How International Investment Banking Works

International investment banking follows virtually the same pattern as domestic banking, with only a few minor differences. In countries outside of the United States, it is possible for investment banking interests to be combined with deposit banking as it is seen on the main streets and understood by the average person. In the domestic banking system these interests are kept separate, and are even administered by different government bodies within the overall banking administration, in an attempt to reduce the possibility for corruption and insider dealing.


In most parts of the developed world the basic operations of investment banking are unaltered. That is, they issue stocks into the stock market of the country in which they are licensed to operate, and they also place investor money into that market, and into other related markets within the same jurisdiction. The most important work which investment bankers do is the issuance of stock on behalf of corporations and government interests. These stock issues should be fully subscribed, so that all of the money which is needed can be raised from the one issue. To make this happen, the bank will need to have enough knowledge of the market to know which price the stock is likely to fetch.

investment banking

Investment bankers are also able to take and manage funds on behalf of clients. Many countries have a system similar to the one which exists in the United States, where investors are able to realize tax free gains on investment as long as the money is kept within a retirement fund. The amounts which can be invested in such funds are limited, but it makes sense to take advantage of the allowances which are on offer. Those with more money to invest will typically create more mutual funds, and then host them with the same investment banker.

There are those who are attracted to international investment banking because it appears to offer higher gains than Wall Street, but this is not necessarily the case. All other markets in developed countries go through the same fluctuations, and they are often influenced by the same worldwide price movements. It is common to see technical graphs of major markets moving in a unified direction, offering no real reason to diversify beyond the market you know best. Of course, there can always be isolated circumstances which make it better to be in one market than another.

Investing in emerging markets is a different matter altogether, and this needs to be done with extreme care. There is a higher potential for gain, but also a greatly increased risk. If you are going to go down this route, it will be important to only risk a small percentage of your investment capital in this type of market. You will also need to have some knowledge of local market conditions before you can even think about making this type of investment, as studying graphs and technical indicators is not going to tell you enough about the inherent profitability of any company within a foreign high risk market.

The international investment banking community offers many opportunities for graduates to find work and to forge a career, but it is a highly competitive industry and involves long hours and hard work. It is not uncommon for workers within this industry to burn out at a young age, but they will often have earned well in advance of the revenues which are possible in most professions. If you want to work in investment banking, it will be essential that you find the best college course, preferably an MBA course. These are respected throughout international investment banking.