What are the top 10 investment banks?
There are hundreds of investment banks around the world, but it’s quite easy to identify the top institutions. These giants include Goldman Sachs, JPMorgan Chase and Citigroup. Read on to learn about the top 10 investment banks.
What’s on this page
What are investment banks?
Investment banks are major financial institutions that provide specialist services such as raising funds by issuing shares, and facilitating mergers and acquisitions (M&A). Every transaction that an investment bank handles is done on a large scale. For example, if drinks company Diageo wanted to sell £8 billion worth of bonds to expand its business into Russia, it would approach an investment bank to assist with finding buyers.
How do investment banks work?
Investment banks offer financial intermediary services to governments, pension funds, hedge funds and large corporations. These banks work differently from investment banking divisions of consumer (retail) banks, because they offer services such as underwriting, M&A, sales and trading, and asset management.
Investment banks are often involved in several activities when assisting companies with their needs. For example, in the case of an initial public offering (IPO), the bank will examine a business’s financials, assist with drafting a prospectus, offer advice post-IPO, and more.
How to buy and trade investment bank shares
- Do your research – we’ve outlined useful information in this guide
- Create an account or log in
- Choose whether to invest by share dealing or trade using spread bets and CFDs
- Pick an investment bank and take steps to manage your risk
- Open and monitor your position
Share dealing enables you to own the shares outright. As buying physical shares makes you a shareholder, you’d profit if you sell them at a price that is higher than the original buy price. You could also receive dividends if the investment bank grants them. If you choose to sell your shares at a price that’s lower than what you paid, you’d incur a loss, which would never exceed your initial outlay (excluding any additional fees).
With us, you’ll use spread bets and CFDs, which lets you trade with leverage, if you want to speculate on future price movements of investment banks. You’d buy if you think the share price will go up, or sell if you think it’ll go down. Leverage enables you to only put up a small deposit (called margin) to get full exposure to the trade. But, it also increases both potential profits and possible losses to the full value of the trade, making it important for you to manage your risk properly.
Top 10 investment banks
- JPMorgan Chase
- Bank of America
- Wells Fargo
- Morgan Stanley
- Goldman Sachs
- HSBC Holdings
- Credit Suisse
- Deutsche Bank
Note that these banks aren’t listed in any particular order, they’re simply among the most famous investment banks in the world. This list was last updated on 1 September 2021.
The history of JPMorgan Chase can be traced back to 1799, but the bank is completely different today from what it was more than 200 years ago. The company was founded in 2000, after a merger between JPMorgan and Chase Manhattan Bank. It has a presence in more than 100 markets and is said to manage more than $3.2 trillion in assets.1
In 2020, the firm made a net income of $27.4 billion and it hit a record revenue high of $119.5 billion. As at September 2019, JPMorgan Chase has a market capitalisation of $478 billion.
Bank of America
Bank of America is a financial services provider with a very prominent investment banking arm that came about through the acquisition of Merrill Lynch in 2008. The company rebranded the Merrill Lynch arm as BofA Securities. Some of the bank’s other offerings include M&A, risk management, wealth management, lending and trading.
The corporation manages around $2.3 trillion in assets,1 making it the second-largest investment bank in the US. Its 2020 revenue amounted to just over $85.5 billion, its net income was around $17.9 billion. The Bank of America’s market cap was at pinned at $351.3 billion in early September 2021.
Wells Fargo is a US investment bank that covers a range of services, from wholesale banking and loans, to wealth and investment management. This firm, that was founded in 1852, also runs a consumer bank. Wells Fargo manages around $1.8 trillion in assets.1
Revenue was at $80.3 billion for 2020 and its net income was at $1.7 billion. As at September 2021, Wells Fargo’s market capitalisation is $184.4 billion.
American corporation Citigroup is more than 200 years old, employs over 210,000 people, has more than 200 million customer accounts and a presence in 160 countries. Citigroup has a strong focus on investment banking, managing around $1.7 trillion in assets,1 but it also operates a retail bank, called Citibank, with around 2500 branches.
