الأربعاء، 24 يوليو 2013

Investment casting


Investment casting is an industrial process based on and also called lost-wax casting, one of the oldest known metal-forming techniques.[1] From 5,000 years ago, when beeswax formed the pattern, to today’s high-technology waxes, refractory materials and specialist alloys, the castings allow the production of components with accuracy, repeatability, versatility and integrity in a variety of metals and high-performance alloys. Lost-foam casting is a modern form of investment casting that eliminates certain steps in the process.
The process is generally used for small castings, but has been used to produce complete aircraft door frames, steel castings of up to 300 kg (660 lbs) andaluminium castings of up to 30 kg (66 lbs). It is generally more expensive per unit than die casting or sand casting, but has lower equipment costs. It can produce complicated shapes that would be difficult or impossible with die casting, yet like that process, it requires little surface finishing and only minor machining.


Process[edit]

A wax pattern used to create a jet engine turbine blade
Casts can be made of the wax model itself, the direct method; or of a wax copy of a model that need not be of wax, the indirect method. The following steps are for the indirect process which can take two days to one week to complete.
  1. Produce a master pattern: An artist or mould-maker creates an original pattern from wax, clay, wood, plastic, steel, or another material.[2]
  2. Mouldmaking: A mould, known as the master die, is made of the master pattern. The master pattern may be made from a low-melting-point metal, steel, or wood. If a steel pattern was created then a low-melting-point metal may be cast directly from the master pattern. Rubber moulds can also be cast directly from the master pattern. The first step may also be skipped if the master die is machined directly into steel.[2]
  3. Produce the wax patterns: Although called a wax pattern, pattern materials also include plastic and frozen mercury.[2] Wax patterns may be produced in one of two ways. In one process the wax is poured into the mold and swished around until an even coating, usually about 3 mm (0.12 in) thick, covers the inner surface of the mould. This is repeated until the desired thickness is reached. Another method is filling the entire mould with molten wax, and let it cool, until a desired thickness has set on the surface of the mould. After this the rest of the wax is poured out again, the mould is turned upside down and the wax layer is left to cool and harden. With this method it is more difficult to control the overall thickness of the wax layer.[citation needed]
    If a core is required, there are two options: soluble wax or ceramic. Soluble wax cores are designed to melt out of the investment coating with the rest of the wax pattern, whereas ceramic cores remain part of the wax pattern and are removed after the workpiece is cast.[2]
  4. Assemble the wax patterns: The wax pattern is then removed from the mould. Depending on the application multiple wax patterns may be created so that they can all be cast at once. In other applications, multiple different wax patterns may be created and then assembled into one complex pattern. In the first case the multiple patterns are attached to a wax sprue, with the result known as a pattern cluster, or tree; as many as several hundred patterns may be assembled into a tree.[3] Foundries often use registration marks to indicate exactly where they go.[citation needed] The wax patterns are attached to the sprue or each other by means of a heated metal tool.[2] The wax pattern may also be chased, which means the parting line orflashing are rubbed out using the heated metal tool. Finally it is dressed, which means any other imperfections are addressed so that the wax now looks like the finished piece.[4]
  5. Investment: The ceramic mould, known as the investment, is produced by three repeating steps: coating, stuccoing, and hardening. The first step involves dipping the cluster into a slurry of fine refractory material and then letting any excess drain off, so a uniform surface is produced. This fine material is used first to give a smooth surface finish and reproduce fine details. In the second step, the cluster is stuccoed with a coarse ceramic particle, by dipping it into a fluidised bed, placing it in a rainfall-sander, or by applying by hand. Finally, the coating is allowed to harden. These steps are repeated until the investment is the required thickness, which is usually 5 to 15 mm (0.2 to 0.6 in). Note that the first coatings are known as prime coats. An alternative to multiple dips is to place the cluster upside-down in a flask and then liquid investment material is poured into the flask. The flask is then vibrated to allow entrapped air to escape and help the investment material fill in all of the details.[2][5]
    Common refractory materials used to create the investments are: silica, zircon, various aluminium silicates, and alumina. Silica is usually used in the fused silica form, but sometimesquartz is used because it is less expensive. Aluminium silicates are a mixture of alumina and silica, where commonly used mixtures have an alumina content from 42 to 72%; at 72% alumina the compound is known as mullite. During the primary coat(s), zircon-based refractories are commonly used, because zirconium is less likely to react with the molten metal.[5]Chamotte is another refractory material that has been used.[citation needed] Prior to silica, a mixture of plaster and ground up old molds (chamotte) was used.[6]
    The binders used to hold the refractory material in place include: ethyl silicate (alcohol-based and chemically set), colloidal silica (water-based, also known as silica sol, set by drying),sodium silicate, and a hybrid of these controlled for pH and viscosity.
  6. Dewax: The investment is then allowed to completely dry, which can take 16 to 48 hours. Drying can be enhanced by applying a vacuum or minimizing the environmental humidity. It is then turned upside-down and placed in a furnace or autoclave to melt out and/or vaporize the wax. Most shell failures occur at this point because the waxes used have a thermal expansion coefficient that is much greater than the investment material surrounding it, so as the wax is heated it expands and induces great stresses. In order to minimize these stresses the wax is heated as rapidly as possible so that the surface of the wax can melt into the surface of the investment or run out of the mold, which makes room for the rest of the wax to expand. In certain situations holes may be drilled into the mold beforehand to help reduce these stresses. Any wax that runs out of the mold is usually recovered and reused.[7]
  7. Burnout & preheating: The mold is then subjected to a burnout, which heats the mold between 870 °C and 1095 °C to remove any moisture and residual wax, and to sinter the mold. Sometimes this heating is also used as the preheat, but other times the mold is allowed to cool so that it can be tested. If any cracks are found they can be repaired with ceramic slurry or special cements.[7] The mold is preheated to allow the metal to stay liquid longer to fill any details and to increase dimensional accuracy, because the mold and casting cool together.[8]
  8. Pouring: The investment mold is then placed cup-upwards into a tub filled with sand. The metal may be gravity poured, but if there are thin sections in the mold it may be filled by applying positive air pressure, vacuum cast, tilt cast, pressure assisted pouring, or centrifugal cast.[8]
  9. Removal: The shell is hammered, media blasted, vibrated, waterjeted, or chemically dissolved (sometimes with liquid nitrogen) to release the casting. The sprue is cut off and recycled. The casting may then be cleaned up to remove signs of the casting process, usually by grinding.[8]
  • The investment shell for casting a turbochargerrotor
    •      
  • A view of the interior investment shows the smooth surface finish and high level of detail
    •      
  • The completed workpiece

