A. Raising capital

Ruth Henly works in an investment bank in New York.

‘Unlike commercial banks, investment banks like ours don’t lend money. Instead we act as intermediaries between companies and investors. We help companies and governments raise capital by issuing securities such as stocks and bonds - that is, we offer them for sale.

We often underwrite securities issues: in other words, we guarantee to buy the securities ourselves if we can’t find other purchasers.

As well as initial public offerings (IPOs), when companies offer stock for sale for the first time, there are other occasions when they raise funds. For example, they might want to expand their operations, or to acquire another company, or to reduce their amount of debt, or to finance a specific project. They don’t only raise capital from the public: they can sell stocks or shares to institutional investors like insurance companies, investment funds - companies that invest the money of lots of small investors, and pension funds - companies that invest money that will later be paid to retired workers.

We also have a stockbroking and dealing department. This executes orders - buys and sells stocks for clients - which is broking, and trades with our own money, which is dealing. The stockbroking department also offers advice to investors.’