1.
Fundamental differences of
Commercial Banks and Investment
Banks, the different job nature and how to make money


An institution which accepts deposits, loan and offer services

Can be classified into 4 groups:
– Community Bank
– Regional Bank
– Super-regional bank
– Money center or international bank


An institution which acts as an underwriter or agent for corporation to issue securities
– Maintain dealer or broker operation
– Maintain market for previously issued securities.
– Offer advisory services for investors

Commercial Bank Investment Bank
1) Types of Institution
2) Nature of Job
3) Classification
Depository
Accepts deposits, makes loans and offers financial services. offer advisory services to investors maintain broker/dealer operations, markets for previously issued securities
Community Bank, Regional NIL
Bank, Super-regional bank and Money center or international bank.
Non-Depository
Act as underwriter or agent for corporation, municipalities issuing securities but doest not accept deposits or make loans, and

Leading Investment Firms:
-Goldman Sachs Group,
-Merrill Lynch
-Morgan Stanley Dean Witter
3 main types of activities:

Investment Banking


Trading and Principal Investments
Asset Management and Securities
Services



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Corporate Advisory Services
– Mergers
– Acquisitions
– Restructurings
Securities Underwriting
– buying all the shares of IPO for resale at a preestablished price per share
Private Placement of Debt and Equity
Securities
– place, negotiate and close transactions of private placement



Fixed Income, Currency and Commodities
– products are: bank loans, commodities, currencies, derivatives
Equities
– trades equities and equity-related products

Principal Investments
– make principal investments directly and through the funds they raise and manage



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Asset Management
– Assets under management include mutual funds, separate accounts managed for institutional and individual investors, merchant banking funds and other alternative investment funds
Securities Services
– includes prime brokerage, financing services and securities lending, all of which generate revenues primarily in the form of fees or interest rate spreads
Commissions
– include fees from executing and clearing client transactions on major stock, options and futures markets worldwide
– also include revenues from the increased share of the income and gains derived from our merchant banking funds.




Investment Banking
– fees charged for financial advisory
– Commissions from Underwriting businesses
Revenues earned through Trading and Principal Investments
Asset Management
– generates management fees by providing investment advisory services

Job dutuies
Basic services
Deposits
Loans
Investment
Credit card
Retirement service
Insurance
Personal Banking
Personal banking plans Banking services
Priority banking
Excel banking
Easy banking
Mobile
WAP
Palm
Automated ATM
Life stage plans
Getting started
Young couples
Getting established
Prime

Assist firm in international trade

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Factoring/Account Receivables services
Import and export Letters of Credit
Documentary collections and guarantees
Document Against Acceptance
Document Against Payment
Credit Bills Negotiation

Tailored trade services packages

Credit facilities help meet financial needs

Working Capital

Cheque Protection

Professional Firm Overdraft

Merchant Overdraft

Residential and Commercial Property
Financing

Help firms manage money

Transactional accounts (e.g. Savings Account and



Current Account)
Time Deposit Account
Remittances and bank drafts
24-hour phone banking services
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Consolidated statement
ATM Services
Fax banking and courier services
Electronic banking services
International and local collection and payment services

Offer protection and employee services provide products such as:
 insurance
 payroll
 provident fund products

 lending and accepting deposit
 to earn net interest income
 charge transaction fees and commission
 from the financial services they provided


Net fees and commissions (HK$ millions)
(HSBC) 2001
Account services 1214
Credit facilities 1534
Import/export 2193
Remittances 856
Securities /stock broking 1530
Cards 2723
Other 3584

Thank You !
The End!