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INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICES

By: Prof. V.K.AGARWAL

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INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICES PERSONAL BANKING SB A/C C/A BUSINESS BANKING RETAIL, SME, CORPORATE COMMERCIAL BANKING MERCHANT BANKING INVESTMENT BANKING KNOWLEDGE BANKING TELE BANKING ON LINE BANKING INTERNET BANKING MOBILE BANKING

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES& FINANCIAL SERVICES Originally “Merchant Bank” was the

British English Term for an investment bank meeting with the requirements related with financial needs of the businessmen.

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INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICES

The investment banking division is generally divided into industry coverage and product coverage groups.Industry coverage groups focus on a specific industry such as healthcare, industrials, or technology, and maintain relationships with corporations with in the industry to bring in business for a bank.

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INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICESProduct coverage groups focus on financial products, such as mergers & acquisitions, leveraged finance, equity and high grade debt.Wockhart Hospital, Apollo Hospital

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INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICES An investment bank is financial institution that raises capital, trades in securities and manage corporate mergers and acquisitions. Investment banks profit from companies and governments by raising money through issuing and selling securities in the capital markets (both equity & bond). Advising on transactions such as mergers &

acquisitions.

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INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICESTo perform these services in US, an

adviser must be a licensed broker.US maintained a separation between

investment banking and commercial banks.

Other developed countries have not maintained this separation historically.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES Investment banking is a field of banking

that helps companies in acquiring funds. In addition to the acquisition of new

funds, investment banking also offers advice for a wide range of transactions a company might engage in.

04/12/239

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES Traditionally, banks either engaged in

commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals.

04/12/2310

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES In the United States, it was illegal for a

bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.

04/12/2311

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES Through investment banking, an institution

generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES An investment banking firm also does a

large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets.

04/12/2313

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES Some of the consultative activities

investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES They also track the market in order to give

advice on when to make public offerings and how best to manage the business' public assets.

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INVESGTMENT BANKINGINVESGTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES The line between investment banking and

other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors.

04/12/2316

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES With the advent of mega-banks which

operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.

04/12/2317

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

Investment banking is a particular form of banking which finances capital requirements of enterprises.

Investment banking assists as it performs IPO’s,

private placement and bond offerings. Also acts as broker and carries through mergers

and acquisitions.  

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INVESTMENT BANKING INVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

Functions of Investment Banking:   Investment banks have multilateral

functions to perform. Some of the most important functions of investment banking may be:

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES To help public and private corporations in issuing securities in the primary market. To guarantee by standby underwriting or best efforts selling and foreign exchange management. Other services include acting as intermediaries in trading for clients.

04/12/2320

INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

Investment banking provides financial advice to investors and serves them by assisting in purchasing securities, managing financial assets and trading securities.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES Investment banking differ from

commercial banking in the sense that they don't accept deposits and grant retail loans. However the dividing lines between the two fraternal twins have become flimsy with loans and securities becoming almost substitutable ways of raising funds.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES Small firms providing services of

investment banking are called boutiques. These mainly specialize in bond trading, advising for mergers and acquisitions, providing technical analysis or program trading.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES In short, Investment banking includes the

activity of raising funds, managing them, advising about investments and marketing of financial products. In the US and Europe.

In India, mostly the commercial banks undertake investment banking in toto or part thereof.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICESSize of Industry:Size of Industry:In 2007 $ 84.3 billionIn 2007 $ 84.3 billionIt was up by 21% on the previous It was up by 21% on the previous year. year. More than double the level in 2003More than double the level in 2003

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

Despite a record year for fee income, many investment banks have experienced large losses related to their exposure to US sub-prime securities investments.

INVESTMENT BANKINGINVESTMENT BANKING& FINANCIAL SERVICES& FINANCIAL SERVICES

ACTIVITIES:ADVISINGADMINISTRATIONUNDERWRITINGDISTRIBUTION

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICESACTIVITY OF RAISING FUNDSMANAGING THEMADVISING ABOUT INVESTMENTMARKETING OF FINANCIAL

PRODUCTS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

IN US AND EUROPE:SEPARATE BANKS

IN INDIA: COMMERCIAL BANKS MERCHANT BANKING IT’S A PART OF INVESTMENT BANKING

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

FUNCTIONS:ADVISING THE CLIENTSADMINISTRATION OF FUNDSUNDERWRITING OF ISSUESDISTRIBUTION OF FINANCIAL

PRODUCTS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICESOTHER FUNCTIONS: MERGERS AND ACQUISITIONS INVESTMENT MANAGEMENT SECURITIES SALES SECURITIES TRADING INSURANCE PRODUCTS DESIGNING PENSION PLANS DESIGNING HEDGING FOREIGN CURRENCY POSITION REAL ESTATE DEALING ASSET MANAGEMENT SERVICES

