price. Call options offer the right to buy, whilst Put options offer the right to sell. Traders use options to speculate, hoping that the stock of the product will go up for call options, or down in the case of put options.

P

Proprietary trading/PPT
Dealing in stocks, bonds, currencies and commodities with the bank’s own money rather than client’s money, in order to make direct profit for the bank.

Q

Quantitative Easing (QE)
The introduction of new money into the money supply by a central bank in order to stimulate the economy and increase lending. The central bank will purchase assets from the market, thereby injecting money into those financial institutions. This has the effect of lowering the yield of the assets bought by raising their price.

R

Ring Fencing
A proposed banking reform which separates retail banking operations from investment and wholesale banking functions. The aim is to protect personal and small and medium-sized enterprises’ deposits and overdrafts from the riskier sides of banking.

ROE
Return on Equity: this measures how profitable  a company is making by showing net income as a percentage of  the money shareholders have invested.

S

Securities
Financial instruments (any tradeable assets): generally equities.

Shadow Banking
The shadow banking system is the collection of institutions that provide banking services but do not hold a banking license and therefore don’t take deposits from the public. This includes hedge funds and money markets funds. These institutions are still subject to the same regulation as the rest of the finance industry.

Shares
The unit of ownership of a company. The equal parts into which a company’s capital (assets) is divided.

Stabilisation fund
Mechanisms set up by governments or central banks to achieve economic stability in domestic markets, for example what is investment banking definition maintain to protect revenue from large commodity price fluctuations and avoid inflation.

Syndicate
Syndicates are an association of individuals or firms temporarily formed in order to undertake a specific duty. In banking & investment terms, syndicates are formed in order to handle large transactions, in order to pool resources and share risks.

T
Trading Floor
Also known as ‘the pit’, the trading floor is where trading activities take place, i.e. the buying and selling of assets. These can be found in a stock exchanges such as the London Stock Exchange, brokerages or investment banks. As trading has become more electronically based, physical trading floors have started to disappear.

U

UCITS
Standing for ‘Undertakings for Collective Investments in Transferable Securities’, UCITS is the European regulatory framework for a collective investment that can be marketed in all EU countries.

UX Specialists
User experience specialists make sure customer satisfaction is high by improving the ease of use and effectiveness of a product.

V
Venture Capital Firms
Venture capital firms specialise in lending money to companies, small or large, to develop what is investment banking definition new business where a high degree of risk may be involved.

W

Wholesale Banking
Wholesale banks provide services between other banks and large companies, services such as cash management, large loans and currency conversion. Wholesale banks generally deal with larger companies and institutions, whilst retail banking caters to individuals and smaller companies.

Источник: https://www.insidecareers.co.uk/career-advice/banking-investments-glossary/

Banking, Capital Markets and Advisory

Our mission is to be the best financial services partner to our clients to help them achieve their goals of economic growth and progress. We do so by providing strategic, financing and operational insight and by executing tailored product and service solutions both across borders and domestically.

The Institutional Clients Group (ICG) responds to clients' changing needs through its long-established relationship coverage approach by providing client solutions that use all of Citi's relevant capabilities including the broadest possible access to financial markets globally. No other institution can match our combination of global insights, client relationship management services, geographic reach and local and cross-border product expertise.

The ICG includes six main business lines: Banking, Capital Markets and Advisory; Commercial Banking; Markets; Securities Services; Private Banking (part of Citi Wealth Management), and Treasury and Trade Solutions (TTS). Working as one, we provide innovative solutions to meet the complex needs of corporations, financial institutions, public sector entities, investment managers and ultra-high-net-worth clients. With a physical presence in 96 countries, local trading desks in 77 markets and a custody network in 63 markets, we facilitate approximately $4 trillion in financial flows daily. We support 90% of global Fortune 500 companies in their daily operations and help them to hire, grow and succeed.

Our network-driven strategy allows us to offer an integrated suite of wholesale banking products and services to clients who value our unmatched country presence and who require a financial services partner that can help them grow in any country where they do business. This includes multinationals that are expanding globally, particularly in the emerging markets, and emerging markets companies that are growing beyond their home market/region. We are uniquely positioned to take advantage of important, evolving global trends, including mobility, fintech, healthcare, wellness and sustainability.

