Diapositive 1

Corporate bankingMade by :

Basma ELMEKNASSI Sofia BELHAJ

SummaryIntroduction

I- Definition of corporate banks

II- Corporate banking services

A) Corporate banking services for small firms B) Corporate banking services for large companies

Conclusion

2

Introduction3There 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 4 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 banksII. Corporate banking services5A) Corporate banking services for small firms Four main types of banking services are offered to small firms :

6Payment 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 firms2. Debt financeExternal 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 financeAdditional sources of external finance for small firms: - Leasing - Factoring - Trade credit

7A) Corporate banking services for small firms3. Equity financeExternal source of funds that allows a company to raise funds by increasing its equity.Few small firms access either public or private equity financePrivate 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.

84. 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.

9A) Corporate banking services for small firms

B) Corporate banking services for large companies Four Core products and services used by large companies:

10Cash 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

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

Long term financingFor large lending requirements, companies can borrow via:

syndicated loansIssuance of bonds (debt investment for a defined period of time and fixed interest rate):

Domestic bonds Vs Eurobonds

11B) Corporate banking services for large companies2. Credit and other debt financing 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)

12B) 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

13B) Corporate banking services for large companies

Corporate banking servicesSmall firmsPayment servicesDebt financeEquity finance - Private equity - Public equitySpecial financing

Large companiesCash management and transaction servicesCredit and other debt financingCommitments and guaranteesForeing exchange and interest rate services14Conclusion15As 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