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICESFEE:FIXED SUMPERCENTAGE OF THE FUNDS

RAISED OR MANAGEDPROFESSIONAL MONEY MANAGER

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICESADVISORY FUNCTIONS: ASSESSING THE FUND

REQUIREMENTS OF IT’S CLIENT - INDIVIDUAL/ CORPORATE

AMOUNT OF FUNDS REQUIRED PURPOSE TIME

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES HAVING KNOWING THE

REQUIREMENTS:COSTSBENEFITS OF VARIOUS SOURCES OF

FINANCE WHICH ARE VIABLE ANDTIMING OF EACH ONE FOR RAISING

REQUIRED FUNDS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES FINALLY INVESTMENT BANKER

WILL ADVISE:BEST SOURCE ANDRECOMMEND A GROUP OF

INSTITUTIONS THAT CAN ASSEMBLE THE PACKAGE AND FULFILL THE FUNDING NEEDS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES ADMINISTRATIVE FUNCTIONS: TO PREPARE THE DOCUMENTATION COLLECT THE DETAILS ASSOCIATED

WITH THE REGULATORY FRAME WORK OF THE COUNTRY IN WHICH THE FUND BEING RAISED

PREPARATION OF THE DOCUMENTS OF THE ISSUE AND PROSPECTUS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES UNDERWRITING FUNCTIONS: MEANS: GUARANTEEING A FIXED PRICE

TO THE SECURITY ISSUER

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES INVESTMENT BANKERS

UNDERTAKE UNDERWRITING OF THE ISSUES THAT ARE BROUGHT TO THE MARKET BY THEIR CLIENTS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES RISK TO THE INVESTMENT BANKER:UNDERWRITING PRICE IS VERY

HIGHISSUE IS NOT FULLY SUBCRIBEDTIME IS NOT GOOOD

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES OTHER FUNCTIONS:BOUGHT OUT DEALSPRIVATE PLACEMENTS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES

DISTRIBUTION FUNCTIONS: PLACEMENT OF NEWLY ISSUED SECURITIES TO BUILDUP A PROPER CHANNEL FOR THE

DISTRIBUTION OF THE ISSUE FORM A SYNDICATE OF UNDERWRITERS TO

MINIMISE THE RISKS ON THE ISSUE STABILIZE THE PRICE PRINTING OF SECURITY PAPERS, ALLOTMENT, REGISTRAR WORK ETC.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES INVESTMENT MANAGEMENT

FUNCTIONS: ANALYZE THE SECURITY AND FIRMS ALSO INVITE FUNDS FROM PUBLIC IN

GENERAL AND MANAGE THE SAME UNDER GUARANTEE

TO PROVIDE A CERTAIN PERCENTAGE OF RETURN

INVESTMENT IN VARIOUS STOCK, BONDS, GILT-EDGED INSTRUMENTS

SUCH INVESTMENT MANAGERS ARE ALSO KNOWN AS MONEY MANGERS

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES IN SHORT, INVESTMENT BANKERS

WORLD WIDE PROVIDES THE SERVICES: INDIVIDUAL INVESTMENT SERVICES MONEY MANAGEMNT POOLING OF FUNDS FOR JOINT

INVESTMENT INDEX FUND INVESTMENT CONSULTANCY SERVICES

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES MERGER AND ACQUISITIONS:HELP THE CLIENT TO FIND OUT

PROSPECTIVE MERGER PARTNER OR ACQUISITON TARGET OR PROSPECTIVE CLIENT FOR SALE

APPROPRIATE STRATEGIES FOR ACQUISITION INCLUDING RAISING FUNDS.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES OTHER ACTIVITIES:DESIGNATION OF INSURANCE

PRODUCTSPENSION PLANS HEDGING RISKS AND RISK

MANAGEMENTFOREIGN CURRENCY ACTIVITIES.

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INVESTMENT BANKINGINVESTMENT BANKING & FINANCIAL SERVICES & FINANCIAL SERVICES INVESTMENT BANKING FIRMS ABROAD: MERRILL LYNCH GOLDMAN SACHS J.P. MORGAN CHASE MANHATTAN SOLOMON SMITH BARNEY ABN AMRO MORGAN STANLEY