Investment Bank Loans

About investment bank loans

Investment banks assist corporations in raising funds (investment bank loans) in the public markets (both equity and debt), as well as provide strategic advisory services for mergers, acquisitions and other types of transactions. Over time, and especially the past decade, many investment banks have come to offer a wider range of services than just raising capital and advising large corporations.

Investment bank loans technically differ from Commercial Banks which serve to directly take deposits and make loans. In recent years, however, it has been increasingly common to see commercial banks and investment banks combined together, as banks have become more integrated. The Glass-Steagall Act was repealed by the Gramm-Leach-Bliley Act in 1999, in the United States, the Glass-Steagall Act prohibited banks from offering both commercial and investment services.

Role of Modern Investment Banks

The original purpose of investment banks was primarily raising capital and advising on mergers and acquisitions. As banking firms have diversified, investment banks have come to fill a variety of roles (list taken from the Swiss Banking Institute:

• Underwriting and distributing new security issues
• Offering brokerage services to public & institutional investors
• Providing financial advice to corporate clients, especially on security issues, M&A deals
• Providing financial security research to investors and corporate customers
• Market-Making in particular securities

Investment banks have also moved into foreign currency exchanges, private banking, and providing investment bank loans.

European Investment Bank

European Investment Bank - nonprofit bank created in 1958 by the six founding countries of the European Economic Community (now part of the European Union [EU]). The bank makes or guarantees loans - investment bank loans to EU members, principally for projects that will contribute to regional development within the union. Some loans are also made to nonmembers, including countries of the Mediterranean region and central and E Europe and, under the Lomé Convention and Cotonou Agreement, developing countries in Africa, the Caribbean, and the Pacific.

investment bank loans