What advantages do Investment Bank with Balance Sheet have?
Looking at some BB and MM, I noticed only some IB have balance sheet. I wonder what advantage do IB with Balance Sheet have?
Since Lehman don't have BS, i wonder if having a bs could save them, i mean, at least theoretically, it can delay the bankruptcy, right?
Bump
large balance sheet gives a bank the ability to hold a large a position for a longer period of time. There are many ways to take advantage of this.
1-relative value - you can hold a large hedged position (long cheap things vs short expensive things) and wait for prices to converge to fair value 2-IB deal related lending. If an investment banking client wants to borrow money, and the market doesn't want to lend to the corp...the bank with large balance sheet can lend directly to the corp, as part of the investment banking business (M&A, etc...) 3-market domination. if you are big enough, you can control a market, and force smaller players to get squeezed out (generally not smart or legal, but in certain circumstances might be ok)
thanks, i have revise my question based on your ans so more people can search and benefit from your output.
Market domination is very legal and very cool
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