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What are different types of Investment Banking
Updated on 30th May, 23 297 Views

An investment bank is an organization that provides financial services to clients for large and complex financial transactions.

Investment banking is a method of guiding investors in their best interests while advisors handle massive, intricate financial transactions.

We can say that it is a tool that is utilized in every line of business to save costs, eliminate hazards, and find the best solutions for complex financial situations.

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To grasp more information about Investment Banking make sure to go through these subtopics:

Points to Capture

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What is Investment Banking?

Corporate Finance is another name for Investment Banking.

It essentially offers corporations and governments advice on how to combine or acquire businesses, how to generate money, and how to reshape their operations to be more successful and efficient.

Investment Banking primarily helps in the merging of two different companies or acquiring one smaller company into a larger company.

Raising money through equity and raising money through debt are also taken care of by these banks, such as buying shares, and putting money in the correct asset.

Restructuring is one of the major roles of investment banks, where the bankers analyze the structure of the business and then decide what changes are required to be made in that business to make it more effective.

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How is Investment Banking Achieved?

Investment banking is achieved by bankers who have a proper skill set that they apply in their respective roles and responsibilities.

The bank provides its customers with expert investment bankers who will assist the clients in planning the investment idea and executing it, as well as helps in removing any dangers from any large-scale initiatives.

These are the ones who know how to invest wisely since they carefully consider all relevant factors. Examining the data angles and patterns, modifying the data to achieve the best outcomes, and then requesting the clients for investment if it has less risk and offers more value.

Being disciplined and self-dedicated to the work, identifying new business opportunities, interpreting in finding the clients and structuring the deals, and then finalizing them, managing the deals, and negotiating with clients, knowing the climate of the market, are the important task done by investment bankers for their specified bank.

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Qualities of Investment Bankers

Qualities of investment banking are never liable on what type of degree a person is holding, these below mentions qualities define a great investment banker.

  • Strong numerical and analytical skills
  • Communicating and interpersonal skills
  • Problem-solving skills
  • Teamwork and team leadership skills
  • Project and time management
  • Ready to adapt and cooperate

Types of Investment Banking

Types of Investment Banking

There are four different types of investment banking listed below, we will be considering them one by one to get a brief understanding of each type with the help of examples.

Bulge Bracket Investment Banks:

The Bulge Bracket Bank covers the top most recognizable investing firms throughout the world. They have the highest brand values among other banks.

Banks that are falling under this category are Goldman Sachs, JP Morgan, Morgan Stanley, and others. They provide financial services for huge investments, advising, and research. These banks typically categorize their investment banking division into product groups and coverage groups. They are well-known outside the finance industry.

They focus on huge projects rather than working on smaller ones, making sure that any sector which is seeking their assistance is asking for heterogeneous projects.

Their primary goal is to provide one genuine product, providing a wide range of financial services, also including advising and analysis.

You will find that Bulge Bracket Banks has offices in major financial hubs globally, making their network strong with various major clients over all the world, but you will not be able to find them in small cities.

The deals for these types of banks should be of huge amounts in the range of over $1 billion or even greater. These banks are the biggest investment banks with the greatest parties as their clients.

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  • Elite Boutique Investment Banks:
    • If you are looking for a higher-paying investment banking analyst, these banks are where you have to stop looking. Lazar LLC, Moelis & Company, and Evercore Group LLC are known as Elite Boutique Banks.
    • They tend to give higher salaries to their employees as compared to any other bank, not even Bulge Bracket, which has the highest brand value. They are known for limited types of activities.
    • These banks don’t have the constraints of location, one will be able to find these types of banks all over the locations whether a posh one or a local one, hence they have more exposure than Bulge Bracket Banks.
    • Different Elite Boutique will focus on single services say if one elite bank is providing a service of advising, the other will be concentrating on capital restructuring. Getting homogenous projects from their clients is their primary goal, with a deal size approximately of $1 billion, making them the competitor of Bulge Bracket.

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  • Regional Boutique Investment Banks:
    • Regional Boutique Banks are those that are dealing in smaller transaction sizes. Deals that they carry forward are usually less than the size of $10 million.
    • You will find out that they usually assist the companies with the work of loan financing. Raymond James, Robert W. Baird, and Brown Brothers Harriman are the banks that fall under this category.
    • These types of banks are not specialized for any specific product or in any specific sector. They will be working on different projects and different clients from different sectors but in smaller cities that have quite local companies or organizations.
    • These banks have strong connections and networks within a particular location, they don’t focus on clients who are outside their specified geography.

Want to explore what is exactly asset management is? Explore it from the blog What is Asset Management?

  • Middle Market Investment Banks:
    • Middle Market Investment banks focus on small emerging businesses to get financial advice and assistance. Working in these banks will let employers make connections within a region. It focuses on the middle market customers and finance that surrounds its office.
    • They don’t have as much brand value as the upper-mentioned banks have. It focuses on middle-market customers and finance. Jefferies, Macquarie, and RBC Capital Markets are the banks that work as Middle Market Banks.
    • These types of banks are categorized as those banks that deal in transactions the size of $500 Million to $1 Billion. They usually target clients who are too big for the Relational boutique type or too small for the Bulge Bracket type.
    • They don’t serve a wide area but are under a specific spread, not presented internationally. Mediocre-sized businesses are the main client of these banks.

Top Investment Banks In India

In the 19th century, the Banking sector acquired land in India for the first time.

That was a start for the Banks to set their foot, and now, India has leading investment banks that are listed below:

  • SBI Capital Markets Ltd.
  • ICICI Securities Ltd.
  • Central Bank of India
  • Axis Bank Ltd.
  • HDFC Bank Ltd.
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Each type has advantages and disadvantages for its employees. Any specific bank that you have to choose as a client will be depending on the size of the deal, product, and services the bank is offering.

As to seek a job in one of these banks you have to check the different constraints, say for example, if you want to choose a bank for its brand value, exposure, great exit opportunities, and decent salary then you can choose Bulge Bracket Bank.

However, if reasonable pay is not enough for you, then you should go for the banks that have fewer brand values as they offer higher salaries and incentives. If you have location barriers then also all four banks provide plenty of choices.

Want to know about the Investment Banking Analyst’s salary? Our guide will help you know about average pay rates, factors that impact salaries, and tips.

The job opportunities these bank offer will bring a great experience, and you will get familiarised with multi-disciplinaries of business and investments.

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