There was an article in the news this week that got our IFAP class talking. UBS, a global investment bank that is now a shadow of what it used to be, has decided to go back to the drawing board and do ‘real’ investment Banking. Read the article here Here is an excerpt:
“The goal: Give advice and conduct trades while taking less risk : As head of the investment bank at UBS, Andrea Orcel is trying to revive a lost business model: connecting buyers and sellers of stocks and bonds and advising corporate clients — without borrowing money to boost returns. “What I would very much like to create is a real investment bank,” says Orcel, “the kind that there aren’t anymore.”
This brought us to thinking what is Investment Banking and why did it begin. Investment Banking is not Private Equity nor is it lending corporate loans or funding leveraged buyouts. Investment Bankers were transaction experts that brought people together. You want to sell something; a good banker will sell it for you. You then want to buy something else, that same banker might you buy it. You want to go IPO to raise money to expand, if the banker knows how to underwrite they can take you IPO. They were glamorous brokers that brought people together. And traders were only folks who would help you sell a stock by finding you a buyer and then popping the commission. All was simple. But then the corporate banker said, why don’t you let us help him buy the company. Let’s finance the deal as well. Let’s bundle the products. Bundling creates conflict, which increases risk. Suddenly the bank, which would have only made a small transaction fee on the deal, has exposure. Etc etc…we go beyond the mandate of Investment Banking but more than that, bankers get dependent on securing sell side or buy side mandates on the back of the balance sheet and not their ability to run a transaction which is why you have the boutique banks suddenly scrambling for business. While UBS is no boutique, they fired over 5000 bankers post the crisis and are rebuilding both their team and their balance sheet.
“UBS ranks 12th among advisers on mergers and acquisitions this year, down from seventh in 2007. It’s struggling to win M&A assignments because it no longer routinely offers to finance deals it advises on, according to two former bankers who asked not to be identified discussing their former employer. Orcel says bankers who can’t build a relationship without relying on lending are focussed on either the wrong clients or the wrong way to serve them.”
We have to wait and see how true Investment Banking products will do especially as Private Equity firms, key players in M&A, are able to originate faster and more effectively reducing costs. They can also run their own deals. For now Orcel is taking a gamble and getting ready to play with the big boys, only they might have to draw with a much smaller gun.
– Reshma Krishnan
Tag: Investment Banking
Understanding Of The Banking World
Understanding Of The Banking World
We come across a lot of finance aspirants who wish to understand the banking world. Broadly, it’s bifurcated in 2 divisions. A. Retail Banking/Commercial Banking, B. Investment Banking. Here’s a detailed explanation to answer all your questions related banking.
Retail Banking/Commercial Banking:
The primary bread and butter of this arm is to Lend and accept deposits. The margins are earned by lending money at higher rate of Interest in comparison to what is paid to creditors or depositors. For Eg: JP Morgan has retail presence all across United states, Deutsche bank has huge retail presence in Frankfurt and Europe and some retail presence in India as well.
Investment Banking
Investment banking arm is broadly classified into three core activities or functions:
- Raising Capital (Underwriting Services).
- Advisory Services
- Sales and Trading.
Raising Capital:
Here Financial institutions helps corporate and Govts to design the plan and help them raise capital either through Equity or through Debt.
It is one of the most important functions of IB arm as it involves lot of ground work where Investment banks need to run the entire IPO process on behalf of the company and help it go public and thus raise desired capital. This function involves meeting all regulatory requirements, submitting prospectus or offer document, reaching to general public through various means of communication and finally selling the shares.
IB’s take all key decisions as to what should be price of the IPO, how much money should be raised through Equity and how much through debt, when should the IPO be launched, who should be target audience etc.
Investment Banks helps firms who need capital by raising capital on their behalf. They do this by selling securities, thus they represent Sell Side Firms.
Advisory Services:
Under this arm, IB’s offer expert advice in terms of Research, valuations, market trends and sector specific information to clients. The primary bread and butter business is assisting clients in Merger and Acquisition deals by doing the most appropriate valuations of any company a client wishes to merge with or acquire.
