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. adjective [ before noun ] BANKING, FINANCE informal. used to describe the largest investment banks, whose clients are very large companies and very rich people: Huge fees were earned by the so-called bulge-bracket firms from their work on multi-billion dollar deals.
What makes a 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 the best bulge bracket to work for? ›
In our Prestige Rankings, Goldman Sachs again ranks No. 1, with peer bankers saying that the firm “still commands prestige,” is “the best of the bulge brackets,” and is “where you go to build your resume.”
How to answer why should we hire you in investment banking? ›
Most websites, books, and other resources recommend generic answers:
- You want to learn a lot.
- You're interested in corporate finance.
- You like a fast-paced environment.
- You've always done well in finance/accounting classes.
- You want to work with smart and motivated people.
Some examples of common weaknesses in investment banking include public speaking, networking, and delegating tasks. Explain how you are working to improve your weaknesses. For example, you could talk about how you are taking a public speaking class or how you are practicing delegating tasks to your team members.
How do you break into a bulge bracket? ›
To do this you must make your CV stand out and be finance-oriented. Generally, bulge banks will only deem your application to be worthy when you have satisfied at least two characteristics academic excellence, interest in finance/investment banking and relevant experience.
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.
What is the deal size for a bulge bracket? ›
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.
How prestigious is the UBS? ›
In recent years it has been named the World's Best Bank for Wealth Management and the Investment Bank of the Year for Equity Raising, among many other honors. UBS offers rewarding internships and careers in numerous areas, including corporate finance, asset management, IT, data science, and more.
Bulge bracket banks offer both financing and advisory services. Financing has to do with raising capital while advisory services of a bulge bank are split into four categories: investment banking advisory service, sales & trading, equity research and asset management.
Is Wells Fargo a bulge bracket? ›
Is Wells Fargo a bulge bracket? No. Despite being a very reputed and established firm in the market, Wells Fargo is an in-between-a-bank, in other words, a middle-market firm. It falls between a bulge bracket and a boutique bank.
What is the best bulge bracket bank? ›
List of Top 10 Bulge Bracket Investment Banks
| Name of the Bank | Year of Foundation | Headquarter |
|---|
| Goldman Sachs & Co | 1869 | New York |
| Morgan Stanley | 1935 | New York |
| J.P. Morgan Chase & Co | 1799 | New York |
| Bank of America Merrill Lynch | 1991 | Charlotte N.C |
6 more rowsMost bulge bracket investment banks offer a suite of services which are anchored around corporate banking or lending, therefore the potential for conflicts of interest arises if hired as restructuring advisors.
What is the difference between MM and bulge bracket? ›
Bulge brackets: A league of their own
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. However, the distinction between different categories of investment banking firms is neither exact nor fixed.
Why work for a bulge bracket bank? ›
Bulge banks tend to offer more competitive salaries and are more likely to offer a relocation package and higher bonuses. However, an employee's influence on his or her pay package is likely to be limited, as there are many people working at the same level and under the same standardized pay systems.
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.
How to answer why corporate banking? ›
Why corporate banking rather than investment banking? Don't say that you “want to work on deals but have a better lifestyle” – instead, say that you like how the corporate banking role is central to everything at a bank, and you want to manage long-term client relationships rather than just working on one-off deals.
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.
