Investment Banks - Just What Are They? Oleksiy Nesterenko

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Explaining about Investment banking Oleksiy Nesterenko says that an i-bank is a form of banking that assists companies in creating more funds. In addition to the accumulation of more funds, investment banking also offers help and support for a whole range of deals a company might engage in.

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• Investment banking
• Management consulting

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• Publié par: PatrickMSumner
• Publié le: 10 janvier 2016
• Nombre de lectures: 0
• Langue: English

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Investment Banks - Just What Are They? Oleksiy Nesterenko

We hear the term "investment bank" on a daily basis. These banks are viliIed for their role in the Inancial crisis and criticized for the proIts they reap and the large compensation packages for their employees. But many people have no idea what they are or what they do. Let's take a look at the role i-banks play in the Inancial services industry and the economy at large.

So what is an investment bank?Explaining about ïnvestment banking Oleksiy Nesterenko says that an i-bank is a form of banking that assists companies in creating more funds. ïn addition to the accumulation of more funds, investment banking also oFers help and support for a whole range of deals a company might engage in.

Traditionally, banks either engaged in commercial banking or investment banking. ïn commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. ïn 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.

Through investment banking, an institution generates funds in two diFerent 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.

The core functions of an i-bank include investment banking - otherwise known as corporate Inance - sales and trading and research. Some larger investment banks also perform other services like investment management or merchant banking. Here is a closer look by Oleksiy Nesterenko at the core three.

Investment Banking (Corporate Finance)

ïnvestment banking can be a confusing term because many people use it to refer to any activities performed by an i-bank. More speciIcally, though, investment banking refers to assisting companies with raising capital and giving advice on mergers and acquisitions.

The corporate Inance department of a bank is the group that works with a company to put together an initial public oFering (ïPO). Or, if a company already has public stock outstanding, they might put together a follow-on oFering, which is simply an additional issuance of stock shares. The corporate Inance department can also help companies raise capital through private placements, which often involve securing capital from private equity groups.

Sales and Trading

Sales and trading is perhaps the primary service that an i-bank can oFer. There are often two major divisions within sales and trading - institutional and retail. The institutional division buys and sells Inancial products for institutional clients such as mutual funds, pension funds, etc. The retail division buys and sells Inancial products for retail investors. Stock brokers fall into this area.

The sales and trading department engages in market making. Market making involves buying and selling Inancial instruments in order to make an incremental proIt on each trade.

Research

The research department is staFed by research analysts. These are the people who often appear on business news programs and talk about the performance of a particular company or stock. The role of the research department is to analyze companies and writes research reports that discuss their performance potential. These reports often include a "buy" or "sell" recommendation.

The research department on its own does not generate a lot of income. What it does do is inuence trading volume, which results in more fees for sales and trading. When a research analyst changes his or her recommendation on a stock, many investors will then act on that recommendation and the sales and trading team earns more in trading fees.

ïnvestment banking and other forms of banking have been partially indistinguishable in recent years, as self-regulation has allowed banks to take on more and more Ields. With the beginning of Mega banks operating at diFerent levels, many of the utilities are often grouped with investment banking and are now accessible to clients who may not have been big enough to make their business productive.

Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive travelling, gruelling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also oFers an exciting lifestyle with huge Inancial incentives that are a draw to many people.

Oleksiy Nesterenkoprofessional Inance and strategy consultant) has (a spent most of his career in the investment banking industry covering publicly-traded and early stage companies in the US, Europe, and Russia. During his tenure as a Inancial adviser, Mr. Oleksiy developed superior analytical and Inancial modeling expertise, improved eFective interpersonal and project management proIciency, and enhanced business acumen and management capabilities.

Presently, Oleksiy works as a Inance and strategy consultant providing strategic CO/COO services to entrepreneurs and startups on an interim or consulting basis and have set a consultant Irm nameOleksiy Nesterenko Startup inance.