Banking investment
Banking investments are those financing institutions which provide long term finance to business corporations and governmental bodies. They invest in shares, stock and bonds of different companies. These banks, unlike commercial banks, act primarily as intermediaries between business houses and investors. Generally they purchase the entire issue of new shares and bonds of business corporations or government bodies and resell them to the public. More often, they act as underwriters of the issue of securities. They also act as agents on commission basis.
Banking investments are classified into originators, underwriters and retailers. As originators, they bring out new issue of securities. As underwriters, they underwrite the issue of shares and debentures. As retailers, they retail the securities to individual and institutional investors.
The operational technique of investment bankers will be stated as follows. As originators, they enter into preliminary negotiations with the issuing corporations. They seek the detailed reports regarding the history of corporations including its corporate powers, nature and type of products produced, conditions of plant and machinery and other assets, its capital structure and the object of the new issue. They ask for the opinion of the expert techniques and professional accountants with an attorneys report regarding the majority of the issue. If the details are found to be satisfactory, the originator enters into an agreement with the issuing corporation undertaking to sell the new issue. The next step is to invite the small retailers to join the syndicate and finally the securities are offered for public subscription.
An investment banker thus performs a highly useful service to the corporate world by supplying long term capital. They render a useful service to the small investors by providing necessary guidance for investment.
Banking investment is for ambitious people with strong analytical skills, excellent oral and written communication skills, and the ability to be a leader as well as a team player. Many get into this field through analyst programs at banks investment even though they only have degrees at the bachelor level. Many others go the master of business administration route because values on this degree, as well as the added knowledge you obtain in a graduate program.
We are living in a fast paced, rapidly changing world and no field is moving faster than finance. Not only is there increased competition here in the united states, but financial institutions around the world want to control their own destinies with leading market positions, broad based client access, balanced earnings, and a presence in the global marketplace.
Young men and women interested in pursuing careers in finance will find that the activities in this field will continue to be global in nature. We already know how economic conditions in the United States can impact the rest of the world and vice versa. As technology makes communicating and financing easier and more common than ever before, crossing borders to invest will become the norm.
The capitalist mode is growing in developing nations and former communist countries as stock markets and other financial institutions spread their wings hopefully to claim financial stability and increased productivity in the world marketplace. As needs grow, foreign markets and governments will continue to look to the financiers in the United States to help lead the way to their solvency. And here at home, a growing population with increasing needs from homes to jobs to schools to healthcare and more are also looking to and relying on financial institutions for that same financial stability and greater productivity to keep the good times rolling.
It is an exciting time to contemplate a career in this field. The future trend is total globalization and one stop shopping for financial services. All major banks and Wall Street firms already operate in at least one overseas market and have embraced the one-stop shopping concept. It is not surprising that American investment banks are dominating global investment activities.
Full service banking investment generally includes three major professional divisions:
- Corporate finance, public finance, mergers and acquisitions.
- Sales and trading.
- Research.
There are great rewards in banking investment, but there are also great risks. These professionals must have expertise in what a business is worth either to price the securities offering, or to set the value of a merger or acquisition. Securities include stocks and bonds, and a stock offering may be an initial public offering or any subsequent offering. Banks investment charge very large fees for providing this valuation service as well as all other kinds of financial services and business advice. But whatever advice is given, it must be right on the mark. The penalty can be loss of a client and loss of your job.
Life Insurance Corporation and Guaranteed Investment Certificate are considered as investment institutions. They mobilize funds from the investing public by floating by various schemes. In addition to these, there are mutual funds stated by public sector banks and financial institutions. The money mobilized will be invested in shares and bonds of a variety of companies so as to minimize risks. Similarly Life Insurance Corporations and Guaranteed Investment Certificate invest the premiums collected on insurance policies in shares and bonds of companies
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