Forward Planning: Growing need for investment banking

The efforts of a few responsible decision-makers have influenced the fast and steady growth and general prosperity of the UAE, particularly Dubai.

'The city that rarely sleeps' still surprises us with new and daring ventures while we already enjoy a unique type of life.

Government decision makers may decide on the strategy, lay the infrastructure and support the growth; but the most wanted involvement for building and maintaining the economy still has to come from the private sector.

The sense of responsibility toward the success of our economy should overwhelm all of us. I have tried in my articles to cover the gaps and shortages that we encounter while at the same time looking at ideas and systems that the modern world is enjoying and from which we can benefit.

Banking here has for many years benefited from higher interest rates but limited to a few available services like personal loans and bank deposits.

I was recently visiting a banker who is working now to change the institution's image and cater to the additional needs of its retail and corporate clients.

The change of image was the first step and the second soon afterwards was the establishing of an investment department with the goal of helping individuals and corporates alike to invest their monies in diverse instruments and have an alternative to the usual earning from bank deposits.

It's a very positive phenomenon observed lately: changes are taking place toward better serving the clients' needs.

A bank investment department is a relatively new concept in this part of the world, which started around beginning/middle of the 1990s and it's what we desperately need to see developing more and more in the UAE.

Investment banks usually help government and companies to issue securities, investors to purchase and trade securities; they provide financial advice and manage financial assets.

Examples of investment banks are Merrill Lynch, Morgan Stanley Dean Witter and Salomon Smith Barney.

In the U.S., the investment banking industry employs about 613,000 people and generates $145 billion a year in revenues from mutual funds, bonds and securities sales, facilitating mergers and acquisitions and underwriting corporate debt.

An investment banker in raising the money usually helps businesses that are looking for a long-term growth and need capital. He also advises and guides the company in dealing with the investment community.

Businesses that would like to expand or are facing financial problems would seek his advice if they need to take the company public or raise the needed money.

If a company is going public, the investment bank may agree to underwrite a stock issue and take all the risk of this stock issue to be shared among a larger group of banks called a syndicate.

Each member of the syndicate takes a certain amount of liabilities and shares to sell. The original investment bank acts as a manager until all the shares are accounted for.

One of the largest investment bankers offers real estate services like financing, advising and investments to real estate companies and investors all over the world.

They offer their services in relation to the real estate capital markets, public or private equity, secured debt, unsecured debt, and convertible instruments.

Individual investors also enjoy a wide range of services from investment banks through financial planning, estate planning and retirement planning.

The investor is offered many types of accounts to help for the immediate and/or long term objectives like investment, education funding, retirement and business accounts.

Financial needs and requirements are met and enhanced through the services provided by investment banking for the individuals as well as for the business community.

We have many established businesses in this part of the world which may need to expand, go public, generate more revenues, invest better, sell the business, acquire or merge with another one.

Although our economy here is flourishing there is still room for improvement.