Investment banking is a special segment of banking operation that helps individuals or organisations raise capital and provide financial consultancy services to them. They act as intermediaries between security issuers and investors and help new firms to go public. They either buy all the available shares at a price estimated by their experts and resell them to public or sell shares on behalf of the issuer and take commission on each share.
Investment banks perform two basic, critical functions for the global marketplace. First, investment banks act as intermediaries between those entities that demand capital (e.g. corporations) and those that supply it (e.g. investors). This is mainly facilitated through debt and equity offerings by companies. Second, investment banks advise corporations on mergers & acquisitions (M&A), restructurings, and other major corporate actions. The majority of investment banks perform these two functions, although there are boutique investment banks that specialize in only one of the two areas (usually advisory services for corporate actions like M&A).
Kindly find below a few of the top investment banks.
1. GOLDMAN SACHS.
This is one of the largest investment banking enterprises in the world, founded by Marcus Goldman and Samuel Sachs in 1869 (149 years ago). The Bank is a leading market maker. A market maker is a dealer in securities or other assets who undertakes to buy or sell at specified prices at all times. Its products include asset management, commercial banking, commodities, investment banking, investment management, mutual funds and prime brokerage. The company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending and Investment Management. As at 2018, it has a total number of 37,300 employees. Its Chairman is Llyod Blankflein and the CEO is David Solomon. Goldman Sachs reported net revenues of $32.07 billion for FY 2017, of which investment banking division contributed $7.37 billion. The revenue generated in the investment banking division was the highest among all divisions. Earnings per share (EPS) were $9.01 for 2017.
2. BARCLAYS BANK
This is a British multinational investment bank and financial services company headquartered in London. It was founded in 1690. Aside investment banking, is organised into four core businesses: personal banking, corporate banking, wealth management and investment management. Its group chairman is John Mcfarlane and its group chief executive is Jes Stanley. Barclays Bank reported net revenues of £21.076 billion (2017) for FY 2017. Its 2016 annual report indicates total income of £21,451 million of which the investment banking segment contributed to £10,533 million. Overall, EPS (equity per share) was £-0.12.
3. JP MORGAN CHASE
JPMorgan Chase & Co. is a leading global financial services firm and one of the largest banking institutions in the United States, with operations worldwide. The firm provides investment banking, treasury and securities services, asset management, private banking, commercial banking and other services. JPM Chase reported net revenues of $99 billion for FY 2017, of which investment banking revenue contributed $34.5 billion. EPS was $6.31. “The firm has $2.53 trillion in assets and $255 billion in stockholders’ equity” and operates in 60 countries with more than 260,000 employees with a diversified set of services. Apart from investment banking, it also operates in consumer and community banking, commercial banking, asset and wealth management, and corporate. Its Chairman and CEO is Jamie Dimon.
4. BANK OF AMERICA
The Bank of America Corporation (abbreviated as BofA) is an American multinational investment bank and financial services company based in Charlotte, North Carolina with central hubs in New York City, London, Hong Kong, and Toronto. Bank of America was formed through NationsBank’s acquisition of BankAmerica in 1998. It had a total net income of $18.23 billion in FY 2017, the investment banking division contributed $6,953 million. The overall EPS was $1.56 for 2017. It was founded by Amadeo Giannini. Its present chairman and CEO is Brian Moynihan. In Euromoney Institutional Investor Award, Bank of America was named the “World’s Best Bank.” Bank of America Merrill Lynch is the investment bank division under the auspices of Bank of America. It is one of the leading providers of wealth management securities trading and sales, corporate finance and investment banking services.
5. CITIBANK GROUP
is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomerate Travelers Group in 1998; however, Travelers was spun off from the company in 2002. Citigroup now owns Citicorp, the holding company for Citibank, as well as several international subsidiaries. In 2016, revenue from the investment banking division was $3.8 billion. Its chairman is Michael O’ Neill. Its CEO is Michael Corbat.
6. CREDIT SUISSE GROUP
This is one of the prominent investment banks and one of the largest wealth management firms with total assets under management of CHF 1.345 (September, 30, 2017) It operates through two global divisions: Private Banking & Wealth Management and Investment Banking. The Investment Banking division provides securities products and financial advisory services to corporations, governments, institutional investors and high-net-worth individuals. As of March 20, 2018, it had a market capitalization of about $46 billion.
7. DEUTSCHE BANK
Deutsche Bank is a German bank and financial services company headquartered in Frankfurt, Hesse, Germany. It is one the world’s leading investment banks and fixed income powerhouses. It includes five corporate divisions: Corporate Banking & Securities (CB&S), Global Transaction Banking, Deutsche Asset & Wealth Management, Private & Business Clients and the Non-Core Operations Unit. The Banker named Deutsche Bank the most innovative investment bank for IPO and equity raising. Deutsche Bank reported a net revenue of EUR 26.4 billion, down by 12% year-on-year.
8. Morgan Stanley
Morgan Stanley is an American multinational investment bank and financial services company headquartered in New York City. The business operates in three segments: Institutional Securities, Investment Management and Wealth Management. Morgan Stanley was named the Best Equity Bank in North America and United States by Global Finance in 2016. It reported net revenue of $37.9 billion in FY 2017, of which the investment banking segment contributed $1.4 billion, increasing from $1.3 billion a year ago. EPS was $3.09.
UBS is a global firm office in more than 50 countries. It operates through six business units: Wealth Management Americas, Retail & Corporate, Global Asset Management, the Investment Bank and Corporate Centre. UBS had a net profit of $1.25 billion and EPS of $0.32 in the year 2017. The firm has a strong workforce of around 60,000 employees across the globe with majority of them in US and Switzerland.
10. WELLS FARGO
Wells Fargo is the largest bank in the worl by market value. It is ranked No. 1, 2 or 3 in the U.S for most of its products and services. The company has four major business groups: Community Banking, Weal, Brokerage and Retirement, Consumer Lending and Wholesale Banking. Its investment banking fees were more than $2 billion in 2016. Its Chairman is Elizabeth Duke. Its CEO is Timothy Sloan.