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Is Bank of America investing in investment banking?



Leading investment banker

Bank of America (BAC) and JPMorgan Chase (JPM) are the biggest players in the US investment banking space. JPMorgan’s investment banking operations were the largest in the United States for several years. But in 2013, Bank of America’s revenues from investment banking exceeded JPMorgan’s.

Goldman Sachs (GS), which is part of the Financial Select Sector SPDR ETF (XLF), and Morgan Stanley (MS) occupy the third and fourth positions, respectively, in the US investment banking market.

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Underwriting and advisory services

Bank of America’s (BAC) investment banking services include debt and equity underwriting and distribution as well as merger-related and other advisory services. Debt and equity underwriting involves raising capital on behalf of companies, usually through public offer. It also includes raising capital, mainly debt, for governments. The bank is also responsible for distributing the securities and is required to hold them if it can’t find interested investors.

Bank of America raised $700 billion for its clients in 2013. The bank also advised some of the top deals, including Verizon, H.J. Heinz, and Silver Lake-Dell that same year. The bank earned $6.1 billion in investment banking fees in 2013.

The above chart shows the break-up of Bank of America’s (BAC) investment banking fees for 2013. Debt issuance contributed the highest to the total fees.


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