Investment Banking - Commercial Banking

Money and banking are critical elements of any modern day economy. Investment banking concerns itself with all the areas related to raising capital for new and established ventures. Mortgage banking activities involve purchase and finance of real estate, either for commercial or personal use.

Investment banking encompasses investment and commercial banking products and services. Advisory services on corporate strategy and structure, risk management techniques, raising capital in equity and debt markets and all forms of cash securities and derivative instruments come within the scope of Investment banking. Investment bankers make important decisions relating to proprietary investing and trading activities.

The investment banking market generates about $150 billion a year in revenues and these accrue primarily from mutual funds, securities and sales of bonds. Underwriting corporate debt and facilitating mergers and acquisitions are important functions of any business banking or investment banking firm. Investment bankers specialize in raising capital for business firms that are needed for long-term growth. They guide a client into the commercial marketplace and aid in interacting with the investment community.

Alternative investment banking services extend to firms that are facing financial difficulties or those that are seeking to expand. Services of this nature would involve raising cash for expansion or sustenance, as the case may be. Investment bankers must constantly feel the pulse of the money market and keep themselves abreast of the general economic conditions in addition to the market environment on Wall Street. Underwriting for a company is an important function of a merchant banking agency. It spreads the risk of a stock issue.

It has been increasingly noticed that investment banks are facing a problem of maintaining their bottom line because of increasing costs and diminishing returns. The volume of mergers and acquisitions has drastically reduced and it has led to investment banking outsourcing functions such as research. Service providers specializing in investment banking operations provide the following support:

Business banking has been affected by the Internet Revolution. It provides instant access to critical information that helps in taking informed decisions. But on the flip side, online trading systems at low commissions have resulted in many lost jobs.

Business Banking

Small business banking is taking on an added dimension these days, with many self-employed proprietors such as realtors and consultants. But the first small banking tip that is of vital importance is that personal accounts and business accounts must be kept separate. There are special small business banking fees and features that take into consideration the characteristics that are typical to self-run firms. Many commercial banks have personalized small banking divisions to cater to their unique needs.

Mortgage Banking

Mortgage banking activities include providing solutions for commercial and residential lending. These would include activities ranging from licensing and securitization to foreclosure. Mortgage banking services include:

Mortgage banking solutions need to be customized to meet individual needs. Such mortgage banking solutions offer home buyers a wide spectrum of home financing options. These could include fixed and adjustable mortgage services for residence and commercial property. Construction loans with rate lock protect you against fluctuations in the interest rates. Bridge loans are another mortgage banking solution that offer short-term financial support until a longer term solution is arranged. Mortgage banking software helps maintain critical loan information and monitor the lending process.

Merchant Banking

Merchant banking goes back a long way, to late 17th and early 18th century Europe. This type of banking focuses on facilitating business processes and providing financial requirements for its developments. Capital assistance is an important facet of merchant banking. A merchant banker has to carefully weigh the costs of capital in terms of availability, payment terms and operating effectiveness vis-à-vis interest rates. He has to identify the risks involved before finalizing the capital disbursement process.

Merchant banking is part of the commercial banking sector. Issue management, loan syndication, lease financing and corporate advisory services relating to portfolio management services and public issues are offered by merchant bankers.

Commercial Banking

Commercial banks are involved in the business of extending banking services to individuals, small businesses as well as large corporate houses. Commercial banking services can range from the branch level to even international banking, trade credit as well as credit cards. Commercial banks provide commercial loans on different credit lines as well as extend letters of credit and revolving lines of credit. Mortgage banking services also come under the gamut of operations of the commercial banking sector. You can acquire real estate, renovate or seek to satisfy your refinance needs with the commercial bank. Asset based lending is another primary area of commercial banking. Capital lines of credit are offered with business assets as security, be it inventory or accounts receivable.

Money and Banking

Money is the medium of exchange and standard for deferred payments. With money playing such an important role in the economy, it is little doubt that money and banking form the fulcrum of the financial system of an economy.