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
Bulge bracket banks are multinational, brand-name banks that regularly handle billion-dollar transactions and employ thousands of people in financial centers around the world. Then there are boutique banks—smaller, younger banks that specialize in certain areas of investment banking and handle smaller deals.
Why is it called bulge bracket? ›
The name comes from the way investment banks are listed on the "tombstone", or public notification of a financial transaction; the more important banks in a syndicate are listed first. There is often debate over which banks are considered to belong to the bulge bracket.
Is Goldman Sachs a bulge bracket? ›
Bulge bracket banks
For instance, JP Morgan, Goldman Sachs, and Bank of America are commonly known bulge bracket investment banks. Some especially large firms also offer consumer banking services, such as checking accounts and lending products for homes or vehicles (typically due to legacy mergers).
How hard is it to get into bulge bracket? ›
Experience Internships/Related Banking Experience
Undergraduates should be aiming for at least one finance-related internship (the more the merrier though). This is important because if you have little to zero work experience, successfully applying for a BB role is closer to zero – not impossible, but closer to zero.
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.
Why boutique over bulge bracket? ›
Boutiques offer more opportunities for direct client engagement. Largely due to leaner deal teams, you get far more opportunities to interact and work with the senior management at both your own firm, and with clients.
Is UBS a top tier bank? ›
Tier 1 includes the "big three" listed above. Tier 2 includes Credit Suisse, Barclays, and Deutsche Bank. Tier 3 includes UBS, BNP Paribas, and SocGen.
What are the best bulge bracket banks? ›
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 rowsApr 30, 2024
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.
Is Wells Fargo bulge? ›
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.
Companies Considered Too Big to Fail
Bank of America Corp. The Bank of New York Mellon Corp. Citigroup Inc. The Goldman Sachs Group Inc.
Who are the big four investment bankers? ›
What Are the Big 4 Investment Banks? The big four are JPMorgan, Goldman Sachs, Citigroup, and Morgan Stanley. Some other global giants are treading on their heels, including Deutsche Bank, Barclays, Credit Suisse, and UBS.
Can you move from middle market to bulge bracket? ›
Within IB, it's feasible to go from a boutique to a middle market bank, or a middle market bank to an elite boutique or bulge bracket. But you're probably not going to move from an unknown 10-person boutique in the Middle of Nowhere directly to GS, MS, or JPM in New York.
What are the 9 bulge brackets? ›
Components of Bulge Brackets
- Bank of America Merrill Lynch.
- Barclays Capital.
- Citigroup.
- Credit Suisse.
- Deutsche Bank.
- Goldman Sachs.
- JPMorgan Chase.
- Morgan Stanley.
Most 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.
How to answer why bulge bracket? ›
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.
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.
