What is the Investment Banking Division (IBD)?


The division inside a bank or financial institution that is in charge of creating and selling securities is known as the Investment Banking Division (IBD). This section often works with big businesses, governments, and other institutions to issue and sell assets like stocks and bonds in order to raise money. Along with offering market intelligence and other research services, the IBD also offers guidance on mergers, acquisitions, and other strategic financial transactions.


IBD plays a significant role in underwriting new securities offerings in addition to providing the aforementioned services, which effectively positions them as a middleman between businesses looking to raise funds and investors looking to purchase securities. The IBD will also assist with valuing the securities and producing the offering's required paperwork. The IBD's role in advising and supporting businesses who are thinking about mergers and acquisitions is another crucial one. This can involve offering assessments, locating potential buyers or sellers, and assisting in deal structuring and negotiation. In general, the IBD is essential in assisting businesses and organisations with capital raising and navigating the complicated world of corporate finance.



Other Divisions of an Investment Bank



Other significant departments within an investment bank, besides the Investment Banking Division (IBD), include:

Sales and Trading: This department is in charge of purchasing and reselling securities on behalf of the bank and its customers.

Research: The bank's other departments and clients employ the research and analysis this division creates on various businesses, markets, and industries.

Asset management: This department looks after money and other assets on behalf of the bank's customers.

High-net-worth individuals can obtain banking and investment services from this section through private banking.


Risk Management: This division is responsible for managing and mitigating risks that the bank faces in its various businesses.

Compliance: This division ensures that the bank is in compliance with all relevant laws and regulations.

Operations: This division is responsible for the day-to-day management of the bank's internal systems and processes.

These are main and most common divisions found in Investment Banks, however, the structure and the division name might vary from bank to bank.



Not Everyone Who Works at an Investment Bank is an Investment Banker


That is true. An investment bank has more than one division, and not everyone who works there is an investment banker, even if the Investment Banking Division (IBD) is one of its most important parts. Typically employed in the IBD, investment bankers concentrate on tasks including structuring and negotiating agreements, advising on mergers and acquisitions, and underwriting securities issues. There are several positions and duties within an investment bank, nevertheless, that are unrelated to investment banking.



For example, sales and trading professionals buy and sell securities on behalf of the bank and its clients, while research analysts produce research and analysis on various companies, industries, and markets that is used by the bank's other divisions and clients. Other roles within an investment bank include risk management, compliance, operations, and technology.

In conclusion, although while investment bankers are important to an investment bank's operations, they are not the only professionals there, and the bank needs many other positions to function properly.



Industry Groups With IBD



The Investment Banking Division (IBD) often divides its teams into industry groups that concentrate on particular industries. Within IBD, the following industry groups are the most prevalent:

Healthcare: This area focuses on businesses in the healthcare industry, including pharmaceutical, biotech, and medical device manufacturers.

Technology, Media, and Telecommunications (TMT): This group focuses on businesses in the media, telecommunications, and technology industries.

Energy & Power: This section focuses on businesses in the energy and power industries, including oil and gas, utilities, and renewable energy.

Financial Institutions Group (FIG): This group focuses on businesses in the financial services industry, including banks, insurance providers, and asset managers.


Industrial: This group focuses on companies in the industrial sector, such as manufacturing, construction, and engineering.

Consumer and Retail: This group focuses on companies in the consumer and retail sectors, such as retail stores, food and beverage, and consumer products.

Real Estate: This group focuses on companies in the real estate sector, such as real estate investment trusts (REITs) and other real estate-related companies.

Natural Resources: This group focuses on companies in the natural resources sector, such as mining, metals, and agriculture.


Job Titles in the Investment Banking Division (IBD)



There are several different job titles within the Investment Banking Division (IBD) of a bank or financial institution, some of the most common include:

Investment Banking Analyst: This is an entry-level position that typically involves working on financial modeling, performing industry and company research, and assisting with the preparation of presentations and pitch books.

Investment Banking Associate: This is a more senior position that involves taking on more responsibility for deal execution, including working on financial modeling, performing industry and company research, and participating in meetings with clients.

Vice President (VP): This is a more senior position that involves leading deal teams, managing junior bankers, and working on the most complex and high-profile transactions.


Managing Director (MD): This is the highest level of the hierarchy in the IBD, this role involve leading teams of bankers and managing the most important and high-profile clients and transactions.

Director: This position is also a senior one and is responsible for leading teams of analysts and associates and working with clients on complex transactions.

Executive Director (ED): This position is similar to the Managing Director, and it is also the highest level of the hierarchy in the IBD, this role involve leading teams of bankers and managing the most important and high-profile clients and transactions.





Additional Resources

This has been the CFI guide to how investment banks are structured and hopefully sheds some light on exactly what it means to be in the IBD.  To keep learning and developing your career, we highly recommend these additional resources: