Financial institutions like banks and insurance companies provide their clients with expertise and advice to help them on their path to a sound financial future. But where does a financial institution go when it needs advice itself? That's where a financial institutions group can come into the picture. But what exactly is a FIG and what does it do?
Key Takeaways
- Financial institutions groups provide expertise and advisory services to banks, insurance companies, and other financial institutions.
- Wells Fargo, Goldman Sachs, and Morgan Stanley are examples of firms with FIG business activities.
- Investment banking, debt restructuring, and raising capital are among the services offered to FIG clients.
- Financial institutions groups can also make money by borrowing money at lower rates and selling at higher rates.
What Is a FIG?
A FIG refers to a financial institutionsgroup. It is an ensemble of financial professionals who provide expertise and advisory services to clients, and the clients are typically financial institutions. Banks, insurance companies, technology companies, specialty finance, and asset management firms are examples of companies that hire the services of a financial institutions group.
FIG businesses typically hire analysts and other professionals with strong academic backgrounds in finance. Many investment banks also have training programs that help educate analysts on the important aspects of the business’s offerings with a multitude of opportunities available after the training program ends.
Who Are FIGs and What Do They Do?
In order to provide more tailored services, some investment banks may segmentareas of expertise for the financial institutions group into a banking orfinancial servicesgroup and an insurance group. Some investment banks use these sorts of divisions more as a marketing technique, which can help attract customers seeking specific types of services under the FIG umbrella.
Nearly all of the large investment banks have a FIG business integrated with their overall offerings. Some of the larger investment banks with a FIG business include Morgan Stanley, Wells Fargo, and Goldman Sachs. The services that FIGs provide for their clients can vary and range from initial public offerings (IPOs) to financings and buyouts, along with the following:
- Investment banking advice
- Mergers and acquisitions (M&A)
- Raising capital
- Restructuring
- Debt financing
FIG businesses can represent both public and private companies. Or, it can serve to help a private company go public. Investment banking FIG businesses might also offer specific expertise in certain market segments or have specialists that can work across many segments, such as mortgage lending, debt capital markets, and equity capital raising.
Generally, large FIG businesses will service a variety of needs for financial institutions.
How Do FIGs Make Money?
FIG business structures can range broadly across the industry. Some may be located within a large investment bank culture. Some FIG businesses may be smaller entities with a focus primarily on one of the above-mentioned service offerings. In addition, FIGs may be siloed or integrated with broad services for major sectors, including healthcare, industrial, media, telecommunications, mining, energy, retail, technology, andreal estate.
Some examples of ideal FIG clients include insurance companies specializing in personal or commercial products; commercial finance companies that provide financial services to businesses, banks, brokerages, investmentdealers, asset andwealth management companies; emerging companies seeking to go public; and private companies seeking financing through a private placement.
FIGs don't just make money the traditional way or necessarily sell physical products. They can also make profits from borrowing at cheap rates and then selling at higher rates. So they make money through interest income by moving money around in money markets, through loans, and other deposits.
What Type of Clients Work With a Financial Institutions Group?
Commercial banks, insurance companies, brokerages, investment banks, and specialty finance firms are among the clients that hire a financial institutions group.
What Is an Example of a Financial Institutions Group?
As one example, Morgan Stanley's Financial Institutions Group runs a team of roughly 170 investment bankers globally that offer mergers and acquisitions expertise to a wide range of clients. Among the range of services it provides are strategically guiding corporate finance transactions and financial analysis.
Did FIG Advisers Help Broker UBS's Acquisition of Credit Suisse?
In 2023, FIG advisers at JP Morgan and Morgan Stanley worked with UBS to acquire Credit Suisse in a $3.2 billion dollar deal over a mere 48-hour period. Credit Suisse, a 167-year old bank, was on the brink of collapse, and the deal was among the most notable acquisitions in the banking sector since the 2008 global financial crisis.
The Bottom Line
Financial institutions groups provide a wide range of corporate finance services, from mergers and acquisitions advisory to capital raising. Given their sophistication and scale of expertise, they have been instrumental in brokering some of the most significant banking deals in recent history, such as the UBS takeover of the 167-year old Swiss bank, Credit Suisse.