For e.g. (Face book acquired or bought whatsapp at 19bn $, so definitely there was some math to arrive at this figure, this is performed by Investment banks).They make good commissions in this business and is one of the most important driving factor which keeps competition alive amongst Investment banks.
Sales and Trading:
Under this arm banks assist institutional clients and wealthy investors in trading into Equity and Debt (secondary markets essentially).It also helps client to take exposures into complex derivative exotic products and contracts. It also designs customised products to suit client requirements and create a market for the same. They not only help trade in domestic markets but across all the markets around the globe, with the help of their global presence and relevant infrastructure which makes it possible for them to facilitate this service.
Whole Sale banking:
Whole sale banking largely captures three important functions (Trade finance, Project finance, and Loan Syndication)
A simple example of Project finance could be Reliance going to bank for financing the Metro project, stating their fund requirement for the entire project, their expected cash flows, potential earnings and repayment methodology of this loan. This is Project finance.
Trade finance involves financing International Trades (Importers and Exporters), come to banks for assistance in such trades. They generally require Letter of Credits which acts as guarantee from buyer’s bank to seller’s bank as transactions are on credit.
Loan syndication simply means group of lenders (syndicate) coming together to loan or lend funds to the borrower. Depending upon the requirement the number of syndicate members may vary. One of the banks acts as lead bank or arranger and contributes major share of loan amount and other banks contribute as per their respective share in the syndication.
Asset Management:
Asset Management simply means professional management of Portfolio and assets within that portfolio. It primarily captures two important products (Mutual funds and Hedge funds).While both are Investment vehicles which pools money from Investors but the way they operate and their investment decisions, strategies differ significantly. While Mutual funds are less risky, Hedge funds are extremely risky pool. The ultimate objective of both the funds is to align their investment decisions with investment objective of investors. Both are managed by professional Fund Managers who specialise in this field of Investments.
Mutual Funds, Hedge funds, Pension Funds have lots of capital collected through Investment pool and they need to invest these funds into financial securities to generate returns and meet investment objectives. Thus they represent Buy side firms as they have capital and need securities.
All businesses are categorised in three broad categories and accordingly roles and responsibilities are also aligned:
- Front Office
- Middle Office
- Core Operations
Imarticus Learning is one of the institutes for investment banking, which offers various programs to train and place its students in banks such as J.P Morgan, Nomura, Deutsche Bank, BOA and many more. The programs at Imarticus Learning have been developed by industry experts, and designed to impart relevant practical skills and knowledge needed by today’s workforce.
What are the Basics of Bond?
Bonds are often referred to as the poor, unglamorous cousins of stocks. Stock markets are frequently in the news. They are more sensational as one hears about the wealth generated by investing in stock markets. But it takes a bear market to remind us of the importance of stability and regular income which only bonds can offer.
Bonds are issued by corporations, governments, municipals for raising capital with a promise to pay interest at regular intervals (except zero coupon) and repay the principal on maturity. The investors in these securities could be individuals, corporations, mutual funds etc. Investors here are seeking an additional return on their surplus funds.
Bonds are mainly classified as fixed rate, floating rate, zero coupon, callable and puttable bonds
Fixed rate, as the name suggests, pays a fixed rate of interest throughout the life of the security.
Floating rate bonds are indexed to a particular benchmark and pay a return that is equal to the benchmark, in some cases there could be a spread over the benchmark rate. Some of the popular benchmarks are LIBOR, Treasury, Inflation Index etc.
Zero coupon securities are issued at discount and the final redemption happens at par value. E.g. a one-year bond with an interest rate of 5% will be issued at $952.38 and redeemed at $1,000 after a year. The difference between the par and the discounted value is the interest.
Callable bonds can be redeemed by the issuer of the bond before the maturity of the bond. Companies issue callable bonds to protect themselves in case the interest rate drops. This feature is very important for long term bonds – if not, issuers can find themselves locked into a high interest rate for a number of years. Companies are willing to pay a premium to redeem the bonds before maturity.
