What are the main divisions inside a bank?

For a beginner: investment banking/advisory, capital markets, sales & trading/markets, equity research, asset or wealth management, risk/compliance, and operations. IB recruiting usually focuses on advisory and capital markets.

Intuition

These divisions exist because capital markets need three distinct functions: origination of financing needs, distribution and pricing of risk, and long-term stewardship of capital. IBD connects issuers to the market, S&T turns financing into tradable securities and liquidity, and Asset Management supplies patient demand. The bank sits at the intersection of capital formation and capital allocation.

Watch

Expect a follow-up on how the divisions interact on a single deal — be ready to trace a bond issuance from IBD origination through S&T distribution to Asset Management buyers.

Deep Dive

Identify and explain the main functional divisions inside an investment bank and how they relate to each other.

1. Investment Banking Division (IBD)

  • Function: Advisory — helps clients raise capital or execute transactions
  • Two main groups:
    • M&A: advises on buying, selling, or merging companies; earns advisory fees
    • Capital Markets: helps clients issue debt (DCM) or equity (ECM); earns underwriting fees
  • Sub-organized by industry coverage groups (Healthcare, TMT, Energy) and product groups (M&A, Leveraged Finance, Restructuring)
  • IBD originates the deals — client-facing 'sell' of the bank's services

2. Sales & Trading (S&T)

  • Function: Executes trades and makes markets in equities, fixed income, currencies, commodities
  • Sales: maintains relationships with institutional investors (buy-side) and pitches trade ideas
  • Trading: provides liquidity by quoting bid/ask prices and managing risk positions
  • Revenue: bid-ask spreads, commissions, and (where permitted) proprietary positioning
  • Links to IBD: when ECM/DCM issues new securities, S&T distributes them and supports secondary-market trading

3. Asset Management / Investment Management

  • Function: Manages money for institutions, HNW individuals, retail
  • Revenue: management fees (% of AUM) and sometimes performance fees
  • Operates like a buy-side business housed within the bank

Supporting / Adjacent Divisions:

DivisionRole
ResearchPublishes analysis on companies/sectors; supports S&T and IBD
Risk ManagementMonitors and limits exposure across all divisions
Private Wealth ManagementAdvises HNW individuals; overlaps with AM but more relationship-driven
Middle/Back OfficeTrade settlement, compliance, operations, technology

Follow the Deal:

  1. IBD (DCM) advises a company to issue in bonds
  2. S&T Sales markets bonds to institutional investors; Trading prices and allocates
  3. Research may have published a report that built investor interest
  4. Asset Management may purchase some bonds for its funds
  5. Post-issuance, S&T makes a secondary market

Illustrative revenue split (large universal bank):

  • S&T: ~40-50%
  • IBD: ~20-25%
  • Asset/Wealth Management: ~25-30%
  • Other: remainder

Shortcut: Three divisions = Originate (IBD) → Distribute (S&T) → Steward (AM).