Advantages of Investment casting[edit]

  • Intricate forms with undercuts can be cast.
  • A very smooth surface is obtained with no parting line.
  • Dimensional accuracy is good.
  • Certain unmachinable parts can be cast to preplanned shape.
  • It may be used to replace die-casting where short runs are involved.

Disadvantages of Investment casting[edit]

  • This process is expensive, is usually limited to small casting, and presents some difficulties where cores are involved.
  • Holes cannot be smaller than 1/16 in. (1.6mm) and should be no deeper than about 1.5 times the diameter.
  • Investment castings require very long production-cycle times versus other casting processes.
  • This process is practically infeasible for high-volume manufacturing, due to its high cost and long cycle times.
  • Many of the advantages of the investment casting process can be achieved through other casting techniques if principles of thermal design and control are applied appropriately to existing processes that do not involve the shortcomings of investment castings.

Counter-gravity pouring[edit]

A variation on the pouring technique to fill the investment upside-down. A common form of this is called the Hitchiner process, which is named after the Hitchiner Manufacturing Company that invented the technique. In this technique the investment shell is placed in a vacuum tight mold chamber and then lowered into a pool of molten metal. A vacuum is then created, which draws the metal up into the investment shell. After the casting has solidified the vacuum is released, which allows any remaining liquid metal to flow back into the pool.[9]
This technique is more metal efficient than traditional pouring because less material solidifies in the gating system. Gravity pouring only has a 15 to 50% metal yield as compared to 60 to 95% for counter-gravity pouring. There is also less turbulence, so the gating system can be simplified since it does not have to control turbulence. Plus, because the metal is drawn from below the top of the pool the metal is free from dross and slag, as these are lower density (lighter) and float to the top of the pool. The pressure differential helps the metal flow into every intricacy of the mold. Finally, lower temperatures can be used, which improves the grain structure.[9]
This process is also used to cast refractory ceramics under the term vacuum casting.[10]

