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(FINANCE) a type of bank that raises money for clients by issuing stock (see initial public offering and follow-on offering) or by issuing bonds.

Prior to the repeal (1999) of the Glass-Steagall Act, commercial banks and investment banks were required to be separate entities. Subsequently, the law was changed so that a bank holding company could own a commercial bank and an investment bank. Outside of the USA, commercial banks have always been allowed to engage in underwriting securities.

Investment banks usually sell shares of stock on a major exchange, such as the NYSE or NASDAQ. They give a fixed amount of money to the borrower, but also an agreed-upon number of shares, so if the shares soar in price after the public offering, then the investment bank makes an immense amount of money.

Investment banks also underwrite other kinds of securities, such as bonds.
Goldman Sachs is the largest and most successful investment bank in the USA. Prior to 1999 it was a limited partnership; now it is a publicly traded corporation and also a bank holding company.
by Abu Yahya September 24, 2010
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Greed, the downfall of American Productivity.
If your factory or enterprise is no longer privately held, and margins are less than 25%, prepare for your job to move offshore.
Fred: "Hey Greg, where's your car?"

Greg: "Couldn't afford the payment. An investment bank took over our factory, sold off the machinery and building, and now 14 year old Chinese girls make Oster blenders."

Fred: "It's economics. 1/8th the quality at 1/10th the wage."
by ebbing July 22, 2008
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