What we're gonna do now is look at how an investment bank works in a little bit more detail and look at the different divisions in an investment bank. Investment banks are really like financial dating agencies, so they've got two types of clients, investors and capital raisers. Capital raisers are helped by the bank's financial advisors in M&A or the investment banking department. They won't just work on mergers and acquisitions, but also divestitures, debt restructuring, capital structure, credit rating, and other types of financial transaction. The M&A floor is like a library to some extent, so people are hunched over their computers when they work on transactions which will typically take between three to six months. It's slow and methodical work where billions of dollars will typically ride on the decision. Many of the M&A type of activities such as acquisitions, debt restructuring, result in new financing being required. The capital markets divisions are typically split into debt capital markets for bond issuance and equity capital markets for stock issuance. The capital market floors are a bit more buzzy, they will have Bloomberg Terminals and probably CNBC playing on monitors with the sound down unless something dramatic is happening in the markets. Transactions are more frequent and will take anything from three months or more for an IPO to a day for refinancing. It's worth saying that a lot of debt capital market's work is refinancing, particularly for financial institutions. Once capital markets have structured and done the initial pricing for a security, they'll need a sales team to sell it for them. Between the sales and the capital markets divisions is what's commonly known as a Chinese wall. This is an information screen with prevent market-sensitive information from being leaked to the market. The sales team sit on the trading floor and manage the relationships with large investor clients. Sales jobs are increasingly being automated by the growth of electronic trading. Their key currency are ideas, so they will leverage the research department who provide reports on the markets, economics, and individual stocks and bonds. Once a bank has sold these securities, then it commits to providing after-sale service. It does this by providing ongoing research on the company, but also the ability for an investor to sell back their securities. It might not be at a price that they want, but the bank agrees to be a market maker in the security, to provide liquidity to investors. Depending on the structure and type of bank, there might be other divisions. Some of them are very large, including lending, transaction services, currency accounts, and FX et cetera, for example for JP Morgan, asset management, private wealth management, e.g. Credit Suisse and UBS, and securities custody, e.g. BNY Mellon. In addition, there is a whole array of different support services that are required to support the different divisions.