Puttable bonds provide the option of redeeming the bonds before maturity to the investor. This helps investors in the event the interest rates increase in the market.
US MarketsBonds vs. Equities
Bonds are more widely traded than equities. The below graph of US markets clearly indicates that the investment in bonds is much higher compared to equities.
Source – Learning Bonds (https://www.learnbonds.com/how-big-is-the-bond-market)
Risk of Investing in Bonds
One cannot assume that all bonds are risk free. Treasury bonds issued by the US Government are considered the safest as they are backed by “full faith and credit” of the US Government. Corporate bonds, on the other hand, carry the highest risk. Government and municipal bonds are less risky as compared to corporate bonds.
The bonds risk can be measured in two dimensions:
- Default risk of the issuer – This can be measured with the help of ratings provided by credit rating agencies like Standard and Poor’s, Fitch and Moody’s. Bond ratings are report cards issued for companies. Blue chip and companies with strong fundamentals have high ratings whereas riskier companies have low ratings.
- Interest rate risk – Plays a role if you don’t intend to hold the bond till maturity and want to sell the bond in the secondary market. The problem is interest rates could have increased from the time the bond was bought and the bond is no longer attractive to the buyer.
Eg: – An investor has bought a 7% $1,000 bond for three years. At the end of year one, the interest rates in the market stand at 8%. Market is paying $80 and bond holder is offering $70. In order to incentivise the buyer, an adjustment has to be made to the value of the bond. The bond will be offered at a price of $980, this adjustment makes the bond equivalent to other bonds in the market.
How do you measure the sensitivity of the bond to the change in the market interest rates?
Duration measures sensitivity of the bond to changing market interest rates. Simply put, duration is measured in terms of years. Higher the bond’s duration, greater is the impact of changing interest rate on the bond. The duration is shorter for interest paying bonds as compared to zero coupon bond.
Factor’s affecting duration of a bond
- Bond Price: Higher the price of the bond, lower the duration and vice versa.
- Coupon: Higher the coupon rate, the greater is the income generated by the bond early on and shorter the duration.
- Maturity : Longer maturity bonds have a higher duration.
- Callability : In case of a callable bond the duration is shorter because the principal is repaid earlier as compared to a normal bond.
With the help of what we have read, let us now interpret a recent bond issue by Apple Corporation.
Details of the issue
| Issue Amount (US$ bn) | Type | Coupon | Issue Price | Maturity |
| 1.0 | Floating rate | Libor + 7 bps | 100.00% | May 6, 2017 |
| 1.0 | Floating rate | Libor + 30 bps | 100.00% | May 5, 2019 |
| 1.5 | Fixed rate | 1.05% | 99.947% | May 6, 2017 |
| 2.0 | Fixed rate | 2.10% | 99.962% | May 5, 2019 |
| 3.0 | Fixed rate | 2.85% | 99.754% | May 9, 2021 |
| 2.5 | Fixed rate | 3.45% | 99.916% | May 6, 2024 |
| 1.0 | Fixed rate | 4.45% | 99.459% | May 6, 2044 |
| The issue is rated “AA+” by Standard and Poor’s, and “Aa1” by Moody’s. Both agencies have given “high security” ratings to the issue.The 12 billion dollar issuance is a 7 part bond offering with 2 floating rate tranches and 5 fixed rate tranches maturity ranging between 3-30 years.The floating rate bonds are indexed to Libor with some spread (7 – 30 bps) and the fixed rate bonds are offered at discount in comparison to “on the run” comparable treasury yields. | ||||
As per the prospectus filed by Apple Corp., they intend to use the proceeds from the sale of bonds for repurchase of common stock to return capital to the shareholders, pay dividend and other general corporate purposes.
You can learn much more about bonds in our investment banking course called CIBOP (Certified Investment Banking Operations Professional).
Pune Becomes New Hub for Global Bank’s Back Offices
Several professionals across levels are making Pune their home. The city, known as a BPO hub for information technology majors, is now a hot destination for back offices of global banks, which are set to witness a hiring boom in the next 18-24 months. Many candidates who have done banking and finance courses can look to establish their careers in this favourable banking sector environment.
