Investment Banks “Teaser” Industry Report

Industry Analysis

Investment Banks Q1 2012 Industry Overview

Raising capital by underwriting and acting on behalf of individuals, corporations, and governments in the issuance of securities is the main thrust of investment banks. They also assist companies involved in mergers and acquisitions (M&As) and provide ancillary services like market making, derivatives trading, fixed income instruments, foreign exchange, commodities, and equity securities. Investment banks bannered the 2008 global financial and economic crisis, with U.S. investment bank Bear Sterns saved by J.P. Morgan Chase. Later in the year, filed for bankruptcy due to liquidity, leverage, and losses, as Lynch narrowly escaped such a fate with its purchase by Bank of America. Lehman Brothers was the largest bankruptcy in history at the time, with liabilities of more than $600 billion. Such unprecedented events caused panic in world markets, sending bonds, equities, and other assets into a severe decline. survived with an investment from Japan-based Mitsubishi UFJ Financial Group, and Goldman Sachs took a major investment from Warren Buffet’s Berkshire Hathaway. All major financial players took large financial from the U.S. government. Post-Lehman Brothers, both American and British banks took a huge beating. In the U.K., hundreds of billions of pounds of public money was provided to support , Lloyds, and Royal Bank of (RBS). Upon the government’s pressure, Lloyds took over HBOS to create and after three years, taxpayers end 2011 nursing a loss on their stake of almost £40 billion ($62.4 billion). The crisis in the Eurozone and regulatory changes being implemented by the coalition have dented investors' appetite for bank shares. In all, £65 billion ($101.4 billion) of taxpayer funds were used to prop up the two banks, taking an 83 percent stake in RBS and just over 40 percent in Lloyds after being bailed out in October 2008. Investment banks Defined. To differentiate, investment banks do not take deposits, unlike commercial and retail banks, aligned with the separation between investment banks and commercial banks in the U.S. per the 1933 Glass- Steagall Act until the 1999 Gramm-Leach-Bliley Act. However, other industrialized*Full countries,report contains including insurance G8 -countries,focused research have historically not observed such a separation. including: critical analysis, statistics, and qualitative commentary, along with Advisen analytics such as Trading securities for cash or other securities or promoting securities is the “sellMSCAd side” Large of investment Losses & Insurance banks. ProgramDealing Pricing with pension funds, mutual funds, hedge funds, and the investing public is the “buy side” of investment banks. Many large institutions have both buy and sell side components. The sell side, however, is the*Click traditional here for investment full sample reportbanks side. Companies primarily engaged in the buy side are considered to be in a different industry. *Advisen subscribers have full access to the reports, please contact [email protected] for information

*Bulk rates are also available, please contact [email protected] for information

Page 1 of 20 To purchase the full version of this report please click here www.advisen.com