Investment Banking in the Philippines: Opportunities for Prosperity

 

The Function of Investment Banks

How Do Large Businesses Make Smart Financial Decisions?

Have you ever wondered how big companies acquire other businesses or merge to expand their market share? How do they decide where and when to place their funds for maximum returns? This is where specialized financial services come into play.

Investment banking helps businesses, governments, and organizations raise capital, manage mergers, and execute major financial transactions. It connects companies in need of funds with investors looking for opportunities.

Mins to Read: 14  minutes

Age: 18-60 years old

 

In this article, we’ll discuss the following:

 

What is Investment Banking?

This sector focuses on facilitating large-scale financial transactions, including:
✅ Mergers and Acquisitions (M&A) – Assisting businesses in buying, selling, or merging with others.
✅ Underwriting – Helping companies secure funding through stock or bond issuance.
✅ Financial Advisory – Providing guidance on strategic growth and financial planning.

Experts in this field offer insights to help organizations navigate high-stakes financial decisions.

The Philippine Banking Landscape

The country’s financial sector is diverse, consisting of commercial banks, rural banks, thrift banks, and non-banking institutions.

🔹 57 thrift banks
🔹 492 rural banks
🔹 36 commercial banks
🔹 40 credit unions
🔹 6,000+ non-banking institutions

The Bangko Sentral ng Pilipinas (BSP) regulates all financial entities to maintain stability. Analysts have praised BSP’s strategies in managing economic conditions, leading to a growing and resilient sector.

How Does Investment Banking Work?

Financial institutions specializing in this sector assist companies and organizations with:

1️⃣ Raising Capital – Helping businesses obtain funding through stock sales, bonds, or private investments.
2️⃣ Mergers & Acquisitions Advisory – Evaluating business acquisitions, negotiating deals, and facilitating partnerships.
3️⃣ Underwriting Services – Assessing financial risks and ensuring successful public offerings (IPOs).

Comparison with Traditional Banking

Feature	Specialized Financial Services	Traditional Banking
Focus	Large-scale transactions, M&A, IPOs	Savings, loans, and deposits
Clients	Corporations, governments, investors	Individuals and small businesses
Revenue Sources	Advisory fees, underwriting fees, trading profits	Interest on loans, transaction fees

Key Services Offered

1️⃣ Underwriting Services

Underwriting involves securing funds by selling stocks or bonds. Common types include:

✔ Firm Commitment – The underwriter purchases all securities and sells them to investors, guaranteeing full funding.
✔ Best Efforts – The underwriter sells as many securities as possible but doesn’t ensure a complete sale.
✔ All-or-Nothing – If all securities aren’t sold, the deal is canceled, and no funds are raised.

2️⃣ Mergers & Acquisitions Advisory

Experts in this field guide companies through business acquisitions and mergers. The process involves:

1️⃣ Defining a growth strategy and identifying potential targets.
2️⃣ Evaluating financial health and profitability.
3️⃣ Negotiating terms and conducting due diligence.
4️⃣ Finalizing contracts and securing necessary funding.

3️⃣ Financial Advisory Services

Specialists offer guidance on:

✔ Business expansion strategies
✔ Debt restructuring
✔ Risk assessment
✔ Wealth management

The Function of Investment Banks

An investment bank and a bank’s investment banking division (IBD) can occasionally be confused. Underwriting, mergers and acquisitions, sales and trading, equities research, asset management, commercial banking, and retail banking are just a few of the many services provided by full-service investment banks. A bank’s investment banking section provides only underwriting and M&A consulting services.

 

Investment Banking Underwriting Services

Investment Banking Services

1️⃣ Underwriting Services

Underwriting involves selling stocks or bonds to raise capital. Common types include:

✔ Firm Commitment – The underwriter buys all securities and sells them to investors, ensuring full funding.
✔ Best Efforts – The underwriter sells as many securities as possible but does not guarantee full sale.
✔ All-or-Nothing – If all securities are not sold, the deal is canceled, and no funds are raised.

2️⃣ Mergers & Acquisitions (M&A) Advisory

Investment banks assist in business acquisitions and mergers. The process involves:

1️⃣ Defining an acquisition strategy and identifying potential targets.
2️⃣ Evaluating financial health and profitability.
3️⃣ Negotiating terms and conducting due diligence.
4️⃣ Finalizing contracts and securing funding.

3️⃣ Financial Advisory Services

Investment banks guide businesses on:

✔ Strategic growth planning
✔ Debt restructuring
✔ Risk assessment
✔ Asset management

 

 

Full-service banks provide the following services:

• Underwriting – Capital-raising and underwriting organizations work with businesses looking to raise capital or go public through the IPO process. The primary market, or “new capital,” is served by this function.
• Mergers & Acquisitions (M&A) – Advisory responsibilities for both business buyers and sellers, overseeing the M&A process from beginning to end.
• Sales and Trading – Connecting secondary market buyers and sellers of securities. Investment banking sales and trading teams can trade the company’s own funds in addition to acting as clients’ agents.
• Equity Research – The research, or “coverage,” of securities conducted by the equity research group supports stock trading and assists investors in making investment decisions.
• Asset management – The process of overseeing assets for a variety of clients, including institutions and private individuals, in a wide range of investment strategies.

Between buyers and sellers, brokers operate as a middleman. For instance, they assist in locating investors to purchase assets in investment banking.

 

Philippine Investment Banks – Salaries

Philippines labor is renowned for being inexpensive. The salary of investment banking expert in the Philippines is  low, which is the most terrible aspect of the industry.

 

An investment banking firm’s average salary is PHP 370,186/year. Investment banking experts in the Philippines earn about USD 6000 per year for less than ten(10) years of expertise. This is compared to millions made by their counterparts in the US and Europe.

 

However, your income may increase significantly if you advance and manage to land a position as a partner at a reputable investment bank.

 

Here is a graph made by PayScale that could be useful:

 

MUST-READ AND SHARE!

2023 Your Practical Wedding Guide

Your Ultimate Access to Kuwait Directories in this COVID-19 Crisis

Investments and Finance Ultimate Guide

OFW FINANCE – Money News Update that you need to read (Table of Contents)

A Devotional for having a Grateful Heart

Stock Investment A Beginner’s Guide

How To Save Money Amidst Inflation

Philippines Best Banks with High-Yield Savings Return

Savings Dos and Don’ts

Essentials Before Applying For a Credit Card

 

If you like this article please share and love my page DIARYNIGRACIA PAGE Questions, suggestions send me at diarynigracia @ gmail (dot) com

You may also follow my Instagram account featuring microliterature #microlit. For more of my artworks, visit DIARYNIGRACIA INSTAGRAM