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Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
An investment bank is a financial institution that helps companies take new bond or stock issues to market, usually acting as the intermediary between the issuer and investors.
Investment banks may underwrite the securities by buying all the available shares at a set price and then reselling them to the public. Or the banks may act as agents for the issuer and take a commission on the securities they sell.
Investment banks are also responsible for preparing the company prospectus, which presents important data about the company to potential investors.
In addition, investment banks handle the sales of large blocks of previously issued securities, including sales to institutional investors, such as mutual fund companies.
Unlike a commercial bank or a savings and loan company, an investment bank doesn't usually provide retail banking services to individuals.
investment bank a BANK which accepts deposits of money from savers and which specializes in investments in SHARE CAPITAL and the provision of LOAN finance for corporate borrowers (see VENTURE CAPITAL). Increasingly the leading investment banks are obtaining the greater part of their revenue from consultancy and advisory services to corporate clients; for example, in the recent £20bn takeover by Hewlett Packard of Compaq Computers (creating the world's largest PC maker), the former was advised by Goldman Sachs and the latter by Citigroup's Salomon Smith Barney arm (both in the USA). See BANKING SYSTEM, MECHANT BANK.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
investment bank a BANK the particular function of which is the provision of long-term equity and loan finance for industrial companies. See EUROPEAN INVESTMENT BANK.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005