Investment Banking
Investment banking is a field in finance which helps business entities acquire funds. It also helps businesses in terms of financial advice.
Investment banking is a branch of banking which exists mainly to assist companies and other businesses when it comes to fund acquisition. Investment banks specialize in activities that will provide new sources of funds for their clients, which are mainly business entities. In the past, banks had to focus specifically on investment banking as their business. Today, however, banks tend to diversify and a single corporation may engage in different aspects of banking, including investment banking.
How an investment bank is organized
An investment bank may be divided into separate units, each of which has its own functions. In general, an investment bank may be divided into three main groups – the front office, the middle office, and the back office.
The front office takes care of the actual fund raising activities for their clients. This unit is also involved in investment management, which is basically the management of professional assets such as securities, bonds, and other similar items.
The middle office is tasked with risk management and other aspects of operation. With any business venture, there is always a degree of risk involved. It is the middle office that is tasked with analyzing risks associated with the market and credit.
The back office is tasked with monitoring risk and managing the company’s capital. They have the responsibility of ensuring that everything in the background is going smoothly. The Information Technology team also falls under the jurisdiction of the back office.
Advantages and disadvantages of working in investment banking
There are a lot of pros to working in investment banking. Perhaps the biggest attraction for many people is the fact that money flows in this branch of banking. There is no denying this – the industry is willing to offer very attractive pay packages to their top employees. Of course, in exchange for this attraction, one involved in investment banking has to have a lot of skill and talent. More so, one has to be willing to work long and hard hours in order to make a career in investment banking.
Another advantage when it comes to investment banking is more intangible – the prestige that comes with it. The nature of investment banking makes it inevitable for people working in the field to rub elbows with the who’s who of their community. More so, there are also extensive travel opportunities for those working in this sector.