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Showing posts with label INVESTMENT BAKING. Show all posts
Showing posts with label INVESTMENT BAKING. Show all posts
Investment banks ‘show green shoots’
Posted in INVESTMENT BAKINGTHE retail banking sector’s prospects remained weak for the second quarter of this year, while investment banks saw an upsurge in sentiment, largely driven by business fundamentals.
Retail banking confidence fell from 32 points in the first quarter this year to a slightly weaker 28 points in the second quarter, while investment banking rose sharply, from 32 to 50.
These are the findings of the 30th quarterly Ernst & Young financial services index, released yesterday. It was carried out by the Bureau for Economic Research in Stellenbosch to measure confidence in the banking industry.
Emilio Pera, the lead financial services director at Ernst & Young, said: “We have been hearing a lot about the appearance of early signs of a recovery (green shoots) in the last four to six weeks. In the case of investment banks, this appears to be more pronounced.”
Pera said it was interesting that business fundamentals were not entirely different between retail and investment banks.
Both segments were experiencing continuing and protracted profit contractions, caused by flat or reduced income growth, and continued high growth in non-performing loans. Investments banks were benefiting from a client base more resilient to interest rate increases over the last two years, although corporate entities were starting to feel the effect toward the end of the rate tightening cycle.
Pera said a more fundamental reason for the return of confidence in investment banking was a turnaround in resource companies. All the major producers had gained from rebounding commodity prices, which had led to a resumption in corporate mergers and acquisitions (M&A) activity and a re-look at moth-balled projects.
While demand for credit remained weak, banks themselves were maintaining stringent credit standards, particularly in the retail sector. On the other hand, investment banks saw a noticeable relaxation of credit standards in the second quarter.
“Retail banks remain wary of granting credit in an environment where the ability of over-extended households to repay secured and unsecured debts continued to be a concern,” Pera said.
“Credit cards, mortgages and instalment finance are all either reflecting negative or flat growth in the year to April,” he said.
It was understandable that banks were more cautious in their credit granting processes. .
What is Investment Banking?
Posted in INVESTMENT BAKING
Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investmentbanking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investmentbanking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
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