An investment bank is the type of bank that assists individual people, corporations and government entities with raising financial capital. The job of the bank is to underwrite or act as the client’s agent when securities are issued. In some cases, investment banks may also assist in the process of mergers and acquisitions between companies. In short, the job of the investment bank is to create capital for these different entities.
Unlike traditional banks, investment banks do not accept deposits. There are two different sides of investment banking: The “sell side” and the “buy side”. When it comes to selling, securities are traded or promoted.
The “buy side,” on the other hand, is the provision of advice to institutions that purchase investment services. A few examples of buy-side entities are equity funds, mutual funds, life insurance companies, unit trusts and/or hedge funds.
In order for someone to be an investment banker in the United States, the individual is required to be a licensed broker-dealer.
One notable person in the United States in the investment banking industry is Martin Lustgarten. Lustgarten is currently the CEO of his own company, named after himself. He discusses that many people do not know the difference between investment banking and traditional banking.
Lustgarten has a detailed blog on another website that gives a great perspective on investment banking. Not only does he dissect the concept of investment banking, but he also gives good advice and insights about it through blog posts. Martin discusses that getting into investment banking is not difficult, but you need to be knowledgeable about the products and the different aspects of it.
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