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Investment Banking

Help companies and governments to raise money by issuing and selling securities in the primary market

Assist public and private corporations in raising funds in the capital markets (both equity and debt)

Pproviding strategic advisory services for mergers, acquisitions and other types of financial transactions

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Principal of Banking Arrange finances for corporations and government

1. Equity2. Debt3. Convertibles

Advises on mergers and acquisitions

Asset Management Business1. Offers equity, fixed income, alternative

investments, and money market investment products and services to individual and institutional clients

2. For alternative investment products, the firm co-invests with clients in hedge fund, private equity and real estate funds

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Principal of Banking

Client Trading

Sells and trades securities and other financial assets as intermediary on behalf of investing clients

Proprietary Trading Investment activity by the firm that affects the firms accounts, but does not involve investing clients

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Types….

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Investment Bank v/s

Commercial BankCommercial Bank

Individual or small to mid sized companies Loan to buy a house or future education Earns money based on the interest charged on loans Bank- creditor or general Public- debtor

Investment Bank

Companies and start up

Borrows to finance the growth of a company Earns money through the fees charged on providing the services Investors- creditor Companies- debtor

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Units of Investment Banks

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Investment Banking in India

SBI , First Indian public sector set up in 1972

SBI Caps and IDBI Caps two prime examples of Investment Bank in India

300 banks registered with SEBI till date

Certificate of registration granted by SEBI is important for a bank to be called as Investment Bank

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Front OfficeSales desks communicate their clients orders to the appropriate trading desks, who can price and execute trades, or structure new products that fit a specific need. In the process of market making, traders will buy and sell financial products with the goal of making an incremental amount of money on each trade.

Front Office

Pitching to various clients and institutions

Setting the terms and conditions for any form of deal

Trading of securities on behalf of clients

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Middle OfficeMiddle office usually consists of traders, analysts, and managers who are knowledgeable of trading activities but usually don’t engage in market activities themselves ( Chinese Wall Policy)

Risk Management involves

Analyzing the market and credit risk that traders are taking onto the balance sheet in conducting their daily trades

Setting limits on the amount of capital that they are able to trade in order to prevent bad trades having a detrimental effect to a desk overall

To ensure that the above mentioned risk are captured accurately and on time

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Back Office

Operations involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers

Every major investment bank has considerable amounts of in-house software, created by the Technology team, who are also responsible for Computer and Telecommunications-based support

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