Strategic

Analysis on Investment
Banking

Submitted in partial fulfilment of the requirements for the award if

Degree of BBM (Professional)

Summer Internship Project Report

By
Ashley Geo Thodukayil
Reg No. 132603009
(October, 2015)

Under the Guidance of

Mr. Adithya Shetty
Assistant Professor

Department of Commerce,

Manipal University, Manipal-576104

Acknowledgment
Project is a milestone in every students life. I hereby take
privilege to acknowledge management for providing an
opportunity to study in their esteemed institution.
I wish to place on report my grateful thanks to Mr. Sandeep
Shenoy, HOD, Department of Commerce, BBM, Manipal
University, for providing me with continuous encouragement and
support.
I express my sincere thanks to Mrs. E Geetha, Assitant
Professor & Project Co-ordinator, for her motivating support.
I would also like to express my sincere thanks to my project
guide Mr. Adithya Shetty, for his suggestions and co-operation.
Finally, I would like to thank all teaching and non-teaching
staff of department of commerce BBM, Manipal University,
friends, parents and those who either directly or indirectly helped
me by providing useful suggestions which gave me new ideas.

Declaration
I, Ashley Geo Thodukayil (132603009), Department of Commerce,
Manipal University, declare that the Project Report entitled
Strategic Analysis on Investment Banking, being
submitted to the Department of Commerce, Manipal University, in
partial fulfillment of the requirements for the award of degree o
BBM (Professional), is my original work and the same is/was not
earlier submitted to any other Degree, Diploma, Fellowship or any
other similar title or prizes.

Signature:

Index
1

Executive Summary

Objectives

Research Methodology

4
5

Data Collection
Introduction

Definition

Registration of Investment Banks

Registration Charges

Code of Conduct

10

Offering & Services of Investment Banks

11

Functions of IB

12

Organization Structure

13

Skills Suggested for Investment Bankers

14

Evolution of Investment Banking in India

15

SWOT Analysis

16

Top Ten Investment Banks

17

Conclusion

Executive Summary
The project on Strategic Analysis of Investment Banking has
been undertaken with a view to study the overall investment

banking industries in India and their products offering, services ,

operations , client management systems and other part of the
industry.
In the above study, I have highlighted the key regulatory
parameters regarding Investment banks like Definition of
Investment Banks, Registration of Investment Banks, Code of
Conducts for Investment Banks, Registration Charges & Function
of Investment Banks.

Objectives
The main objectives of the project are to:

Study the overall view of the Indian Investment Banks.

Study the Regulatory Requirement for Registration of

Investment Banks.

To analyze the strengths and weakness of investment

banks

Research Methodology

The research methodology used for the project report is

descriptive and research is based on secondary data sources. This
include Top Ten Investment Banks. As far as other information is
concerned I had personally visited various websites including SEBI
and RBI.

Data Collection
The objective of this exercise is to get the overview of the
Investment Banking Structures in India. I have collected the data
from following data sources.
Data related to Registration, Functions, Code of Conducts of
Investment Banks taken from the SEBI Website and Investment
Banking book of R Machiraju.

Introduction
Investment banks play a significant role in the financial services
sector. However, Investment banking, as advisory financial
services, emerged rather late. Formal Investment banking service
in India originated with the setting up of the Investment banking

division by the Grind lays Bank in 1969 for undertaking

management of public issue and financial consultancy, followed
by other foreign banks.
Pursuant to the recommendations of the Banking Commission
(1972), State Bank of India started Investment banking service in
1973. The ICICI Ltd was the first development finance institution
to initiate such service in 1974. The period following the midseventies witnessed a boom in the growth of Investment banking
organizations in the country which were sponsored by banks,
financial institutions, NBFCs Brokers and so on. This led to
diversification into the scope of these activities such as loan
syndication, portfolio management, corporate counseling, project
counseling, debenture trusteeship, mergers, Amalgamations &
takeovers and so on.
Investment banking is a particular form of banking which finances
capital requirements of an enterprise. Investment banking assists
as it performs IPOs, private placement and bond offerings, acts as
broker and carries through mergers and acquisitions.

