Investment banking is the services and activities that enable corporations to raise capital by selling securities to investors. Bankers who provide this service are called investment bankers. It can also refer to the department within a large organization that carries out such transactions. Corporations are complex entities and they like seeing their other complex entities, banks, trying to make sense of them by providing the right financial products.
Benefits of investment banking
#1 Finance business
Banks can offer finance to the company to help it meet its financial needs. Bankers on their part are trying to keep their other complex entities afloat, they do that by providing finance to keep them running. Moreover, the bank may have other complex entities that need the same services and products.
#2 Finance personal needs
When people retire, banks provide them with financial services and products to make them live comfortably for their remaining days. Banks usually look for people with a good track record and would want to be referred by them or approve the people they recommend to the bank so that they can trust those referred. Investment banking in Singapore will be counted as one of the largest industries in Singapore.
Some people will buy shares and stocks because they believe that the company will perform well. Those who sell their shares at a higher price than what they bought them, will gain profit from these transactions, but if they sold their shares at a lower price than what they bought them, then this would be a loss to them.
#4 Debt financing
Some people will look for financial products that would enable them to get rid of their debts so they can have a clean slate. Banks try to provide such financial products as they can use the money that they loan out to other complex entities, or will use it on a capital asset such as property or stocks. They usually charge interest on the loan and also charge some fees to keep completing their mission, they are trying to have all the loans repaid in time.
#5 Offer different financial products
Banks try to be creative when it comes to providing financial products to other complex entities. They can offer various financial products that can fit into their financial needs, some complex entities will not accept what is offered if they do not trust the bank, they may look for other banks and will consider taking a loan from them if their bank does not have what they need.
#6 Selling securities
Investment banking is the services and activities that enable corporations to raise capital by selling securities to investors. Investment bankers are those who provide this service. A banker would want to get high profits from his other complex entities so that the bank can continue to do so in the future.
Investment banking is a complicated business, it is not all that easy to understand, but knowing that is the key. The company needs to know and understand the other complex entities inside it, this way they can get a clear picture of what they are dealing with.