What Is Bulge Bracket?
"Bulge bracket" is a slang term that describes the company or companies in an underwriting syndicate that issued the largest number of securities on a new issue. The bulge bracket is usually the first group listed on the tombstone—a print advertisem*nt of a new issue.
Bulge bracket is also a catchall term for the most profitable multi-national investment banks in the world, whose banking clients are normally large institutions, corporations, and governments. Then there areboutique banks—smaller, younger banks that specialize in certain areas of investment banking and handle smaller deals.
Key Takeaways
- Bulge bracket is the major company (or companies) involved in an underwriting syndicate for a new issue of securities.
- The bulge bracket is usually the first name (or group of names) on the print advertisem*nt of the new issue and may also be the manager of the underwriter syndicate.
- The term can also refer to the top investment banks in the industry, such as JPMorgan Chase and Goldman Sachs.
Understanding Bulge Bracket
As the largest firm in an underwriting syndicate, a bulge bracket may also act as the manager or co-manager of the underwriter syndicate. In the investment banking industry, syndicates are formed so that underwriting companies can share the risks and profits associated with a new security issue with other firms. The larger the new issue, the more firms are likely to take part in the new issue through syndication.
The term bulge bracket as a catchall for investment banks is less used since the financial crisis, being replaced with the terms tier one, tier two, or tier three.
Being in the Bulge Bracket
Beyond firms being involved in underwriting syndicates, bulge bracket may also refer to major investment banks. Bulge bracket investment banks usually provide both financing and advisory banking services, in addition to market making, sales, and research for various financial products. The bulge bracket is usually the book-running manager or the bank that controls the allocation of securities to investors. It is listed in the larger print above all others and on the prospectus cover.
As a catchall term for this class of large global investment bank, "bulge bracket" commonly refers to Bank of America Merrill Lynch, Goldman Sachs, Barclays Capital, Credit Suisse, Deutsche Bank, JPMorgan Chase, Citigroup, Morgan Stanley, and UBS. As massive multinational banks, these investment banks offer all kinds of services to clients and many also run retail banking operations.
Since the global financial crisis of 2008, "bulge bracket" as a catchall term has been somewhat outmoded by the practice of referring to investment banks as "tier one," "tier two," or "tier three" investment banks. The only tier one investment bank might be JPMorgan Chase because it ranks first or second globally across most product areas. Tier two would be Goldman Sachs, Barclays Capital, Credit Suisse, Deutsche Bank, and Citigroup. Examples of tier three would be UBS, BNP Paribas, and SocGen.
Being a bulge bracket bank does not necessarily mean it is rock solid. Bear Stearns and Lehman Brothers were once bulge bracket banks, which famously went under during the 2008-09 financial crisis.
How Many Bulge Bracket Banks Are There?
There are around a dozen bulge bracket banks today, including:
- Bank of America Merrill Lynch
- Barclays
- Blackstone
- Citi
- Credit Suisse
- Deutsche Bank
- Goldman Sachs
- HSBC
- J.P. Morgan Chase
- Morgan Stanley
- UBS
Which Is the Biggest Bulge Bracket Bank?
The largest bulge bracket investment bank, by market capitalization, is J.P. Morgan Chase (JPM), with a market value of around $400 billion as of November 2022. Bank of America (BAC) comes in second at around a $300 billion market cap.
Which Is the Oldest Bulge Bracket Bank?
J.P. Morgan Chase is the oldest investment bank still in operation, founded in New York City in 1799 by John Pierpont Morgan.
The Bottom Line
In summary, bulge bracket firms are the major underwriters (or bankers) of a securities issue and the managers of the underwriter syndicate. These include the biggest and most well-known companies in the investment banking world. While there is increasing competition from smaller, boutique investment banks, the bulge bracket remains the dominant force in helping companies issue new securities.
FAQs
Answer this question by citing experience and skills relevant to working with international business clients and large capital funds. Example answer: 'I intend to become a bulge bracket investment banker as I believe that this role provides a good opportunity to take on further responsibilities.
What is the meaning of bulge bracket? ›
"Bulge bracket" is a slang term that describes the company or companies in an underwriting syndicate that issued the largest number of securities on a new issue. The bulge bracket is usually the first group listed on the tombstone—a print advertisem*nt of a new issue.
