You might not be familiar with investment banks, which are neither typical financial institutions nor investment companies. For instance, you don’t walk into one and ask for advice on high-yield investments from an investment broker. Instead, good investment banks support the global financial economy by helping companies bring shares to market and conduct high-level financial activities.
Here’s what you need to know about the top investment banks and how they make money.
How Investment Banks Make Money
You’ve indirectly benefited from an investment bank if you’ve ever owned a share of stock or a mutual fund. Small, boutique investment banks and large, well-known ones assist private companies with becoming publicly traded corporations. The investment returns on your mutual funds are actually a result of an investment bank’s initial work with a company.
Investment banks perform many different fee-based activities to make money, such as providing specialized services for companies and large investors. They help firms with complex financial transactions that include mergers and acquisitions and initial public stock offerings and manage various types of investments and trading for their own accounts. Additionally, investment bankers handle wealth management tasks, mainly for clients with substantial net worth.
The Biggest Investment Banks
GOBankingRates has identified a list of top 10 investment banks in the world. These picks were based on the investment banks’ net revenues in 2016, the most recent data made available by the investment banks. All of the top investment banks offer financial advisors, treasury services, wealth management and corporate banks. All but RBC Capital markets and BMO Captial Markets offer mobile apps.
|Top Investment Banks|
|Investment Bank||Total Net Revenue (2016)|
|JP Morgan||$95.67 billion|
|Bank of America Merrill Lynch||$83.70 billion|
|BNP Paribas||$52.15 billion|
|Deutsche Bank||$35.32 billion|
|Morgan Stanley||$34.63 billion|
|Goldman Sachs||$30.61 billion|
|RBC Capital Markets||$26.74 billion|
|Credit Suisse||$21.70 billion|
|BMO Capital Markets||$14.68 billion|
|Information accurate as of Jan. 9, 2018.|
JPMorgan Chase & Co.
Total Net Revenue: $95.67 billion
JPMorgan Chase & Co. is an international company with over $2.5 trillion in assets used in its operations around the world. The firm sits atop this ranking with over $95 billion in total net revenue, an increase of over $2 billion from the previous year, and more than $12 billion ahead of the second-highest finisher.
In addition to investment banking, the company also is a leading provider in e-commerce merchant acquisition volume. In May 2017, The Nilson Report named the firm the largest merchant processor by volume in Europe.
Bank of America Merrill Lynch
Total Net Revenue: $83.70 billion
Bank of America Merrill Lynch finds itself second on the list with almost $84 billion in total net revenues for the year. The company works with almost every company listed in the Standard & Poor’s 500 index in various capacities.
The investment banking group at Bank of America Merrill Lynch is part of its Global Banking Group, which saw an increase of $380 million in revenues from the prior year. The bank also provides its clients with a range of other services, including treasury support, liquidity management, and trade and supply chain finance.
Total Net Revenue: $69.88 billion
Citigroup comes in third with almost $70 billion of net revenue for the year. In addition to large revenues, Citigroup’s investment banking group received several awards, including being named the most innovative investment bank, both globally and in North America, by The Banker.
Citigroup’s investment banking services are divided into two subgroups: Strategic Coverage and Corporate Banking. The Strategic Coverage group focuses on mergers and acquisitions, while the Corporate Banking group provides banking and financial services to clients around the world.
Total Net Revenue: $52.15 billion
BNP Paribas is one of only four investment banks with more than $50 billion in total net revenue for the year. The bank focuses its retail banking efforts in Belgium, France, Luxemburg and Italy, but has a global reach with 46,000 of its 192,000 employees based outside of Europe, including at its Bank of the West branches in the United States.
Over a quarter of its revenue came from its Corporate and Institutional Banking group, and BNP Paribas received the Most Innovative Investment Bank for Climate Change and Sustainability Award at The Banker Investment Banking Awards.
Total Net Revenue: $35.32 billion
Although headquartered in Frankfurt, Germany, Deutsche Bank has a global reach. During the year, Corporate Finance group helped clients raise almost $450 billion in debt and equity financing and worked on M&A deals valued at over $375 billion. In addition, the bank’s Wealth and Commercial Clients group was named the Best Provider of Private Banking Services in Germany — a title which it has held the past seven years.
Total Net Revenue: $34.63 billion
Morgan Stanley is nipping at the heels of Deutsche Bank, coming in with under $1 billion less in total net revenue than its German counterpart. In the fourth quarter, the company reported over $100 million in additional revenues from advisory revenues as compared with the prior year because of its increased work in the mergers and acquisitions field. The company brought in $100 million less in equity underwriting fees, however, because of fewer companies going public through IPOs.
Related: The Most Anticipated IPOs of 2018
Total Net Revenue: $30.61 billion
Goldman Sachs is headquartered in New York City but does deals across the globe. Goldman Sachs serves as the investment banker for over 8,000 clients located in about 100 countries around the world and was ranked first for announced and completed mergers and acquisitions.
In addition, the company set a firm record by bringing in $2.5 billion in net revenues for debt underwriting. The company has also grown its lending footprint, with funded loans almost tripling over the past four years to $64 billion.
RBC Capital Markets
Total Net Revenue: $26.74 billion
RBC is the largest bank in Canada and also one of the largest in the world. The bank has over 80,000 employees who serve 16 million clients in 38 countries, which equals millions of dollars in foreign bank accounts. Its Capital Markets group accounts for over 20 percent of the banks overall earnings. During the 2016 fiscal year, the bank’s 80 plus mergers and acquisitions representatives were involved in almost 150 deals worth $214 billion in addition to helping with takeover defenses, leveraged buyouts and joint ventures.
Total Net Revenue: $21.70 billion
Credit Suisse is headquartered in Zurich, Switzerland, but has built operations in over 50 countries since its founding in 1856. The Investment Banking and Capital Markets group at Credit Suisse had a stellar year, increasing revenue, decreasing costs and generating almost $300 million in pretax earnings. Credit Suisse advised on six of the 10 largest mergers and acquisitions deals, including Bayer AG’s purchase of Monsanto for $66 billion and China National Chemical Corporation’s purchase of Syngenta International AG for $43 billion.
BMO Capital Markets
Total Net Revenue: $14.68 billion
BMO is the second Canadian bank to make the list, claiming the 10th and final spot. The bank’s investment banking group, BMO Capital Markets, saw revenues jump by 16 percent from the previous year for a gain of $237 million. The group’s net income, however, dropped 4 percent, though the group still brought in over $1 billion. BMO has carved out a niche as an investment bank for mining, as Global Finance named it the World’s Best Metals & Mining Investment Bank for the seventh year running.
Up Next: The 30 Best Banks of 2018
Barbara Friedberg contributed to the reporting for this article.