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Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
Banking Industry Overview
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Banking Industry Overview

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  • 1. Banking/Brokerage Overview by Justin Burt for Upwardly Global June 20, 2007
  • 2. Banking / Brokerage Firm Overview Investment Banking and Brokerage Firm Brokerage Banking and Capital Markets Brings in client money that the firm will be paid Provides financial advice and general banking to manage and invest, and that the firm can services to corporations, handles the logistics of also lend to others complex financial transactions such as mergers, and trades stocks and bonds for the firm’s clients Private Bank / Retail Brokerage Investment Banking Equity Research Corporate Banking Sales and Trading Transaction Services 2
  • 3. Private Bank Overall Provides banking and other services to clients with large amounts of money to invest Function (typically more than $10 million) Handling client requests, e.g. investment advice, buying or selling a certain stock or bond, or arranging a large loan Prospecting new clients through networking and cooperation with other divisions of the bank Examples: Meet with client in order to discuss strategies to minimize taxes or achieve other Day-to-Day financial objectives Work Advise client on investing in non-traditional areas such as art or sophisticated financial instruments such as hedge funds Meet with investment bankers in order to bring CEO of a client company in on a personal basis as a private bank client Arrange large personal loans using assets such as planes or company stock as collateral Example Citigroup Private Bank, UBS, Northern Trust, Julius Baer Companies 3
  • 4. Retail Brokerage Overall Provides banking and other services to clients with varying amounts of money to invest Function Handling client requests, e.g. investment advice, buying or selling a certain stock or bond Prospecting clients (usually through "cold calling") Examples: Call all the lawyers at a particular law firm to see whether any are interested in opening Day-to-Day up an account Work Buy 500 shares of Procter & Gamble on a client’s behalf Distribute mutual fund information to a client and recommend the best investments for a client’s objectives Inform the client of new products (such as different types of insurance or annuities) that the brokerage is offering that could be useful in attaining certain financial goals Example Smith Barney, Charles Schwab, Morgan Stanley, Fidelity, Raymond James Companies 4
  • 5. Equity Research Overall Creates research reports recommending selling or buying certain company stocks; Function often also produces other types of economic and financial reports Build complex Excel spreadsheets that help predict the future financial performance of companies Publish reports involving financial projections as well as other types of data that help predict the future performance of a company Research on industries (such as restaurants or oil companies) and on economic trends (such as the price of gold or the Japanese economy) Day-to-Day Examples: Work Publish a 10-page report predicting the stock performance of Coca-Cola including full financial statements, using e.g. regulatory filings, conversations with executives at the company, information on Coca-Cola’s market share in selected markets, etc. Monitor news on specific companies Speak with people inside the company, and sometimes investment managers within the company, about the prospects of an investment Example Smith Barney, JPMorgan, Goldman Sachs, Credit Suisse Companies Equity research was traditionally a function of an investment bank so most investment banks will have an affiliated research unit 5
  • 6. Investment Banking Overall Provides financial advice and services to corporate clients Function Build complex Excel spreadsheets that help predict the future financial performance of companies Put together Powerpoint proposals for bank services that could be useful to a client (for example, might include financial statistics or ideas for companies to buy) Draft and proofread financial statements and regulatory documents Day-to-Day Meet with and build relationships with client executives Work Examples: Help a company determine a fair price at which to sell itself to a competitor Provide negotiation advice to a large company while it acquires a smaller one (or vice versa) Draft legal and regulatory documents for issuing stocks or bonds, then travel with client executives to help sell the new stocks or bonds Citigroup Investment Bank, JPMorgan, Goldman Sachs, Credit Suisse Example Companies There is some overlap between all four “Banking and Capital Markets” functions so companies will typically offer all of them, but specialize in one or two areas 6
  • 7. Corporate Banking Overall Provides day-to-day financial advice and services to corporate clients; many are Function similar to those offered by a consumer bank, but on a much larger scale Build complex Excel spreadsheets that help predict the future financial performance of companies Put together Powerpoint proposals for bank services that could be useful to a client (for example, might include financial statistics or ideas for companies to buy) Draft and proofread financial statements and regulatory documents Day-to-Day Meet with and build relationships with client executives Work Examples: Arrange a regular multi-billion dollar loan to a corporation to help it expand its operations Arrange a special type of loan that allows a company to borrow money at a low interest rate and that is collateralized with some of the company’s assets (such as planes or construction equipment) Arrange a mortgage on an industrial property such as a factory Citigroup Investment Bank, JPMorgan, Goldman Sachs, Credit Suisse Example There is some overlap between all four “Banking and Capital Markets” functions so Companies companies will typically offer all of them, but specialize in one or two areas 7
  • 8. Sales and Trading Overall Buy and sell stocks and bonds for large investors such as companies and Function governments Sell company or government stocks and bonds to financial investment firms (such as other banks, mutual fund companies, and hedge funds) Fulfill orders to sell or buy large quantities of stocks and bonds at a predetermined price Day-to-Day Check to see whether trades are executed correctly Work Examples: Buy 500,000 shares of Nike for a hedge fund that wants to invest in Nike stock Call investment firms to persuade them to buy their stocks and bonds through you in exchange for a commission Put together a group of investors to buy a large amount of new stock that is coming to market Example Citigroup Investment Bank, JPMorgan, Goldman Sachs, Credit Suisse Companies There is some overlap between all four “Banking and Capital Markets” functions so companies will typically offer all of them, but specialize in one or two areas 8
  • 9. Transaction Services Overall Provides operational services for managing very large amounts of cash, stocks and Function bonds including technology support Especially broad variety of day-to-day job functions, depending on the specific area Collect, analyze and report financial data for clients, including a client's day-to-day financial status Implement a technology solution for helping clients trade stocks more efficiently Meet with and build relationships with client executives Day-to-Day Examples: Work Train a client in the use of a new financial reporting system Supervise and check the transfer of a large amount of money or stock from an client's account to another company Design and develop database to store records relating to claims in a class-action suit Compute interest due on a bond and inform the issuer of the bond, then coordinate payment to all bondholders Citigroup, JPMorgan, Northern Trust, Bank of New York, Wachovia Example Companies There is some overlap between all four “Banking and Capital Markets” functions so companies will typically offer all of them, but specialize in one or two areas 9

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