Corporate banking — blend of enormous financial knowledge and huge resources

Corporate banking consists of simple business of issuing loans to more complex matters, such as helping minimize taxes paid by overseas subsidiaries, managing changes in foreign exchange rates, or working out the details of financing packages necessary for the construction of a new office, plant or other facility.

In many cases, there is an overlap between corporate banking and capital markets. Bankers associated with capital markets help companies raise money by issuing equities or debt whereas corporate banking has the bankers who typically help clients raise money through loans. When necessary, corporate bankers will bring in the expertise of their capital markets colleagues.

Corporate banking also needs an understanding of complex financing methods like securitization, where a company sells bonds based on the money it will earn in the future from assets such as rented shop space or a back catalogue of products.

During the last five years, in an atmosphere of fierce competition, the corporate banking has changed considerably as there has been an enormous consolidation taking place. One of the most important among such consolidations is UK-based Royal Bank of Scotland integrating the operations of Dutch asset manager ABN Amro.

Corporate Banking also involves variety of services such as term loans, bridge financing, credit lines, revolvers and other kinds of working capital facilities, structured finance, mezzanine financing, property and asset finance and investment financing. Corporate Banking also provides comprehensive cash management and other add-on products and services, such as cash pooling, cash sweeping and comprehensive internet banking from various banks.

The importance and significance of corporate banking grew with the repeal of the Glass-Steagall Act in 1999. Glass-Steagall was an act in a Depression-era law that prevented U.S. commercial banks from owning brokerages or being involved in the securities markets.

With its repeal, the roles of investment bankers and corporate bankers began merging. In addition, the increasing globalization of the financial markets makes it imperative for large money-center banks to be able to offer a broad array of services to help their business clients raise needed capital.

With the demanding and challenging eco political global scene, corporate banking too requires some special kills such as analytical ability and statistical aptitude, strong communication skills, ability to grow and maintain client relationships, and  demonstrable drive.

Thus, in the light of the discussion, it can be said that corporate banking has huge requirements in terms of human resources as well as other strategic and operational aspects needed to run the organization.

Given this huge scope of corporate banking, and pressing demands to provide reliable banking service by these large corporations, most top banks of the world have a separate dedicated corporate banking operation which caters to the needs of companies that are quite different in requirements and scale as compared to an average small to medium enterprise.

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