What is an Investment Bank?

 

We’ve talked about banks. But I recently read about an investment bank. But what is an investment bank anyway?

An investment bank is a specialized type of bank that performs large and complex financial transactions, usually for other companies or governments.

What does an investment bank do?

An investment bank helps companies raise money by issuing new stock and bonds, assists companies with mergers and acquisitions, acts as a broker for other companies, etc. Trading divisions of investment banks also buy and sell securities with an intention of making a profit for the investment bank itself, which is called proprietary trading.

Wow, that’s a lot of services!

Wait, there’s more. Research divisions of investment banks analyze the performance of companies and their stocks, and provide buy, sell or hold recommendations. Some investment banks also have a separate retail operation for individual customers like you and me.

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Can you give me some examples of investment banks?

Some of the major investment banks are Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase, Credit Suisse, etc.

Investment Bank
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