But the scope of such services was neither defined nor was a set
of rules and regulations governing them in place. The formation of
SEBI in 1992 was a landmark in the evolution of Investment
banking as a professional service in the country. Investment
banking organizations have to be mandatorily registered with
SEBI. While Investment bankers are currently providing a variety
of services, registration with SEBI is required for (i) Capital issues
related activities : both pre-issued and post-issue, (ii) mergers and
acquisitions, and (iii) Portfolio Management.

Definition
An Investment banker is any who is engaged in the business of
issue management either by making arrangements regarding
selling, buying or subscribing to securities or acting as
manager/consultant / advisors or rendering corporate advisory
service in relation to such issue management.

Registration of Investment Bank

Compulsory Registration:
Investment bankers require compulsory registration with
the SEBI to carry out their activities. They fall under four
Registration categories
Category I Investment bankers can carry on any
activity related to issue management, that is , the
preparation of prospectus and other information relating
to the issue, determining the financial structure, tie up of
financiers, final allotment of securities, refund of the
subscription and also act as advisors, consultants,
managers, underwriters or portfolio Managers.
Category II Investment bankers can act as advisors,
consultants , co-managers, underwriters and portfolio
Mangers.
Category III Investment bankers can act as
underwriters, advisors and consultants to an issue.

Category IV Investment bankers can act only as

adviser or consultant to an issue.
Thus, only category I Investment bankers could act as
lead managers to an issue. With effect from December 9,
1997, however, only Category I Investment bankers are
registered by the SEBI. To carry on activities as portfolio
managers, they have to obtain separate certificate of
registration from the SEBI.
Net worth requirement for Registration is as follow:
Category I : Rs. 5,00,00,000
Category II : Rs. 50, 00, 000
Category III :Rs. 20, 00, 000
Category IV : Nil

Registration Charges

An Investment banker has to pay to the SEBI

1.

Application fee of Rs.25,000;

2.

Registration , Rs. 10 Lakhs and

3.

Renewal fee of Rs. 5 lakhs every three years from the fourth
year from the

date of initial registration.

Code of Conduct
1.

Make all efforts to protect the interest of investors.

2.

Maintain high standards of integrity, dignity and fairness in

the conduct of its business.

3.

Fulfill its obligations in a prompt, ethical and professional

manner.

4.

At all times exercise due diligence, ensure proper care and

exercise independent professional judgments

5.

Endeavour to ensure that (a) inquiries from investors are

adequately dealt with; (b) grievances of investors are
redressed in a timely and appropriate manner ;(c) where a
complaint is not remedied promptly, the investor is advised

of any further steps which may be available to him under the

regulatory system.
6.

Ensure that adequate disclosures are made to the investors

in a timely manner in accordance with the applicable
regulations and guidelines so as to enable them to make a
balanced and informed decision.

7.

Endeavour to ensure that the investors are provide with true

and adequate information without making any misleading or
exaggerated claims or any misrepresentation and are made
aware of the attendant risk before taking any investment
decision.

8.

Endeavour to ensure that copies of the prospectus, offer

document, letter of offer or any other related literature is
made available to the investors at the time of issue or the
offer.

9.

Not discriminate amongst its clients, save and except on

ethical and commercial considerations.

10. Not make any statement, either oral or written, which would
misrepresent the services that the Investment banker is

capable of performing for any client or has rendered to any

client.
11. Avoid conflict of interest and make adequate disclosure of its
interest.
12. Put in place a mechanism to resolve any conflict of interest
situation that may arise in the conduct of its business or
where any conflict of interest arises, should take reasonable
steps to resolve the same in an equitable manner.
13. Make appropriate disclosure to the client of its possible
source or potential areas of conflict of duties and interest
while acting as Investment banker which would impair its
ability to render fair, objective and unbiased services.
14. Always endeavor to render the best possible advice to the
clients having regards to their needs.
15. Not divulge to anybody either or in writing, directly or
indirectly , any confidential information about its clients
which has come to its knowledge, without taking prior
permission of its clients, except where such disclosures are
required to be made in compliance with any law for the time
being in force

