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CHAPTER 3: INTERNATIONAL INVESTMENT BANKING (INTRODUCTION (Specialize in…

- - - - :star: Bringing an Initial Public Offering of a new financial security to the market
        
        Initial Public Offering
        :star: Enable company to raise new funds or cash in private stock for public stock.
        :star: First sale of stock by company to the public. A company can raise money by issuing either either debt or equity. If the company has never issued equity to the public, it's known as an IPO.
        :star: May consist of common stock, bond and preferred stock.
- - - - : :fountain_pen: Providing banking and financial services to the general public
        
        : :fountain_pen: Help to mobilize the savings in the economy
        
        :fountain_pen:Accepts deposits from depositors and lend money to the borrowers
        
        : :fountain_pen: Provide daily transactions service
        
        :fountain_pen:Not a strategic advisory to corporations
    - - Example of Commercial Banking
        
        Islamic Bank
        
        RHB Bank
        
        Maybank Berhad
      - Example of Investment Bank
        
        Kenanga Investment Bank Berhad
        
        Al Rajhi Banking and Investment Corporation (Malaysia) Berhad
        
        AmInvestment Bank Berhad
    - - :fountain_pen: Set up especially for the investors, big corporation and government
        
        :fountain_pen: Help to raise the business capital
        
        :fountain_pen: Provide services such as underwriting of securities, raise initial capital, asset management, wealth management and merger
        
        :fountain_pen: Does not provide daily transactions service
        
        : :fountain_pen: Act as advisory to companies with regards to their structure, acquisitions, divestment, and capital markets product
- - - - Relates to risk management issues.
        
        Focus on identifying and managing level of risk that company assumes.
        
        Works with the front office to identify risk of doing business with certain clients.
        
        Relies heavily with on data collected by back office in terms of risks, profits and losses and the underlying reasons for those activities.
        
        Functions: Risk management, corporate treasury, financial control and compliance.
    - - Two types of divisions: Operations Department, Information Technology.
      - TYPES OF FACILITIES OFFERED:
        
        Underwriting new issues
        
        providing long term equity & debt finance for corporations & government
        
        company raising capital by selling common stock to public for first time (IPO)
        
        Underwriting activities ( equity and bond issues and convertible bonds )
        
        Trading securities and risk arbitrage
        
        Investment banks- security broker & dealer in secondary market.
        
        Broker- make arrangements for buyers & sellers complete business transactions and it receives commission.
        
        New product development
        
        Trend in investment banking is more on creativity and innovation or creation of new products (hybrid) which can generate profitable opportunities for particular banks.
        
        In Islamic Banking, many hybrid products have been introduced to meet the needs and wants of the Muslims and non-Muslim clients.
        
        Creativity & innovation activities - to stabilize the financial market imperfections
        ( taxes, transaction costs, regulations and ignorance of market participants )
        
        Providing advice
        
        offered from restructuring exercises to rearrange company's operations.
        
        Others
        
        Financial Research, Bridge Financing and Currency Exchange