Corporate banking is a part of the banking industry that provides complex, often customized financial solutions, such as lending and financing options and risk management, to corporate customers, such as companies and institutions.
Who is corporate banking for?
The services provided under the corporate banking umbrella are complex, integrated with other segments of the bank and typically offered on a large scale (such as asset-based loans ranging from $2 million to $1 billion). That complexity is designed to meet the needs of mid-size and large institutions and companies, including those with a global reach.
Corporate banking often provides large clients with a suite of services and a close relationship with banking specialists who can cater to the particular needs and risk profiles of large businesses.
Common corporate banking services
Services typically offered through a corporate bank account include:
Depending on their needs or credit rating, businesses may require different types of credit tailored to their industry or market opportunities. Corporate banking teams often work with institutional clients on customized credit solutions, such as operating or revolving lines of credit, derivative hedging products, bridge or acquisition financing, real estate financing, leveraged finance or leases.
Corporate banking also provides large clients with cash management services such as tracking payments and running transaction reports, often in conjunction with a company’s treasury team, liquidity management, streamlining of accounts payables and receivables, cross-border banking and corporate card services.
Fixed asset financing
Corporate banking teams also provide institutional clients with asset-based loans and lines of credit, where the bank advances a certain percentage of appraised inventory value or provides financing based on specific accounts receivable or invoices.
Responsible investing and environmental, social and governance (ESG) investing are the focus of many companies and investors. According to EY’s 2021 global survey of institutional investors, 90% of those surveyed said they consider ESG performance more important when making investment decisions than before the COVID-19 pandemic. Nearly three-quarters (74%) said they were more likely to divest from companies with poor track records in ESG than they would have been before 2020.
In response to these trends, corporate banking often approaches investing, lending, advisory services and public offerings with a sustainability focus by including solutions like sustainability-linked loans, ESG strategy, and green, social and sustainable finance bonds.
Corporate banking teams can also assist clients with international trade via import/export and supply chain financing, facilitating payment verification across global markets, and helping with risk mitigation by reviewing the payment terms of international contracts.
What’s the difference between corporate banking and commercial or business banking?
Terms like “corporate” and “commercial” may sound like they apply across the board to all companies. But corporate banking services — such as treasury management, asset-based lending, capital markets or bridge financing — are geared toward the needs of large companies with a domestic or global focus.
In contrast, business or commercial banking services are designed for smaller and mid-size firms, providing them with day-to-day chequing, loan, payroll, investment and credit solutions separate from their owners’ personal banking.
Business banking options allow multiple individuals to access and manage a company’s financial information and transactions. Similar to services for corporate banking clients but on a smaller scale, commercial banking services often include access to a range of options depending on the customer’s size and sector. Commercial banking may also provide a relationship manager to help businesses navigate their borrowing, banking or investing options.
How does corporate banking differ from retail banking?
Retail banking products — those you use for personal banking rather than for your business — are offered on a much smaller scale, as they are designed for individual customers rather than for large corporate clients.
Retail and personal banking include products like savings and chequing accounts, tax-free savings accounts (TFSAs), mortgages and lines of credit.
How does corporate banking compare to investment banking?
Unlike corporate banking, where specialists support businesses with financial service offerings like lending, financing and trade solutions, investment banking teams help firms with strategic transactions, providing advisory and capital-raising solutions like mergers and acquisitions, management buyouts and divestitures.
These two functions can often work under the same “capital markets” banner or alongside equity capital markets and debt capital markets teams.
Which institutions offer corporate banking services in Canada?
In Canada, the capital markets or securities divisions of the Big Six banks, such as TD Securities, BMO Capital Markets, RBC Capital Markets, Scotiabank Global Banking and Markets, and CIBC Capital Markets, all offer corporate banking services, often in partnership with their investment banking and global markets teams.
Several multinational banks based in other jurisdictions (known as Schedule II and Schedule III banks) also offer corporate banking services in Canada, including HSBC Bank Canada, Mitsubishi UFJ Financial Group (MUFG) Americas and Wells Fargo.
How to Open a Bank Account
Are you ready to open a bank account? Almost everyone can open a bank account at a Canadian bank or credit union, including non-residents living, working or going to school in Canada. It’s an easy process that can be done in person or online in just a few steps. Here’s what you need to know […]
A Guide to Common Canadian Bank Fees and Charges
Having a bank account makes it easier to save and spend your money, but in exchange for holding on to your hard-earned cash and facilitating those transactions, most banks charge fees. Bank fees can easily eat up hundreds of your hard-earned dollars each year. And banks can choose to increase those fees whenever they want, […]
Do You Need a Business Bank Account?
Ever wonder what the difference is between a business bank account and a personal account? Read on to discover what makes a business bank account unique and find out if it’s something you need. » MORE: How to open a bank account What is a business bank account? A business has many of the same […]
What is ESG Investing?
In recent years, a growing number of investors have been inspired to consider the impact of their investment choices on both people and planet. Canada experienced a 48% increase in sustainable investment assets between 2018 and 2020, according to a biennial review published by the Global Sustainable Investment Alliance. Over 60% of the Canadian market […]