Vacuum pressure casting[edit]


Vacuum pressure casting (VPC) uses gas pressure and a vacuum to improve the quality of the casting and minimize porosity. Typically VPC casting machines consist of an upper and a lower chamber. The upper chamber or melting chamber housing the crucible, and the lower casting chamber housing the investment mould. Both chambers are connected via a small hole containing a stopper. A vacuum is pulled in the lower chamber, while pressure is applied in the upper, and then the stopper is removed. This creates the greatest pressure differential to fill 
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Introduction


Investment casting is also known as the lost wax process. This process is one of the oldest manufacturing processes. The Egyptians used it in the time of the Pharaohs to make gold jewelry (hence the name Investment) some 5,000 years ago. Intricate shapes can be made with high accuracy. In addition, metals that are hard to machine or fabricate are good candidates for this process. It can be used to make parts that cannot be produced by normal manufacturing techniques, such as turbine blades that have complex shapes, or airplane parts that have to withstand high temperatures.
The mold is made by making a pattern using wax or some other material that can be melted away. This wax pattern is dipped in refractory slurry, which coats the wax pattern and forms a skin. This is dried and the process of dipping in the slurry and drying is repeated until a robust thickness is achieved. After this, the entire pattern is placed in an oven and the wax is melted away. This leads to a mold that can be filled with the molten metal. Because the mold is formed around a one-piece pattern, (which does not have to be pulled out from the mold as in a traditional sand casting process), very intricate parts and undercuts can be made. The wax pattern itself is made by duplicating using a stereo lithography or similar model-which has been  abricated using a computer solid model master.
Just before the pour, the mold is pre-heated to about 1000 ºC (1832 ºF) to remove any residues of wax, harden the binder. The pour in the pre-heated mold also ensures that the mold will fill completely. Pouring can be done using gravity, pressure or vacuum conditions. Attention must be paid to mold permeability when using pressure, to allow the air to escape as the pour is done.The materials used for the slurry are a mixture of plaster of Paris, a binder and powdered silica, a refractory, for low temperature melts. For higher temperature melts, sillimanite an alumina-silicate is used as a refractory, and silica is used as a binder. Depending on the fineness of the finish desired additional coatings of sillimanite and ethyl silicate may be applied. The mold thus produced can be used directly for light castings, or be reinforced by placing it in a larger container and reinforcing it more slurry.
Tolerances of 0.5 % of length are routinely possible, and as low as 0.15 % is possible for small dimensions. Castings can weigh from a few grams to 35 kg (0.1 oz to 80 lb), although the normal size ranges from 200 g to about 8 kg (7 oz to 15 lb). Normal minimum wall thicknesses are about 1 mm to about 0.5 mm (0.040-0.020 in) for alloys that can be cast easily.
The types of materials that can be cast are Aluminum alloys, Bronzes, tool steels, stainless steels, Stellite, Hastelloys, and precious metals. Parts made with investment castings often do not require any further machining, because of the close tolerances that can be achieved.
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Investment Casting


Investment casting is one of the oldest manufacturing processes, dating back thousands of years, in which molten metal is poured into an expendable ceramic mold. The mold is formed by using a wax pattern - a disposable piece in the shape of the desired part. The pattern is surrounded, or "invested", into ceramic slurry that hardens into the mold. Investment casting is often referred to as "lost-wax casting" because the wax pattern is melted out of the mold after it has been formed. Lox-wax processes are one-to-one (one pattern creates one part), which increases production time and costs relative to other casting processes. However, since the mold is destroyed during the process, parts with complex geometries and intricate details can be created.

Investment casting can make use of most metals, most commonly using aluminum alloys, bronze alloys, magnesium alloys, cast iron, stainless steel, and tool steel. This process is beneficial for casting metals with high melting temperatures that can not be molded in plaster or metal. Parts that are typically made by investment casting include those with complex geometry such as turbine blades or firearm components. High temperature applications are also common, which includes parts for the automotive, aircraft, and military industries.

