UK Accounting Glossary
An investment bank is an institution that performs a variety of financial services for corporations, individuals, and the government. The primary function of an investment bank is to raise capital for growing companies and the government by issuing equity and debt securities. In essence, the role of an investment bank is to operate as an agent between companies in need of funding and the public markets. The chief difference between an investment bank and retail bank is that an investment bank does not accept deposits or originate loans. An investment bank also offers advisory and strategic services related to mergers, acquisitions, and corporate restructuring. Today, a typical investment bank may offer risk management and broker-dealer services as well. An investment bank is also known as an underwriter.
Investment bank refers to an institution or individual that behaves as an agent or underwriter for municipalities and corporations engaged in the issuance of securities. A number of investment banking entities are engaged in dealer and broking operations. Investment bankers also offer advisory services to their respective client investors. The principal distinguishing factor of investment banks as compared to their traditional bank counterparts is that they do not accept deposits and grant loans of any kind to individuals.
It is described as a banking division that covers business entities managing with creating capital for other companies. Investment banking also apprises companies on business matters like issue and placement of equity securities or stock.
An investment banking group is described as a cluster of investment banks that collectively underwrite and distribute new securities. The group may also lend money to a particular borrower. Investment banking groups generally do not exist on a permanent basis. Investment banks are bought together for particular deals that are considered too risky or hard for a single borrower or underwriter to manage. An Investment banking group is also known as a banking syndicate or distributing syndicate.
It is described as the technique by which investment bankers obtain investment capital from investors for utilization by governments and corporations that are issuing securities. Both debt and equity securities are applicable.
Sterile investments are those that do not offer any interest or dividends to the investor. Any kind of return is exclusively through capital gains. Gold and silver investments are one of the more prominent examples of sterile investments.
The hidden reserves of a financial institution that does not appear on public documents like a balance sheet. They are, however, tangible assets and are accepted as such by banks and other financial institutions.
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This glossary post was last updated: 9th February 2020.