Pune has many factors working in its favour. Topping this list is its proximity to the commercial capital Mumbai – it is barely a three hour ride from the megapolis. It is the preferred choice for talent not only from Mumbai and other parts of Maharashtra, but also from cities like Bangalore, Gurgaon, Hyderabad and Calcutta. From the standpoint of companies, it is an attractive destination due to the cost advantage in terms of real estate, as well as people.
Rentals in the historically rich city are about 40 per cent to 50 per cent lower than those in Mumbai, as per real estate sources. The city has an existing presence of IT product and services organizations, as also captives. Attractive SEZs and good corporate infrastructure with the availability of quality talent has made Pune an attractive destination for corporates to set up their GICs. The individuals who want to make their banking sector careers more successful, are moving to this city for better prospects. Banking professionals are very much in demand with the set up of different global banks. Various students with a foray in investment banking courses can have good chances of securing a job.
The city is also relatively more cosmopolitan compared with emerging locations like Chennai, Hyderabad according to industry experts. The current talent base at Citi’s GIC in Pune has professionals from Mumbai, Delhi, NCR, Bangalore, Hyderabad and other cities. Around 8 per cent employees have moved from Delhi and NCR, 10 per cent from Bangalore, 7 per cent from Hyderabad and other cities. Deutsche Bank, which is the latest to set up its back office — DBOI Global Services India — in Pune this year, has moved about 600 people from Mumbai, an industry source said. This trend is beneficial for professionals who have the background of various banking courses and financial sector training.
Facilities and living comforts apart, Pune also has a high availability of talent across business areas. The world class educational institutions are moulding individuals with aspirations in various banking career options. Also the people who are keen to make a career in investment banking are sure to establish their careers in the receptive environment. The educational institutions present in the city are also responsible for developing the ideal candidates who can fit the bill for the various job opportunities available at new banking establishments.
Role of Information Technology in Investment Banking
In today’s markets, it is technology that turns a trading strategy into a trading profit, enables new pricing models and introducing products to the market. Investment banking industry thrives on the flow, analysis and interpretation of information and technology has the power to deliver competitive advantage. Technology touches every part of an investment bank and underpins every deal that is made. When a system is unavailable, millions can be lost. So robust systems and infrastructure more than important, they are fundamental to investment banking’s ability to operate & make profits.
Another challenge is the evolving regulatory burden of the financial sector. Technology has to do more than keep up; it has to drive the changes and developments necessary to keep investment banks ahead of the competition.
Investment banks rely on advanced technologies in the front office to enable high-speed, high-frequency trading. Until now, the upfront benefits from this activity have been so enormous that the complexity and inefficiency of post-trade processes and systems have often been overlooked.
That is changing fast. The highest performing investment banks are now using their front-office technologies in bold, innovative ways as a source of competitive advantage for the whole business. By concurrently enabling interdependent business functions, such as risk management, settlement and financial reporting, these technologies are transforming the way organizations ‘think’, ‘react’ and ‘operate’.
There are a number of reasons for change in this trend:
- Management is demanding integrated, proactive technology infrastructures that can anticipate the impact of new market and regulatory developments and adapt to the same.
- Technical leaders are under mounting pressure to get a return on their massive investments in technology by using these assets to drive down costs, as well as driving up revenues (traditionally the principal focus for front-office technologies)
- This increasing emphasis on ROI means technology leaders need to develop flexible IT systems / assets that, by adapting to business change, can appreciate in value over time.
Understanding complex technology is one aspect, but a firm grasp of business problems is also essential. Investment Banking IT Professionals work closely with the sales, trading floor, middle office operations to develop the software that enables them to make the split second decisions or use their creativity and initiative to enhance state-of-the-art front-to-back systems and databases. Whatever the task investment banking technologists work in a fast-moving environment where solutions move from concept to implementation in weeks and months rather than years.
