Introduction

A company can raise capital in many different ways in the contemporary world. However, organizations may choose the investment bank as a tool to make money. The income from the investment bank is higher than from the ordinary commercial bank but it is riskier. Investment bank has many other activities, which can help the company to increase capital. The process usually starts by advising. Therefore, the company has to decide which policy suits their settlement. The share of investment banks in the assets of the credit system is relatively small. However, because of the banking awareness and the founders connections, they play an important role in the economy.

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Investment banks place an additional emphasis on shares and bonds of the existing companies and corporations. Currently, it is impossible to sell the securities without the investment banks. At the same time, placement of securities is a significant source of profits. Therefore, the investment banks policy is a difficult process, which requires a lot of knowledge and experience.

The Difference between an Investment Bank and a Commercial Bank

The investment bank is a special financial institution engaged in the financing and investment lending. Some of the services include IPOs, boutiques, equity research, sales, trading, asset management, wealth management, front and back offices, such as financial control and corporate strategy. The main operation of the investment banking is securities underwriting and securities trading. The investment bank can act as a broker to different clients. On the contrary, a commercial bank has absolutely different services. A commercial bank is a financial institution engaged in universal banking operations mainly due to the funds raised in the form of deposits. Moreover, the commercial bank is regulated by law, when the Securities and Exchange Commission governs the investment bank. Some banks combine the two divisions of investment and commercial activities. However, the experience shows that many of them did not survive on the market.

Barclays Bank

Barclays Bank is divided into the different subdivisions. Each of them performs certain functions and services. The band includes retail banking, Barclaycard, wealth and investment management, corporate banking, and investment banking. The part of the bank, which participates in investment, is different every year, because the investment business may be partially sold in different countries. However, around 37.5% of activities are dedicated to investment (Barclays 2013). In 2015, Barclays decided to sell the investment banking business in Brazil, which will lead to the decrease in the measure of capital allocations. However, the decision will allow the bank to develop other sectors, which occupy a greater share of the system.

Every year investment banking strategy is expanding, but the completion of the goals is not as effective as it supposed to be:

Year

Strategy

Percentage of Completion of the Goals,%

Reference List

Reference Type

2012

Focus investment in the UK, the US and Africa

68

Barclays 2012, Barclays, viewed 24 October 2015, https://www.home.barclays/content/dam/barclayspublic/

docs/InvestorRelations/

AnnualReports/AR2012/2012-barclays-bank-plc-annual-report.pdf/>.

Web Page

2013

Stabilize the organization, provide context for the change to come, maintain short-term momentum

89

Barclays 2013, Barclays, viewed 24 October 2015, https://www.home.barclays/content/dam/barclayspublic/

docs/InvestorRelations/

AnnualReports/AR2013/2013-barclays-bank-plc-annual-report.pdf/>.

Web Page

2014

Invest for growth;

major opportunities Barclaycard and Africa;

innovation in consumer payments;

66,6

Barclays 2014, Barclays, viewed 24 October 2015, https://www.home.barclays/content/dam/barclayspublic/

docs/InvestorRelations/

AnnualReports/AR2014/2014-barclays-bank-plc-annual-report.pdf/>.

Web Page

2015

Improve business returns

-

Barclays 2015, Barclays, viewed 24 October 2015,

Web Page

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All of the aforementioned changes will lead to additional expenses of around ?0.5 billion in 2015. Downsizing the banks investment capacity will result in the banks share value increase from $18 to $19 (Trefis Team 2014). The downsizing happens when the structure of the bank changes. It can result from the investment banks policy deregulation. The policy changes information should be public, so potential clients could know which of the investment banks is stable. If downsizing happens, it hits not only the banks ability to growth, but also the countrys global status. However, some researchers suppose that downsizing is the process that can help to the overgrowth organizations in some cases. It helps to find the balance between the strategy and the purpose of the bank. Overall, the results of the process are controversial. Moreover, the outcomes of the downsizing depend on the financial condition and the strategy of the bank.

Barclays Bank is always focused on the customers satisfaction and broadening investing services. Thus, it can be believable when the financial condition of the bank is reliable.

The trend in the financial statements of 2013-2014 years:

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Despite the fact that some sectors, such as certificates of money market instruments and equity cash products are decreasing, the total sum of the liabilities and assets is growing. One of the activities of the investment banks is providing financial analysis on securities trading by the bank. The activity is generally not profitable. On the contrary, it has become one of the most expensive operations in investment banks. Therefore, it can be classified as an intermediate between the internal and external activities of the investment bank.

The financial condition (Barclays Bank):

Company Contribution to the Group

2014

2013

2012

Reference List

Reference Type

Income (m)

7.588

8.596

9.104

Barclays 2014, viewed 24 October 2015, https://www.home.barclays/content/dam/barclayspublic/

docs/InvestorRelations/AnnualReports/AR2014/2014-barclays-bank-plc-annual-report.pdf/>.

Web Page

Profit before tax( m)

1.377

2.020

2.554

ROE (%)

2.7

8.2

9.6

Cost: income ratio (%)

82

77

71

Loans and advances to customers (bn)

106.3

104.5

93.2

Total assets (bn)

455.7

438.0

398.5

JP MORGAN

GOLDMAN, SACHS & CO.

EIB

BARCLAYS BANK

Reference List

Reference Type

Total assets (in millions)

467,613

477,076

542,371,988

630,152

JP Morgan 2015, viewed 24 October 2015,

Goldman, Sachs 2015, viewed 24 October 2015,

Web Page

Total liabilities (in millions)

765,728

465,699

542,371,988

1,291,948

EIB 2015, viewed 24 October 2015, www.eib.org>

Barclays 2015, viewed 24 October 2015,

Thus, Barclays Bank is the only British bank that competes with the giants in the banking industry like JP Morgan and Goldman Sachs. Barclays raise almost ?6bn by shrinking its balance sheet by up to ?80bn. Barclays is planning to deregulate the policy of the bank. The management will not increase funding for the investing. Instead, the bank is planning to give the funding for the Personal and Corporate Banking, Africa Banking, Barclaycard, and the Head Office. The bank supposes that the deregulation will help them to better balance capital allocation for 2016. Finally, the bank is not planning to increase the sum of investments in securities, which can affect the financial condition as well.

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