Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 3: INTERNATIONAL INVESTMENT BANKING (Features of International…
CHAPTER 3: INTERNATIONAL INVESTMENT BANKING
Features of International Investment Banks
Manage the buying and selling of stock, bond and other financial system
Securitization or bundling of assets to sell in the secondary market
Bringing an Initial Public Offering (IPO) of a new financial security to the market
An Initial Public Offering (IPO) enable company to raise new fund by issuing either debt or equity to public
The Differences between Commercial Bank and Investment Bank
Investment Bank
No deposits taking
Provider of a very custom-made/tailored services
Not loan providder
Not a transnational day-to-day
services provider
Have a few hundred core customers/less
Commercial Bank
Deposits taking
Provider of a very standardized services
Loan Provider
a transactional day-to-day
services provider
May have millions of customers
Functions of International Investment Banks
They assist public and private corporations in raising fund in the primary capital markets
It serve as intermediaries between corporations or government that want to attract investment capital and investors wanting to invest capital
They also act as intermediaries in trading for clients
Revenue generating activities
Investment bank assist with corporate reorganizations and advising on strategic matters such as, joint ventures
Types of International Investment Banking Operational System
Middle Office
It focuses on identifying and managing the level of risk that the company assumes in order to do business
It depends heavily on data collected by the back office
It relates to rick management Issues
Front Office
Two main areas of the front office are investment banks and markets
The Primary activities of international investment banks include advising big firms on M&A
as in the market, investment bank helps customers to raise funds
Back Office
It is devided by two which is Operations Department and Information Technology
Facilities Offered by Back Office
Providing Advise
It Offered from corporate restructuring exercise to rearrange a company's operations
Also offered independent evaluation on corporate transaction including valuation of companies/ businesses/ securities/ assets
Others
Financial Research, Bridge Financing & Currency Exchange
New Product Development
In Islamic banking many hybrid product have been introduced in order to meet the needs and wants of the Muslim and non-Muslim clients
Creativity and innovation activities are stabilize the financial market imperfections
Trend in investment banking is more on creativity and innovation or creation of new product called as "hybrid" which can generate profitability opportunities
Underwriting New Issues
Underwriting activity includes basic securities like equity and bond issues
Investment bank provides many services in underwriting activities such as advising, documentation and actual writing
Activity of providing long term equity and debt finance for corporations and government
Company raising capital by selling common stock to the public for the first time is known as Initial Public Offering (IPO)
Trading Securities and Risk Arbitage
Broker makes arrangement to help buyer and seller to complete a business transaction
Example of services
Recommendation of security purchase or disposal to its clientele
Help client to obtain margin credit on the collateral of securitie
Investment bank serve as securities broker and dealer in secondary market