Global Investment: Largest Funding Sources In Banking

Investment banks play a crucial role in the global financial landscape, providing a range of services such as capital raising, trading, and advisory services. The largest investment banks in the world are typically those with the largest market capitalisation or market cap. A bank's market cap is the value of its shares owned by stockholders.

The top investment banks in the world, based on market capitalisation in 2023-2024, are:

1. JPMorgan Chase & Co

2. Bank of America Securities (previously Bank of America Merrill Lynch)

3. Morgan Stanley

4. Goldman Sachs Group, Inc

5. Citigroup

6. HSBC Holding PLC

7. BNP Paribas

8. UBS Group

9. Barclays Investment Bank

10. Société Générale

The largest investment banks in the world are dominated by US multinational firms. As of September 2024, JPMorgan was the world's leading bank in terms of investment banking revenue, generating around $5.1 billion.

The top investment banks can be categorised into three types: bulge bracket, middle market, and boutique. Bulge bracket banks are the largest and most profitable global investment banks, offering a full range of services. Middle market banks offer similar services but on a smaller scale, often specialising in certain industry sectors or regions. Boutique investment banks are smaller in scale and typically specialise in specific segments of the banking industry, such as mergers and acquisitions advisory or restructuring.

Bulge Bracket Banks

"Bulge bracket" is a slang term used to describe the most profitable multinational investment banks in the world. These banks are the major underwriters of securities issues and the managers of the underwriter syndicate. Their clients are usually large institutions, corporations, and governments.

The term "bulge bracket" comes from the way investment banks are listed on the "tombstone", or public notification of a financial transaction. The more important banks in a syndicate are listed first in larger print, making them seem to bulge out from the page.

As of 2024, the following banks are considered to be in the bulge bracket:

• Bank of America Merrill Lynch
• Goldman Sachs
• Barclays Capital
• Credit Suisse
• Deutsche Bank
• JPMorgan Chase
• Citigroup
• Morgan Stanley
• UBS

The largest bulge bracket investment bank, by market capitalization, is JPMorgan Chase, with a market value of around $600 billion as of July 2024. Bank of America is the second largest, with a market cap of around $320 billion.

Middle Market Banks

Middle-market investment banks are financial institutions that provide services to mid-tier companies with annual revenues between $10 million and $1 billion. They are smaller than bulge-bracket banks but larger than regional boutique banks. Middle-market banks tend to have a solid presence in their home countries but a weaker international presence. They offer a range of services, including mergers and acquisitions advisory, equity fundraising, and debt fundraising, and some may also offer restructuring, sales and trading, and equity research.

Middle-market banks include:

• Baird
• Brown Gibbons Lang & Co
• William Blair
• Lincoln International
• Lazard
• Stifel
• Houlihan-Lokey
• Harris William
• Raymond James
• BGL
• Jefferies
• Cowen
• Macquarie
• Piper Sandler
• PJ Solomon
• Oppenheimer
• Wedbush
• TD Cowen
• JMP
• RBC
• HSBC
• Truist Financial Corporation
• PNC Financial Services

Middle-market banks offer certain advantages, such as a potentially more relaxed culture and better work-life balance, more responsibility and client interaction, and a more comprehensive understanding of the deal process and rationale. They are also a good option for career changers or those who decided on investment banking late. However, there are also some disadvantages, including smaller and simpler deals, a lesser-known brand name, reduced exit opportunities, and highly variable work experience.

Boutique Banks

• Elite Boutiques (EBs)
• Up-and-Coming Elite Boutiques (UCEBs)
• Industry-Specific Boutiques (ISBs)
• Regional Boutiques (RBs)

Elite Boutiques are at the top of their game, often advising alongside bulge bracket banks on important deals. Examples include Centerview, Evercore, Guggenheim, Lazard, Moelis, Perella Weinberg, PJT Partners, and Rothschild.

Up-and-Coming Elite Boutiques are those that are gaining in stature and approaching EB status. They are often founded by senior bankers from EB or BB banks who take a few big clients with them and establish a niche within an industry. Examples include LionTree Advisors, Zaoui & Co., Robey Warshaw, Lakeside Capital Advisers, and Dyal Co.

Industry-Specific Boutiques are often closer to middle-market banks because they tend to work on larger deals, they may have a few offices, and analysts have somewhat better exit opportunities. Examples include SVB Leerink (Healthcare), Ziegler (Healthcare, Senior Living, and Education), FT Partners (Fintech), Raine Group and Allen & Co. (both TMT), and Seabury (Transportation/Maritime/Aerospace & Defence).

When most people say "boutique banks", they're referring to regional boutiques. These firms have anywhere from ~5 to ~50 employees, with 1-2 offices, and they advise on smaller deals (usually under $50 million). Examples include Marlin & Associates, Financo, Foros, KLR Group, Rivington Capital Advisors, India Brook Partners, Young & Partners, and Sawaya Partners.

In-Between-a-Banks

• RBC
• Many European, Asian, and Canadian banks, such as HSBC, BNP Paribas, Mizuho, Nomura, BMO, and CITIC
• Santander
• Deutsche Bank
• Barclays

IBABs are often strong in one particular region, such as Europe for the French banks or Japan for the Japanese banks, but don't perform as well elsewhere.

Analysts at IBABs can still win traditional exit opportunities, but it's less common for them to get into the largest buy-side funds. Instead, they may be more likely to move to other banks, smaller funds, or regular companies.

Top Banks by Market Capitalization

Market capitalization, or market cap, is the value of a company's issued shares owned by stockholders. It is calculated by multiplying the share price by the number of outstanding shares.

As of March 2024, JPMorgan Chase & Co was the world's largest bank by market cap, with a value of $383,549 million. It is followed by the Industrial and Commercial Bank of China Ltd ($235,043 million), and Bank of America Corp ($228,780 million). As of December 2023, JPMorgan Chase was the largest bank in the world by market cap, with a value of $490 billion, followed by Bank of America with a market cap of $266.45 billion.

Other banks in the top 10 include Agricultural Bank of China Ltd, China Construction Bank Corp, Royal Bank of Canada, and Wells Fargo.

The largest full-service global investment banks include Wells Fargo Securities, Mitsubishi UFJ Financial Group, and Bank of China.

Frequently asked questions