Degree
Master of Business Administration
Faculty / School
Faculty of Business Administration (FBA)
Advisor
Dr. Ahmad Junaid, Assistant Professor, Department of Finance
Committee Member 1
Dr. Ahmad Junaid, Assistant Professor and Chairperson Finance, CBER Research Fellow, Institute of Business Administration (IBA), Karachi
Project Type
MBA Research Project
Keywords
https://ir.iba.edu.pk/do/search/?q=Investment%20banking%20industry&start=0&context=8598587&facet=">Investment banking industry, Security Investment Bank Ltd, SECP, Business model, Unique selling point
Abstract / Summary
This study is aimed at identifying the reasons behind the downfall of stand-alone investment banking industry of Pakistan as it studies how investment banking activities are carried out all over the globe and compares them with the investment banking industry of Pakistan to explain why gaps (if any) exist. More specifically, this study has been conducted for Security Investment Bank Ltd (SIBL) to provide recommendations on its performance and how to improve it. The research draws attention to a number of factors including competition, regulation, process flows, types of clients, and business model while explaining the industry structure and identifying problems with the sector.
The project was divided into two phases; with phase one focusing on secondary research on what investment banking is and how it is being carried out in other developing and developed countries. The second phase, on the other hand, is based on primary research as it focuses on conducting in-depth interviews of industry professionals, in order to gather large amounts of data on industry structure and problems and to sieve through that data to find meaning in it. To facilitate completion of phase two, the group interviewed investment banking divisions of commercial banks and brokerage houses, regulator (SECP), and industry experts, to understand the investment banking scenario in Pakistan, its origins, its past and current performance, its operations, regulatory and competitive environment, and growth opportunities (if any).
With respect to investment banking industry of Pakistan, the research found that the competition from other industry players including investment banking divisions of commercial and brokerage houses and boutique firms have a great impact on the stand-alone investment banks along with the strict regulators/regulations. Stand-alone investment banks come under the purview of SECP, which has stringent rules compared to State Bank of Pakistan (SBP). Moreover, the research found out that the stand-alone investment banks are not carrying out core investment banking activities in Pakistan and are working on somewhat “flawed” business model. The link of investment banking with the economic cycle of a country is also an important factor that is resulting in deteriorating performance of investment banks.
To improve SIBL and the overall sector performance, the report suggests that stand-alone investment banks should develop their unique selling point (USP) either in the funded or non-funded segment, i.e. investment banks can tap the niche market that has not been dominated by other industry players or focus on core investment banking activities like advisory, if they want to compete with big industry players like commercial banks and brokerage houses. Geographical expansion in the country and involvement in CPEC projects can also help in stand-alone investment banks’ survival and growth in the future.
Recommended Citation
Ajaz, A., Khan, M. M., Riaz, S., Ali, S. Q., & Masood, S. R. (2019). Revamping stand-alone investment banking industry in Pakistan (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-mba/222
