Investment banking

The business activities of investment banks form the core of asset management of their customers, trading in securities and assisting companies in capital raising, such as through an IPO. Investment banks are used to support trading on financial markets through so-called investment business.

Investment banks emerged originally in the U.S. dual banking system as a counterpart to the commercial banks ( commercial banks ), where the recording of customer deposits was permitted, but subject to a stricter supervision. As part of the U.S. banking crisis of 2008, the remaining major investment banks have, however, omitted in September 2008 on their special legal status. In states with a universal banking system, such as Germany, there are usually no separate status for the investment banking business.

Historical development

Investment banks developed in the United States after the introduction of the Glass- Steagall Act (1933 ), which required a strict separation between commercial banks and investment banks. Although the strict separation of business was repealed by this Act in 1999, investment banks were subject to further a less sharp regulation.

Ever since the late 1980s has been observed an increasing takeover of investment banks by universal banks. This was in addition to the attractiveness and image of the business and thus justified that give mixed banks for their customers greater guarantees for emissions and the total financing portfolio could cover. So took the Credit Suisse 1988, the First Boston, the German bank in 1989 Morgan Grenfell and in November 1998/Juni 1999 Bankers Trust New York Corp.. , Dresdner Bank in 1995 Kleinwort Benson and 2000 Wasserstein Perella, UBS SG Warburg and Paine Webber, the Citigroup Smith Barney and Salomon Brothers.

With the U.S. banking crisis of 2008 disappeared in the U.S. from May to September 2008, the five largest U.S. investment banks. Thus, because of funding difficulties in September 2008, the traditional house Merrill Lynch by Bank of America acquired and Lehman Brothers went bankrupt. Bear Stearns in March must agree to their sale to the consolidated financial JPMorgan Chase. Even the then remaining investment banks Goldman Sachs and Morgan Stanley gave up their legal status as an investment bank. Given these developments, designated the former head of Bear Stearns, Alan Greenberg, who had worked over 60 years on Wall Street, in a December 2008 interview with Bloomberg TV in investment banking as "completed".

Services

  • In primary markets they deal with the issue of debt and equity.
  • Assist borrowers in finding lenders and take their advice through the purchase and sale of equity investments (M & A) agency services.
  • In secondary markets they operate in customer service and order execution in the trading of securities for customers.
  • You assume the asset management for clients.
  • They are also market makers, ie they trade securities and standardized goods (eg foreign exchange), by asking and selling prices.
  • Proprietary trading is used to increase the gain and increasing the liquidity in the market, which makes the trading of other market participants is facilitated.
  • You help companies restructure existing debt and equity structures and structuring and negotiating plans of reorganization

Documentary

Master of the Universe - The former leading investment bankers Rainer Voss tells about his experiences in investment banking. Movie 2013, ( awarded Locarno Film Award )

Literature on the subject (selection)

Scientific literature

  • The Role of Investment Banking for the German Economy, Michael Schröder, Mariela Borell, Reint Gropp, Zwetelina Iliewa, Lena Jaroszek, Gunnar Lang, Sandra Schmidt, and Karl Trela ​​, ZEW Mannheim, 12-01, 2012, ISSN 1611-681.
  • Alan D. Morrison, William J. Wilhelm, Jr.: Investment Banking: Institutions, Politics, and Law ( Paperback ), Oxford University Press, Revised edition 2008, ISBN 0199544182
  • Investment Banking ( Hardcover ) hrg. by Heinz -Josef Hock Mann ( Editor), Frederick Thiessen, Stuttgart: Poeschel, 2nd revised edition 2007, ISBN 3791025902

Testimonials

  • Jonathan A. Knee: Million Dollar Boys - insider story of an investment banker, Munich: Redline Wirtschaft Verlag, 2007
  • Michael Lewis: Liar's Poker, London: Hodder and Stoughton, 1989
  • John Rolfe, Peter Troob: Monkey Business: Swinging Through the Wall Street Jungle, B & T, Reprint 2001
  • Anne T.: The greed knew no bounds, Econ, Berlin 2009, ISBN 978-3-430200820
Universalbank Glass–Steagall Legislation Citibank Morgan Stanley Wealth Management Financial capital#Borrowed capital Equity (finance) Restructuring
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