Learn More

Banking, Capital Markets and Advisory listens, collaborates and problem solves, working tirelessly on behalf of our corporate, financial institution, public sector and sponsor clients to deliver a range of strategic corporate finance and advisory solutions that meet their needs, no matter how complex.

Dedicating ourselves to these relationships and ensuring our client experience stands above all else, we leverage the breadth of our unmatched global network to provide debt capital raising, equity-related strategic financing, and merger and acquisition solutions, as well as issuer services. By serving these companies, what is investment banking definition help them grow, creating jobs and economic value at home and in communities worldwide.

Following the market dislocation last spring, Citi was integral in reopening both the debt and equity markets, leading on several large transactions. In 2020, Citi led, as a bookrunning manager, over half of the record $1.7 trillion investment grade and $435 billion high-yield issuance volume. The issuance environment was very dynamic, with a rush to source liquidity during the first three months of the pandemic, turning to a more opportunistic and acquisition financing environment as the year progressed with markets steadily improving and ultimately rallying by year end. Citi was an early leader, providing significant balance sheet support for clients and guiding issuers that raised record amounts of liquidity from fixed income investors at the peak of the pandemic. As markets improved, Citi helped countless clients achieve record-low coupons. Citi served as a bookrunner on a number of landmark investment grade financings, including raising $25 billion in April for Boeing, $8.5 billion in March and $9.5 billion in April for ExxonMobil, $4.1 billion and €2.6 billion in September for Coca-Cola, and $8.9 billion secured financing in June for PG&E. Citi advised and executed on behalf of COVID-19-affected and opportunistic high-yield clients, including $8 billion in April for Ford, $4.7 billion in June for American Airlines, $2.0 billion in June for Occidental Petroleum and $2.8 billion in December for Community Health.

In equity capital markets, historic volatility drove waves of equity issuance. Citi served as underwriter on a number of successful initial public offerings (IPO) in 2020, including Snowflake's $3.4 billion offering in September and Royalty Pharma's $2.2 billion IPO in June. We saw record issuance particularly in the special purpose acquisition company (SPAC) space, with nearly $100 billion issued in 2020. Most notably among 2020 SPACs was the $4.0 billion blank check company sponsored by Pershing Square Capital Management whereby Citi served as left lead on the transaction. In addition to being the largest SPAC raised globally, the transaction garnered significant praise for the use of minority broker-dealers as co-leads on the deal. Citi was left lead underwriter for both Dragoneer SPAC offerings for a combined total of $966 million and sole underwriter for the first ESG-linked SPAC in May. Citi was also selected as left lead for Shopify's two secondary equity offerings, including its $1.5 billion follow-on offering in May, representing the largest internet overnight follow-on to date.

Citi’s Global Mergers & Acquisitions Group advised on landmark transactions signed and negotiated during the peak of the COVID-19 crisis, demonstrating how our clients turn to us to provide trusted advice and to offer innovative strategic solutions. Citi advised Unilever on its transformational restructuring to create a simpler company with greater strategic flexibility and better positioning for future success. This transaction removes complexity and strengthens corporate governance by uniting its dual UK PLC and Dutch N.V. legal and listing structure resulting in a single parent company: Unilever PLC, which will have a market capitalization of approximately £110 billion. Citi was sole financial advisor to Telefóica on its joint venture with Liberty Global for its U.K. businesses (O2 and Virgin Media), valued at $38 billion. Citi served as a financial advisor to S&P Global on its announced merger with IHS Markit, an all-stock transaction implying an enterprise value for IHS Markit of $44 billion. This was one of the largest transactions of 2020, bringing together two world-class organizations with unique and highly complementary products and cutting-edge innovation and technology.

Citi Public Sector Group worked closely with governments and the public sector to find liquidity alternatives and advised on the issuance of social bonds to support countries in the emerging markets throughout the pandemic. In November, we announced our selection as financial advisor to Gavi, the Vaccine Alliance, for its COVAX Facility. In this capacity, a team consisting of more than two dozen senior bankers across multiple business units, spearheaded by the Public Sector Group, is providing Gavi with expert advice on structures to mitigate sovereign, credit and operational risk as the COVAX Facility seeks to facilitate pooled procurement and equitable distribution of safe and effective COVID-19 vaccines globally.

