Sie sind auf Seite 1von 15

CORPORATE BANKING

Made by :
Basma ELMEKNASSI

Sofia BELHAJ

SUMMARY

Introduction
I- Definition of corporate banks
II- Corporate banking services
A) Corporate banking services for small firms
B) Corporate banking services for large companies
Conclusion

Introduction

There are a lot of financial institutions that constitutes


the financial system, but we will focus principally on the
corporate banks.
This type of banks is very important for companies
because it leads them to manage their cash and also to
obtain loans in order to maintain and develop their
activity; they can consequently create value for the
economy.

I. Definition Of Corporate Banking

Corporate banking: aspect of banking that deals with


corporate customers.
The term was created after the Glass-Steagall Act in 1933
to distinguish it from investment banking
Corporate banking VS investment banking:
The corporate bank is more connected with the
operations of a business while the investment bank is
connected with larger-scale strategic decisions.
Corporate banking : a key profit center for most banks
4

II. CORPORATE BANKING


SERVICES

A) Corporate banking services for small


firms
Four main types of banking services are offered
to small firms :
1. Payment services:
. Generally the same services than
retail customers
. Small firms are provided with
business current accounts
. Main types of payments: Cash and
checks deposit (and writing)
facilities + electronic transfers.

A) Corporate banking services for small


firms
2. Debt finance
External source of funds offered by the bank to small
companies that
raise funds by increasing their debts.
Main sources of external finance for small firms:
- Traditional bank loan
- Overdraft finance
Additional sources of external finance for small firms:
- Leasing
- Factoring
- Trade credit

A) Corporate banking services for small


firms

3. Equity finance
External source of funds that allows a company to raise
funds by increasing its equity.
Few small firms access either public or private equity
finance
Private equity consists in an investment in the equity of
companies that are not publicly traded on a stock
exchange.
Public equity markets involves the selling of publicly
traded common shares or some form of preferred stock
or convertible security to private investors.
8

A) Corporate banking services for small


firms
4. Special financing

This kind of financing serves to promote


the development of small firms in
economically deprived areas or ethnic
minority firms.
Auto lending sector for borrowers that
dont have good credit ratings.
Generally, these loans have higher interest
rate than the one offered to borrowers with
clean credit ratings because there is a
higher default risk.
9

B) Corporate banking services for large


companies
Four Core products and services used by large
companies:
1. Cash management and transaction services
.Reasons of the growth of these services:
- excess cash balances is an opportunity cost (lose of interest)
- need to know cash position on a real time basis
.Services proposed:
-

Controlled disbursement accounts


Account reconciliation services
Cheque deposit services
Electronic sending of letters of credit
Treasury management software
Online corporate advisory and risk management services

10

B) Corporate banking services for large


companies
2. Credit and other debt financing
Long term financing

Short term financing


Large firms can negotiate
credit lines with a
certain number of banks
=> they arent dependent
on one sole supplier of
funds

For large lending requirements, companies


can borrow via:

syndicated loans
Issuance of bonds
(debt investment for a
defined period of time
and fixed interest
rate):
Domestic bonds Vs
Eurobonds
11

B) Corporate banking services for large


companies
3. Commitments and guarantees

Commitments : a bank commits to provide services to


raise funds to a company at a future date, for which it
receives a fee.
Guarantees : in case a bank has underwritten the
obligations of a third party.
Example => Letter of credit (LC)

12

B) Corporate banking services for large


companies
4. Foreign exchange and interest rate services
Tools offered by the bank to large firm to hedge their :

interest rate risk


foreign currency positions

13

Corporate banking services

Small firms

Payment services

Debt finance

Large companies

Cash management and transaction services

Equity finance

Credit and other debt financing

- Private equity

Commitments and guarantees

- Public equity

Foreing exchange and interest rate services

Special financing

14

Conclusion
As we have seen, Corporate Banking reflects
a bank's strengths in providing corporate
clients a wide array of commercial,
transactional and electronic banking products.
This can be achieved through innovative
product development and a well-integrated
approach to relationship management

15