16. Ensure that any change in registration status / any penal

action taken by the SEBI or any material change in the
Investment bankers financial status, which may adversely
affect the interests of clients / investors, is promptly
informed

to

the

clients

and

any

business

remaining

outstanding is transferred to another registered intermediary

in accordance with any instructions of the affected clients.
17. Not indulge in any unfair competition, such as weaning away
the clients on assurance of higher premium or advantageous
offer price or which is likely to harm the interests of other
Investment bankers or investors or is likely to place such
other Investment bankers in a disadvantageous position
which competing for or executing any assignment.
18. Maintain arms length relationship between its Investment
banking activity and any other activity.
19. Have

internal

control

procedures

and

financial

and

operational capabilities which can be reasonably expected to

protect its operations, its clients, investors and other
registered entities from financial loss arising from theft,

fraud, and other dishonest acts, professional misconduct or

omissions.
20. Not make untrue statement or suppress any material fact in
any documents, reports or information furnished to the SEBI.
21. Maintain an appropriate level of knowledge and competence
and abide by the provisions of the SEBI Act / regulations /
circulars and guidelines, which may be applicable and
relevant to the activities carried on by it.
22. Ensure that the SEBI is promptly informed about any action,
legal proceedings, etc, initiated against it in respect of
material breach or non-compliance by it, of any law , rules,
regulations , directions of the SEBI or of any other regulatory
body.
23. (a) Not render, directly or indirectly, any investment advice
about any security in any publicly accessible media, whether
real-time or non real-time , unless a disclosure of his interest
including a long or short position, in the security has been
made, while rendering such advice; (b) In the event of an
employee of the Investment banker rendering such advice,
the Investment banker should ensure that such employee

should also disclose the interests, if any, of himself , his

dependent family members and the employer Investment
banker, including their long or short position in the security ,
while rendering such advice.
24. Demarcate the responsibilities of the various intermediaries
appointed by it clearly so as to avoid any conflict or
confusion in their job description.
25. Provide adequate freedom and powers of its compliance
officer for the effective discharge of his duties.
26. Develop its own internal code of conduct its internal
operations and laying down its standards of appropriate
conduct for its employee and officers in carrying out their
duties. Such a code may extend to the maintenance of
professional

excellence

and

standards,

integrity,

confidentiality, objectivity, avoidance or resolution of conflict

of interest, disclosure of shareholding and interest etc.
27. Ensure

that

good

corporate

governance are in place.

policies

and

corporate

28. Ensure that any person it employees or appoints to conduct

business is fit and proper and otherwise qualified to act in
the capacity so employed or appointed.
29. Ensure that it has adequate resources to supervise diligently
and

does

supervise

diligently

persons

employed

or

appointed by it in the conduct of its business, in respect of

dealings in securities market.
30. That the senior management, particularly decision makers
have access to all relevant information about the business
on a timely basis.
31. Not be a party to or instrument for (a) creation of false
market ;(b) price rigging or manipulation or; (c) passing of
unpublished

price

sensitive

information

in

respect

of

securities which are listed and proposed to be listed in any

stock exchange to any person or intermediary in the
securities market.
Offering & Services of Investment Banks
Project Counseling:
Project counseling includes preparation of project reports,
deciding upon the financing pattern to finance the cost of the

project and appraising the project report with the financial

institutions or banks. It also includes filling up of application forms
` relevant information for obtaining funds from financial
institutions and obtaining government approval.
Issue Management:
Management of issue involves marketing of corporate securities
viz. equity shares, preference shares and debentures or bonds by
offering them to public. Investment banks act as an intermediary
whose main job is to transfer capital from those who own it to
those who need it. After taking action as per SEBI guidelines, the
Investment banker arranges a meeting with company
representatives and advertising agents to finalize arrangements
relating to date of opening and closing of issue, registration of
prospectus, launching publicity campaign and fixing date of board
meeting to approve and sign prospectus and pass the necessary
resolutions. Pricing of issues is done by the companies in
consultant with the Investment bankers.
Underwriting of Public Issue:
Underwriting is a guarantee given by the underwriter that in the
event of under subscription, the amount underwritten would be

