What is an Investment Bank?
An is a financial institution that helps companies, governments, and other large organisations raise capital and navigate complex financial transactions. It is very different from the retail bank where you keep your current account and savings.
What do do?
Their core activities fall into a few areas. They help companies raise money by issuing shares, managing and other offerings or by issuing . They advise on , helping companies buy, sell, or merge with other businesses. They trade financial instruments on behalf of clients and sometimes with their own money. They also provide research on companies and markets to .
Who are the major ?
The largest and most well known include Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan (JPM), Bank of America (BAC), Barclays (BCS), and Deutsche Bank (DB). Some large universal banks combine retail and under one roof, though regulations in many countries require these activities to be separated.
How do make money?
They charge fees for the services they provide a percentage of the deal value when they manage an or advise on a merger, for example. They also earn from trading and from the interest on loans they extend to clients.
Why does this matter for an ?
shape the landscape in which you invest. They bring new companies to market. They facilitate the major corporate transactions that affect the companies in your . And their research, while primarily aimed at institutional clients, influences how markets price individual . You may never deal with an directly, but their work is present in almost every corner of the market.