Top 5 Investment Banks in the World

Top 5 Investment Banks in the World

The long-term investments in financial, tangible, and intangible assets, which generate profits and achieve a positive social effect play an important role in the economic market. In this article, we will consider the top 5 investment banks in the world, and the essence of their functionality.

The role of investment banks

The economic development of any country depends not only on the level of development of modern technologies and equipment, but is largely determined by the degree of progress of the banking system. The division of labor in the credit sphere has led to the allocation of investment banks (IBs) in most developed countries, which specialize primarily in issuing and installation activities, like an initial public offering, as well as resale of securities of industrial, construction, commercial and other companies. Such institutions occupy leading positions in the primary securities markets. In many cases, it is impossible to place a new large consignment of securities without their help. At the same time, these banks act not only as simple intermediaries between companies that need long-term financing of investments and investors – owners of capital but also as founders of start-ups or guarantors of new issues of existing companies. The placement of a large batch of shares or bonds is usually preceded by thorough technical, economic, financial, and legal expertise.

IB specializing in the organization of issuance, a guarantee of arrangement and trading in securities; also advises clients on various financial issues, focused mainly on wholesale financial markets, or as a non-clearing bank specializing in medium investments in companies.

The need for the functioning of such specific financial institutions as IBs stems from their institutional nature, as they are professional participants in the investment market who have excellent skills in the accumulation of long-term resources and their rational allocation.

The top IB firms in the world

IB specializes in the organization of issuance, a guarantee of arrangement, and trading in securities; also advises clients on various financial issues, focused mainly on wholesale financial markets. If the first group of banks included motives aimed at increasing savings and optimization, then the second group includes motives caused by the need or desire of managers and shareholders to increase cash receipts or reduce dependence on cyclicality. That is why the issue of investments in banks is very important.

In addition, organizations, by placing their own and attracting funds in various investment projects, contribute to the creation of new industries, the speedy introduction of scientific and technological ideas and achievements into production, the re-equipment of existing industries with modern equipment and technologies.

The list of the top 5 IB in the world include:

  • Credit Suisse
  • Goldman Sachs
  • Morgan Stanley
  • Deutsche Bank
  • P. Morgan.

Moreover, the IB is a kind of regulator of certain segments of the financial market; it seems that it can be called a structure-forming element of the financial market. In this capacity, IB is intended to partly streamline and rationalize the circulation of financial instruments.

These banks are most actively mastering the following services:

  • feasibility study of investment projects;
  • formation of optimal emission portfolios;
  • underwriting;
  • organization of optimal individual portfolios of securities for large investors;
  • brokerage services;
  • consulting on investment issues, selection of a foreign investor for enterprises, selection of investment subjects for investors.

By carrying out financial intermediation, banks implement some sub-functions at once, namely: accumulation and redistribution of funds, risk reduction through its diversification, and reduction of distribution costs.