What is an investment bank?
If you want to raise a large amount of capital to fund your company you will want to talk to an investment bank to find you the best solution. An investment bank will help raise the capital needed, but also acts as a financial adviser if you want to take your company public in an IPO.
Where have you heard about investment banks?
During the financial crisis of 2008 there was a lot of discussion about whether some investment banks misled clients into buying poor investments. They are also sometimes mentioned when large deals are being done as advisers to the deal.
What you need to know about investment banks.
Investment banks advise in some of the most complicated aspects of banking, including raising capital by issuing bonds, buying and selling businesses, going from private to public ownership, international deals, proprietary trading and for their own accounts. They can for example, underwrite the issuing of new shares.
Market performance can impact on the trading divisions of the bank, leading them to experience profit or loss; while the advisory divisions of investment banks are paid a fee for their services.
Well known investment banks include JP Morgan, Goldman Sachs, Barclays, Deutsche Bank, Bank of America, Morgan Stanley, UBS and Credit Suisse. Some have specialist expertise in particular sectors, while others serve the whole market.
Investment banks were historically referred to as merchant banks in the UK because they were a key driving force behind both domestic and international trade.
Find out more about investment banks.
See some of the potential of conflicts of interest between the banks advisory arm and their salespeople in this BBC article: https://www.bbc.co.uk/news/business-11211776.