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Investment banks offer corporations, institutions, funds and investors a diverse range of strategic business and innovative investment solutions. Their global presence and expertise helps clients tap into the capital markets worldwide, navigate and execute complex financing services and transactions.
Trading, underwriting and advising are the three major sources of revenue to investment banks.
Investment banks trade heavily on stocks, bonds, currencies and commodities for clients and on their own (i.e. proprietary trading). To meet the needs of investors with higher risk tolerance (such as hedge funds), investment banks deliver prime brokerage service, alongside securities lending, financing, global custody, operational support and consulting services, etc.
In the capital market, investment banks serve as a host of underwriting which helps distribute debt instruments and equity. Private companies may call upon an initial public offering, also known as IPO, to raise capital. As an underwriter, banks ensure that the companies comply with the applicable listing rules, and help the companies get access to a cluster of top notch investors. After going public, companies can continue to make use of the equity and debt markets to strengthen their financial positions.
In terms of advisory services, investment banks mainly offer clients specialist guidance in various types of transactions - mergers, acquisitions, restructuring and joint ventures. Such guidance is usually derived through its established network (covering peer banks, institutional and influential investors, policy makers and corporate clients) and internal advisory teams. In addition to tailor-made guidance, investment banks regularly publish fundamental yet insightful market analyses. Investors with lower risk appetite may make use of these analyses for making more informed investment decisions.