I thought I’d expand the focus of my blog a little, and talk about corporate banking today. I like to use this blog to share what I know – but also to take the opportunity to learn about things I’m not really familiar with.
So, without further ado – an introduction to the world of corporate finance.
What exactly is corporate banking?
Corporate banking involves financial services that are specifically offered to corporations. Financial institutions (that is, banks) often maintain specific divisions for handling the needs of corporate clients that are separate from consumer or retail banking activities for individual accounts.
So, if you walk into your friendly neighborhood bank, and want to open a chequing account, you probably won’t be directed to the same person that someone running their own corporation would be.
And corporate banking doesn’t just refer to corporations – corporate banking services can also be offered to other financial institutions, governments, and agencies.
What kind of financial services are available in corporate banking?
Most banks offer a range of services, including the following:
- Raising capital – Banks can help corporations find a way to access new capital, in order to expand or improve their organizations
- Accessing markets – Banks offer specialized market professionals who can provide their corporate clients with access to fixed income, equity, foreign exchange, commodity and hedge fund markets
- Mitigating risk – Banks can also help corporate clients mitigate risk by providing them with derivatives and structured products which ensures that clients limit or enhance exposure to commodities, credit, equities, fixed income, foreign exchange and interest rates
Can you list everything a corporate client could be offered?
It can vary from bank to bank, but most banks will offer at least some of the following:
- A variety of loans, such as term loans, margin loans, and acquisition loans
- Revolving lines of credit
- Letters of credit
- Foreign exchange, money market, derivatives and treasury services.
- Sales of and trading of securities
- Real estate financing
- Dealership financing
- Corporate bank accounts
- Corporate credit cards
- Investment options, such as GICs
I hope you’ve enjoyed reading this post, and my introduction to the world of corporate finance!