Investment banking, as a financial services company, acts as a crucial intermediary in large and complex financial transactions. Its primary focus is on equity financing for transnational and local businesses, individuals, and even governments. These financial transactions can take various forms, including equity/debt IPOs, bonds offerings, mergers and acquisitions, portfolio surveillance, and more.
In the United States, there are approximately 8 top investment banks, three of which we will discuss in this article. It’s important to note that the rankings are not in any particular order, and the data presented here is based on information available as of January 2020.
- Goldman Sachs (GS): Founded in 1869 and headquartered in New York City, Goldman Sachs offers a wide range of services across four divisions—investment banking, institutional client services, investing and lending, and investment management. In the fiscal year 2018, Goldman Sachs recorded net revenues of $36.62 billion, with the investment banking division contributing $7.86 billion, the highest among all divisions. Earnings per share were $25.27.
- JP Morgan Chase (JPM): One of the largest investment banks, JP Morgan Chase reported net revenues of $109 billion for FY 2018, with investment banking revenue contributing $36.4 billion. The firm has a vast presence in 60 nations, with over 256,000 employees offering a diversified set of services. Apart from investment banking, JP Morgan Chase is also involved in consumer and community banking, commercial banking, asset and wealth management, and corporate services.
- Barclays (BCS): Founded in 1896 and based in London, UK, Barclays made headlines in 2013 for statements about the mechanism of London interbank ratios and significant job cuts worldwide. With a strong workforce of 86,800 employees globally, Barclays’ 2018 annual report indicated a total income of £21.1 billion, of which the investment banking sector contributed £9.8 billion. Overall, the earnings per share were £9.2.
- Morgan Stanley (MS): Established in 1935 and headquartered in New York, USA, Morgan Stanley employs 60,348 employees spread across numerous countries. In FY 2018, the firm reported net revenue of $40.1 billion, with the investment banking segment contributing $6.1 billion. Apart from traditional investment banking services, Morgan Stanley also offers prime brokerage, custodian, concession, and clearing services.
- Deutsche Bank (DB): Based in Germany and listed on the New York Stock Exchange, Deutsche Bank reported net revenue of EUR 25.316 billion in 2018. It specializes in various services, including cross-border payments, international trade financing, cash management, insurance, and investment banking.
- Citigroup (C): Tracing its roots back to the origin of Citibank in 1812, Citigroup has 204,000 employees and operates in 160 countries. Of the total revenues of $72.9 billion reported for 2018, contributions from investment banking fell 7% from the previous year to $5.01 billion. Citigroup has a strong presence in investment banking, investment management, private banking, and card processing.
- Credit Suisse (DHY): With a net income of CHF 20.92 billion and EPS of 0.77 in 2018, Credit Suisse is based in Zurich, Switzerland. It employs 45,680 workers across the globe in over 50 countries. Apart from regular investment banking business, it also has a presence in taxation and advisory, structural lending, real estate leasing, and investment research services.
- Bank of America Corporation (BAC): Bank of America Corporation is an American multinational banking and financial services company that offers a wide array of banking services, including investment banking, mortgage, trading, brokerage, and card services. Operating in 40 countries with a total net income of $28.1 billion in FY 2018, the investment banking division contributed $8.1 billion. The overall EPS was $2.61.
Investment banks play various roles, such as providing strategic financial advice to institutional investors, facilitating mergers and acquisitions, acting as intermediaries between corporations and financial markets for IPOs and stock offerings, and conducting extensive research to advise clients.
The clients of investment bankers include institutional investors, governments, and corporations. Investment banks work closely with these entities to trade securities, raise capital, provide research, and offer general corporate finance advice.
In conclusion, the investment banking industry plays a vital role in the global financial landscape, offering a wide array of services to various clients. As with any financial endeavor, successful investments depend on prudent decision-making and adhering to the right channels of operation.