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Understanding corporate banking and investment

Corporate banking, also referred to as corporate financing, describes a range of banking services that are tailored for corporations, governments, financial institutions and other large organisations. In some instances, corporate banking services can also be offered to wealthy (high-net-worth) families and individuals. Different types of banking and investment services are available to cater for different needs.

Corporate banking services

Essentially, corporate banking services are those activities that involve lending and borrowing products and services between a bank and a corporate client. These lending and borrowing services and products could be as basic as a secured or unsecured loan or more sophisticated like a structured or syndicated financial transaction involving many different banks.

Trade finance and cash management also fall under the corporate banking umbrella. In the UK, for example, corporate banking services focus on providing UK commercial and corporate customers innovative banking products, everyday banking hours and specialist banking advice.

Investment banking services

Corporate investment banking, on the other hand, involves development, marketing and trading of a wide range of securities, equity and other financial assets on the international financial markets. These securities and equity include shares or stocks, bonds or fixed income, currencies and commodities.

The investment banking “asset classes” can all be traded directly or indirectly using derivative methods like swaps, options and futures. The derivative trading methods provide more investment opportunities for clients and also help manage risks.

It is important to note that investment banking does not only involve capital market activities. It also encompasses detailed research and analysis into performance, effects and influencing factors affecting individual companies, as well as specific industry sectors.

Benefits of corporate banking and investment

Corporations deal with significantly larger amounts of money than small firms and individuals. As a result, the specialized tools and analysis instruments corporate banking offers address the exact needs of corporations, which goes a along way in guaranteeing well informed appropriation of corporate funds and securities.

In addition to research, advisory and traditionally lending services, corporate banking also offers to manage its clients’ major transactions like mergers and acquisitions. This presents opportunities for more effective transactions and better management of corporate assets.

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