A traditional investment bank is composed of multiple divisions, including sales and trading and investment banking. The investment banking division is an intermediary between companies that need capital and clients wanting to invest capital.

Bankers advise clients that need capital or are planning a strategic action, such as a merger or acquisition. Bankers also help execute these strategic actions. Normally, the investment banking division is divided between industry, product, and capital markets groups.

Investment banks are frequently discussed and anlyzed in the financial press, especially during the current credit and financial crunch. This article reviews the structure and normal functions of typical investment banks.

Investment banks primarily have two functions. The first function is to raise and invest capital. The second is to advise clients on strategic actions, such as mergers and acquisitions. Investment banks primarily serve as intermediaries between companies that need capital and companies wanting to investment capital.

In addition, investment banks have been increasingly employing their own balance sheets to generate profits without directly serving clients through groups such as proprietary trading and internal alternative investment funds.