If you are here, you must be curious on what an investment bank is and what it does. We will help you!
To start with, we should understand the National Financial System. It works based on different agents helping drive the national economy. Banks are intermediates for financial transactions, making it easier for the currency to circulate and giving room to services such as loans investments, financing, etc.
In this scenario, there are three types of banks: commercial, multiple, and investment ones. Investment banks started in the United States, after the 1929 crash. Aiming to protect account owners deposits, an act created for separating the banks defined categories of commercial and investment banks. In Brazil, the first investment banks were founded in the 1960s.
Now you might be asking "but what is an investment bank?"
What is an investment bank?
Investment banks, like any other bank, are institutions regulated by the Central Bank of Brazil (BCB). In addition, their activities are regulated by the Securities Commission (CVM), which sets standards and limits for investments in Brazil.
Resolution no. 2,624, of July 29, 1999, by the BCB defines investment banks as private financial institutions specialized in operations for temporary company interest, productive activity financing for supplying fixed and working capital, and third-party resource administration. They must be organized as incorporations and mandatorily include the expression "Investment Bank" in their corporate name.
And what does an investment bank do?
Investment banks make it possible to grant medium- and long-term credits to individuals and companies through the access to the capital market and carrying out structured transactions. In addition, they can offer other services such as financial assistance and third-party resource administration. Let s learn a little more on their functions and differences from traditional banks.
Investment Bank x Commercial Bank x Multiple Bank
What are the main differences between an investment bank and a traditional bank?
On the term "traditional bank", we can consider two definitions: commercial bank and multiple bank.
Commercial banks are financial institutions, either public or private, whose purpose is making it possible to raise resources for the short- or medium-term financing of trade companies, industries, service providers, individuals and enterprises in general. They offer services as resource raising through sight deposits (checking accounts), withdrawals, credit card, overdraft facility, in addition to bank charging, fee and public tax activities.
Multiple banks, as their name suggests, are banks offering multiple portfolios. One of such portfolios must be a commercial or investment one.
Investment banks, on the other hand, aim to promote investments, i.e., to grant medium- and long-term credit to individuals and companies, with highlights to the following services:
- financing productive activity for providing fixed and working capital;
- carrying out company interest operations;
- financially assisting individuals and companies;
- administering third-party resources;
- carrying out sales operations, by themselves or third parties, of negotiable instruments and securities;
- coordinating the issuance and distribution of negotiable instruments and securities;
- coordinating initial public offerings (IPO) and subscription of new shares of a company.
What is the best investment bank?
The best investment bank is the one meeting your needs, offering convenience and agility through online services, competitive market fees and financial assistance needed for you and your company to grow together and reach your goals.
Banco Master de Investimento, part of Grupo Master, is now born for rapidly and flexibly structuring tailored operations for raising resources in the national and international market.
Offering a complete structure, Banco Master de Investimento focuses on servicing customers in an integrated way and as per the highest quality standards. Learn more on the services offered.
Your success, our greatest achievement!