What is the difference between the investment banking department of a commercial bank and the invest

I have been in charge of the investment banking department of a large branch of a joint-stock bank for almost two years, and I have a lot of feelings, so I would like to share it with you. Our investment banking department is positioned as a management department and a product department by its nature, which means that it is a cost center rather than a profit center. The basic business mainly includes traditional syndication and project financing, bond underwriting in the interbank market, acquisition financing and structured financing, and the innovative business is mainly transaction matching financial advisory, PE integrated services and quasi-direct investment (mezzanine), and green finance business.

In the current environment of separate supervision rather than license supervision, our licensed business only includes bonds, not including *** and the China Securities Regulatory Commission, and there is no license for IPO and M&A and restructuring of listed companies. In contrast to independent investment banks, there is a lack of trading and asset management, which are generally placed in the financial markets department. From the above aspects, we can see that the investment banking department of a commercial bank is actually quite narrow.

Although the licensed business such as bonds and traditional business such as the syndicate affirm that we are going all out, those unlicensed business we are also unwilling to give up, because generally we actually have a deeper and more comprehensive relationship with customers, and the single income is also large, we will generally strive to cooperate with the brokerage to complete, together to build a project team to serve customers, rather than simply selling customer resources, because the customer relationship must be maintained, and the team must also be trained. The same is true for M&A business, we often start from financing to the consulting link, of course, the listed companies must also cooperate with the brokerage, and the rest can be done by themselves, but the income is mainly reflected in the financing, in fact, not only China and other parts of the world customers are not willing to pay only for the program. I also looked at the income structure of the financing sector of U.S. investment banks, in fact, China and the United States are quite similar, most of the income of investment banks with the background of commercial banks such as Morgan is also partial debt and syndicated financing income, while most of Goldman Sachs and other companies are partial stocks and mergers and acquisitions.

The investment banking department of commercial banks focuses on bond underwriting, and before 06 years, the business of this department included: short-term financing bonds, medium-term notes, financial bonds, three loans and so on. The investment banking department of a commercial bank is generally under the corporate finance department, and the corporate finance department takes the lead in initiating projects.

After 06 years, the need for diversified business development of commercial banks, but also in order to get a piece of the pie from the primary market (after all, it is profitable), they gradually shifted the focus of investment banking business from bond underwriting to asset management. As a result, we began to set up a special holding company to obtain the corresponding license to do the investment banking business that we can understand in the sense now, such as: issuance, mergers and acquisitions, asset management, etc.

The investment banking department of the brokerage is a separate department, and its business scope includes: issuance, sponsorship and underwriting of listing, brokerage, investment consulting, financial advisory related to transactions and transactions, bond proprietary trading, asset management, investment, interbank market interest rate swap business, etc. <>

1.Differences in business direction. Brokerage investment banks are investment banks in the traditional understanding, and their main responsibilities include stock issuance, bond issuance, mergers and acquisitions, and capital markets.

The core service group is listed companies; Banks and investment banks cannot do work in the direction of stocks, such as IPOs, etc., but can only do business in the direction of bond issuance and debt-like business. The thinking point of banks as investment banks is debt, and mergers and acquisitions are also mergers and acquisitions loans.

Make a fixed increase. It is also a fixed increase priority.

There are also capital market oriented businesses including ** pledge (in the securities company responsible for the department is ** financial department). The profound reason for this difference lies in the genes of the bank itself, and the bank is an institution that makes loans, because the capital market plays an increasingly important role, and the bank customers have the most money and therefore participate in it in the form of loans.

2.Differences in funding and resources. 80% of the funds and customer resources are caged in the hands of banks, and banks do investment banking business, and the least worrying thing is the problem of customer resources, and although they are currently directly financing.

The proportion is rising, and companies in general are still quite dependent on bank loans.

As the largest comprehensive financial provider, banks have the advantage of capital to lend to enterprises, and provide various services to enterprises on a daily basis, and the stickiness of enterprises is the strongest. In contrast, the most worrying thing for brokerages is customers, and the first thing for the team leader is to block business.

3.Differences in assessment and operation. For example, security and banking are naturally different, and the former is essentially asset-based.

It has to be circulated and traded, so it needs to be marketized; The essence of banking is credit, the core is to look at the credit of the counterparty, and the core lies in independent risk judgment. Therefore, the brokerage company is an investment bank, and the operation is still more market-oriented, and the money is made if it is done well, and it has to be boiled if it is bad; To be an investment bank, a bank still has to rely on a set of approval mechanisms of project manager, branch investment bank, branch leader, and head office. In general, the investment bank in the brokerage company has done a good job, and it depends more on personal ability and ability to mobilize resources; In the bank, the investment bank has done a good job, and it is more important to mobilize internal resources to complete the project**, so the assessment of securities companies is relatively more market-oriented.

4.Differences in the direction of development. Whether it is a bank or a brokerage investment bank, the common thing is the capital market business of serving enterprises, but because of the difference in the nature of the business, in addition to the investment banking circle jumping around, the place of the brokerage has to be regarded as the business line, and the direction of the stock can go to the industry to do investment and board secretary.

It can also turn to the investment side of financial institutions; The direction of debt is still biased towards the financing side; Bank investment banks are more interested in the accumulation of resources and more inclined to the internal flow of the banking system.

The investment banking department of the bank is mainly engaged in investment and wealth management, and the main business of the investment banking department is financial intermediation in the capital market. The investment banking department is directly connected with the issuance of ** and bond companies, and is responsible for most of the preliminary work of IPO or bond issuance.

The Investment Banking Department is mainly responsible for organizing and completing the annual operating indicators of the bank's investment banking business, organizing and carrying out direct operation of target customers, target markets and major projects, and promoting the overall marketing of the investment bank's reputation and simple banking business.

Not exactly the same from bank to bank, but the main business responsibilities are as follows:

1. Bond underwriting business;

2. M&A financial advisory business, combined with the plan, comprehensively use various M&A financing tools such as bonds, wealth management, trust and leasing, and design the optimal M&A financing capital arrangement plan;

3. Asset-based products;

4. Research on the development of the private equity industry, the innovation trends of policies and regulations, and the research and development of innovative products, services and business models for equity financing;

5. Carry out medium and long-term loans, project financing business, PPP business, etc.

There are two differences between investment banks and banks: from the perspective of financing methods, investment banks carry out direct financing and focus on long-term financing; Commercial banks, on the other hand, carry out indirect financing and focus on short-term financing. From the perspective of basic business, the basic business of investment banks is underwriting, while the basic business of commercial banks is deposits and loans.

There is no precise definition of investment bank, but the general investment bank is mainly engaged in ** market business, does not operate traditional commercial banking business, and does not directly conduct business for individual residents. Underwriting, initial public offerings of venture companies, reissuance of enterprises, participation in mergers and acquisitions, etc., are common investment banking services.

Commercial banks are financial institutions for the purpose of making profits, that is, in addition to absorbing savings deposits, issuing commercial or consumer loans and related derivative businesses, commercial banks are not allowed to conduct any form of other financial business, such as public offerings, etc., that is, commercial banks are not allowed to enter the field of investment banking business.

But commercial banks can become investment banks that issue or sell bonds, etc., and charge a certain fee from them. In China, banks are divided into state-owned banks and commercial banks, and generally speaking, state-owned banks have large banking organizations, strong financial strength, and a wide range of businesses.