When we say ‘banks’ we usually mean a kind of financial institution where we deposit our savings or draw our payments. These banks are known as commercial banks. However what we are talking about here is investment banks. These are large financial organizations to be precise that provide financial services to other organizations. The activities of investment banks have a great impact on the economy. The global financial crisis that rocked the world recently was because of the plummeting of company stocks handled by investment banks. It was that crisis which highlighted the term ‘investment bank’ to the common people.
There have been vehement accusations that the global financial crisis had happened because of the doings of certain investment banks. From time to time there are also allegations about how these investment banks reap in profits and how its employees get large compensation packages. Well, let’s leave those in the backburner since we are talking about something different here.
An investment bank does not function like a commercial bank. It does not take deposits but instead it is involved in trading of financial instruments like stocks, bonds etc which are known as securities. It provides assistance to companies and other institutions in trading of securities (buying and selling). Therefore the main function of an investment bank is corporate finance or investment banking.
There are so many investment banks in the world which offer specialized investment banking services to numerous entities. These are headquartered in different countries. Some of these investment banks because of their impeccable service become a favorite in the corporate world while others struggle to improve their services. Just like other service providers, every year investment banks are rated according to their service and performance. Some hold on to their rank for a long time while some others move up and down the ladder depending on their ranking.
So, here we present the top 10 investment bankers in the world at the moment. The rankings are based on points gathered by these banks by virtue of their services and performance.
1. Goldman Sachs:
Goldman Sachs is highly reputed investment banking and securities firm with global presence. It was in 1869 that this global major was established. Most of its clients are institutional. Apart from handling investment banking and securities of its clients the firm also provides investment management services along with other financial services.
2. JP Morgan Chase:
JP Morgan Chase operates in 60 countries and its assets are worth $2 trillion. This global financial services provider is amongst the oldest firms. JP Morgan is credited to manage market capitalization which is by far the largest at the moment. Currently it is managing assets worth US$779 billion.
3. Morgan Stanley:
Morgan Stanley is another investment banker with worldwide presence. It offers financial services to diverse companies. Apart from that it also manages assets of governments and other financial institutions including that of individuals. At present Morgan Stanley has under its management assets worth US$779 billion.
Citigroup is a US based financial services provider. The company is headquartered in New York and is one of the major American companies offering financial services. The network of Citigroup is considered to be the largest in the world. The company has about 16000 offices located in almost 140 countries.
5. Bank of America (Bank of America Merrill Lynch):
Bank of America Merrill Lynch which was formerly Bank of America is another global financial service major. In the US this investment bank is considered as the largest bank by virtue of the assets held by it. In terms of market capitalization this bank ranks second in the US.
6. Barclays Capital:
Forbes Global 2000 had ranked Barclays Capital at 25th position (while presenting the list for year 2008) in the world’s largest financial services company category. On the other hand Tier 1 capital ranked it as the world’s fourth largest financial services provider for managing assets worth $32.5 billion. Barclays Capital with assets worth $3.7 trillion is the largest financial services provider in the world.
Lazard is another reputed global financial services provider that offers financial advisory and asset management services to several international corporations. With a cumulative value worth $1 trillion and debtor assets worth $350 billion (by executing over 250 restructurings) this investment bank one of the largest in the world.
8. Credit Suisse:
Credit Suisse investment bank was founded in the year 1856. It was Alfred Escher who established this bank. Credit Suisse offers financial services related to investment banking, asset management and also private banking.
9. Deutsche Bank:
Deutsche Bank is another global financial service major with worldwide presence. Apart from services like trading, sales, debt and equity origination, mergers and acquisitions it also offers financial products connected to risk management, corporate finance, wealth and fund management. It is also into retail and transaction banking.
UBS AG is a Switzerland based investment banker that operates globally. It offers diversified financial services to international clients. The company has its headquarters in Basel and Zurich. In terms of private wealth asset management UBS is considered as the second largest wealth manager in the world. On the other hand in terms of profitability and market capitalization UBS is ranked as Europe’s second-largest bank. With offices spread over in more than 50 countries, UBS has its presence in almost all the major financial centers of the world.
The importance of investment banks is manifold in the world. Companies need capital to run and to raise capital companies need financial institutions like investment banks. In addition people will not be able to grow their money if they are not able to invest in lucrative schemes. Investing in a savings deposit does not lead to growth.
This will lead to unequal wealth distribution. Everyday financial transactions will become the exclusive to only large institutions or affluent individuals. The existence of investment banks ensures rapid flow of capital. This helps in faster growth of businesses as well as savings. As a result the economy grows. Investment banks handle intricate financial activities to simplify things for us. Investment banking is all about raising capital for the purpose of capital growth.