The Investment Banks provide assistance to governments and companies for raising fund by selling and issuing securities in both the capital markets of debt and equity. The United States retained a distinction between the commercial banks and the Investment Banks till the later years of the 1990s. Most of the Investment Banks also provide tactical advices for acquisitions, mergers, divestiture or other types of money-related services for their clients like the dealing of fixed income, commodity, foreign exchange, equity securities and derivatives. Securities for the deals like the securities or cash or the support of securities, such as research or underwriting, is known as the "sell side". The "buy side" is comprised of the mutual funds, pension funds and hedge funds, and the people who invest and enjoy the products or services of the sell-side for maximizing their refund on investment.
The major operations of the Investment Banks are the purchase and sale of products on the behalf of the banks and their clients. Banks accept the risk with the help of proprietary trading, which is done by a particular group of traders who don't interact with their clients and also with the help of Principal Risk, which is the risk taken on by the dealers after the sale or purchase of the products to the clients and does not avoid his full exposure. The Investment Banks look after maximizing productivity for a particular amount of risk on their balance sheets.
The Investment Banks are divided into the Front Office, the Middle Office and the Back Office:
1. Front Office -
- Investment Banking is the basic service offered by the Investment Banks. It is concerned about assisting customers increase fund in the so-called Capital Markets and counseling on acquisitions and mergers. Investment banking can also be regarding the subscription of the investors to the security issuances, matching up bidders and discussion on the targets of the mergers.
- Investment management is the management of different types of securities and assets for accomplishing objectives of investment to benefit the investors.
- Sales and Trading has been time and again the most money-spinning area of the Investment Banks.
- The division of research assesses the businesses and submits reports about their views mostly with ratings of "sell" or "buy".
- Structuring is a comparatively new division due to the introduction of the derivatives.
2. Middle Office -
- Risk Management is concerned with the analysis of credit risk and market.
- Operations check the data of the deals that have been made.
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3. Back Office -
- The areas of finance are involved with risk monitoring and capital management of the Investment Banks.
- Technology is the IT department as all the leading Investment Banks has significant amounts of software for the house, which has developed by the Technology teams.
The ranks in the Investment Banks are comprised of Partner, Senior Managing Director, Managing Director, Executive Director, President, Senior Vice President, Vice President, Senior Associate, Associate, Senior Analyst, Analyst, Trainee and Intern.
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