What is an example of a bulge bracket? ›
Of these, six firms—The First Boston Corporation, Goldman, Sachs & Company, Merrill Lynch & Company, Morgan Stanley & Company, Salomon Brothers and Shearson Lehman Brothers—are so powerful that they make up the bulge bracket, so-called because more often than not they lead the deals, garnering the top tombstone spots.
What are the benefits of a bulge bracket? ›
Bulge brackets can advise a company on an M&A transaction, but they can also provide the debt financing for the deal. Their equity research team can help issue reports on your stock for the public markets and their sales and trading team can help you place your large buy orders of public stock.
How to answer why JP Morgan? ›
Informal Tone:-
Well, I've always been interested in the financial industry and jpmorganchasecc.com in particular has a strong reputation and a wide range of opportunities for growth and development. I also appreciate the company's commitment to diversity and inclusion, which aligns with my own values.
How to answer why should we hire you in investment banking? ›
How to answer "Why investment banking?" in an interview
- Showcase your interest in the industry. ...
- Focus on how can you can be beneficial. ...
- Include your educational background. ...
- Offer some on-the-job examples. ...
- Highlight your strengths and skills.
Experience Internships/Related Banking Experience
An internship is considered a prerequisite to landing a place in bulge bracket investment banks. The reason is that when you start working – even though you will receive training – you will be expected to hit the ground running or at least know how they operate.
Do bulge brackets read cover letters? ›
At bulge bracket investment banks, the recruiters are unlikely to read a cover letter for just-out-of-school positions; they may only see your resume. But some insist on cover letters for graduate positions for a sort of first assessment. Generally, a cover letter is more likely to be read in smaller or local banks.
Where does the name bulge bracket come from? ›
Definition of Bulge Bracket
The font size of the banks at the top is larger and bolder – thus they "bulge" out. If you have heard of the Big Four in the accounting world think of bulge bracket banks in that light. Being a member of this group means the bank is prestigious.
What is the meaning of big bulge? ›
1. a swelling or an outward curve. 2. a sudden increase in number or volume, esp of population.
Bulge Bracket Investment Banks (BBs)
They tend to work on the largest deals, usually those above $1 billion USD in size, though they sometimes go lower than that depending on the market. Over time, a split has developed in this group, with the “Top 3” (GS, MS, and JPM) performing better than the rest.
Is Wells Fargo a bulge bracket? ›
Multiple banks rank differently in various financial metrics, but some maintain top positions. As such, there is no official list of bulge bracket investment banks, but some prominent names include JPMorgan Chase, Goldman Sachs, Morgan Stanley, HSBC, UBS, etc. Is Wells Fargo a bulge bracket? No.
Why boutique vs bulge bracket? ›
There are two main categories of investment banks: elite boutiques and bulge brackets. Elite boutiques are smaller organizations that focus solely on investment banking, while bulge brackets are large firms that provide many different corporate finance solutions.
What is the difference between bulge bracket and middle-market? ›
The overwhelming majority of bulge bracket clients are Fortune 500, if not Fortune 100, firms executing multibillion-dollar deals. As such, they have huge teams in almost every major city. Meanwhile, middle-market and large boutiques usually work on deals ranging from $50-500 million.
How to answer the question "Why Goldman Sachs?"? ›
A sample response is: “I am thrilled to interview for Goldman Sachs. The company's commitment to excellence and historical performance in finance made me realize that this is the firm for me. I am a hard worker, and I believe I embody the company's values.
What is unique about UBS? ›
UBS is the preeminent universal bank in Switzerland, the only country where we operate in all five of our business areas: personal banking, wealth management, corporate and institutional clients, investment bank and asset management.
How to answer why banking? ›
"I am interested in banking because it's a good match for my hard-working and highly ambitious nature. I have always enjoyed pushing myself and being part of an environment that celebrates hard work. Being surrounded by intelligent, driven peers also inspires me to do my best work.
How to answer the why finance question? ›
Tips to answer "Why do you want to pursue a career in finance?"
- Showcase your passion. ...
- Highlight your analytical skills. ...
- Discuss the impact. ...
- Emphasize the challenge. ...
- Show your understanding of the industry. ...
- Link it to your skills. ...
- Highlight the potential for continuous learning. ...
- Discuss the potential for growth.