Investment casting requires the use of a metal die, wax, ceramic slurry, furnace, molten metal, and any machines needed for sandblasting, cutting, or grinding. The process steps include the following:

  1. Pattern creation - The wax patterns are typically injection molded into a metal die and are formed as one piece. Cores may be used to form any internal features on the pattern. Several of these patterns are attached to a central wax gating system (sprue, runners, and risers), to form a tree-like assembly. The gating system forms the channels through which the molten metal will flow to the mold cavity.
  2. Mold creation - This "pattern tree" is dipped into a slurry of fine ceramic particles, coated with more coarse particles, and then dried to form a ceramic shell around the patterns and gating system. This process is repeated until the shell is thick enough to withstand the molten metal it will encounter. The shell is then placed into an oven and the wax is melted out leaving a hollow ceramic shell that acts as a one-piece mold, hence the name "lost wax" casting.
  3. Pouring - The mold is preheated in a furnace to approximately 1000°C (1832°F) and the molten metal is poured from a ladle into the gating system of the mold, filling the mold cavity. Pouring is typically achieved manually under the force of gravity, but other methods such as vacuum or pressure are sometimes used.
  4. Cooling - After the mold has been filled, the molten metal is allowed to cool and solidify into the shape of the final casting. Cooling time depends on the thickness of the part, thickness of the mold, and the material used.
  5. Casting removal - After the molten metal has cooled, the mold can be broken and the casting removed. The ceramic mold is typically broken using water jets, but several other methods exist. Once removed, the parts are separated from the gating system by either sawing or cold breaking (using liquid nitrogen).
  6. Finishing - Often times, finishing operations such as grinding or sandblasting are used to smooth the part at the gates. Heat treatment is also sometimes used to harden the final part.
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Careers-in-Investment-Banking.com

Welcome to a comprehensive web site on investment banking careers. Investment Banks help companies and governments issue securities, help investors purchase securities, manage financial assets, trade securities and provide financial advice. The top investment banks including Goldman Sachs, JP Morgan and Morgan Stanley are said to be in the bulge bracket.
Other investment banks are regionally oriented or situated in the middle market (e.g. Piper Jaffray). Others are small, specialized firms called boutiques which might be oriented toward an industry vertical, bond-trading, M&A advisory, technical analysis or program trading. Firms have lots of different areas and groups within them. In most firms, there is sales and trading which works with owners of securities, investment banking which works with issuers of securities (firms and governments) and capital markets which goes in between the other two.
Further Information on Investment Banking
Best Resources

Investment Banking Explained: An Insider's Guide to the Industry
Provides a complete overview of investment banking in its modern form; defines key terms and discusses the functions of investment banks.
Monkey Business: Swinging through the Wall Street Jungle.
By John Rolfe and Peter Troob.
Many a starry-eyed megalomaniac has followed the siren song of Wall Street. Money, prestige, and power await them as they waltz off into the promised land...or so they think. The promised land, it turns out, is always one more twenty-hour workday ... Monkey Business is the hilarious confession of two young investment bankers.
An Introduction to Investment Banks, Hedge Funds, and Private Equity: The New Paradigm.
By David Stowell.
Provides a very good introduction to the role of investment banks and how they interact with hedge funds and private equity firms. This book provides a very readable introduction to how the financial system is working now and is a great backgrounder for anything contemplating banking as a career.
Too Big to Fail.
By Andrew Ross Sorkin.
One of the best books ever written about the investment banking industry. Tells the story of the rescue of the banks in the depths of the financial crisis.
Investment Banking Interview Study Guide.
By Sean Miller.
This is a timeless guide to help you in prepping for finance interviews, particularly for Investment Banks and Private Equity funds.
The Best Book on Getting An IBanking Internship: Written By A Former Banking Intern At UBS, JPMorgan, and FT Partners.
By Erin Parker.
Internship expert, Erin, has fought for her spot at top bulge bracket banks and boutique firms. She knows how stressful it can be to face case study questions at interviews, and she wants to help you stand out from the thousands of other applicants to earn your position at JP Morgan. Erin guides you step-by-step from interview preparation to conquering the 90-hour work week. Erin's tips will give you an unfair advantage over your toughest competitors as you network at info sessions, nail your interview questions, and rise to the top of your internship class.
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Investment banking



