The "bulge bracket" is a slang term to describe the largest and most profitable multi-national investment banks in the world whose banking clients are normally huge institutions, corporations, and governments. The tombstone - an advertisement of a new issue - usually has the bulge bracket listed as the first group.
These bulge bracket investment banks typically offer both financing and advisory banking services, in addition to market making, sales, and research for a large range of financial products like credit, equities, commodities and derivatives. Bulge bracket banks also tend to be very involved in creating novel financial products like mortgage backed securities, carbon emission trading, credit default swaps, and insurance products. The bulge bracket investment banks are normally primary dealers in U.S. treasuries.
The name "bulge bracket" originates from the manner in which investment banks are listed on the public notification of a financial deal or transaction - or the "tombstone." The bookrunning manager, or bank with control of security allocation to investors, is listed above all others and on the prospectus cover. The printing size of the font for this bank is larger than the others and tends to "bulge" out.
Some debate exists over which banks are part of the bulge bracket since there is no universally recognized criteria for membership in the group.
Bulge bracket banks are massive, multinational corporations. They offer all kinds of services to clients (IBD, sales and trading, asset management) and many also run a commercial banking operation (JPMorgan Chase, Barclays, Bank of America). The type of work, positions available and compensation are very similar across all of the banks.
Bulge bracket bank clients are typically large corporations and even governments, and bulge bracket firms offer financial advisory services among other finance services for their clients. The exclusive Bulge Bracket Investment Bank List consists of the most profitable and largest multinational investment banks in the world.
As of September 2011 the Bulge Bracket Investment Bank List consists of:
- Bank of America Merrill Lynch (BAML)
- Barclays Capital (BarCap)
- Citigroup (Citi)
- Credit Suisse (CS)
- Deutsche Bank (DB)
- Goldman Sachs (GS or Goldman)
- JPMorgan Chase (JPM)
- Morgan Stanley (MS)
- Asset Management (AM)
- Commercial Bank
- Equity Research (ER)
- Investment Bank (IB)
- Investment Banking Division (IBD)
- Private Wealth Management (PWM)