[What Do Investment Banks Do… Really]
By: DUAN Yanlin, Alan (Jockey Club Academy Hall)
You have all heard this term investment bank (or i-bank, IB, etc.) in movies like Wall Street or on news when big things like Alibaba’s IPO happened. You probably know there is a famous one called Goldman Sachs, and there are some more with ‘Morgan’ in their names. But eventually, the questions will come to: do you know what investment banks really do? If your answer is no, just continue reading, and I am sure that this article will help you get a sense of it!
The most traditional service that an investment bank provides is underwriting securities: to simply put, it means that the bank will raise capital from investors on behalf of its client. For example, in an Initial Public Offering (IPO), investment banks help their client to walk through this process and ensure the success issuing of new equity securities (stocks). Investment Banking Department (IBD) is the place where makes all these deals come true.
Another key function of an investment bank is offering market liquidity. Again, take stock as example. Investment banks would both buy and sell some stocks to facilitate the investments or trading needs of their clients. This is done by Sales and Trading Department (S&T), where you can see big trading floor, multiple computer screens and people talking through phone or using Bloomberg system.
Of course, what we have just discussed is a “simpler” version of the reality: there are many more things that an investment bank would cover: company research, merger and acquisition, equity derivatives and structured products… If you are interested in any of these, simply browse through internet and figure out what they are! Welcome to the world of investment bank!