01-111112-004

IB ASSIGMENT #1
ABDUL RAFAY ALI
SECTION S
9/21/2014

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Question#1
Types of Investment Banking Services offered in USA & European Markets?
The primary service provided by investment banks is underwriting, which refers to guaranteeing a
company a set price for the securities it plans to issue. If the securities fail to sell for the set price, the
investment bank pays the company the difference. Therefore, investment banks must carefully
determine the set price by considering the expectations of the company and the state of the market for
the securities. In addition, investment banks provide a plethora of other services including financial
advising, acquisition advising, divestiture advising, buying and selling securities, interest-rate swapping,
and debt-for-stock swapping. Nevertheless, most of the revenues of investment banks come from
underwriting, selling securities, and setting up mergers and acquisitions.

Services offered in USA and European markets:

Standard bank
Standard Bank has a long history of success in serving the diverse needs of governments, larger
corporate, financial institutions and international counterparties around the world through the
combined areas of corporate and investment banking. They have concluded many deals that cross
function, business line and region, and provide a comprehensive range of products and services to their
clients through cross-functional teams.
With their capacity in strategically important countries and regions, they are able to provide clients with
market-leading solutions across global markets, investment banking, real estate and transactional
products and services, supported by trusted advisory and research teams
Their Real Estate teams focus on real estate investments, finance and affordable housing developments,
Their Investment Banking teams provide a full suite of advisory and financing solutions from term
lending to highly structured and specialized products across the equity and debt capital markets.
Their Global Markets teams offer a range of trading and risk management solutions across the financial
markets including foreign exchange, the money market, interest rates, equities, credit and commodities.
Their head office in New York office leverages Standard Banks global emerging markets presence and
in-country specialists to realize significant value for clients. Extensive global footprint enables standard
bank to facilitate trade and investment flows between the Americas and developing economies,
exposing clients to new markets and opportunities across economies in Africa, Asia, Central and Eastern
Europe, the Middle East and Latin America.

Offer a wide range of products and services, with particular expertise in the mining, energy and
telecoms sectors. Customize solutions to the unique requirements of business, drawing on Standard
Banks world-class risk and capital management systems and their global network of regional and
product experts. Standards bank Investment Banking arm provides corporate finance advisory and
innovative financing solutions across the debt capital markets. They specialize in the provision of
structured debt finance, securitization, project, acquisition, property and structured trade & commodity
finance as well as syndicated lending and distribution,

Mergers and acquisitions

Nordea Markets Investment Banking is the leading Nordic merger & acquisitions (M&A) advisor. They
advise on mergers, acquisitions, divestments, spin-offs and public offers. They handle transactions in a
diverse range of industries and have sector experts to provide our customers with deep industry insight.
M&A service offerings include:
Corporate and Leveraged Finance

Analysis and evaluation of businesses for sale

Identification and screening of potential buyers or target companies

Fairness opinions

Advice on shareholder value enhancement initiatives and other strategic advice

Management of the entire transaction process from initial analysis to final payment

Advice regarding transaction structure

Deal and negotiation tactics

Financing and capital rising:

Analysis and structuring of both corporate and sponsor backed financings

Loan and Bond underwriting and distribution

Restructurings

Structured Finance Solutions to support global companies

Structured Derivative Solutions

Deal responsibility and project management for all aspects of the financing process

Fixed income

The leading Nordic fixed income house with strong distribution capacity and deal execution

The leading Nordic house in the Eurobond market and across the Nordic domestic fixed income

The only Nordic bank with an active presence in all segments of the Nordic HY market

Leading presence in the covered bond and senior unsecured markets for Nordic financial

Market leader in the Nordic SSA market in both the public and private placement markets

Experienced securitization team offering broad array of client solutions

Equity Capital Markets:

Structuring of complex equity transactions

Advising issuers in primary or secondary offerings

In depth knowledge of local market rules, codes and practices

Understanding of investors' preferences, pricing and timing issues

Project management and coordination throughout the transaction process

Execution in close coordination with Equity Sales and Equity Research

Question#2
Role of Commercial Banks in both markets
Understanding the many roles that banks play in the financial system is one of the fundamental issues in
theoretical economics and finance. The efficiency of the process through which savings are channeled
into productive activities is crucial for growth and general welfare. Banks are one part of this process.
Lenders of funds are primarily households and firms. These lenders can supply funds to the ultimate
borrowers, who are mainly firms, governments and households, in two ways. The first is through
financial markets, which consist of money markets, bond markets and equity markets. The second is

