INVESTMENT investing their money in a financial

INVESTMENT BANKING
DEFINITION:

The term “investment banking” is made up of the words
“investment” and “banking”. The meaning of the term can be understood by seeing
that it contains the word investment. People invest their money so that they
can raise their capital and they can do this by investing their money in a
financial institution called an investment bank.

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The main purpose of investment banking is to raise capital
and provide advisory services. Capital means the financial assets which
includes money.  The operations of
investment banking are performed in a financial intuition called an investment
bank.

An investment bank works to provide their clients the maximum
financial rewards with the lowest risks involved.

The people who work at an investment bank are called
investment bankers.

 

DIFFERENCE BETWEEN AN
INVESTMETNT BANK AND A COMMERCIAL BANK

SERVICES

·       
An
investment bank provides financial and advisory services.

·       
A
commercial bank provides traditional banking services like accepting deposits.

CLIENTS

·       
The
clients of an investment bank include large corporations and wealthy individuals.

·       
The
clients of a commercial bank include all sorts of people and entities who come
from all financial backgrounds like the rich and the poor.

NUMBER OF BRANCHES

·       
An
investment bank typically has only one branch in a city.

·       
A
commercial bank has multiple branches in a city.

 

IMPORTANCE OF
COMMUNICATION IN INVESTMENT BANKING

Effective communication plays a very big role in the
business role. Likewise, it also plays an important role in the field of
investment banking.

The investment bankers have to look presentable and must have
appropriate communication skills to talk to clients. The clients are the source
from which the investment bank earns its revenues.

When talking to the clients an investment banker must speak
clearly and must use appropriate gestures. He must also make sure that he
doesn’t offend the client in any way.

Client advisory is a major part of investment banking and the
investment banker must have appropriate communication skills in order to
succeed in this field.

 

THE FUNCTIONS OF AN
INVESTMENT BANK

MERGERS AND ACQUISITIONS

The term merger means to merge 2 companies into 1. An
investment bank advises the 2 companies about the risks and the benefits that
are involved in the merger.

EXAMPLE:

When 2 TV manufacturing companies want to merge into 1
company they will hire an investment bank to advise them about the risks and
the financial gains involved in the merger.

Acquisition means to acquire a company. Investment bankers
are hired by wealthy individuals to help them acquire a company by buying the
shares of that same company.

EXAMPLE:

Ahmed is a wealthy individual who wants to buy a company
called HAROON TRADERS PUBLIC LIMITED. He will hire an investment bank to buy
the shares of that company. The investment bankers will advise him that he
doesn’t need to buy all the shares of the company, he just needs to buy 51
percent of the shares so that he can have the majority of control of that
company.

AID IN THE SALE OF FINANCIAL
SECURITIES

An investment bank helps companies and individuals to sell
their financial securities like stocks (shares) and bonds.

EXAMPLE:

A new company called HSO PUBLIC LIMITED has been established.
It wants to issue and sell its financial security called shares to the general
public. It will hire an investment bank to make sure that this process moves
smoothly and that their shares are easily available in the stock market.

RISK MANAGEMENT

An investment bank helps to manage risk of a corporation or a
corporation. It advises a corporation or an individual on how they can reduce
risk.

EXAMPLE:

An individual wants to invest his money in a company. He goes
to an investment banker and the investment banker decides on certain
quantitative and qualitative factors whether the individual should invest or
not.

WEALTH MANAGEMENT

Wealth management means to manage the wealth of your client
is such a way that you can provide him with certain financial plans which will
benefit him in the future

INVESTMENT BANKS IN
PAKISTAN

·       
UBL
FUND MANAGERS

·       
AMZ
Securities

·       
BMA
Capital Management Limited

·       
IGI
Investment Bank Limited

 

REASONS WHY PEOPLE
CHOOSE THIS FIELD

 The main reason that people choose this field
is because of the monetary compensation. Investment bankers are one of the
highest paid people in the world. Although, the work hours are long, investment
bankers are compensated by overtime pay and bonuses. In 2015 the

This field
involves a lot of analytical thinking and methods. A person who has good
analytical skills can easily be successful in this field so people who have a
strong background in finance choose this field.

A person can
easily leave this field if he wants and still have other opportunities waiting
for him. In other fields like marketing you have no other career options other
than the field of marketing but if you decide to leave investment banking then
you can easily get other opportunities. 
The reason is because investment banking involves a diverse set of
skills.