America bank investment industry has experienced substantial growth over the passage of time. In 2005 USA alone generated 51% of the total global investment banking revenue. The global investment banking is also experiencing a hike of 14% in 2005 from the previous year.
The investment banking in America is primarily involved in raising money for the governments or companies by issuing and selling financial securities in the primary market. The main objective of the investment banking is to generate funds both in debt and equity and also provide financial advices on mergers, acquisitions and other financial transactions.
The recent study on the global investment banking states that revenue generated in this field has increased up to 14% from the previous year and the total revenue generated in 2005 was $52.8 billion. The United States of America was the highest revenue generator in the same year contributing 51% of the total market share while the Europe along with Middle East and Africa grabbed the 31% and Asian countries held the 18% share of the total investment banking revenue.
The major difference between an investment bank and commercial bank is that the commercial banks generally take deposits and give away the commercial and retail loans while the investment banks raise funds for the public or private corporations. But in the recent years the difference between the commercial and investment banks are slowly diminishing. Following the Stock Market Crash in 1929, the Glass-Steagall Act was initiated that prohibited the banks to accept deposits and underwriting financial securities. In 1999 the Glass-Steagall Act was replaced by Gramm-Leach-Bliley Act that opened up competition among the insurance companies, security companies and banks. This act also allowed the commercial banks and investment banks to consolidate and a result, the Citibank merged with an insurance company, Travelers Group in 1997 resulting in the formation of Citigroup. Now Citigroup is one of the biggest financial service providers in the USA and offers both banking and insurance underwriting services.
The major investment banks of the America are:
- Bank of America
- Bank of Montreal (BMO)
- Barclays Plc
- Canadian Imperial Bank of Commerce (CIBC)
- Citigroup
- JP Morgan Chase
- Key Bank
- Royal bank of Canada (RBC)
- Toronto Dominion Bank
- Wachovia Corporation
- Wells Fargo & Co
