Investment banking has a long and storied history going back over a hundred years. Major firms like Lazard, JPMorgan, Goldman Sachs, UBS were founded in the late 19th or early 20th centuries and have grown to become giants in investment banking. The late 19th and early 20th centuries saw huge growth in public markets and the rise of modern investment banks. Firms like Lazard focused on advisory services for mergers and acquisitions while others expanded into sales, trading, underwriting and research. They rode waves of economic development while surviving crashes like the Great Depression. Post-WW2 saw further expansion of investment banking activities. The 1980s brought deregulation which led to more competition but also more risk-taking. The 2008 financial crisis led to consolidation of the industry. Major firms today offer a diverse suite of investment banking services. Investments over the decades have evolved with the times as new assets like cryptocurrency emerge. But timeless principles underlie sound investing. Looking back on the history provides useful context for today’s investors.
Lazard founded in 1848 has a long history in investment banking and advising on M&A deals
The Lazard investment bank was founded in 1848 and has survived over 170 years. It started out in dry goods and gold trading. In the late 19th century, it expanded into finance as demand grew for capital to fund new companies and railroads. Lazard focused on advisory services, establishing a presence in major financial hubs like New York, London and Paris. It joined the New York Stock Exchange in the 1880s. While competitors diversified into lending and underwriting, Lazard remained focused on advising clients. Its specialty was mergers and acquisitions. In the 2000s, Lazard was a top advisor on major M&A deals, generating huge fees. The Lazard model of specialization and discretion has powered its success over the decades.
JPMorgan Chase was created by the merger of several old banking institutions
JPMorgan Chase as it exists today was formed by the merger of J.P. Morgan & Co. and Chase Manhattan Bank in 2000. This brought together two banks with long pedigrees. J.P. Morgan & Co. traced its roots to the 19th century. It financed the formation of major companies like GE and ATT in the 1890s and 1900s. Chase Manhattan Bank was itself the product of several previous mergers including the Bank of Manhattan and Chase National Bank. After 2000, JPMorgan continued acquiring banks like Bear Stearns and Washington Mutual, becoming one of the largest financial institutions. Today JPMorgan Chase provides investment banking, asset management, private banking and other financial services worldwide.
Goldman Sachs also has origins in the 19th century
The Goldman Sachs investment bank was founded in 1869 by German immigrant Marcus Goldman. In the late 19th century, it participated in some early IPOs and joined the New York Stock Exchange. In the 20th century, it expanded into new areas like securities trading and underwriting. In the 1980s it grew rapidly, participating in mergers, acquisitions and securities issuance. It offered new products from emerging markets as finance went global. The 1990s saw it become a leading underwriter of IPOs during the dot-com boom. It acquired competitors like J. Aron & Company. Today it is one of the largest investment banks offering services across sales, trading, investment management and investment banking.
UBS has Swiss origins but is now a global financial services firm
The UBS Group originated from Swiss banking institutions like the Swiss Bank Corporation that trace back to the mid-19th century. Through mergers, the Swiss banking industry consolidated into two large banks – UBS and Credit Suisse. In the 1990s, the Swiss Bank Corporation merged with Union Bank of Switzerland, taking the UBS name. UBS acquired PaineWebber, a US brokerage firm, in 2000. Today UBS has its headquarters in Zurich but operates worldwide, providing corporate, institutional and wealth management services. After the 2008 crisis, UBS was forced to restructure, focusing more on wealth management, but it remains a large player in investment banking activities globally.
Major investment banks like Lazard, JPMorgan, Goldman Sachs and UBS have long histories stretching back over a hundred years. They have survived economic volatility by adapting their investment banking services. The evolution of investing from the 19th century to today has been enormous but guided by fundamental principles.