In addition, drawing on Citi's global reach with physical presence in nearly 100 countries and territories and the capability to serve nearly 60 additional countries, Citi's Corporate Bank served as a critical partner to large multinationals in COVID-19-affected industries throughout 2020, providing new lines of credit and shoring up balance sheets for many blue-chip corporations. In 2020, Citi syndicated 500+ loans with volumes in excess of $895 billion.

Learn More

Citi Commercial Bank puts 200 years of experience to work for midsized, globally oriented companies by delivering actionable insights and ideas, comprehensive banking solutions and a truly global network.

We provide high-quality financial advice, helping businesses prosper and grow in domestic markets, as well as internationally. Our distinctive approach puts the client at the center of everything we do. By understanding their industries what is investment banking definition learning their business priorities, our Relationship Managers bring our clients insights designed to help them succeed. Whether providing capital to fund growth or refinancing debt, Citi Commercial Bank offers solutions that support the right capital structure to meet companies' short- and long-term financing needs. With the full spectrum of Citi's capabilities and access to our global network, we are able to deliver tailored solutions to meet our clients' unique goals and objectives.

In the past year, Citi Commercial Bank enhanced our core client and internal applications and significantly improved our processes, reducing client friction and digitizing more of the client experience. We continue our digital transformation with the redesign and expansion of CitiBusiness® Online features and a new Gateway portal in the U.S. for account onboarding, Know Your Customer and product setup activities and continued to build a world-class experience by facilitating a fully digital onboarding journey through Gateway and CitiDirect BE® Digital Onboarding.

Citi Commercial Bank worked together with the Global Consumer Bank in the U.S. to support clients adversely affected by the COVID-19 pandemic by providing loans and participating in the PPP programs administered by the U.S. government. We also participated in a number of other government-supported programs outside the U.S. and developed solutions to assist clients in need throughout the crisis.

Learn More

World-class solutions that are as diverse as the needs of our clients. With trading floors located in over 80 countries across America, Asia, Europe, the Middle East, we work around the clock to enrich the relationships, products, and technology that define our market-making presence. We partner with our clients to provide solutions, insights, liquidity and risk management support when and where they need it.

In 2020, Citi retained our ranking as the World's Largest Fixed Income Dealer for the fifth straight year, according to Greenwich Associates' Annual Benchmark Survey, which polled more than 3,500 fixed income investors around the world. Citi's leading market position is driven by our strength in both Rates and Emerging Markets, ranked #1, respectively, along with the top spot in Municipal Bonds. In addition to the distinction of being overall share leader, Citi ranked #1 in Overall Quality, Sales Quality, Trading Quality and e-Trading market penetration. Citi was also named Largest Affordable Housing Lender in the country for the 11th year in a row in Affordable Housing Finance magazine's annual survey of affordable housing lenders. Partnering with developers, nonprofits and local governments, Citi has helped create or preserve nearly 488,000 affordable housing units over the past decade. In 2020, Citi Community Capital, the bank unit through which Citi works to finance all types of affordable housing and community development projects, reported more than $7 billion of lending to finance affordable rental housing projects.

Citi Velocity®, Citi's #1 ranked digital content platform for Institutional Clients, delivers electronic access to Citi's capital markets services across equities, futures, FX, emerging markets, rates, credit, commodities, securitized products, municipals, securities services and research spanning thousands of content creators and apps. Nearly 100,000 Institutional Clients spread over almost 150 countries use Citi Velocity on a regular basis across all asset classes. 2020 was the Citi Velocity platform's strongest year since its 2011 launch. In addition to pricing millions of derivative instruments and supporting half a billion data interactions, Citi Velocity made a big push into the audiovisual content and mobile space. We hosted 1,850 webcasts that were attended by more than 100,000 clients, an increase of 200% year-over-year. We produced over 3,100 videos and podcasts, 28% more than in prior years. The platform saw mobile growth soar 57%, while the number of unique client users best co2 bb gun 9%. While Citi Velocity was laser focused on being the best digital product for our clients, it was also used to offer clients and colleagues some respite from the year's events. Citi Velocity streamed two concert series in 2020, in partnership with the London Philharmonia, which became the most popular video content of the year.

