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Investment Banking Associates

History

The first investment bank in the United States was established by the financier Jay Cooke. Just months before the start of the Civil War, Cooke founded Jay Cooke & Company in Philadelphia, which made loans and sold bonds to help finance the Union war effort. The investment banking industry grew rapidly after the war. Companies interested in raising capital began selling securities in the public markets, and financial firms became an active partner of the issuing company: acting as underwriter of the financing, distributor of the resulting public offering, and a jack-of-all-trades attending to the miscellaneous transaction details. Firms such as Goldman Sachs (founded in 1869) and Salomon Brothers (1910) became household names. From the early days of Jay Cooke & Company and Goldman Sachs to today, associates have played a significant role at investment banks.

The investment banking industry is currently in a state of transition as a result of new rules on capital and risk taking established by the federal government after the 2008 financial crisis, increasing business competition, and reduced profitability. Banks are cutting front-office staff such as associates in order to save money or as a result of moving away from trading activities (instead focusing on expanding their wealth management divisions), among other factors. Coalition Ltd., a London-based research firm, reports that at the end of 2014 the 10 largest investment banks employed 51,600 front-office producers (i.e., associates, analysts, investment bankers, etc.)—a decrease of 12,800 workers since 2010.

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