subscribed by him. Banks/Investment banking subsidiaries cannot

underwrite more than 15% of any issue.
Managers, Consultants or Advisers to the Issue:
The managers to the issue assist in the drafting of prospectus,
application forms and completion of formalities under the
Companies Act, appointment of Registrar for dealing with share
applications and transfer and listing of shares of the company on
the stock exchange. Companies can appoint one or more
agencies as managers to the issue.
Portfolio Management:
Portfolio refers to investment in different kinds of securities such
as shares, debentures or bonds issued by different companies and
government securities. Portfolio management refers to
maintaining proper combinations of securities in a manner that
they give maximum return with minimum risk.
Advisory Service Relating to Mergers and Takeovers:
A merger is a combination of two companies into a single
company where one survives and other loses its corporate
existence. A takeover is the purchase by one company acquiring
controlling interest in the share capital of another existing

company. Investment bankers are the middlemen in setting

negotiation between the two companies.
Off Shore Finance:
The Investment bankers help their clients in the following areas
involving foreign currency.
(a) Long term foreign currency loans
(b) Joint Ventures abroad
(c) Financing exports and imports
(d) Foreign collaboration arrangements
Non-resident Investment:
The services of Investment banker includes investment advisory
services to NRI in terms of identification of investment
opportunities, selection of securities, investment management,
and operational services like purchase and sale of securities.
Loan Syndication:
Loan syndication refers to assistance rendered by Investment
bankers to get mainly term loans for projects. Such loans may be
obtained from a single development finance institution or a
syndicate or consortium. Investment bankers help corporate
clients to raise syndicated loans from banks or financial

institutions.
Corporate Counseling:
Corporate counseling covers the entire field of Investment
banking activities viz. project counseling, capital restructuring,
public issue management, loan syndication, working capital, fixed
deposit, lease financing acceptance credit, etc.

Organizational Structure
Front Office
-

Investment Banking
Sales & Trading
Research
Custodian
Investment Mgmt

Main activities and units

Middle Office
- Risk
- Finance
- Compliance

Back Office
- Operations
- Technology

An investment bank is split into the so-called front office, middle

office, and back office. Investment banks offer security to both
corporations issuing securities and investors buying securities. In
the case of corporations, investment bankers offer information on
when and how to place their securities in the market. The
corporations do not have to spend on resources with which it is
not equipped. To the investor, the responsible investment banker
offers protection against unsafe securities. The offering of a few
bad issues can cause serious loss to its reputation, and hence loss
of business. Therefore, investment bankers play a very important
role in issuing new security offerings
Front office
Investment banking is the traditional aspect of the investment
banks which also involves helping customers raise funds in the
capital

markets

and

advise

on

mergers

and

acquisitions.

Investment banking may involve subscribing investors to a

security issuance, coordinating with bidders, or negotiating with a
merger target. Another term for the investment banking division
is corporate finance, and its advisory group is often termed
mergers and acquisitions (M&A). The investment banking division

(IBD) is generally divided into industry coverage and product

coverage groups. Industry coverage groups focus on a specific
industry such as healthcare, industrials, or technology, and
maintain relationships with corporations within the industry to
bring in business for a bank. Product coverage groups focus on
financial products, such as mergers and acquisitions, leveraged
finance, equity, and high-grade debt and generally work and
collaborate with industry groups in the more intricate and
specialized needs of a client.
Sales and trading: On behalf of the bank and its clients, the
primary function of a large investment bank is buying and selling
products. In market making, traders will buy and sell financial
products with the goal of making an incremental amount of
money on each trade. Sales is the term for the investment banks
sales force, whose primary job is to call on institutional and highnet-worth investors to suggest trading ideas (on caveat emptor
basis) and take orders. Sales desks then communicate their
clients' orders to the appropriate trading desks, who can price and
execute trades, or structure new products that fit a specific need.
Structuring has been a relatively recent activity as derivatives

have come into play, with highly technical and numerate

employees working on creating complex structured products
which typically offer much greater margins and returns than
underlying cash securities. Strategists advise external as well as
internal clients on the strategies that can be adopted in various
markets.

