Investment banks

Investment banks are slightly different from the other two on the list.

Their main function is actually to manage the trading of stocks, securities and bonds between companies and their investors.

But on the other hand, investment banks act as financial intermediaries and advisors.

These banks often advise individuals and corporations that need financial assistance.

Investment banks play an important role in mergers and acquisitions of companies, working to reorganize acquired firms.

Investment banks also manage investment portfolios of businesses and individuals to raise capital for certain businesses and, in some cases, the federal government.

Investment banks are not like Wells Fargo down the street, where you can open a checking account.

These banks are primarily for asset management, corporate finance and trading.

Here are some of the services you can expect from an investment bank.

• Corporate Finance: Investment banks are known to facilitate corporate finance for their clients. Investment banks help corporations manage funding sources, structure capital and make investment decisions.
• Merger and Acquisition Assistance: Investment banks accompany firms in mergers and acquisitions. These banks play an important role in the mergers and acquisitions process, advising the firms involved to maximize profits from the action. Investment banks evaluate merger proposals and help firms arrange financing for the deal.
• Raising capital: These banks raise money for their clients through initial public offerings (IPOs), issuing and selling bonds on behalf of the client, and selling company stock to investors through private placements.
• Equity research: Investment banks often write reports, conduct analysis, and make recommendations to their clients about whether they should buy, sell, or hold the investments they are considering.
• Selling and trading stocks, bonds and various securities.
• Asset Management: Investment banks manage their clients’ investments, being responsible for evaluating investments while reducing risk. The bank will determine which investments to make or avoid in the interest of building their clients’ portfolios.
• Investment banks make a profit by charging return fees and service charges for providing their extensive financial services.

Interactions with such banks are ideal for publicly traded companies and individual investors with sufficient capital.