2. What are Financial Executives?
One of the common threads between specialties is the
responsibility of analyzing a
firm's financial transactions and leveraging its assets.
There are two types of financial executive positions:
1. an executive position in the financial industry
2. a financial management position in a different
industry
3. What Is Investment Banking?
• An investment bank is a financial institution that
assists individuals, corporations, and governments
in raising financial capital by underwriting or
acting as the client's agent in the issuance
of securities (or both). An investment bank may
also assist companies involved in mergers and
acquisitions (M&A) and provide ancillary
services such as market making, trading
of derivatives and equity securities, and FICC
services (fixed income instruments, currencies,
and commodities).
4. Importance of Investment Banking
• Helps the corporations in raising capital. It
facilitates the trading of securities thereby,
increasing the liquidity of the securities.
• It provides investment opportunities to the
individuals .
• Most of the corporations get advisory services
from the investment banks regarding the
mergers, acquisitions
5. What is the Difference??
Commercial Bank
1. Individual or small to
mid sized companies.
2. Loans to buy a house
or future education etc.
3. Bank- Creditor &
General Public – Debtor
4. Earns money through
the interest charged on
loans
Investment Bank
1. Companies/ Start-ups
2. Borrows to finance
the growth of a
company.
3. Investors – Creditor
& Companies – Debtor
4. Earns money through
the fees charged for
providing services
7. Principal Businesses of Investment
Banks
• Arranges financing for corporations and
governments.
1] Debt
2] Equity
3] Convertibles
• Advises on mergers and acquisitions (M&A)
transactions.
• Asset Management Business
• Client Trading
• Proprietary Trading
8. Investment Banking In India
SBI was the first Indian public sector bank to set up its
investment banking division in 1972.
‡SBI Caps and IDBI Caps are two prime examples of
investment banks in India today.
‡Currently, there are 300 investment banks registered with
SEBI.
‡Currently, without holding a certificate of registration
granted by the Securities and Exchange Board of India, no
person can act as a investment banker.
9.
10. Investment Bank Organizational Structure
Front office
investment banking
sales & trading
research
Middle office
risk management
financial control
corporate strategy
Back office
Operations involves data-checking trades that have
been conducted, ensuring that they are not
erroneous, and transacting the required transfers.
12. Need Gaps in the IB sector
• Front End
Still at a very nascent stage in India.
Trust factor
Lack of Investor knowhow
Concentrated only on the metros.
• Back End
Need to develop more robust risk management systems.
Use of better technology and systems required for 2
main purposes
1. To keep a better track of an investor’s database
2. Bring in faster and more intelligent systems
Underwriting is the procedure by which an underwriter brings a new security issue to the investing public in an offering. The underwriter guarantees a certain price for a certain number of securities to the company (client) that is issuing the security (in exchange for a fee).
IB is still at a very nascent stage in India and hence needs to be developed and promoted properly.
The trust factor is still not been built up amongst the companies and investors. Here there is need of trained analysts to do the same.
Lack of Investor knowhow
Still concentrated only on the metros. Need to move to the tier-2 and tier-3 cities to tap in more potential investors.