Ranging

from

derivatives

to

specific

industries,

strategists place companies and industries in a quantitative

framework with full consideration of the macroeconomic scene.
This strategy often affects the way the firm will operate in the
market, the direction it would like to take in terms of its
proprietary and flow positions, the suggestions salespersons give
to clients, as well as the way structures create new products.
Banks also undertake risk through proprietary trading, done by a
special set of traders who do not interface with clients and
through "principal risk", risk undertaken by a trader after he buys
or sells a product to a client and does not hedge his total
exposure. Banks seek to maximize profitability for a given amount
of risk on their balance sheet. The necessity for numerical ability
in sales and trading has created jobs for physics and math P.H.D.s
who act as quantitative analysts.

 Research is the division which reviews companies and writes

reports about their prospects, often with "buy" or "sell" ratings.
While the research division generates no revenue, its resources
are used to assist traders in trading, the sales force in suggesting
ideas to customers, and investment bankers by covering their
clients. There is a potential conflict of interest between the
investment bank and its analysis in that published analysis can
affect the profits of the bank. Therefore in recent years the
relationship between investment banking and research has
become highly regulated requiring a Chinese wall between public
and private functions.
Custody and agency services: is the division which provides
cash management, lending, and securities brokerage services to
institutions. Prime brokerage with hedge funds has been an
especially profitable business, as well as risky, as seen in the "run
on the bank" with Bear Stearns in 2008.
Investment management is the professional management of
various securities (shares, bonds, etc.) and other assets (e.g. real
estate), to meet specified investment goals for the benefit of the
investors. Investors may be institutions (insurance companies,
pension funds, corporations etc.) or private investors (both

directly via investment contracts and more commonly via

collective investment schemes eg. mutual funds). The investment
management division of an investment bank is generally divided
into separate groups, often known as Private Wealth Management
and Private Client Services.

Middle office
Risk management involves analyzing the market and credit risk
that traders are taking onto the balance sheet in conducting their
daily trades, and setting limits on the amount of capital that they
are able to trade in order to prevent 'bad' trades having a
detrimental effect to a desk overall. Another key Middle Office role
is to ensure that the above mentioned economic risks are
captured accurately (as per agreement of commercial terms with
the counterparty), correctly (as per standardized booking models
in the most appropriate systems) and on time (typically within 30
minutes of trade execution). In recent years the risk of errors has
become known as "operational risk" and the assurance Middle
Offices provide now includes measures to address this risk. When

this assurance is not in place, market and credit risk analysis can
be unreliable and open to deliberate manipulation.
Finance areas are responsible for an investment bank's capital
management and risk monitoring. By tracking and analyzing the
capital flows of the firm, the Finance division is the principal
adviser to senior management on essential areas such as
controlling the firm's global risk exposure and the profitability and
structure of the firm's various businesses. In the United States
and United Kingdom, a Financial Controller is a senior position,
often reporting to the Chief Financial Officer. Corporate strategy
often falls under the finance division as well.
Compliance areas are responsible for an investment bank's daily
operations' compliance with government regulations and internal
regulations. Often also considered a back-office division.
Back office
Operations

involve

data-checking

trades

that

have

been

conducted, ensuring that they are not erroneous, and transacting

the required transfers. While some believe that operations
provides the greatest job security and the bleakest career
prospects of any division within an investment bank, many banks
have outsourced operations. It is, however, a critical part of the

bank. Due to increased competition in finance related careers,

college degrees are now mandatory at most Tier 1 investment
banks. A finance degree has proved significant in understanding
the depth of the deals and transactions that occur across all the
divisions of the bank.
Technology refers to the information technology department.
Every major investment bank has considerable amounts of inhouse software, created by the technology team, who are also
responsible for technical support. Technology has changed
considerably in the last few years as more sales and trading desks
are using electronic trading. Some trades are initiated by complex
algorithms for hedging purpose.