In May 2020, Proxymity, a digital investor communications platform developed within Citi's Institutional Clients Group, was spun off into a standalone entity that raised $20.5 million in a strategic round of investment led by Citi Ventures, with participation from a global industry consortium. Proxymity's services include a digital, real-time and fully transparent proxy voting platform, providing post-meeting vote confirmation and giving investors up to nine additional days per meeting to research and vote. Proxymity also offers a shareholder disclosure platform that automates shareholder ID requests and eliminates the need for any manual handling. The idea for Proxymity was formulated in 2017 by two Markets and Securities Services colleagues as a way for issuers to better communicate with investors. As the idea for the platform evolved, D10X, an internal strategic growth model that enables employees to take new business ideas from concept to launch, helped Proxymity iterate and evaluate its vision to improve the proxy voting system. From there, the Citi Innovation Lab in Tel Aviv developed Proxymity into a market-ready offering in less than two years using a Lean team model and rapid, agile development. Citi is incredibly proud of what Proxymity has been able to achieve thus far and looks forward to continuing to support the platform as a member of the consortium.

Learn More

We provide a full suite of securities services in more than 100 markets, including our proprietary network of over 60 branches and across 23 fund domiciles. Our solutions include custody, clearing, asset servicing, fund administration, ETF services, middle office, agency securities lending, collateral management, transfer agency, and fiduciary services.

In 2020, Citi entered into an alliance with BlackRock, through its Aladdin® business, to enhance the delivery of securities services to Citi's clients who use the Aladdin end-to-end investment management platform. Connecting to Aladdin Provider, Citi will provide outsourced middle-office services directly on a client's instance of Aladdin for seamless integration with the front office, from trade confirmation to post-settlement reconciliation. This agreement expands Citi's relationship with BlackRock, to whom we provide custody, accounting and/or fiduciary services for certain BlackRock funds domiciled in Hong Kong, Mexico and Colombia. In addition to funds managed by BlackRock, Citi provides custody services to many asset managers on the Aladdin platform. Joining the Aladdin Provider network will allow Citi to optimize our operating model to support not only BlackRock's asset management business but to provide an enhanced level of service to members of the broader Aladdin community.

Learn More

The Private Bank is dedicated to helping the world's wealthiest individuals, families and law firms protect and responsibly grow their wealth.

From 50 locations worldwide, we serve more than 13,000 ultra-high net worth clients hailing from over 100 countries, including 25% of the world’s billionaires and more than 1,400 family offices. In 2020, total client business amounted to around $550 billion.

Our unique business model enables us to focus on fewer, larger and more sophisticated clients with an average net worth above $100 million. Clients enjoy a highly customized experience, with access to a comprehensive range of products and services spanning investments, banking, lending, custody, wealth planning, real estate, art, aircraft finance and lending, and when does usps open today.

In everything we do, we emphasize personalized advice, competitive pricing and efficient execution. Citi Private Bank's close partnership with Citi's Institutional Clients Group means we can connect clients' businesses to banking, capital markets and advisory services, as well as to Citi's other institutional resources. A growing number of our clients seek to align their investments with their personal values. Investing with Purpose is what we call our approach to sustainable and impactful investing. We help clients articulate their sustainability goals and objectives, provide them with comprehensive advice and offer in-house investment management that incorporates environmental, social and corporate governance principles. We also partner with third-party asset managers to deliver relevant themes and strategies.

In 2020, we transformed our flagship annual Family Office Leadership Program—often described by participants as "the Davos for family offices"—into a virtual summit. Sessions this year covered vital topics that include sustainable investing, advances in family healthcare practices, future of energy and the building of resilient families. Nearly 6,000 participants from 100+ countries took part in the program. We also launched the Direct Private Investments business to identify opportunities for family offices and private investment company clients to actively invest in direct private deals.

