Becoming an investment banker is one of the most prestigious career paths you can pursue. But few people realize thereโs a diverse array of roles within investment bankingโeach markedly distinct from the others yet equally exciting and demanding.
If hired by an investment bank's Capital Markets division, you'll assist companies in raising funds through equity or debt financing. This is why within the Capital Markets division of an investment bank we have ECM (Equity Capital Markets) and DCM (standing for Debt Capital Markets). An ECM banker assists companies in โgoing publicโ by offering their equity to a wide range of institutional and retail investors and listing it on public stock exchanges for the first time. A banker on the debt capital markets team assists companies seeking to raise debt financing. Issuing bonds for large loans often proves more cost-effective than relying solely on bank financing.
Next, we have the Advisory side of the investment banking business. Bankers in this area tend to consult firms on M&A or Restructuring. M&A dealsโoften headline-makingโrequire investment bankers to purchase and sell companies. In these transactions, bankers are classified as either buy-side or sell-side.
Besides M&A, some investment bankers specialize in restructuring advisory. Companies need such services when they have significant financial performance issues, and bankers need to find a way to turn their business around.
Trading and brokerage involve purchasing and selling securities using an investment bankโs own money or on behalf of its client. The first type of trading is โproprietary trading,โ while the second is โbrokerage.โ Today, investment banks trade all kinds of financial instruments.
In addition to the traditional asset classes like equities and fixed income, they are active with instruments like derivatives. Trading and brokerage bankers thrive in rising markets but face challenges when markets decline. As you can see, the investment banker role is exciting and offers a steep learning curve.
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