Skills Suggested for Investment Bankers

campus recruitments
jobs, an MBA is a must. Investment banks rely heavily on
right academic credentials. Typically, for most of the important
investment banks find it important to recruit people with the
and the skill requirements have multiplied. Consequently,
background. Today, the business has become very complicated
banking, not much importance was attached to academic
Academic Background: In the early days of investment
Technical Skill
Marketing Skills
Inter-Personal Skills
Networking Skills

Ability to Cater to the Audience According to its

Awareness Levels Negotiation Skills
Personality Traits

Other Skills
Communicat
ion Skills

Academic Background
Conceptual Soundness
Product Specialization
Legal Knowledge
Knowledge of Capital Markets and Functioning
Knowledge of Regulatory Bodies involved in the Various
Operations
Knowledge of International Business Scenario and
Economic Trends
Knowledge of Software Tools, Developments in the Field
of Information Technology

Technical Skill

 Conceptual Soundness: One of the major benefits for a

professional in an investment bank is the learning associated
with work. The financial skills of an expert are tested to the
core while handling a complicated deal. Comprehensive and indepth knowledge of financial and business concepts are
essential to sustain business. Multiple relationships between
various

factors

render

decision-making

difficult.

Financial

solutions can be provided to the clients only when the advisor

is competent to understand all or at least a majority of them.
Before practical solutions emerge, the tools for decision-making
will give greater choice to the solution provider. A strong
grounding in theory and concepts facilitates this.

Product Specialization: One way to specialize in an

investment bank is through products. An expert in a particular
product, say hybrid instruments, can work out financial
solutions for any client across the industries. Each client has his
or her individual risk taking ability. To cater to the client on an
in basis, appropriate products that would suit their risk profile
should be identified. The clients will also feel at home while
dealing with a product specialist.

 Legal Knowledge: While clear cut guidelines can be issued to

the traders regarding their market related activities that are
governed by the law, the complexity multiplies for an M&A
deal. The regulators guidelines have to be strictly followed,
even while envisaging a combination. Legal knowledge is also
important for structuring such deals, which will help identify the
constraints associated with proposed solution. The situation
gets more intense when the deal is a cross-border M&A
proposal. Apart from the knowledge of the inland laws, foreign
laws also have to be considered. Any regulation by the foreign
government can make an otherwise desirable deal, unviable.
Knowledge of Capital Markets and Functioning: More than
any other industry, it is the investment banking industry that
has a direct bearing on the way capital markets function. Any
changes in the capital market regulations affect the brokerage
side of the business, along with the trade clearing and
settlement houses. The trading personnel should be conversant
with the regulations, guidelines, procedural formalities and
actual trade execution processes involved in capital market.

E.g. Trading system involves a lot of additional skills than online

trading. He has to be conversant with the codes, symbols and
conventions followed by the market. Quick signaling and
accurate interpretation are of utmost significance. Any mistake
in these would lead to faulty execution of orders and might
entail additional costs to the firm in correcting the errors.
Knowledge of Regulatory Bodies involved in the Various
Operations: It is necessary for an investment banker to be
aware of all the regulatory bodies that govern the activities in
which he/she is involved. A thorough knowledge of all such
bodies is absolutely essential to perform extraordinarily. In
India, the SEBI & central bank acts as a watchdog and regulator
of market related activities.
Knowledge

of

International

Business

Scenario

and

Economic Trends:Though a researcher is primarily involved in

economic and business cycle studies, it is the duty of all the
investment bankers to have a general overview of these affairs.
Salespersons, who also act as financial consultants/advisors,
should essentially be aware with economic and business cycles,
lest they lose the respect and trust of the client. The

requirement for global perspective and international exposure

is becoming increasingly important. The firm should offer
services across the national borders to the corporate clients
and informed services are possible only when the employee is
well-equipped with international business information.

Knowledge of Software Tools, Developments in the Field

of Information Technology: One of the most important
technical skills is the usage of computers, tools and internet
technologies.

Marketing,

brokerage,

research

and

capital

mobilization have all undergone sweeping changes owing to

technology.
The

securities

trader

has

changed

into

tech-savvy

professional, executing online orders & maintaining databases.

The technology helps management and other departmental
professionals and even the clients to disseminate such data in
negligible time. Asset managers have now complicated tools
for scientific and in-depth valuation of portfolios. Comp

frameworks

can

be

solved

with

minimum

effort

using

technology.

