What is corporate banking?

Company banking is a deadline for a group of services provided by banks to companies opening accounts. There are a number of services that make up this type of banking, including loans, counseling and securitization services. Most corporate banking resembles individual banking, but there are also aspects that are specific to corporate customers' needs. Company bankers have developed in response to the release of regulations in the United States on banks' investment activities to provide their business clients a wider range of possibilities.

Some corporate banking functions are similar to banking services available to individual customers. For example, corporate banks provide loans to companies. As with individual loans, the decision of the banker on whether or not the loan is based on the perceived credibility of the applicant. Various rating agencies such as Moody's and Standard & Poor's, publish the rating of the companytí; These are often structured as bond evaluation, indicating the likelihood that the company will not be able to pay obligations set out in its bond contracts. A banker's decision is a similar decision of the bond investor, because if the company fails, it is not even repaid.

There are other services that offer corporate banking that are specific to corporate clients. Corporate bankers help their clients adapt to regulations and maintain as much profit as possible. For example, they can provide tax advisory to their clients. It also advises clients in the field of procedures such as the transfer price, which is the process of determining the price that one part of the company charges for goods and services another part. Optimization of processes like this is important to society, but often corporations have to pay attention to the laws governing their boundaries - corporate boards ensure that the requirements willfulfilled.

Another feature that some corporate bankers decide to accept is the securitization process. This means that they help their clients create investment products to raise money. For example, the bank could agree that the client's initial public offer of shares.

Securitization services in the United States were created after adopting the Gramm-Leach-Bliley law in 1999, which abolished part of the Glass-Steagall Act of 1933. Glass-Steagall limited how many banks could engage in investment activities. The aim was to separate banking, which includes the purchase of investment products, from services such as the securitization produced by these products. The abolition of the law blurred the limit between investment companies and corporate banks.