BENEFIT OF STARTING YOUR OWN INVESTMENT BANK & INVESTMENT FUND
Investments banks are the charm of wall street, and getting your feet dipped in it can be challenging; overall, they are among the most complex financial mechanism in the world. The best way to find your place in this financial space is by getting a job in a reputable investment bank. (At least this is what we heard of till now.) But if you're reading this, you are already a step ahead and thinking of setting up your own investment bank or an investment fund (or both). With this article, we aim to “dot all the i’s and cross all the t’s” and enlighten you on the benefits of owning an investment bank or a fund.
Let's get some basics clear before we dive deep into the benefits and how you can reap from an investment bank.
WHAT DOES AN INVESTMENT BANK DO?
As the name suggests, investment banks manage clients’ investments. Clients can be high net-worth individuals (HNI), corporations, companies, and even governments. Investment banks provide services like raising capital but are not limited to it. They provide an array of services like:
Sales & trading, proprietary trading services
Merger and acquisitions advisory (M&As),
Corporate finance (leveraged finance and finance restructuring)
Helping a firm go public (through IPO’s)
There are boatloads of profitable services which an investment banker performs to earn his fair share. This fair share can exponentially increase when you own an investment bank or an offshore bank, especially when incorporating modern digital capabilities.
WHY OWN AN INVESTMENT BANK OR AN INVESTMENT MANAGEMENT FIRM?
You always wanted to own a business and now have an entrepreneurial spirit to make a more extensive influence on society.
Your investment thesis is different and has a unique value proposition.
Your current workplace is changing its mission or is winding down. So now it's time to start your journey.
You enjoy managing money and running a business. And now you want to step up and want to do both!
You recognize the plenty of demand for financial advice, and investors have difficulty picking the right financial products.
Approximately 10,000 US residents retire daily
42% of the states' residents lack a succession plan.
Are you ready to explore further and want to start working on your Investment bank, offshore bank, or Equity fund, but afraid of getting caught in bureaucratic "red-tapism" and high cost? You want to create an independent Bank/fund but don't think you are alone; BancorpTrust is a licensed investment bank that can help set your dream bank or fund with electronic payment capabilities at a price that will not hurt your pockets. Contact us today to tap into our vast array of expertise!
1) ACQUIRING AN INVESTMENT BANK FOR SALE
Starting from scratch can be challenging and time-consuming. And understanding the time value of money, what can be better than buying an investment bank on sale?
Benefits of buying an investment bank for sale rather than starting from scratch:
Government-approved license and intellectual property of the firm
Benefit from the existing goodwill
SWIFT code access
Focus time and funds on expansion rather than just setting up the business
After deciding the niche, your bank will serve, start with conducting market research, sale listings, and location. Perform proper 360-degree due diligence of the selected bank before making the purchase.
2) BUYING AN OFFSHORE BANK FOR SALE
Offshore banks don’t always need to concur with a negative connotation of illegal or illicit activities. An offshore bank is a bank regulated under an international banking license, usually located outside the home country of the depositor. These banks typically provide financial (tax) and legal tax advantages.
Benefits of buying an offshore bank for sale rather than starting from scratch:
Political and economic stability always helps a business grow and sustain itself in the long run. And with Offshore bank, you can get access to these stable states.
Buying an already established offshore bank can save you time and cost for setting the core banking system, compliance systems, and your offshore bank license.
Tax planning (Legally saving taxes and maintain your profits in a low tax jurisdiction)
Active cash flow management with minimal infrastructure as most of the transactions are carried online.
Easier access to banking information and financial markets
Ease in multi-currency transactions
Issuing bonds, guarantees for tenders, providing loans and credit facilities
Diversification and increase in the image of the individual/group holding the bank
If you don’t want to miss the opportunity to capitalize from an offshore bank license and don’t want to go through the hurdle and uncertainty of applying, acquiring might an existing bank might be the best possible move.
Private equity has outperformed the overall US markets over the last few decades. And the firms which are most benefited from these markets are Investment banks and offshore banks as they provide financial services directly dealing with the money.
1. Underwriting income
Helping a company going public (IPO). They help by selling the shares of the company in the open market.
2. Advisory/Consulting fees
Investment banks provide the best knowledge about the financial markets and financial products. They charge high consulting fees, depending on the number of hours of work a banker had to put in.
3. Trading income
Investment banks often invest (and trade) on behalf of their clients and charge a percentage of above-average return called asset management fees.
Innovation in financial products has led to more sources of income for investment banks, and one such example is selling securitized assets.
5. Research fees
Investment banks and their research analysts' data and reports are highly valued in the financial space because of their expertise. If anyone wants to gain access to these reports, it can only be done via paying a fee.
6. Part-ownership in a business
While assisting as a mediator between the buy and sell-side, investment banks can buy a stake in a company by being a shareholding. Thus, making a profit in the long run (compounding).
Apart from this lucrative earning potential of an investment bank, you should always focus on building your reputation and track record as these are the things that speak for you and why people should entrust in you! If your returns and services make sense, more people and corporations will be willing to listen to you.
4) SYNDICATION & ITS BENEFITS
No matter how rewarding a business is, we cannot ignore the market risk involved and the massive funds required to acquire it. Syndication helps in countering the market risk and arrangement of funds.
When a group of investment banks pools funds together for a specific entity, it is called a syndicate. In addition to the shield against risk factors, as it is a newly formed corporation by law, it gets a tax reduction.
5) MARKET MAKER VS MARKET TAKER
Market makers are individuals or firms who provide liquidity and depth to the market. Most Investment banks have proprietary trading, and the amount of volume they generate continually helps them profit from the difference between the bid-ask spread.
In other words, Market makers are the arbitrageurs who earn from the spread by providing liquidity to the market takers (traders/investors/consumers/producers). This liquidity allows easy sale-purchase of an asset hence smoother working of financial markets.
Another complex offering by investment banks that attracts high net worth individuals and corporations is structured products. These structured products and derivatives are financial instruments whose values are linked to an underlying asset, product, currency, commodity, interest rate, or index. They provide an additional source of income hence improving the profitability of your bank.
6) ACCESS TO EUROPEAN UNION
Registered offices of Investment banks or Investment funds established by BancorpTrust are in the United States or the Netherlands. Apart from these 2 countries, it is possible to set up an additional branch office in Geneva, Switzerland, or anywhere else in the world. Hence you can also access its benefits by "passport" through the European Union with your licensed Dutch investment fund.
Now you understand the benefits of starting your own investment bank or offshore bank. If you are the one with entrepreneurial zeal to create your own investment bank or an investment fund and are tired of searching for "how to establish your own investment banking fund," we at BancorpTrust are the one-stop solution for you. With over 3 decades of successful track record, we specialize in establishing Investment banks, offshore banks, licensed Investment funds, Capital trusts, Statutory trusts, etc., at a fraction of the cost of other similar service providers.
The management team of BancorpTrust has been in this industry since 1990 and has a track record of successful Investment Bank establishments for over 3 decades.
Contact us for a confidential consultation! Our experts will contact you within 24 hours.
LET'S GET YOU YOUR BANK!!!