Communication Skills
Ability

to

Cater

to

the

Audience

According

to

its

Awareness Levels: Communication skills include both the

means of communication written and oral. However, the
audiences

vary

extensively,

and

hence,

the

requisite

communication skills also differ widely. A marketer handling

individual investors will necessarily have to keep the content
very simple and express t in laymans terms. Usage of financial
terms & jargons will not fetch results. Cash flows, the
characteristics of the instruments & the risk class to which the
investment belongs to must be explained in simple & easily
understandable terms.
Negotiation Skills- Negotiation skills is important at a variety
of places. Institutional clients have to be convinced about the
prospects of the investments that are solicited by the firm.
Investors in syndicated debt must be satisfied with the

payment streams and interest rate terms. M&A transactions are

the toughest assignments for negotiations. Even a friendly
transaction would be difficult if not for patient and mutually
negotiations. The common issues that pertain to negotiation
are terms of offer, offer price, post merger integration,
organization and reporting structure, business lines to be
developed above all dealing with the overlapping functions.
While negotiating, the banker should always keep the prime
object in the mind & quickly evaluate the various counter offers
& suggestions made by other party.

Personality Traits- Personality Traits plays an important role

in developing the skill set of an investment banker. Creativity is
an

important

feature.

It

comes

in

use

while

handling

prospectus, clients & team members. It is essential when

solutions are to be identified for complex problem. Innovations
& creativity are required structure deals.

Other Skills

Marketing Skills-

The marketing skills would be an

application of skills mentioned above. One of the important

marketing skill would be relationship management. Unlike most
other industries where relationship plays a facilitating role in
conducting business, it is fundamental issue in the investment
banking industry. An attitude for creating, establishing &
maintaining relationships, during boom & down period, is of
utmost importance in getting mandates.
Inter-Personal

Skills-Inter-personal

skills

are

basically

blended from communication skills, and personality traits. They

include interactions with superiors, subordinates, colleagues,
clients, competitors, team members and even politicians and
public office bearers. Inter-personal skills come to the fore
during team exercises where diplomacy and manners become
essential. Team exercises can also include dealing with
members from other departments or even with other firms.
Such situations call for greater application of team skills and an
element of mutual respect towards each other.

 Networking Skills- Networking refers to the process of

developing a web of contacts and acquaintances. Some of the
special attributes required to develop networking abilities
would include:
Knowledge of human psychology;

Presence of mind to apply the appropriate skills as situation

demands;

Approaching

through

proper

channels

that

would

lend

credibility respectability to contacts;

Persuasion skills;
Highest standards of professionalism.

Evolution of Investment banking in India

The origin of investment banking in India can be traced back to
the 19th century when European merchant banks set-up their
agency houses in the country to assist in the setting of new
projects. In the early 20th century, large business houses followed
suit by establishing managing agencies which acted as issue

house for securities, promoters for new projects and also provided
finance to Greenfield ventures. The peculiar feature of these
agencies was that their services were restricted only to the
companies of the group to which they belonged. A few small
brokers also started rendering Merchant banking services, but
theirs was limited due to their small capital base.
In 1967, ANZ Grindlays bank set - up a separate merchant
banking division to handle new capital issues. It was soon
followed by Citibank, which started rendering these services. The
foreign banks monopolized merchant banking services in the
country. The banking committee, in its report in 1972, took note
of this with concern and recommended setting up of merchant
banking institutions by commercial banks and financial intuitions.
State bank of India ventured into this business by starting a
merchant banking bureau in 1972. In 1972, ICICI became the first
financial institution to offer merchant banking services. JM finance
was set-up by Mr. Nimesh Kampani as an exclusive merchant
bank in 1973. The growth of the industry was very slow during
this period. By 1980, the number of merchant banks rose to 33
and was set-up by commercial banks, financial institutions and

