Page 127 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes Banks, Merchant Bank or Accepting Houses and Discount Houses but except saving banks and
investment banks and other intermediaries.

8.1 Corporate Banking

Corporate banking includes products and services that are offered specially to corporations
such as lending services that could be in the form of a secured or unsecured loan, financing,
underwriting, cash management, issuing of stocks and bonds etc. Few of these transactions may
include various banks and syndicates.
Corporate banking represents a wide range of banking and financial services provided to domestic
and international operations of large local corporates and local operations of multinational
corporations.

Services of corporate banking include the following:
Access to commercial banking products, including working capital facilities such as
domestic and international trade operations and funding,

Channel financing, and overdrafts,
Letters of guarantee, etc.
Structured solutions both onshore and offshore,
Term loans (including external commercial borrowings in foreign currency),

Domestic and international payments,
Support to client’s worldwide operations, ensuring a full understanding of the company’s
business and financial needs.
Banks may classify their corporate customers into three segments on the basis of capital employed
and sales volume: Large corporations, Mid-size companies, and Small and Medium business
Enterprises (SMEs). Corporate customers can be further segmented into industry verticals, such
as automobiles, aviation, tourism, etc. Banks develop long-term relationships with their corporate
clients as a part of their marketing efforts. In a competitive market, building strong relationships
with the customers help to retain customers and improve profitability. The communications
and relationships between the banks and their corporate clients are affected by three factor
groups – the external environment, the atmosphere of the interactions, and the interaction
process. The ‘Partnership Relationship Lifecycle Model’ describes the evolution of the
bank-corporate customer relationship, beginning at an early stage where a ‘customer’ shows
interest in the bank’s offerings, and growing to become a mutually beneficial ‘partnership
relationship’ between the ‘client’ and the bank.

Did u know? Banking products are broadly classified into fund-based products and
fee-based services.

Fund-based products are further subdivided into asset products and liability products.
Liability products include salary accounts, current accounts, fixed deposits, and
payment cards.

Asset products include various kinds of credit products like trade finance, corporate
finance, project finance, and term loans.

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