An investment bank is a financial institution that assists individuals, corporations, and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).
Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (Glass–Steagall Act) until 1999 (Gramm–Leach–Bliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation. As part of the Dodd-Frank Act 2010, Volcker Rule asserts full institutional separation of investment banking services from commercial banking.
There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e. facilitating transactions, market-making), or the promotion of securities (i.e. underwriting, research, etc.) is the "sell side", while buy side is a term used to refer to advising institutions concerned with buying investment services. Private equity funds, mutual funds, life insurance companies, unit trusts, and hedge funds are the most common types of buy side entities.
An investment bank can also be split into private and public functions with an information barrier which separates the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas such as stock analysis deal with public information.
An advisor who provides investment banking services in the United States must be a licensed broker-dealer and subject to Securities & Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regulation.[1]

Organizational structure[edit]

Investment banking is split into front office, middle office, and back office activities. While large service investment banks offer all lines of business, both sell side and buy side, smaller sell-side investment firms such as boutique investment banks and small broker-dealers focus on investment banking and sales/trading/research, respectively.
Investment banks offer services to both corporations issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their securities on the open market, an activity very important to an investment bank's reputation. Therefore, investment bankers play a very important role in issuing new security offerings.[2]

Core investment banking activities[edit]

Investment banking has changed over the years, beginning as a partnership form focused on underwriting security issuance (initial public offerings and secondary offerings), brokerage, andmergers and acquisitions and evolving into a "full-service" range including sell-side research, proprietary trading, and investment management. In the modern 21st century, the SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: (1) investment banking (fees for M&A advisory services and securities underwriting); (2) asset management (fees for sponsored investment funds), and (3) trading and principal investments (broker-dealer activities including proprietary trading ("dealer" transactions) and brokerage trading ("broker" transactions)).[3]
In the United States, commercial banking and investment banking were separated by the Glass–Steagall Act, which was repealed in 1999. The repeal led to more "universal banks" offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable large banks with significant investment banks include JPMorgan Chase, Bank of America, Credit Suisse, Deutsche Bank, Barclays, and Wells Fargo. After the financial crisis of 2007–2008 and the subsequent passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act, regulations have limited certain investment banking operations, notably with the Volcker Rule's restrictions on proprietary trading.[2]
The traditional service of underwriting security issues has declined as a percentage of revenue. As far back as 1960, 70% of Merrill Lynch's revenue was derived from transaction commissions while "traditional investment banking" services accounted for 5%. However, Merrill Lynch was a relatively "retail-focused" firm with a large brokerage network.[2]

Front office[edit]

Investment banking[edit]

Corporate finance is the traditional aspect of investment banks which also involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions (M&A). This may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Another term for the investment banking division is corporate finance, and its advisory group is often termed mergers and acquisitions. A pitch book of financial information is generated to market the bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. The investment banking division (IBD) is generally divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry – such as healthcare, public finance (governments), FIG (financial institutions group), industrials, TMT (technology, media, and telecommunication) – and maintains relationships with corporations within the industry to bring in business for the bank. Product coverage groups focus on financial products – such as mergers and acquisitions, leveraged finance, public finance, asset finance and leasing, structured finance, restructuring, equity, and high-grade debt – and generally work and collaborate with industry groups on the more intricate and specialized needs of a client.The Wall Street Journal, in partnership with Dealogic, publishes figures on investment banking revenue such as M&A in its Investment Banking Scorecard.[4]

Sales and trading[edit]

On behalf of the bank and its clients, a large investment bank's primary function is buying and selling products. In market making, traders will buy and sell financial products with the goal of making money on each trade. Sales is the term for the investment bank's sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on acaveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, which can price and execute trades, or structure new products that fit a specific need. Structuring has been a relatively recent activity as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities. In 2010, investment banks came under pressure as a result of selling complex derivatives contracts to local municipalities in Europe and the US.[5] Strategists advise external as well as internal clients on the strategies that can be adopted in various markets. Ranging from derivatives to specific industries, strategists place companies and industries in a quantitative framework with full consideration of the macroeconomic scene. This strategy often affects the way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structurers create new products. Banks also undertake risk through proprietary trading, performed by a special set of traders who do not interface with clients and through "principal risk"—risk undertaken by a trader after he buys or sells a product to a client and does not hedge his total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet. The necessity for numerical ability in sales and trading has created jobs for physics, mathematics and engineering Ph.D.s who act as quantitative analysts.