Also Read: Why Do So Many People Want To Go Into Investment Banking
Investment Banking Jobs At Boutique Firms
The Imarticus team felt quite proud this week as the Economic Times featured the country’s top 5 boutique investment banks and their journey so far. Reshma Krishnan, our IFAP program’s head faculty, is an alumnus of Avendus Capital which took center stage in the article.
It was during Reshma’s five year stint with the firm that she realized the need for professionally trained Investment Banking analysts to fulfill the needs of boutique firms like Avendus Capital, Mape and the host of boutique firms out there that cater to rising need of mid- market firms not catered to by bulge bracket investment banks.
Investment banking jobs in boutique firms are among the most sought after because unlike being an analyst in a bulge bracket firm, the boutique firm analyst is part of the entire deal, from origination to execution to closure, thereby gaining exposure to all crucial aspects of a transaction.
In bulge bracket firms, the analyst is predominantly involved in collateral preparation and hardly ever sees the client. But what do analysts do in an investment banking job in a boutique bank?
If you refer to our earlier post on the difference between the buy side and the sell side, you will understand the role the investment bank plays during a transaction. To summarize, a sell side transaction is where an investment bank represents the client who is selling an asset or raising funds by selling equity. A buy side is, as the name suggests, a client who wants to buy an asset or infuse equity, or buy a stake in a firm. Boutique firm clients can be corporate or private equity funds and many boutique firms specialize in mergers and acquisitions (M&A), and private equity (PE) fund raising for corporates.
In any M&A or PE sell side situation, this is the typical process:
Planning and Preparation
Goal – Gain clarity on business objectives and how they map to market realities
Key Deliverables – Clear definition of M&A criteria or fund raising requirements and valuation expectations
Analyst role – Read more in our earlier article
Marketing and Prospecting
Goal – Create deal possibilities by mapping the market, identifying a target universe and reaching out to prospects
Key Deliverables – Qualified list of targets that are interested in participating in M&A or PE Process
Analyst role – Meet client, acquire and analyze information, create Information Memorandum and other documents. Start help populating the Due Diligence room
Evaluation and Prospect Finalization
Goal – Create shortlist of candidates with whom we can close a deal if we converge on valuation and terms
Key Deliverables – Adequate number of buyers or sellers with whom a deal can be closed
Analyst Role – Identify potential partners and create and maintain buyer/funder tracking list
Bid
Goal – Make an offer or receive offers that balances out appropriate negotiation tactics and dynamics of the situation on the other side. Get multiple term sheets
Key Deliverables – Exclusivity with best available option
Analyst Role – Analyze data to help team negotiate the best offers; continue populating the DD room
Due Diligence
Goal – Help co-ordinate due diligence, Assess all existing and potential risks with the business (financial, operational, etc.)
Key deliverable – Make sure Diligence goes smoothly and mitigate all risks
Analyst role – Co-ordinate Due Diligence
Documentation
Goal – Document final commercial and legal terms and conditions through appropriate legal documents
Key Deliverables – Share Purchase Agreement, Disclosure Letter, Escrow Agreements, etc
Analyst Role – Arrange meetings, gather data to support negotiations
Closing
Goal – Coordinate closure of conditions precedent, flow of consideration and exchange of shares
Key Deliverables – Successfully closed transaction
Analyst Role – Be on ground resource to team
Our IFAP program equips analysts to handle all parts of the process from valuation, collateral preparation, to documentation.
This is why we are among the top preferred partners for boutique investment banks.
Also Read: Different Types of Investment Banking Jobs
Investment Banking Job Interviews
It’s common to feel butterflies in your stomach or get goose bumps before you step in for an interview at an Investment Banking firm. But this can be avoided if you are well prepared.
Let us share with you, some of the questions asked to an Imarticus CIBOP student at a Panel Interview at a well-known Investment bank in Mumbai. CIBOP is our investment banking operations certification program.
