Investment Banking

By: EconomyWatch   Date: 9 September 2010

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Investment banking is a particular form of banking that finances capital requirements of an enterprise. Investment banks aids in the launch of an initial public offering (IPO), private placement and bond offerings, acts as a broker and carries out mergers and acquisitions (M&A).

Functions of Investment Banks

Investment banks have multiple functions to perform. Investment banking helps public and private corporations issue securities in the primary market, underwriting, advisory services, and forex management. Other services include acting as intermediaries in trading for clients.


In The News: Lehman Brothers, 2008

In late 2008, Lehman Brothers, with $619 billion in debt, filed for bankruptcy, making it the largest bank failure in history. Lehman was one of the world’s leading investment banks at the time of its collapse, with a staff count of 25,000, and also the largest victim of the US subprime crisis.

Lehman’s collapse shook financial markets around the world for weeks, given its size and the level of influence it held globally, leading to the wipeout of close to $10 trillion in market capitalization from global equity markets in October 2008, a record monthly decline. Lehman’s bankruptcy eroded more than $46 billion of it’s stock value.


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