This website uses cookies to ensure you have the best experience. Learn more

Investment Banking Essay

1476 words - 6 pages

Notes on investment banking prepared by Jacob Westerberg on a lecture by professor Robert Shiller at Yale University

February 4, 2010

Investment Banking

The term bank is misleading since this is often used in everyday life

as a synonym for a depository institution. A depository institution is

an institution that accepts deposits from individuals and companies and

later on the owner can take the money back at an interest. Meanwhile the

institution makes loans, or invest the money at higher interest rates

than they give out on the deposits and that is how they make a profit

(e.g. a savings- ,savings and loan- or commercial bank).

Historically and at

present ...view middle of the document...

P. Morgan & Co decided to be a commercial bank. Two individuals that at this

time worked with the investment banking department, Henry S. Morgan and Harold Stanley,

then decided to open up Morgan Stanley, a new investment bank. Since 1933 J.P. Morgan has

gotten back into investment banking however and the companies are today competitors)

The problem was that in the US there was a division between

investment banking and commercial banking while in Europe there was not

which resulted in a lot of complaints from companies in the business

saying that the laws of the US handicapped them against there foreign

competitors. Finally part of the Glass-Steagall Act was repealed by the

Gramm-Leach-Bliley Act of 1999 (GLBA) which led to a wave of mergers

between investment banks, commercial banks and insurance companies, many

occurring just before the bill but were given waivers (e.g. The commercial

bank Citicorp merged with the insurance company Travelers Group to form the conglomerate

Citigroup).

Financial Crisis of 2007-2010

Many of the investment banks buckled during the financial crisis. The

first to fail was The Bear-Stearns Companies, a global investment bank,

securities trading and brokerage firm until its collapse and fire sale

to JPMorgan Chase in 2008 (for $10 a share, a price far below the 52-week high of

$133.2. The Federal Reserve helped smooth the process by giving a $29bn line of credit to

JPMorgan in exchange for the promise that JPMorgan would buy Bear-Stearns. This

controversial decision by the Fed was made to minimize the contaminating effects of the

Bear-Stearns crash. Ironically Bear-Stearns was one of few firms that survived the 1929

Wall Street Crash without laying off a single employee).

The crisis saw the lat of

the US investment banks which hadn’t gone bankrupt or been acquired in a

bankrupt-like state convert to “bank holding companies” which are

eligible for emergency government assistance (the Troubled Asset Relief Program

Notes on investment banking prepared by Jacob Westerberg on a lecture by professor Robert Shiller at Yale University

(TARP) is a program of the United States Government designed to purchase assets and

equity from financial institutions to strengthen the financial sector).

The Underwriting Process

1

Investment Banks

Book-building
- Distribute the prospectus

Issuing Firm

Lead-underwriter

Syndicate of Underwriters

Group of Sellers

One investment
bank is chosen
by the firm.

The lead-underwriter
chooses a syndicate
of underwriters.

Group of intermediaries
between issuer and
investors.

Paperwork
- SEC Registration Statements

2

- Meet with potential buyers
- Book promised sales
- Analyze feedback from brokers

- Credit ratings
- Legal approval
- Printing Securities

3

Final price is determined

Tombstone is published in newspapers

Single price is offered
...

Other Essays Like Investment Banking

Hrm in Hsbc Essay

923 words - 4 pages of personal finance and commercial banking, to corporate and investment banking, and private banking. It is the largest bank in Hong Kong and has offices in Asia Pacific region. HSBC Private Bank is the group’s private banking operation, providing private banking and trustee services to wealthy individuals and their families worldwide. The Private Bank has in excess of 60 offices worldwide, with the major centers being Miami, New York, London

Internet Banking Essay

3393 words - 14 pages employs e-banking on a large scale. E-Banking being a heavy investment, would be a waste of time, effort and money if an organization’s new scheme of e-banking is not communicated to their customers. Door-to-door marketing is still the most effective marketing technique for banks to market their products in India. Given the research and findings, it is recommended for CLAB and other local area banks in India to employ e-banking because

Efficiency and Competition of Islamic Banking in India - Secura Investments

516 words - 3 pages , construction etc. In addition to Investment services, Secura does Leasing of spaces, professional fund management and also project management services. Being the India’s first Shariah compliant real estate Venture Capital Fund, Secura stands as a unique identity in the Shariah compliant financial model in India. With steady growth rate and Islamic banking is galloping all over the world and is ready to gain enough momentum in India. It is a