Learn More

Treasury and Trade Solutions (TTS) provides integrated cash management, working capital and trade finance solutions to multinational corporations, financial institutions and public sector organizations around the globe. With the industry's most comprehensive suite of digitally enabled platforms, tools and analytics, TTS leads the way in delivering innovative and tailored solutions to clients. Based on the belief that client experience is the driver of sustainable differentiation, TTS has focused its efforts on transforming its business to deliver a seamless, end-to-end client experience through digital capabilities, client advocacy, network management and service delivery across the entire organization.

Our digital transformation accelerated in 2020 with increased momentum in client engagement and digital adoption as evidenced by strong growth in CitiDirect BE® users, API volumes and digital account openings. Digital Onboarding is now live in 50 countries, and CitiDirect BE users were up 9% versus the prior year. Additionally, we delivered to the market 83 live APIs that collectively reached 1 billion API calls since inception. Citi's digital channels remain pivotal in helping clients with operational resiliency while continuing to operate in remote or continuity-of-business modes. Digital Onboarding enabled clients around the world to set up accounts using eSignatures and overcome major obstacles due to the pandemic.

With Instant Payments becoming a new norm, enabling our clients to disrupt their business model and shift toward a 24/7, always-on environment, we continue to invest in building a globally consistent Instant Payments proposition, having launched the capability in six additional markets in 2020, taking our global presence to 26 markets. Our global volumes have seen a growth of more than 70% year-over-year and are rapidly approaching the million daily transaction mark. With an ambitious road map to continue to expand our footprint and capabilities, we are very well positioned for another exciting and successful year in 2021.

In October 2020, in support of U.S.- based suppliers affected by COVID-19, we worked with the U.S. EXIM Bank to create facilities, including the guarantee of a $500 million facility by EXIM that allows Citi to finance accounts receivable from The Boeing Company to its U.S.-based suppliers. The agreement also includes the preliminary approval of a $327 million facility for the purchase of Boeing aircraft by Copa Airlines, exported from Renton, Washington.

Learn More

Источник: https://www.citigroup.com/citi/about/institutional_business.html

Long Term Finance

Back to Key Terms Explained

Long Term Finance

Definition

Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments. Maturity refers to the length of time between origination of a financial claim (loan, bond, or other financial instrument) and the final payment date, at which point the remaining principal and interest are due to be paid. Equity, which has no final repayment date of a principal, can be seen as an instrument with nonfinite maturity. The one year cut-off maturity corresponds to the definition of fixed investment in national accounts. The Group of 20, by comparison, uses a maturity of five years more adapted to investment horizons in financial markets (G-20 2013). Depending on data availability and the focus, the report uses one of these two definitions to characterize the extent of long-term finance. Moreover, because there is no consensus on the precise definition of long-term finance, wherever possible, rather than use a specific definition of long-term finance, the report provides granular data showing as many maturity buckets and comparisons as possible.

Importance of long-term finance

Extending the maturity structure of finance is often considered to be at the core of sustainable financial development. Long-term finance contributes to faster growth, greater welfare, shared prosperity, and enduring stability in two important ways: by reducing rollover risks for borrowers, thereby lengthening the horizon of investments and improving performance, and by increasing the availability what is investment banking definition long-term financial instruments, thereby allowing households and firms to address their life-cycle challenges (Demirgüç-Kunt and Maksimovic 1998, 1999; Caprio and Demirgüç-Kunt 1998; de la Torre, Ize, and Schmukler, 2012).

The term of the financing reflects the risk-sharing contract between providers and users of finance. Long-term finance shifts risk to the providers because they have to bear the fluctuations in the probability of default and other changing conditions in financial markets, such as interest rate risk. Often providers require a premium as part of the compensation for the higher risk this type of financing implies.  On the other hand, short-term finance shifts risk to users as it forces them to roll over financing constantly.

The amount of long-term finance that is optimal for the economy as a whole colorado medicare phone number for providers not clear.  In well-functioning markets, borrowers and lenders will enter short- or long-term contracts depending on their financing needs and how they agree to share the risk involved at different maturities. What matters for the economic efficiency of the financing arrangements is that borrowers have access to financial instruments that allow them to match the time horizons of their investment opportunities with the time horizons of their financing, conditional on economic risks and volatility in the economy (for which long-term financing may provide a partial insurance mechanism). At the same time, savers would need to be compensated for the extra risk they might take.

