Investment banking was a lucrative business till the arrival of the financial crisis in 2008. However, the sub-prime mortgage crisis took a toll in the global investment banks. A major reason for the crisis is that these investment banks were not under the control of either the Federal Reserve Bank or the US Securities Exchange Commission, which made it easier for them to take risks. As a result of the financial crisis worsening in late 2008, the biggest investment banks collapsed.
Bear Stearns was acquired by JP Morgan Chase in March 2008. Lehman Brothers filed for Bankruptcy and was declared bankrupt in September 2008. The Asian and European operations of Lehman Brothers were bought by Nomura and the North American Lehman operations by Barclays Capital. Merill Lynch was acquired by Bank of America for $50 billion. Goldman Sachs and Morgan Stanley converted themselves into commercial banks.
The collapse of these towering investment banks were felt in the Indian Investment Banks also. There were drop in fat fees and revenue for these banks. However, in the middle of the gloomy environment, there is opportunity for investment banks to go global with properly designed strategies.
Presently, the growth rate of Indian economy is slow but it is resilient and performing better than many developed countries in the world. Capital market is performing well. Nifty and Sensex are performing at an all-time high level. Many IPO’s have successfully forayed in the year 2016-17.
However, investment can enhance their growth by exploring new and alternate markets, developing strong and long term relationship with the existing and new clients, giving quality advice to clients and assisting them in every stage of their growth, hiring qualified staff and promoting ethical behavior.
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