Research[edit]

The equity research division reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. Investment banks typically have sell-side analysts which cover various industries. Their sponsored funds or proprietrary trading offices will also have buy-side research. While the research division may or may not generate revenue (based on policies at different banks), its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. Research also serves outside clients with investment advice (such as institutional investors and high net worth individuals) in the hopes that these clients will execute suggested trade ideas through the sales and trading division of the bank, and thereby generate revenue for the firm. However, research does not directly bring in revenue through commission or profit, which arguably places research in a middle office role. Research also covers credit research, fixed income research, macroeconomic research, and quantitative analysis, all of which are used internally and externally to advise clients but do not directly affect revenue. All research groups, nonetheless, provide a key service in terms of advisory and strategy. There is a potential conflict of interest between the investment bank and its analysis, in that published analysis can affect the bank's profits. Hence in recent years the relationship between investment banking and research has become highly regulated, requiring aChinese wall between public and private functions.

Front office/Middle office[edit]

Risk Management[edit]

Risk management involves analyzing the market and credit risk that an investment bank or its clients take onto their balance sheet during transactions or trades. Credit risk focuses around capital markets activities, such as loan syndication, bond issuance, restructuring, and leveraged finance. Market risk conducts review of sales and trading activities utilizing the VaR model and provide hedge-fund solutions to portfolio managers. Other risk groups include country risk, operational risk, and counterparty risks which may or may not exist on a bank to bank basis. Credit risk solutions are key part of capital market transactions, involving debt structuring, exit financing, loan amendment, project finance, leveraged buy-outs, and sometimes portfolio hedging. Front office market risk activities provide service to investors via derivative solutions, portfolio management, portfolio consulting, and risk advisory. Well-known risk groups in JPMorgan Chase, Goldman Sachsand Barclays engage in revenue-generating activities involving debt structuring, restructuring, loan syndication, and securitization for clients such as corporates, governments, and hedge funds. J.P. Morgan IB Risk works with investment banking to execute transactions and advise investors, although its Finance & Operation risk groups focus on middle office functions involving internal, non-revenue generating, operational risk controls.[6][7][8] Credit default swap, for instance, is a famous credit risk hedging solution for clients invented by J.P. Morgan's Blythe Masters during the 1990s. The Loan Risk Solutions group[9] within Barclays' investment banking division and Risk Management and Financing group[10] housed in Goldman Sach's securities division are client-driven franchises. However, risk management groups such as operational risk, internal risk control, legal risk, and the one at Morgan Stanley are restrained to internal business functions including firm balance-sheet risk analysis and assigning trading cap that are independent of client needs, even though these groups may be responsible for deal approval that directly affects capital market activities. Risk management is a broad area, and like research, its roles can be client-facing or internal.

Middle office[edit]

This area of the bank includes treasury management, internal controls, and internal corporate strategy.
Corporate treasury is responsible for an investment bank's funding, capital structure management, and liquidity risk monitoring.
Financial control tracks and analyzes the capital flows of the firm, the Finance division is the principal adviser to senior management on essential areas such as controlling the firm's global risk exposure and the profitability and structure of the firm's various businesses via dedicated trading desk product control teams. In the United States and United Kingdom, a Financial Controller is a senior position, often reporting to the Chief Financial Officer.
Internal corporate strategy tackling firm management and profit strategy, unlike corporate strategy groups that advise clients, is non-revenue regenerating yet a key functional role within investment banks.
This list is not a comprehensive summary of all middle-office functions within an investment bank, as specific desks within front and back offices may participate in internal functions.[11]

Back office[edit]

Operations[edit]

This involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Many banks have outsourced operations. It is, however, a critical part of the bank. Due to increased competition in finance related careers, college degrees are now mandatory at most Tier 1 investment banks.[citation needed] A finance degree has proved significant in understanding the depth of the deals and transactions that occur across all the divisions of the bank.

