Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 3: INTERNATIONAL INVESTMENT BANKING (MBM1195A) :…
CHAPTER 3: INTERNATIONAL INVESTMENT BANKING
(MBM1195A)
:
DIFFERENCES BETWEEN COMMERCIAL BANK AND INVESTMENT BANK
:
Investment bank
-Not taking deposits
-Not provide loan for customer
-The service is provider for a custom made
-The customer was have a few hundred core
-The transaction is not day to day service. Eg, fund based and fee based service.
-Have strategic advisor to companies with regards to their structure, divestments and
capital markets product. Eg debts and equity instrument.
Commercial bank
-Their taking the deposits
-Their provide the loan in the bank
-The customer may have millions comes to the bank
-The transactional was day to day service provider. mortgage and personal loans and insurance. Eg current account, savings account, credit and debit cards,
-Commercial bank was not have a strategic advisor to companies/corporations.
TOP TEN INTERNATIONAL INVESTMENT BANKS
Fees ($m)
6,398.67
5,693.77
5,556.45
5,310.17
4,489.64
4,263.81
3,768.46
1 more item...
RANK
1
2
3
4
5
6
7
2 more items...
INTRODUCTION OF INTERNATIONAL INVESTMENT BANKING
“Banking activities whose functions involved provision of long-term equity and loan finance for industrial and other corporations, particularly new securities”
by Hughes & MacDonald (2002).
1st - sell new securities at Primary Market
2nd - After the securities sold, IB make Secondary Market
Provide advisory service to corporate clients (securities issues & M&A activities
Deal with companies & other large institution (do not deal with retail customers)
Do not take deposits
Ex: Citigroup, Labuan Branch, and Swift Investment
Early 16th century - investment banking system emerged
18th century - J.P. Morgan , Goldman Sachs
19th & 20th century - prominent banking partnerships and dramatic expansion on investment banking respectively
Operational System
Front Office
Is any software that has a direct relation to customers
Middle Office
Calculate profits & losses and help the front office determine what projects to conduct or clients with whom they will work
Back Office
System that do not deal directly with the customer, such as inventory management & account payable
FUNCTIONS OF INTERNATIONAL INVESTMENT BANK
Revenue generating activities
Secondary market making
Trading
Corporate restructuring
Financial engineering
Advisory services
Primary market making
Investment management
Venture capital
Consulting
Support activities
Clearing
Internal finance/funding
Information services
Investment banks assit with corporate reorganizations and advising on strategic matters such as M&A, diverstitures, corporate defence strategies, joint ventures, privatizations, spin-offs and leverage buyouts.
Investment banks primarily serve as intermediaries between corporations or governments that want to attract investment capital and investors wanting to invest capital.
They also act as intermediaries in trading for clients.
FEATURES OF INTERNATIONAL
INVESTMENT BANKS
Investment bankers manage the buying and selling of stocks, bonds, and other financial instrument for own portfolio and on behalf of clients.
Trend in investment banking is securitization or bundling of assets (to sell in secondary market)
Specialties of investment banks is bringing an initial public offering (IPO) of a new financial security to the market
Initial Public Offering (IPO)
A company can raise money by issuing either debt or equity
Enables a company to raise new funds or to cash in private stock for public stock
First sale of stock by a company to the public
May consists:
Preferred Stock
has some characteristic of both common stock and bonds
Bond
a legal debt commitment by the issuing company to pay the bondholder a fix amount of money at specific time in the future
called offerings or issuances
Common Stock
Equity stock that has voting rights
No securities if the firm goes bankcrupt
Companies fall into two broad categories:
Public
Private
OPERATIONAL SYSTEM
Back Office
Underwriting New Issues
New Product Development
Trading Securities and Risk Arbitrage
Providing Advice
Front Office
Middle Office
DEC 2018, JAN 2018, MAR 2016 (LIST 4)
FUNCTIONS
Risk Management
Corporate Management
Compliance
Financial Control
FEATURES
DIFFERENCES BETWEEN COMMERCIAL BANK AND INVESTMENT BANK
FUNCTIONS
Differences between revenue generating activities and support activities
Two main functions
TOP 10 INTERNATIONAL INVESTMENT BANK
COMPANY
J.P. Morgan & Co.
Bank of America Merrill Lynch
Goldman Sachs
Morgan Stanley
Citigroup
Deutsche Bank
Credit Suisse
Barclays
Wells Fargo
1 more item...
DEC 2018
JUNE 2018
JAN 2018 & OCT 2016
OCT 2016
OCT 2016
DEC 2018, JUNE 2018, MAR 2017, MAR 2016
MAR 2017
MAR 2016
