What is Investment Banking?

Learn all about the investment banking industry

Investment Banking Overview

Investment banks are financial institutions that operate several different divisions, which we have outlined below.  Each division serves a unique function, but all the various groups work together to provide “full service” to their clients.  Professionals who work in investment banking spend a lot of time doing financial modeling and creating presentations for clients.

what is investment banking

 

What do investment banks do?

Underwriting – Capital raising and underwriting groups work between investors and companies that want to raise money or go public via the IPO process. This function serves the primary market or “new capital”.

Mergers & Acquisitions (M&A) – Advisory roles for both buyers and sellers of businesses, managing the M&A process start to finish.

Sales & Trading – Matching up buyers and sellers of securities in the secondary market.  Sales and trading group act as agents for clients and also can trade the firm’s own capital.

Equity Research – The equity research group research or “coverage” of securities to help investors make investment decisions and support trading of stocks.

Asset Management – Managing investments for a wide range of investors including institutions and individuals, across a wide range of investment styles.

 

Who are investment banks’ clients?

Governments – Investment banks work with governments to raise money, trade securities, and buy or sell crown corporations.

Corporations – Bankers work with private and public companies / operating businesses (known as “corporations” or “corporates”) to help them go public (IPO), raise additional capital, growth their business, make acquisitions, sell business units, provide research for them and general corporate finance advice.

Institutions – Banks work with institutional investors who manage other people’s money (known as “institutions”) to help them trade securities and provide research.

Individuals – Many investment banks also deal with individual investors by providing wealth management services and family office support for ultra high net worth individuals.

 

How can I get into investment banking?

Getting into investment is very challenging.  There are far more applicants than there are positions, sometimes as high as 100 to 1.

We’ve published a guide on how to ace an investment banking interview for more information on how to break into wall street.

In addition, you’ll want to check out our example of real interview questions from an investment bank.

In preparing for your interview it also helps to take courses on financial modeling and valuation.

 

Investment banking careers

 

Who are the main investment banks?

The main banks, also known as the bulge bracket, are:

  • Bank of America Merrill Lynch
  • Barclays Capital
  • Citi
  • Credit Suisse
  • Deutsche Bank
  • Goldman Sachs
  • J.P. Morgan
  • Morgan Stanley
  • UBS

View a full list of investment banks here.

Additional resources

This is been an overview of investment banking and how the industry works. To learn more about career paths and how to break into banking, please see these additional resources: