Chapter 1 - Introduction

Ngân hàng đầu tư Dương Tấn Khoa
Investment Bank
ThS. Dương Tấn Khoa
Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 1

Course descriptions:
 This subject offers insight theories and practice in to
the investment banking industry.
 Students will be equipped with specialized knowledge
related to investment banks activities such as:
underwriting, asset management, financial advisory,
corporate restructuring services....
 Graduated students will be able to develop their
careers in large financial institutions, investment banks,
funds, asset management companies, securities firms,
commercial banks, large corporations, which comprise
the world of modern finance, and gain a wide range of
employable skills.

Course objectives:
 Understanding the nature of investment banks, their
activities and business models.
 Being able to understand and provide investment
banks’ products such as: underwriting, investment
management, Mergers and Acquisitions advisory
services, corporate restructuring services...
 Being able to analyze and create new financial
products
 Apply critical thinking, problem solving and
presentation skills to individual and/or group activities
dealing with investment banking.

Course assessment methods:

Mid-term test: 50%, opened written test
Final test: 50%, opened written test

• Textbooks:
– K. Thomas Liaw, The business of Investment
Banking – A comprehensive Overview, 3th
edition.
– Giuliano Iannotta, Investment Banking A Guide
to Underwriting and Advisory Services

About the lecturer
 Full name: DƯƠNG TẤN KHOA
 Mobile number: 0909.243.600
 Email: [email protected]
 Qualifications:
• Master of Commerce –
Finance (Honors) – The
University of Melbourne –
Australia.
• BA of Finance and Banking –
UEH (Honors)
 Current position
• Vice Dean of School of
Banking - UEH
• Manager of Investment Bank
program - UEH

Chapter 1:
Introduction to
Investment Banks
ThS. Dương Tấn Khoa

Types of Financial Institutions

Depository financial institutions
Non-Depository financial institutions

Depository financial institutions

Most of the money and credit readily available to
the economy comes from financial intermediaries
Depository financial institutions, such as
commercial banks, accept deposits and
contribute to the economy by lending money
saved by depositors.
Depository financial institutions include:
Commercial banks
Credit unions
In Vietnam, depository financial institutions includes:
commercial banks, finance companies (only take deposit
from institutions), leasing companies (only take deposit from
institutions), and credit unions
Depository financial institutions (cont.)

• Depository institutions, especially commercial banks,
provide 4 important services to the economy:
– They provide safekeeping services and liquidity;
– They provide a payment system consisting of
checks and electronic funds transfers;
– They pool the money of many savers and lend it
out to people and businesses;
– They invest in securities.
• The 1st 3 services are so important in any economy
that when banks fail, the economy suffers.

Non Depository financial institutions

Non Depository financial institutions, such as
investment banks, do not legally accept
deposits. They fund their activities by issuing
securities (shares and bonds).
Non Depository financial institutions include:
Investment banks
Securities firms
Funds (mutual fund, hedge fund, pension fund)
Insurance companies


(cont.)
Investment banks are large financial
intermediaries. They help companies access
capital markets—like stock and bond markets—
which helps corporations raise money for
expansion or other needs.
A securities firm is a company that facilitates the
processes of buying and selling stocks for a
small charge. Their services
include securities brokerage, financial trading
advisories, investment banking, and other
banking services


(cont.)
Funds
Fund are basically a large public portfolio that
accepts funds from members and then use these
funds to buy common stocks, preferred stocks,
bonds and other short-term debt instruments
issued by government and corporation.


(cont.)
Insurance Companies:
Are contractual saving institutions which collect
periodic premium from an insured party and in
return agree to compensate against the risk of
loss of life and properties.
They pool the small premiums of the insured to
pay the larger claims to those who have losses.
The premium payments are regular while the
losses are irregular, both in timing and amount.

Ngân hàng đầu tư 2017 Dương Tấn Khoa
Operations of Investment bank

– Underwriting
– Advisory services
• M&A, restructuring
– Trading and brokerage
– Asset management
– Research

 Underwriting:
• Investment bank helps firms to raise funds by
issuing securities in the financial markets.
– Equity
– Debt
– Hybrid securities
• These services are labeled “underwriting”
because investment banks actually purchase
securities from the issuer and then resale
them to the market

 Underwriting (Cont.)
• Equity:
– IPO: Initial Public Offering
– SEO: Seasoned Equity Offering
– Hybrid securities: Convertible debt/bond
• Debt:
– Issue bond
– Securitization

 Advisory services
• Investment banks provide advisory services
to help their client firms with
– Mergers and acquisitions (M&As)
– Corporate restructuring

 Trading and brokerage

 It consists in purchasing and selling securities
by using the bank’s money (proprietary trading)
 Or on behalf of clients (brokerage).

 Asset Management
 Traditional asset management (i.e., open end
mutual funds)
 Alternative asset management, which includes
real estate funds, hedge funds, private equity
funds, and any other asset classes.

 Examples of Investment banks:

 Goldman Sachs
 JP Morgan Chase
 Barclays
 Bank of America Merrill Lynch
 Morgan Stanley
 Deutsche Bank
 Credit Suisse
 UBS
 HSBC

 Universal bank
- What are Universal Banks?
• Banks that perform both commercial and
investment banking activities are labeled
“universal banks”.

 Universal bank
Universal banks may offer:
 Credit, loans, deposits,
 Asset management, investment advisory
 Payment processing
 Securities transactions, underwriting, and
financial analysis.

 Discuss question:
 Which business model is appropriate for
Universal banks:
 Separate their commercial and investment
services into several entities
 Combine their commercial and investment
services into one entity

Bank Holding Company Commercial Bank
Securities firm
Securities firm
Commercial
Investment
Investment
Non Bank
Non Bank
Bank
Bank
Bank
- Commercial
Bank
- Investment
Bank
- Securities
firm
- Non Bank
Thank You!!!

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Ngân hàng đầu tư Dương Tấn Khoa

ThS. Dương Tấn Khoa

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 1

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 2

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 3

Course assessment methods:

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 4

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 5

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 6

ThS. Dương Tấn Khoa

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 7

Types of Financial Institutions

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 8

Depository financial institutions

Depository financial institutions (cont.)

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 10

Non Depository financial institutions

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 11

Non Depository financial institutions

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 12

Non Depository financial institutions

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 13

Non Depository financial institutions

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 14

Operations of Investment bank

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 15

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 16

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 17

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 18

 Trading and brokerage

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 19

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 20

 Examples of Investment banks:

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 21

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 22

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 23

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 24

Bank Holding Company Commercial Bank

Khoa Ngân hàng - Trường ĐH Kinh tế Tp.HCM 26

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