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					           Industry Research

                 Group 1
1.   Fundamental differences of
     Commercial Banks and Investment
     Banks, the different job nature and
     how to make money
 Definition of commercial bank
 An institution which accepts
  deposits, loan and offer services
 Can be classified into 4 groups:
  – Community Bank
  – Regional Bank
  – Super-regional bank
  – Money center or international bank
 Definition of Investment Bank
 Aninstitution which acts as an
 underwriter or agent for corporation
 to issue securities
  – Maintain dealer or broker operation
  – Maintain market for previously issued
    securities.
  – Offer advisory services for investors
            Differences between the
             commercial bank and
                investment bank
                          Commercial Bank                 Investment Bank
1) Types of Institution   Depository                  Non-Depository
2) Nature of Job          Accepts deposits,           Act as underwriter or agent
                          makes loans and offers      for corporation, municipalities
                          financial services.         issuing securities but doest not
                                                      accept deposits or make loans, and
                                                      offer advisory services to investors
                                                      maintain broker/dealer operations,
                                                      markets for previously issued securities
3) Classification         Community Bank, Regional            NIL
                          Bank, Super-regional bank
                          and Money center or
                          international bank.
Job Nature of Investment Banks
   Leading Investment Firms:
     -Goldman Sachs Group,
     -Merrill Lynch
     -Morgan Stanley Dean Witter
3 main types of activities:
 Investment Banking
 Trading and Principal Investments
 Asset Management and Securities
  Services
       1. Investment Banking
   Corporate Advisory Services
    – Mergers
    – Acquisitions
    – Restructurings
   Securities Underwriting
    – buying all the shares of IPO for resale at a pre-
      established price per share
   Private Placement of Debt and Equity
    Securities
    – place, negotiate and close transactions of
      private placement
       2. Trading and Principal
             Investments
   Fixed Income, Currency and Commodities
    – products are: bank
      loans, commodities, currencies, derivatives
   Equities
    – trades equities and equity-related products


   Principal Investments
    – make principal investments directly and
      through the funds they raise and manage
       3. Asset Management and
          Securities Services
   Asset Management
    – Assets under management include mutual funds, separate
      accounts managed for institutional and individual
      investors, merchant banking funds and other alternative
      investment funds
   Securities Services
    – includes prime brokerage, financing services and securities
      lending, all of which generate revenues primarily in the form of
      fees or interest rate spreads
   Commissions
    – include fees from executing and clearing client transactions on
      major stock, options and futures markets worldwide
    – also include revenues from the increased share of the income
      and gains derived from our merchant banking funds.
 How Investment Banks Make
          Money?
 Investment   Banking
  – fees charged for financial advisory
  – Commissions from Underwriting
    businesses
 Revenues  earned through Trading
  and Principal Investments
 Asset Management
  – generates management fees by
    providing investment advisory services
Personal Banking of Standard Charted
               Bank
                                 Job dutuies


                                        Personal Banking



    Basic services     Personal banking plans         Banking services    Life stage plans




         Deposits
         Loans
      Investment
      Credit card                                         Mobile          Getting started
                         Priority banking
  Retirement service                                      WAP             Young couples
                          Excel banking
       Insurance                                          Palm           Getting established
                          Easy banking
                                                      Automated ATM            Prime
Corporate banking --Trade services
Assist firm in international trade
 Factoring/Account Receivables services
 Import and export Letters of Credit

 Documentary collections and guarantees

 Document Against Acceptance

 Document Against Payment

 Credit Bills Negotiation

   Tailored trade services packages
          Credit facilities
 Credit facilities help meet financial
  needs
 Working Capital

 Cheque Protection

 Professional Firm Overdraft

 Merchant Overdraft

 Residential and Commercial Property
  Financing
          Cash management
Help firms manage money
 Transactional accounts (e.g. Savings Account and
  Current Account)
 Time Deposit Account
 Remittances and bank drafts
 24-hour phone banking services
 Consolidated statement
 ATM Services
 Fax banking and courier services
 Electronic banking services
 International and local collection and payment
  services
 Protection and employee service
Offer protection and employee services
   provide products such as:
 insurance

 payroll

 provident fund products
     How to make money?
 lending and accepting deposit
to earn net interest income
 charge transaction fees and
  commission
from the financial services they
  provided
    Service charges and commission
    Net fees and commissions (HK$
     millions)
     (HSBC)                    2001
    Account services          1214
    Credit facilities          1534
    Import/export               2193
    Remittances                856
    Securities /stock broking 1530
    Cards                       2723
    Other                       3584
Thank You !

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