Bank of investment

A banks of investment is a company the purpose of which is principal to advise the investors (private or institutional) on the financial markets. It puts them in relation to the companies to finance their projects or is given the responsability to manage under mandate their funds.

Differences with the deposit banks

With the difference of a deposit bank, it thus does not lend again the deposits of customers (or those of customers of other banks), but it gives access to the market of the capital by issue of shares and obligations. However, the majority of the banks of investment are not independent any more but make from now on started from banking groups having also activities of deposit bank, of insurance and others.

It often also has an important activity in the assembly of operations of Fusion-acquisition

This distinction comes from the the United States, where it was registered in the law by the Knell-Steagall Act after the Krach of 1929.

Differences with the banking in businesses

The banker of businesses advises the company in his optimal search for financing. It happens that the bank of investment has an internal structure of bankers of businesses but it is source of great tension with the teams in load of the client relationship with the investors. One speaks moderately about " conflicts of intérêts" and of " wall of Chine".

Detail of the activities

The trade largely diversified, especially since the emergence of the modern financial system after 1973, in multiple activities related to the financial markets. Those, with different importances according to the establishments, gather:

  • the emission of Title S, for example the Going public, of the companies, the capital growths, tender offer, APERTURE, OPV, the assemblies of fusion-acquisition.

  • the organization of markets on the financial instruments, Derived S or not,

  • the financial Engineering (complex operations combining various financial instruments),

  • the Acquisition of a holding in the capital of companies for their account or others (financial Bearing, Capital non quoted),

  • the installation of syndicated financings (see Pool of financing) of great scale, where many other banks and finance companies take part.

  • the stock exchange broking , activity where they act as Société of broking,

  • the management of funds (or the board of trustees), for themselves, their customers of companies and private individual, and possibly for Fonds of investment

It should be noted that these two last activities, broking and management of funds, can raise a problem deontologic (risk of Délit of initiate, rate manipulations…), from where alternative practice of various banking groups to rather attach them to the Private banking),

See too

Large banks of investment

International

In France

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