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FINANCIAL MARKET COURSES

Business of Investment Banking

The financial crisis generated numerous comments linking investment banking to casinos and gambling. However, this fails to recognize the breadth of investment banking functions and the variety of risk exposures. Much of investment banking is about raising capital for third parties; where banks act as advisors, or agents rather than principals, their own capital is not at risk.

 

Concerns that investment banking activities were a significant cause of the broader financial crisis have their roots in the organizational structure of the overall financial system rather than many business areas. Commercial banks operate in many investment banking areas and vice versa. This interconnected structure links crises in lending areas (such as US subprime) with securities problems (such as ownership of subprime-related assets). This course aims to analyze the ‘individual businesses’ of investment banking, independently of the issues raised by financial market infrastructure.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Outline the basics of investment banking and how investment banking activities are not unique to investment banks

    Describe the key investment banking functions, including M&A/advisory, underwriting, trading, and investment/asset management

    Describe the structure of the investment banking market and the typical institutions within this market

  • COURSE OUTLINE

    Topic 1: Overview of Investment Banking

    Key Business Drivers

    Revenues (Fee Based Activities)

    Revenues (Trading Activities)

    Investment Banking vs. Commercial Banking

    Importance of Investment Banking for Financing

    Buy Side vs. Sell Side

    History & Industry Development

    Shadow Banking

    Topic 2: Key Investment Banking Businesses

    M&A & Advisory

    o Types of transaction

    o Motivations (Synergies)

    o Investment Banking Value-Added

    o Identifying targets

    o Financing transactions

    o Buyouts

    o Fees

    Securities Underwriting

    o Equities bonds

    o Setting the price

    Bookbuilding

    Fixed price

    Auction

    o Syndication

    o Fees

    Securities trading

    o Markets

    o Agent vs. principal

    o Clients

    o Research

    o Prime brokerage

    o Infrastructure

    Asset management

    Topic 3: Structure of the Investment Banking Industry

    A shifting landscape

    Niche/Boutique Players

    Universal Banks

    League Tables

    o M&A

    o Underwriting

    Internal Organizational Structure

    Personnel Hierarchy

    Relationship Management

    Managing Conflicts of Interest

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

INTERMEDIATE

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