Investment Banking in India Investment Bank is a financial intermediary that performs a variety of services, including aiding in the sale

of securities, facilitating mergers and other corporate re-organizations, acting as brokers to both the individual and the institutional clients and trading on its own account. Source: Bloomberg History: In 1967, Grindlays Bank was the first to start Investment Banking in India followed by Citi Bank in 1970 Primary Services included Loan Syndication, Equity Raising and Advisory Services. After the Banking Commission report of 1972, SBI was the first public sector bank to set up merchant banking division in 1972 Bank of India, Central Bank of India and Bank of Baroda Followed the suit. Major Investment Banks in India: SBI Capital Markets ICICI Securities Kotak Mahindra Capital Money Reliance Money Cholamandalam Investment and Finance company Bajaj Capital Yes Bank

Global Investment Banks operating in India: Goldman Sachs JP Morgan Chase UBS Deutsche Bank

 Nomura Securities Current and Expected Future Trends: Investment Banking Revenue at present is just over 4 percent of corporate banking revenue pool which is expected to rise over ten-fold by 2020. In India, there are about 15 Multinational Investment Banks, 15-20 large homegrown Investment Banks, about 500 investment Banks with teams of 5-50 people and nearly 1000 mom and pop Investment Banks. Statistics estimate that every alternate day a new Investment Bank comes up in the country. Comparison with Developed Markets: FTSE Groups List of Developed Markets: FTSE Group assigns market status of countries as Developed, Advanced Emerging, Secondary Emerging or Frontier on the basis of their economic size, wealth, quality of markets, depth of markets, and breadth of markets. Accordingly 26 countries have been classified as Developed Markets by FTSE including Hong Kong and South Korea though their revenues in comparison to India are relatively less. Hence, it is tough to compare markets on these realms due to their inherent Subjective Nature. Market Size: However, as of 2010, Global Investment Banking revenues were estimated to be around $ 66.2 Billion. The figures for India as of November 2010 are just over a Billion Dollars. This translates to less than 2% share in Global Investment Banking Industry. As of 2007 data, the United States accounts for roughly 53% of global Investment Banking Revenues followed by Europe(with middle east and Africa) accounting for 32%. Asian Countries generate the remaining 15%.

Among the Asia Pacific region, China accounted for 51% of the regions income followed by Australia, India, Hong Kong and South Korea Thus, Indias Investment Banking Industry has a very long way to go on the Global Stage given her current size and market share with respect to the Global Investment Banking Industry. Profile of major Investment Banks: Citi Bank was the top Investment Bank in India as on 2010 with 15.1% market share among domestic equity issuances helping 17 companies raise Rs 17,469 crores as per Bloomberg data Citi was followed by domestic Investment Banks Kotak Mahindra and Enam Securities respectively. In November 2010 Axis Bank acquired investment banking, equity distribution and advisory divisions of Enam Securities in an all stock deal valued Rs 2064 Crores As of 2010 Axis banks revenue totaled $3.465billion and had an employee count of 21640. The Headcount of some of the Major Global Investment Banks are as follows:

Investment Banking Scenario pre and post the Sub Prime Crisis: The Investment Banking Industry had been enjoying five years of continuous growth till 2007. But as the sub prime mortgage crisis began to expand, a number of investment banks that had direct exposure therein started experiencing decline in their revenues. In March 2008, Bear Stern was the first major Investment Bank to collapse. Later, it was purchased by JP Morgan Chase for as low as $10 a share, a price far below its 52 week low of $133.20 per share. Other major US Investment Banks either went Bankrupt or were sold for fire sale prices. In September 2008, Lehman Brothers filed for Bankruptcy and Merrill Lynch was bought over by Bank of America. The remaining two major Investment Banks namely Goldman Sachs and Morgan Stanley opted to become commercial banks, thereby subjecting themselves to more stringent regulations. The United States Government came up with a $7oo Billion bail out package to help dozens of US Banks during the crisis. There were mixed reactions to such a move. Some claimed that bailing out failing firms is a proof for that firms that end up taking reckless risks can get away with it when the risks materialize. Bailing out firms is a moral hazard which if not accounted for and checked properly could spread to become much bigger crisis in future. Many also advocated for these Investment Banks to be brought under strict regulation and to be made accountable for tax payers money which have been used for bailing out these banks.

Sources: http://www.scribd.com/doc/30106696/Introduction-to-Investment-Banking http://greenworldinvestor.com/2011/03/08/list-of-top-ten-banks-in-indiaeach-a-good-investment-for-different-reasons/ http://online.wsj.com/article/SB100014240527487034538045761917106913 64984.html http://www.scribd.com/doc/36813414/Strategic-Analysis-of-InvestmentBanking-In-india http://www.scribd.com/doc/56095757/An-analysis-of-increased-regulationsin-the-wake-of-the-financial-crisis http://www.livemint.com/2010/07/15225023/Investment-banks-coming-upin.html http://articles.economictimes.indiatimes.com/2010-1202/news/28389708_1_investment-banking-revenues-dealogic http://en.wikipedia.org/wiki/Developed_market http://www.vccircle.com/500/news/axis-bank-buys-enam-securities-biz-inrs-2064cr-stock-deal http://www.themiddlemarket.com/news/i-banking-revs-up-214438-1.html