Concept of Investment Bankers

The concept of Investment Bankers

Investment bankers are financial middlemen in security offering process. They purchase securities from companies and governments and resell them to the general public. Investment banking indicates a special section of banking that offers financial advice to institutional investors, seeking to assist them with raising capital. It is a specific division of banking related to the creation of capital for other companies, governments, and other entities. Thus, investment bankers bring together suppliers and users of long-term funds in a capital market and thereby play a key role in security offering process.  He/She is an individual who often works as part of a financial institution and is primarily concerned with raising capital for corporations, governments or other entities. It is to be noted that investment bankers are neither investors nor bankers. They do not invest their own funds permanently nor accept and guard the savings of others, as commercial banks do.

Investment banks also provide guidance to issuers regarding the issue and placement of stock. An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities. An investment banker can save a client time and money by identifying risks associated with a particular project before a company moves forward. Thus, when the capital markets are doing well, investment bankers tend to do well since they can generate more revenues from all the activities that they undertake.

 

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