Investment Banking Panel Interview – General Questions
1. Tell me something about yourself
2. What did you learn in your short-term course at Imarticus?
Investment Banking Panel Interview – Technical Questions
1. What are securities and derivatives and the different products of derivatives?
2. Explain the trade life cycle of exchange-traded products and OTC life cycle
3. What are the operations conducted by the three different departments in an Investment Bank?
4. Why did you choose Investment Banking as your career?
5. What are the qualities you have that make you feel you will do a good job in investment banking?
6. Tell us something about the company?
Investment Banking HR round after the Panel Interview
1. Tell me something about your family background
2. What is the difference between exchange-traded products and products traded in the OTC Market?
3. Your strengths and weakness
Lastly, they gave a brief about the openings and the salary that is being offered, confirmed if all the certificates are in place and if the candidate would be okay to work in shifts. They said they would get back to confirm the selection.
Hoping this will help you prepare for your next investment banking interview. All the best!!
Career Development Programs by Imarticus Learning!
Business Management as a career option is very challenging, exciting, and promising. It offers an accelerated career path for those who want to enter the finance industry. The study options to pursue a course in this field is available at the graduation level and at the post-graduation level as well. Aspirants can also pursue a course at diploma and certification level too.
This is a very vast and challenging field with numerous career options. This field offers services such as advisory services, trading securities, selling, and underwriting securities for companies, individuals, and governments. Aspirants can take admission to any college offering this course, but while taking this important decision one should take an informative step.
There are many colleges that offer this course, but while choosing a college or institute you should always keep in mind that colleges must be offering the latest and industry-centric curriculum with the right mix of theoretical and practical training.
Investment Banking Courses:
The course in this field offers you deep and vast knowledge about investment banking. Aspirants can pursue a short term course and a three-year degree course as well. These courses emphasize more on core skills and competencies. After completion of the course, students can enter into the world of global Investment Banking and Capital Market.
Students of these courses will study below topics while pursuing this course:
->Investment Banking
->Securities products Training
->Latest trends in investment banking
->Operational risk and operational stimulation
->Trade confirmation, settlements & transactional reporting, etc.
List of courses offered:
->Diploma in Investment Banking and Equity Research
->MBA in Investment Banking
->PG Programme in Security Analysis, Portfolio Management & Investment Banking
->UG Programme in Security Analysis, Portfolio Management & Investment Banking
->BA in Finance & Investment Banking
->PG Diploma in Banking & Finance
->Post Graduate Diploma in Investment & Business Research
->Post Graduate Diploma in Global Investment
-> Business Management Course (Get a job offer before even joining the course)
Career Options in Investment Banking
->Security Analysts
->Foreign Exchange trader
->Bank Manager
->Financial Analysts
->Financial Advisor
->Research Analysts
->Equity Researcher
->Investmnt Banking Analysts
->Sales Manager
Feel free to visit for more information: https://www.linkedin.com/showcase/4821209/admin
Back to Basics | Mergers & Acquisitions
This is the classic investment banking product offering and involves providing advice to businesses, private investors, government agencies, private individuals and families in divesting and acquiring assets. Advice is provided on a full range of transactions including mergers, sales, buyouts, divestments, leveraged buyouts, joint ventures, raid defenses, spin-offs.
The range of services includes origination of assets to acquire, structuring, negotiation, due diligence right up to documentation and closure. The banker or a team of bankers work side by side with the company often even in charting out their growth strategy before they decide to pursue inorganic growth.
Large bulge bracket M&A teams in Goldman Sachs, JP Morgan etc often have two parts to their business- Origination & Execution. Origination involves the sourcing of deals, which includes business environment analysis, company research, pitching and agreeing on terms. Once a deal has been sourced and the target/strategy agreed on the execution team steps in to validate, value, structure and close.
