What do you know about corporate banking?
Majority of the banks in New Zealand offer financial services specifically to large and mid-sized corporations. We all know that all banks service the needs of retail and non-retail customers to a large extent. Did you know that some major banks often maintain separate divisions for catering to the needs of their corporate clients? Some of these services include cash management, financing, underwriting, and issuing of stocks, bonds, or other instruments.
What are the services that banks offer under corporate banking?
Corporate banking is often defined as those products and services that a bank offers to companies. For example, this could be as simple as a secured or unsecured loan, or it could be a high networth finance transaction with many banks or financial bodies involved in the deal. Under corporate banking, major banks also offer cash management and trade finance services to corporate bodies.
Gamut of services under corporate banking
Corporations have many financial needs such as processing of payments, internet banking, bank drafts and bank cheques. Any bank offering corporate banking services recognizes and services these needs. The gamut of services under corporate banking includes accepting money on term deposits, lending money by overdraft, instalment loan, providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures.
Corporate customer is king
The corporate customer is definitely treated like a king with a huge range of service offerings such as safekeeping of documents and other items in safe deposit boxes, sales, distribution or brokerage, cash management and treasury, merchant banking and private equity financing. Moreover, large commercial banks also underwrite bonds, offer intervention in currency-related deals and transactions, and handle credit-related securities for their corporate clients.
There is something that every bank has to offer for the corporate customer. The corporate customer may be a partnership firm, a private limited company, limited company, limited liability company, society, trust, fund, etc. Alongside services that generate revenue for banks, corporate banking that support the client-facing business indeed accounts for a huge chunk of any bank’s operations. Banks also take on the role of active capital market intermediaries; in other words, they function as the clearing and settlement bank for capital market deals that involve stock exchanges, commodity exchanges and spot exchanges.
Project financing is an important aspect of corporate banking. Let us assume that a corporate wants to set up for example, power plants, chemical processing plants, or transportation infrastructure. Banks cater to these requirements by structuring and arranging finances for large, complex and long-term infrastructure and industrial projects. Last but not least, banks also act as the intermediary for public offerings, private placements and rights issues.
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