The Survival of Islamic Banking

3696 words - 15 pages (Shariah) principles and guided by Islamic economics. Islamic banking as "a non-interest form of banking which transacts banking business, engages in trading, investment and commercial activities, as well as providing financial products and services in accordance with the principles and rules of Islamic jurisprudence, non-interest banking has its origin in both Christian and Islamic scriptures, quoting from Quran 2vs275, Leviticus 25vs36-37

Islamic Bank

1272 words - 6 pages promoting investment/ productive activities, influencing distribution of income and adding stability to the economy. The Islamic banking sector is, however, criticized on several grounds by the Conventional bankers. The banks are believed not to apply the rules of Shariah completely. Islamic banks are said to include interest in their dealings to compete effectively with the Conventional banks. Moreover, conventional banks offering Islamic

Islamin Financial System

1280 words - 6 pages ← Practical deskwork Secondary sources: ← Annual report of ← Website of the Bank ← Published documents ← Office circular ← Relevant books, newspapers, journals etc. regarding general banking operation ← Investment manual of An Overview of SJIBL Background of SJIBL: In the backdrop of economic liberalization financial sector reforms, a group of highly successful entrepreneurs conceived an idea of

Apple Case Study

3560 words - 15 pages delivery of banks’ services, and has enormous effect on development of flexible payments methods and user-friendly banking services (Dixit and Datta, 2010). Today, internet-banking features not only include funds-transfer, loan applications and investment activities but also comprise personal finance management such as importing data into personal accounting software (Akhlaq and Ahmed, 2013). The last decade has witnessed a prompt growth of studies

Organizational Culture - Asset One Bank

640 words - 3 pages Organizational Culture Supplemental Case: ASSET-ONE BANK Asset-One Bank is one of Asia's largest financial institutions, but it had difficulty entering the personal investment business where several other companies dominate the market. To gain entry to this market, AssetOne decided to acquire Taurus Bank, a much smaller financial institution that had aggressively developed investment funds (unit trusts) and online banking in the region

Universal Gravitional

923 words - 4 pages position to provide the additional investment. You wish to maintain family control of the firm regard- less of which form of financing you might undertake. As a first step, you decide to contact an investment banking firm. a.What considerations might be important in the selection of an investment banking firm? b.A member of your board has asked if you have considered competitive bids for the distribution of your securities

Banking Industry

5698 words - 23 pages Dealers Credit Program ➢ Personal Banking ➢ Savings A/C ➢ Daily Profit A/C ➢ FDR A/C ➢ Foreign Currency a/c ➢ Foreign Currency(FC) A/C ➢ Non Resident Foreign Currency Deposit(NFCD) A/C Industrial Financing: ➢ Industrial Financing for Thrust Sectors ➢ Sonali Bank Industrial Credit Scheme ➢ Special Investment Scheme for Cottage and Small Industries. ➢ Financing Large Scale Industries through

Impact of Information Technology on Banking Sector

576 words - 3 pages banks to sell-out of certain banking operations. The cost of IT investment required to remain competitive and the uncertainty future profits has forced withdrawal. Security of information systems was found to be very vulnerable in general. The amount of resources that is required for security is lower than required. The fact that ‘Hackers’ can still get into banking IT systems easily without inside help demonstrate the magnitude of the

Related Papers

Investment Banking Essay

870 words - 4 pages Why have you chosen to apply to this particular role and why at Barclays?Barclays recruits graduates into four business areas: Investment banking Global markets Business functions Personal and corporate banking The business area There’s a description of the four divisions in the business areas section of the bank’s website. Read the one for your chosen division, but, as some descriptions are light on detail, it’s essential your research

Role Of Investment Banking Essay

2327 words - 10 pages Abstract In a developing country like Bangladesh the Investment banking play a vital role in the progress of economic development. In this paper we have tried to analyze the role of investment banking and how it influences economic development of a country. Investment bank is a financial intermediary that performs a variety of services. Investment banks specialize in large and complex financial transactions such as underwriting, acting as an

E Banking Essay

1941 words - 8 pages verified. Features and Services Provided Electronic banking services and solutions fall into a few broad categories, including transactional services, non-transactional services, administrative services and wire transfers. Transactional services include EBPP (electronic bill presentment and payment), transfer of funds between different user accounts, investment sale or purchase, loan transactions and applications. Non-transactional

Too Big Too Fail Essay

1267 words - 6 pages engagement in complex finance activities such as CDS have been blamed for the TBTF phenomenon. There have been a number of proposed solutions put forward to tackle the problem of TBTF whether on the regulatory side such as the separation of commercial and investment banking or on the disclosure side such as Basel 1,2 and 3 accords. By critically reviewing the arguments and evidence presented in the literature, this essay determines how effectively the