Professional Documents
Culture Documents
Seerat Bhatia 3
Seerat Bhatia 3
Seerat Bhatia
Report 3
05 October 2022
There are few job fields which inspire so much awe, respect and curiosity as
investment banking. Despite the heavy hit the industry took during the financial
crisis, investment banks undoubtedly still retain their appeal for those
considering a career in finance. And it is no wonder since 2007 was not the
first time that banks have hit a bump in the road; while the history of investment
banking has not always been straight-forward, the industry has lived through
worse but has still somehow managed to rise again to prosperity like the
While the term ‘investment bank’ gained popularity in the late 19 th – early 20th century,
and largely in relation to the US, investment banking services existed long before Wall
Street. Most of the oldest investment banks started out as merchants trading in
commodities such as spices, silk, metals and so on. In the UK, whose capital still remains
[Last Name] 2
one of biggest financial centers in the world, the term ‘merchant bank’ is used to describe
an investment bank.
The nineteenth century saw the rise of several prominent banking partnerships such as
those created by the Rothschilds, the Barings and the Browns. At this point, investment
banking had started to evolve into its modern form, with banks underwriting and selling
government bonds.
securities. An investment bank may also assist companies involved in mergers and
acquisitions (M&A) and provide ancillary services such as market making, trading
research). Most investment banks maintain prime brokerage and asset management
industry, it is broken up into the Bulge Bracket (upper tier), Middle Market (mid-
Unlike commercial banks and retail banks, investment banks do not take
deposits. From the passage of Glass–Steagall Act in 1933 until its repeal in 1999
[Last Name] 3
of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010
(Dodd–Frank Act of 2010), the Volcker Rule asserts some institutional separation
All investment banking activity is classed as either "sell side" or "buy side".
The "sell side" involves trading securities for cash or for other securities (e.g.
underwriting, research, etc.). The "buy side" involves the provision of advice to
institutions that buy investment services. Private equity funds, mutual funds, life
insurance companies, unit trusts, and hedge funds are the most common types of
buy-side entities.
An investment bank can also be split into private and public functions with a
screen separating the two to prevent information from crossing. The private areas
of the bank deal with private insider information that may not be publicly
disclosed, while the public areas, such as stock analysis, deal with public
(FINRA) regulation.
[Last Name] 4
In the 1980s, investment bankers had shed their stodgy image. In its place was a
reputation for power and flair, which was enhanced by a torrent of mega-deals during
wildly prosperous times. The exploits of investment bankers lived large even in the
popular media, where author Tom Wolfe in “Bonfire of the Vanities” and movie-maker
Oliver Stone in “Wall Street” focused on investment banking for their social
commentary.
Finally, as the 1990s wound down, an IPO boom dominated the perception of
investment bankers. In 1999, an eye-popping 548 IPO deals were done – among the most
ever in a single year — with most going public in the internet sector.
securities or insurance businesses under the Glass-Steagall Act and thus permitted “broad
banking.” Since the barriers that separated banking from other financial activities had
been crumbling for some time, GLBA is better viewed as ratifying, rather than
SOURCES/REFERENCE
http://www.financeinstitute.com/blog/the-history-of-investment-banking/
https://en.wikipedia.org/wiki/Investment_banking
https://www.wallstreetprep.com/knowledge/the-history-of-investment-banking/