Financialtreat – will explain about What is an Investment Bank? Definition of Investment Bank and Stages of Career Prospects that you will get in the following article. let’s look at this article carefully!
Investment banking is a profession whose work is related to the field of corporate finance companies. A variety of tasks must be performed by this profession. Such as, mergers and acquisitions that will draw up a profitable deal on the part of the seller with the buyer. With salary investment banking you can do a job that is related to the company’s finances directly.
The investment banker is also in charge of carrying out arrangements on financial projects. Starting from collecting funds, issuing bonds for financing, managing all documentation and also looking for investors.
What is an Investment Bank? Definition of Investment Bank and Stages of Career Prospects
Actually, there are many other tasks whose responsibilities vary. In general, the task of investing banking in Indonesian salaries is the same, but it still adjusts the policies of each company. Regarding the career stages of an investment banker and also his job prospects, let’s look at the following description.
Benefits of Investment Banks
Investment banks can act as mediators between investors (Owners of capital) and companies that need capital for the development of their business. In general, investment banks are divided into two, namely for buying and selling.
In terms of sales, it usually refers to the sale of newly issued IPO (Initial public offering) shares, placing new bond cases, engaging in market-making services, or facilitating client transactions. At that time, the purchasing side served to organize pension funds, mutual funds, and hedge funds to maximize profits on trading or investing in securities such as stocks or bonds.
Three Types of Investment Bank Services
Many investment banks are divided into three categories of offices related to front office services, middle office, and also back office.
Front office investment services
The front office usually consists of investment banking that will help the company for activities such as:
- Mergers and acquisitions, the company’s finances such as issuing billions of dollars in commercial paper to help fund day-to-day operations
- Professional investment management for institutions or individuals with high net worth
- Merchant banking which is a fancy word for equity in which a bank puts money into a company that is not publicly traded in exchange for ownership
- Investment reports and capital market research are prepared by professional analysts either for residential usage news or for the use of a selective group of clients
- Formulation of tactics including parameters such as asset allocation and risk limits
Middle office investment services
Middle office investment services include compliance with government decisions and restrictions for professional clients such as banks, insurance companies, financial divisions, etc. The middle office is often recognized as a back office that helps oversee the entry and exit of money from the company to determine the amount of liquidity that needs to be maintained.
By the company so as not to experience financial problems. The team responsible for the flow of capital can use the news to limit trading by reducing the existing buy/trade energy for other divisions.
Back office investment services
The back office can be likened to nuts and bolts for investment banks. Because the back office tackles things like
Trade confirmation
- Ensure that the correct securities are sold, purchased, and also settled in the correct amount
- Provide software and technology systems that traders are too likely to carry out their work in a sophisticated and professional manner, create new algorithms, etc.
- Work in the back office is often acknowledged as one-sided, however, without them many things would not have gone on properly.
Investment Bank Activities
In general, investment banks will be seen in the following activities:
- Increase equity capital, such as helping to launch an IPO or creating a special class of prefen stocks that can be placed with sophisticated investors such as insurance companies or banks
- Increase debt capital such as issuing bonds to help raise money for factory expansion
- Insure bonds or launch new products
- Engage in certain trades where the in-house money manager team invests or trades the company’s own money for a personal account.
For example, investment banks believe gold will rise so they speculate in gold futures, grab call options at gold mining companies, or buy gold bars directly for storage in conducive vaults.
Guarantee Services at Investment Banks
Businesses need money to be able to operate and also grow their business. That’s why bankers help companies earn money by marketing the company to investors. The types of guarantees can be:
- Firm commitment – The underwriters (Capital raising and underwriting groups working between the investor and the company) agree to purchase all shares and bear full financial responsibility for each unsold share.
- Best effort – the underwriter commits to selling as many shares as possible at the agreed price but can return the unsold shares to the issuer without financial responsibility.
- All-Or-None – If the entire stock cannot be sold at the price as in the offer, then the deal can be cancelled and the issuing company receives nothing.
Career Stages of an Investment Banker Are Important to Know
Every profession has career stages, this not only affects the position of the position, but also the size of the investment banking salary and also the type of work given. According to a survey, the salary for a position in the Investment Banking sector is approximately Rp 392 million to Rp 735 million per year. The career stages of an investment banker include:
1. Analyst
The first stage is analysis, which takes approximately three to four years. At this stage, what you will do as a professional analyst is to do basic research and also manage client development reports.
2. Associate or Associate
The stage of an investment banker is finally a colleague or associate, which is the name for someone with an MBA (Master of Business Administration) degree. At this stage, the task switches to forming a personal network with the client. After that, the two can start to determine various aspects related to the business. Starting from value, real estate, bonds and others in order to create cash flow.
3. Vice President and Also Director
The next stage in the investment banking profession is the vice president and also the director. Being vice president is the gateway to a middle management position within the scope of an investment bank. This is because his experience is already more than the position below him. When becoming vice president, there needs to be an active role in efforts to find and also direct clients.
As for the position of investment director of bank Indonesia, the responsibilities and obligations are different. That is to add recommendations to the clients. Not only that, it anticipates when there is a change.
4. Board of Directors or Managing Director
The top stage of the investment banker is the director or managing director. This position has the main task of finding new clients, so that the quantity increases. Existing clients are well manage by the board of directors on an active basis. Another task is to generate a variety of new ideas for the sustainability of the client’s business. This is very important to implement to maintain the loyalty of the client.
Read more wealth management:
- What is a Mutual Fund? Types, How it Works, and Advantages
- Definition & Types of Investment, Benefits and Examples
Investment Banker Indonesia’s Current And Future Job Prospects
Capital Market
is not an easy thing. It must be fully prepare and it takes hard work. Especially if you have the main goal of getting a top position, as managing director.
There will be many competitors in a company, especially if the scale is a large category. Not only internal employee competition, but also external. This is what makes trying your best so important.
With regard to the job prospects of this investment banker profession are very promising. The burden of responsibility is quite high, but it is comparable to the salary receive. Even now, many companies have entruste funding issues to investment banking.
So, it is certain that from time to time there will be an increase in users which will make this position also increase the need for its workforce. It is not only his salary that is attractive, but also his career path.
For my Certification Buddy who wants to run a career in this field, you need to know the basic knowledge of sob. You can take part in investment banker certification training to get a certificate and develop your skills in this field.
This certificate can be use as proof that you are competent in the field. My certification has a new program, namely Investment Banker or CIB (Certified Investment Banking) Certification training at affordable prices and providing additional quality assurance.
Thus the review of this article that discusses salary investment banking, hopefully the explanation above will be an additional reference for you and thank you.