Corporate Banking | What is Corporate Banking?

What is Corporate Banking?

Corporate banking is a kind of banking that involves a range of banking and financial services that are offered only to corporate companies or we can say large clients. It is a subset of business banking.

Corporate banking is important for the economy because it is the highest source of profits for banks. It involves working with very large capital and banks can also gain higher rate of interests compared to regular loans. Here the clients usually range from small to mid- sized local business firms to huge businesses.

Credit products-

The service includes loans and credit products to corporate customers. These credit facilities can be very beneficial for a bank they form the largest share of profit but the interest rates imposed on these products are also very high and so they are very risk prone for the commercial banks.SBI Corporate Banking.

Equipment lending-

Corporate which are involved in high capital intensive industries such as transportation, IT industries, and some manufacturing units which require heavy machinery, equipments etc required fixed asset financing. All these financing services are provides under corporate banking.

Employer Service–

Banks also provides services such as selection of retirement plan, payroll facilities, healthcare plans for employees also comes under corporate services.

Treasury, cash management services and other commercial services-

It manages the working capital requirement and provides transactions and investment of client money. It also includes asset management services and underwriters for initial public offerings (IPO).

Commercial banks also provide services of analysis of real estates and trade finances. Services such as debt and equity restructuring etc are also provided under corporate banking. Some additional financial services such as investment, international treanscations, insurance and advisory services are also provided by corporate to clientele.

Characteristics of Corporate Banking-

A bank’s corporate banking unit deals with small, middle sized to large corporation which is made up of different businesses like when one company owns a controlling stake in a number of small companies which conduct unrelated and different businesses which is called clientele.
A corporate banking account can only be opened by the consent of all board of directors of the company. The account must be authorised by an official vote or a resolution.
All contents of such accounts are the property of these big corporate houses. These account holders possess a certain degree of independence.
The functioning of the corporate account forms the credit history of that conglomerate so it also affects the share prices, interest rates applicable to loan and valuation of that company.etc,
This field required a special expertise because it is risk prone and plays a very crucial role in not only the growth and profit share of the banks but also the economy of the country.

Corporate bankiing customer care