Investment Banking

nvestment Banking

Historically, investment banking clients were corporations, governments and pseudo governmental entities and other financial institutions. The client base is broadening and now includes both high-net-worth individuals as well as most recently the general investing public. In this way investment banks are becoming more or less complete financial service providers. Three categories of investment bank exist today:

* Universal Bank - with assimilated investment banking operation

Deutsche Bank initiated the term "Universal Bank" to emphasize its competitive advantage over geographically less well-positioned firms, from both a customer and product perspective. This has provided them with cross-selling opportunities, for example by linking their lending activities to higher-margin, commission-based business to the same clients. The higher margin investment banking transactions are volatile in nature and frequency. However, the various linked activities of wholesale banking (such as traditional loans and services) provide balance sheet stability. Traditional commercial/retail bankers are generally less aggressive when it comes to capitalizing on market opportunities compared to their investment banking colleagues, particularly from a risk management, credit and control perspective. As a result most universal banks are careful to segregate investment banking businesses from their mainstream commercial activities. This can be as organizationally distinct as with Credit Suisse First Boston (CSFB) or in the form of physical separation such as Deutsche Bank and UBS locating their investment banking businesses in London.

* Global Investment Bank

Perhaps the main differences between a global investment bank and a universal bank are the product offerings and the capital size. Global investment banks