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Investment banking.

Compared to other financial institutions, investment banking in Pakistan is a comparatively new phenomenon. At present there are 11 investment banks listed on the stock exchange with total paid-up capital of Rs. 1.8 billion. The first investment bank was listed in 1990, two in 1991, two in 1992 and three in 1993.

Investment banks are allowed to transact the following business:

Money Market Activities

1) Issuing short-term paper of its own or certificates of deposits or investments of not less than 30 days' maturity.

2) Trading in commercial paper issued by its client, government securities, promissory notes, bankers' acceptances, and other money market instruments, acting as a broker or acting on its own behalf.

3) Acting as broker or on its own account in the call money market.

Capital Market Activities

1) Trading in listed securities, both equity and non-equity instruments, acting either as a broker or acting on its own account.

2) Providing professional analysis of securities to both institutional and individual investors.

3) Issuing of long-term certificates of investment and under-writing of stocks and shares, short and long-term participation term certificates and other negotiable term obligations of corporations and financial institutions, acting singly or jointly as manager, underwriter and distributor for such issues, either public issues or private investment.

4) Floating and managing both open-end and closed-end mutual funds and managing portfolios of stocks and shares, pension and provident funds, participation term certificates and other negotiable and debt instruments for both individual and institutional clients, on a discretionary as well as non-discretionary basis.

5) Providing margin loans to individual and institutional investors.

6) Offering of cash management accounts to enable clients to shift, at their discretion, among various investment alternatives.

Project Financing Activities

1) Making investments in projects through underwriting of public issue of stocks and shares and securities, short-term and long-term participation term certificates and term finance certificates of varying features.

2) Guaranteeing and counter-guaranteeing loans and obligations.

Corporate Finance Services

1) Acting as adviser and financial agent for companies in obtaining direct bank loans, syndicated loans, export credits, leases and project finances, both domestically and internationally.

2) Assisting companies in private placement of debt and equity, domestically and abroad.

3) Acting as adviser to companies in corporate or financial restructuring as well as in the preparation of resource mobilisation plans.

4) Acting as advisers to companies in mergers, acquisitions and divestures.

5) Assisting companies with cash management systems.

6) Preparing feasibility, market or industry studies for companies, both domestic and foreign.

7) Raising equity, such as, through venture capital for new and existing companies by acting as a financial intermediary.

General

Raising funds through equity, foreign debentures, both short and long-term, commercial paper issued abroad, sale of short and long-term participation term certificates and term finance certificates, deposit and investment certificates, floating and managing of Modarabas and through other methods and instruments provided that the period of term finance certificates and other instruments is not less than 30 days.
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Title Annotation:Industrial Pakistan 1994; Pakistani banking industry
Author:Akhtar, Mubashir A.
Publication:Economic Review
Date:Aug 1, 1994
Words:494
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