Investment Banking is a special segment of banking operation that facilitates individuals and organizations to raise capital and provide financial consultancy services.
They act as intermediaries between security issuers and investors and help new firms to get listed and go public. They either buy all the available shares at a price estimated by the experts and resell them to public or sell shares on behalf of the issuer and take commission on each share.
Investment Banks functions are revolving around consultancy services are not normally regulated by the authorities in many jurisdictions. Some of the major investment banking in the world such Golden Sachs and HSBC is also well known in the market for their renowned services.
Currently there are over five investment banks in Sri Lanka and they are not regulated by the central bank or Securities and Exchange Commission. However, through the new Securities and Exchange Commission Act the SEC is now considering regulating the sector through licensing a category for Corporate Finance Advisor which is also within the ambit of the Listed securities.
So, Is there scope for investment banking in Maldives?
Maldives have eight commercial banking institutions and three non-bank finance institutions, in the area of housing, leasing and a government-owned SME finance company.
With the development of the accounting profession, and the institutional and regulatory mechanisms such as the Maldives Institute of Chartered Accountants, more home-grown consultancies and advisory services have propped up in the market, which brings more hope for Investment banking Services and a potential regulatory focus on it.
The investment banking services to be tapped wisely to unleash the full potential.