From its 2020 revenues of $74.3 billion, the company had a net income of $11.4 billion. As at September 2021, Citigroup has a market cap of $145.8 billion.
Morgan Stanley has over $1.5 trillion assets under management.2 This, coupled with over 40 years in business, makes it one of the major players. In addition to investment management, the company provides wealth management and corporate restructuring services.
The 2008 financial crisis had a severe effect on Morgan Stanley – it was one of the financial institutions that received the most aid from the US government. In 2020, the firm’s revenue was at $48.2 billion, with a net income of $10.5 billion. As at September 2021, Morgan Stanley’s market capitalisation is $189.9 billion.
Founded in 1869, Goldman Sachs provides investing and lending, private equity, investment management, as well as institutional client services. The bank is infamous for its role in the 2008 financial crisis but remains a powerhouse in the investment bank industry.
Goldman Sachs operates a standalone online consumer bank and also engages in several social responsibility initiatives. The company’s revenue for 2020 was $44.6 billion, of which $9.5 billion was its net earnings. Its market cap, as of early September 2021, is $139.7 billion.
UK-based HSBC Holdings was founded in 1865 and has more than 40 million clients in 64 countries. It manages around $194.9 billion in assets.1 Services of the firm include M&A, investment banking and private banking.
Unfortunately, like with many other companies, Brexit, trade tensions and Covid-19 pandemic affected the company’s bottom line. The company’s year-on-year revenue decreased from $82.7 billion in 2019 to $66.2 billion in 2020. Similarly, the company’s net income dropped over 30% for the same period – giving it a figure of $3.9 billion for 2020. As of September 2021, the firm has a market cap of $78.9 billion.
British giant Barclays is the second-largest British investment bank by total assets (managing £1.1 trillion). Barclays listed on the London Stock Exchange (LSE) in 1953 and it’s also a constituent of the FTSE 100. Its offering ranges from corporate banking to wealth and investment management.
Barclays reported a revenue of $27.9 billion for 2020, with a net income of about $2 billion. The firm’s market cap is at $43.1 billion as of September 2021.
Credit Suisse is a leading Swedish investment bank that dates back to 1856. It operates in major financial centres across the world, managing around $1.8 trillion in assets.3 The firm has operations in 50 countries around the world, with a major presence in the United States and is known for its strict confidentiality and banking secrecy.
For the year 2020, Credit Suisse reported $24.9 billion in revenue, of which just over $3 billion was its net income. Credit Suisse’s market cap at the beginning of September 2021 was around $28 billion.
Deutsche Bank was founded in 1870. As with Credit Suisse, it has a big bearing on investment banking in the US. It holds around $350 billion in assets under management.4 Services include M&A, advisory services and risk management.
Deutsche Bank reported around $746 million in profit and revenue of about $28.7 billion for 2020. As of September 2019, its market cap is $25.7 billion.
How do investment banks make money?
Investment banks make money through the services they offer. This ranges from charging a fixed rate or a percentage per transaction, or collecting interest on monies raised, to charging commission based on the value of a trade. An investment bank will typically make money from the following activities:
- Helping companies to launch an initial IPO
- Engaging in proprietary trading
- Issuing bonds to raise a company’s debt capital
- Insuring bonds
Investment banks vs commercial banks: what’s the difference?
There are quite significant differences between investment banks and commercial (retail) banks, as they provide distinctive services. Investment banks cater mainly to corporate clients, while commercial banks usually service individual and corporate clients.
Further, investment banks offer services such as underwriting and asset management, while commercial banks provide more standard services – for everyday needs. Their services can include lending, accepting deposits, making payments, facilitating debit orders and more. Commercial banks make money from the fees they charge banking clients, as well as from interest off loans.
Investment banks summed up
- Investment banks are financial institutions that provide specialist services such as underwriting, asset management, advisory services, and M&A
- These banks make money by charging interest and commission
- You can trade multi-billion-dollar investment banks with us using spread bets and CFDs
- You can become a shareholder of an investment bank by using our share dealing platform
Last updated :
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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