private sector. The capital market witnessed some buoyancy in

the late eighties. The advent of economic reforms in 1991
resulted in sudden spurt in both the primary and secondary
market. Several new players entered into the field. The securities
scam in May, 1992 was a major setback to the industry. Several
leading merchant bankers, both in public and private sector were
found to be involved in various irregularities. Some of the
prominent public sector players involved in the scam were Can
bank financial services, SBI capital markets, Andhra bank financial
services, etc. leading private sector players involved in the scam
included Fairgrowth financial services and Champaklal
investments and finance (CIFCO).
The market turned bullish again in the end of 1993 after the
tainted shares problem was substantially resolved. There was a
phenomenal surge of activity in the primary market. The
registration norms with the SEBI were quite liberal. The low entry
barriers coupled with lucrative opportunities lured many new
entrants into this industry. Most of the new entrants were
undercapitalized with little or no expertise in merchant banking.
These players could hardly afford to be discerning and started

offering their services to all and sundry clients. The market was
soon flooded with poor quality paper issued by companies of
dubious credentials. The huge losses suffered by investors in
these securities resulted in total loss of confidence in the market.
Most of the subsequent issues started failing and companies
started deferring their plans to access primary markets. Lack of
business resulted in a major shake out in the industry. Most of the
small firms exited from the business. Many foreign investment
banks started entering Indian markets. These firms had a huge
capital base, global distribution capacity and expertise. However,
they were new to Indian markets and lacked local penetration.
Many of the top rung Indian merchant banks, who had string
domestic base, started entering into joint ventures with the
foreign banks. This energy resulted in synergies as their individual
strength complemented each other.

SWOT ANALYSIS
Strengths:
a) Breadth of Financial Services Offerings: investment
banking provides various types of services such as trading,

private equity, venture capital, M&A, joint venture, and project

finance etc.
b) Proficient Employees: the major strength of any sector is its
employees. In investment banking all the workings are done by
professionals because it requires deft and proficient personnel.
c)Technological Advancement: Due to technical advancement,
working efficiency has been increased and works are done quickly
and easily.
d) Advance Infrastructure: The country is equipped with all the
latest and advances amenities such as better telecommunication,
transportation, potable water, internet, land etc.

Weaknesses:
a) Unawareness of Investors: the major weakness is the
unawareness of its services among investors, due to which after
40 years of odyssey it could not reach to the level where It should
have been.

b) Excessive Dependence on Trading Sectors: As per the

data collected by the team and experiences shared by Sr.
managers, it is quite apparent that investors are more dependent
on the trading sector for their investments rather than any other
field.

Opportunities:
a) Growing demand for Investment Banking: The knowledge
of investment banking is increasing among investors and they are
diversifying their investment into many sectors besides trading. It
can be seen by looking at the number of mergers and
acquisitions, various projects in the countries and the level of
Sensex in the country.
b) Removal of International Trade Barrier: 1991 reform policy
and recent amendments in international trade have widened the
area and scope of investment banking in India.
c) Financially Attractive Country: India is a financially
attractive country. Recent experience of Recession shows that,

India is among the few countries (China, Brazil and India) that not
only survived in this difficult era but shows the path to developed
countries to overcome this calamity.

Threats:
a) Increasing competition: competition in investment banking
is increasing day by day. New players are foraying to the market
due to this market share of each existing company is getting
affected and profit as well.
b) Decentralized management: each branch manager in a
company is given the authority of taking decisions in their
respective branches. The decisions made by different managers
are diverse and any wrong decision may lead to heavy losses to
the company.

TOP TEN INVESTMENT BANKS

According to the Financial Times, in terms of total advisory fees

for the whole of 2014, the top ten investment banks were.

Rank

Company

Fees ($m)

1.

J.P. Morgan & Co.

6,398.67

2.

Bank of America Merrill Lynch

5,693.77

3.

Goldman Sachs

5,556.45

4.

Morgan Stanley

5,310.17

5.

Citigroup

4,489.64

6.

Deutsche Bank

4,263.81

7.

Credit Suisse

3,768.46

8.

Barclays

3,706.22

9.

Wells Fargo

2,367.32

10.

UBS

2,219.69

The above list is just a ranking of the advisory arm (M&A

advisory, syndicated loans, equity capital markets
and debt capital markets) of each bank and does not include the

generally much larger portion of revenues from sales and

trading and asset management.

Conclusion