Where it exists, the bulk of long-term finance is provided by banks; use of equity, including private equity, is limited for firms of all sizes. As financial systems develop, the maturity of external finance also lengthens. Banks’ share of lending that is long term increases with a country’s income and the development of banking, capital markets, and institutional investors. Long-term finance for firms through issuances of equity, bonds, and syndicated loans has also grown significantly over the past decades, but only very few large firms access long-term finance through equity or bond markets. The promotion of nonbank intermediaries (pension funds and mutual funds) in developing countries such as Chile has not always guaranteed an increased demand for long-term assets (Opazo, Raddatz and Schmukler, 2015; Stewart, 2014).

Policy challenge

Attempts to actively promote long-term finance have proved both challenging and controversialThe prevalent view is that financial markets in developing economies are imperfect, resulting in a considerable scarcity of long-term finance, which impedes investment and growth. Indeed, a significant part of lending by multilateral development banks (including World Bank Group lending and guarantees) has aimed at compensating for the perceived lack of long-term credit. At the same time, research shows that weak institutions, poor contract enforcement, and macroeconomic instability naturally lead to shorter maturities on financial instruments. Indeed, these shorter maturities are an optimal response to poorly functioning institutions and property rights systems as well as to instability.

From this perspective, the policy focus should be on fixing these fundamentals, not on directly boosting the term-structure of credit. Indeed, some argue that attempts to promote long-term credit in developing economies without addressing the fundamental institutional and policy problems have often turned out to be costly for development. For example, efforts to jump-start long-term credit through development financial institutions in the 1970s and 1980s led to substantial costs for taxpayers and in extreme cases to failures (Siraj 1983; World Bank 1989). In response, the World Bank reduced this type of long-term lending in the 1990s and the 2000s. On the other hand, well-designed private-public risk-sharing arrangements – such as Public Private Partnerships for large infrastructure projects, or credit guarantee schemes –  may hold promise for mobilizing financing for long-term projects, and allow governments to mitigate political and regulatory risks and mobilize funding boone county distillery private investment.

Suggested reading:

G-20 (Group of 20). 2013. “Long-Term Investment Financing for Growth and Development: Umbrella Paper.” Found at:https://g20.org/wpcontent/uploads/2014/12/Long_Term_Financing_for_Growth_and_Development_February_2013_FINAL.pdf

Caprio, Gerard, and Asli Demirgüç-Kunt. 1998. “The Role of Long-Term Finance: Theory and Evidence.” World Bank Research Observer 13 (2): 171–89.

 

Demirgüç-Kunt, Asli, and Vojislav Maksimovic. 1998. “Law, Finance, and Firm Growth.”  Journal of Finance 53 (6): 2107–37.

Demirgüç-Kunt, Asli, and Vojislav Maksimovic. 1999. “Institutions, Financial Markets and Firm Debt Maturity.” Journal of Financial Economics 54 (3): 295–336.

de la Torre, Augusto, Alain Ize, and Sergio L. Schmukler. 2012. “Financial Development in Latin America and the Caribbean: The Road Ahead.” Policy Research Working Paper 2380, World Bank, Washington, DC.

Opazo, Luis, Claudio Raddatz, and Sergio Schmukler. 2015. “Institutional Investors and Long-Term Investment: Evidence from Chile.” Word Bank Economic Review 29 (2).

Siraj, Khalid. 1983. “Report of the Task Force on Portfolio Problems on Development Finance Companies." World Bank, Washington, D.C.

Stewart, Fiona. 2014. “The Use of Outcome-Based Benchmarks: Proving Incentives for Long-Term Investment by Pension Funds.” Policy Research Working Paper 6885, World Bank, Washington, DC.

World Bank. 1989. Report of the Task Force on Financial Sector Operations. Financial Sector Development Department. World Bank, Washington, DC.

Источник: https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/long-term-finance
what is investment banking definition

watch the video

Introduction to Investment Banking

4 Replies to “What is investment banking definition”

  1. Lots of resumes for sure... But what about all the recruiters under the hiring manager? They should skip a read as well? Also, Applicant Tracking Systems are a real trip and weed out some pretty good people simply bc of format or keywords being off. :(((

Leave a Reply

Your email address will not be published. Required fields are marked *