To understand how interconnected the entire spectrum of banking is, we will use the example of Company ABC. ABC is bottling Water Company undertaking a huge organic and inorganic expansion plan. This strategy in itself might have been formulated with the help of a consultancy firm like McKinsey or Monitor. Once a strategy has been formulated, ABC retains an M&A team to chart out its inorganic strategy and put out a criteria list. The M&A team will then scout the globe and bring back a laundry list of possible matches according to the criteria list. They shortlist and start contacting the companies, or their respective bankers and after a lengthy process of sharing preliminary information, they zoom in on XYZ Water Company to be a suitable strategic asset for ABC. The M&A team will now engage, value, and handle the entire transaction on behalf of its client from here on out till closure. Closure includes signing on the dotted line and the fulfillment of conditions precedent (Essentially terms that need to be fulfilled for money and shares to exchange hands) Lawyers play a significant role in M&A as well and work in tandem with the M&A team especially in Due Diligence and Documentation.
This brings us to our IFAP course why it is different from other Financial Analyst Courses. Our IFAP course covers this entire process in detail and will equip you with the tools required to understand and run this process effectively. We will teach you how to research companies, how to value them and use financial models in an M&A transaction. We will take you through the concept of synergy and control premiums. Finally we will take you through the salient points of documentation.
Introduction to Investment Banking
At its heart, Investment Banking is the job of the intermediary; it is the key link between buying and selling, raising and lending.
It’s hard to know what you want to do in life if you don’t know what is out there and one of Imarticus’s keys goals is to spread awareness of the different career possibilities in Corporate Finance. This will then help you understand the need for Investment Banking courses or Financial Analyst courses that will help prepare you for a career in this extremely competitive universe.
The term Investment Banking has gone through a sea change in the last two decades with it becoming almost synonymous with Financial Services. With the scope of commercial bank and traditional investment banks constantly overlapping, there is no one definition. With the repealing of the historical Glass Steagall Act of 1933 in 1999, the walls separating investment banking activities and commercial banking activities dissolved. Even traditional retail banks like ICICI and SBI have investment banking arms today. The crisis of 2008 however has thrown light on these conflicts and chinese walls are being adhered to more carefully now. The term Investment Banking however is a term still used loosely to describe any institutional financial services offering.
Traditional Investment Banking comprises of Mergers & Acquisitions (M&A) and Corporate Finance Advisory. In a broader sense however, it can also include the entire Securities industry, which includes Sales & Trading, Clearing and Corporate Support. Extending their scope even further, investment banks now offer Asset Management and Private wealth managed services as well. At its heart however lies the job of the intermediary, the key link between buying and selling, raising and lending.In the series we intend to break down Investment Banking not just into its academic components but its functions and careers. We will profile Front Office Analysts and Private Equity Analysts to understand what they do everyday. In our next installment we will understand the various functions, the concept of Buy Side and Sell – Side and delve a little into the world of Mergers & Acquisitions.
Did you know?
The Bombay Stock Exchange is the oldest exchange in Asia and can be traced back to the 1850s when four Gujaratis and one Parsi stockbroker would gather under the banyan trees in front of Mumbai’s Town Hall. While BSE Ltd is now synonymous with Dalal Street, it was not always so. The first venue of the earliest stockbroker meetings in the 1850s was in rather natural environs – under banyan trees – in front of the Town Hall, where Horniman Circle is now situated. A decade later, the brokers moved their venue to another set of foliage, this time under banyan trees at the junction of Meadows Street and what is now called Mahatma Gandhi Road. As the number of brokers increased, they had to shift from place to place, but they always overflowed to the streets. At last, in 1874, the brokers found a permanent place, and one that they could, quite literally, call their own. The new place was, aptly, called Dalal Street (Brokers’ Street). The official organization became known as ‘The Native Share & Stock Brokers Association’. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE SENSEX in 1986, giving the BSE a means to measure the overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading SENSEX futures contracts. The development of SENSEX options along with equity derivatives followed in 2001 and 2002, expanding the BSE’s trading platform. Historically an open outcry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition. This automated, screen-based trading platform called BSE On-line trading (BOLT) currently has a capacity of 8 million orders per day. The BSE has also introduced the world’s first centralized exchange-based internet trading system, BSEWEBx.co.in to enable investors anywhere in the world to trade on the BSE platform. (Extract from BSE Website)