Investment Bank

An investment bank is a financial institution that specializes in providing advisory services for mergers and acquisitions, raising capital through debt and equity offerings, and underwriting securities. Investment banks also engage in market-making, proprietary trading, and other services for institutional clients, governments, and corporations. Unlike retail banks, investment banks do not accept deposits; instead, they focus on large, complex financial transactions and investment strategies.

Example

A large corporation hires an investment bank to underwrite its Initial Public Offering (IPO), ensuring the company can raise capital by selling shares to the public.

Key points

• Specializes in underwriting, mergers and acquisitions, and raising capital.

• Provides services for institutional clients, corporations, and governments.

• Does not accept deposits; focuses on complex financial transactions.

Quick Answers to Curious Questions

Investment banks offer services such as underwriting, mergers and acquisitions advisory, raising capital, and market-making.

Investment banks focus on large, complex financial transactions and do not accept deposits, while retail banks primarily serve individual customers with deposit and loan services.

Institutional clients, corporations, and governments use investment bank services for raising capital, financial advisory, and strategic transactions.