Technology[edit]

Every major investment bank has considerable amounts of in-house software, created by the technology team, who are also responsible for technical support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading. Some trades are initiated by complex algorithms for hedging purposes.
Firms are responsible for compliance with government regulations and internal regulations.

Other businesses[edit]

  • Merchant banking can be called "very personal banking"; merchant banks offer capital in exchange for share ownership rather than loans, and offer advice on management and strategy. Merchant banking is also a name used to describe the private equity side of a firm.[12] Current examples include Defoe Fournier & Cie. and JPMorgan's One Equity Partners and the originalJ.P. Morgan & Co. Rothschilds, Barings, Warburgs and Morgans were all merchant banks. (Originally, "merchant bank" was the British English term for an investment bank.)
  • Real Estate Increased Equity Collateral Sale Also called REIECS Advanced Financial Model in which a Real Estate Asset Value is increased thought an Investment Banking Institution (Usually only the Biggest Investment Banks are able to handle REIECS.

Industry profile[edit]

There are various trade associations throughout the world which represent the industry in lobbying, facilitate industry standards, and publish statistics. The International Council of Securities Associations (ICSA) is a global group of trade associations.
In the United States, the Securities Industry and Financial Markets Association (SIFMA) is likely the most significant; however, several of the large investment banks are members of the American Bankers Association Securities Association (ABASA)[13] while small investment banks are members of the National Investment Banking Association (NIBA).
In Europe, the European Forum of Securities Associations was formed in 2007 by various European trade associations.[14] Several European trade associations (principally the London Investment Banking Association and the European SIFMA affiliate) combined in 2009 to form Association for Financial Markets in Europe (AFME).
In the securities industry in China (particularly mainland China), the Securities Association of China is a self-regulatory organization whose members are largely investment banks.

Global size and revenue mix[edit]

Global investment banking revenue increased for the fifth year running in 2007, to a record US$84.3 billion,[15] which was up 22% on the previous year and more than double the level in 2003. Subsequent to their exposure to United States sub-prime securities investments, many investment banks have experienced losses. As of late 2012, global revenues for investment banks were estimated at $240 billion, down about a third from 2009, as companies pursued less deals and traded less.[16] Differences in total revenue are likely due to different ways of classifying investment banking revenue, such as subtracting proprietary trading revenue.
In terms of total revenue, SEC filings of the major independent investment banks in the United States show that investment banking (defined as M&A advisory services and security underwriting) only made up about 15-20% of total revenue for these banks from 1996 to 2006, with the majority of revenue (60+% in some years) brought in by "trading" which includes brokerage commissions and proprietary trading; the proprietary trading is estimated to provide a significant portion of this revenue.[3]
The United States generated 46% of global revenue in 2009, down from 56% in 1999. Europe (with Middle East and Africa) generated about a third while Asian countries generated the remaining 21%.[15]:8 The industry is heavily concentrated in a small number of major financial centers, including City of London, New York City, Hong Kong and Tokyo.
According to estimates published by the International Financial Services London, for the decade prior to the financial crisis in 2008, M&A was a primary source of investment banking revenue, often accounting for 40% of such revenue, but dropped during and after the financial crisis.[15]:9 Equity underwriting revenue ranged from 30% to 38% and fixed-income underwriting accounted for the remaining revenue.[15]:9
Revenues have been affected by the introduction of new products with higher margins; however, these innovations are often copied quickly by competing banks, pushing down trading margins. For example, brokerages commissions for bond and equity trading is a commodity business but structuring and trading derivatives has higher margins because each over-the-counter contract has to be uniquely structured and could involve complex pay-off and risk profiles. One growth area is private investment in public equity (PIPEs, otherwise known as Regulation D or Regulation S). Such transactions are privately negotiated between companies and accredited investors.

Banks also earned revenue by securitizing debt, particularly mortgage debt prior to the financial crisis. Investment banks have become concerned that lenders are securitizing in-house, driving the investment banks to pursue vertical integration by becoming lenders, which is allowed in the United States since the repeal of the Glass-Steagall act in 1999.[citation needed]
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