through banks and other financial intermediaries such as money market funds, mutual funds, insurance
companies and pension funds.
Delegated Monitoring and Banks
One important problem is if borrowers must take some action to make proper use of the funds they
have borrowed. This action could be the level of effort or choice of project from among various different
risky alternatives. The borrower can always claim that a low outcome is due to bad luck rather than from
not taking the correct action. Lenders cannot observe the borrower's action unless they pay a fixed cost
to monitor the borrower. In a financial market with many lenders, there is a free-rider problem. Each
lender is small, so it is not worth paying the fixed cost. Everybody would like to free-ride, leaving it to
someone else to bear the monitoring cost. As a result, no monitoring will be done.
Risk Sharing Role of Banks
One of the most important functions of the financial system is to share risk and it is often argued that
financial markets are well suited to achieve this aim.
Banking Crises
Banks perform an important role in terms of maturity transformation. They collect demandable deposits
and raise funds in the short term capital markets and invest them in long-term assets. This maturity
mismatch allows them to offer risk sharing to depositors but also exposes them to the possibility that all
depositors withdraw their money early. Runs can involve the withdrawal of funds by depositors (retail
runs) or the drying up of liquidity in the short term capital markets

Banks and Growth

Another important role of banks is in spurring growth. There has been a debate on the relative
effectiveness of banks compared to financial markets in doing this. This debate was originally conducted
in the context of German and UK growth in the late nineteenth and early twentieth centurys
, Corporate Governance Role of Banks
The importance of equity ownership by financial institutions in Japan and Germany, and the lack of a
strong market for corporate control in these countries have led to the suggestion that the agency
problem in these countries is solved by banks acting as outside monitors for large corporations. In Japan,
this system of monitoring is known as the main bank system. The characteristics of this system are the
long-term relationship between a bank and its client firm, the holding of both debt and equity by the
bank, and the active intervention of the bank should its client become financially distressed. It has been
widely argued that this main bank relationship ensures the bank acts as delegated monitor and helps to
overcome the agency problem between managers and the firm. However, the empirical evidence on the
effectiveness of the main bank system is mixed.

Question #3
Role of Government Policies,
Government has introduced the biggest reforms to the banking sector in a generation: to make banks
more resilient to shocks, easier to fix when they get into difficulties, and to reduce the severity of future
financial crises.
We want to make sure that when banks make losses, retail customers arent excessively affected and
taxpayers money isnt used to bail banks out

introducing a ring-fence around the deposits of people and small businesses, to separate the
high street from the trading floor and protect taxpayers when things go wrong

making sure the new regulation authority can hold banks to account for the way they separate
their retail and investment activities, giving it powers to enforce the full separation of individual banks

imposing higher standards of conduct on the banking industry by introducing a criminal sanction
for reckless misconduct that leads to bank failure

giving the government power to ensure that banks are more able to absorb losses,

Parliamentary Commission on Banking Standards

The Parliamentary Commission on Banking Standards (PCBS), a joint parliamentary committee led by
Andrew Ryrie MP was appointed on 17 July 2012, to consider and report on:

Professional standards and culture of the UK banking sector, taking account of regulatory and
competition investigations into the LIBOR rate-setting process

Lessons to be learned about corporate governance, transparency and conflicts of interest, and
their implications for regulation and for government policy

To make recommendations for legislative and other action

Independent Commission on Banking

We set up an Independent Commission on Banking in June 2010, chaired by Sir John Vickers. The
commissions role was to review and make recommendations on the structure of the banking system
and on how we could reform it to increase competition and maintain financial stability.
QUESTION#4
Market Share of IBs against CBs
Market share of COMMERCIAL BANKS

The following graph shows the market capitalization of listed banking systems. In US $ billion.
900
800
700
600
500
400
Series1
300
200
100
portufal

ireland

germaney

poland

itlay

turkey

africa

malaysia

singp

russia

switzlnd

spain

uk

india

brazil

japan

cabada

australia

usa

china

Market share of investment banks

The following graph shows the market share of investment banks world wide

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9
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5
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3
2
1
0

Series1

QUESTION#5
Leading Investment Banks of US & Europe

1 - Goldman Sachs

2 - Morgan Stanley

3 - JPMorgan Chase

4 - Bank of America Merrill Lynch

5 - Deutsche Bank

6 - Citigroup

6 - Credit Suisse

8 - Barclays Capital

9 - UBS

10 - HSBC

11 - Nomura Holdings

12 - RBC Capital Markets

13 - BNP Paribas

14 - The Royal Bank of Scotland Group

15 - TD Securities

16 - Wells Fargo

17 - Lazard

18 - Jefferies Group

19 - Socit Gnrale

20 - BMO Capital Markets