What is business and corporate banking?

It should be no surprise to hear that the biggest users of banking services are companies. They need an enormous number of different services from their banks.

• They need to borrow money to set up or expand their businesses.
• They need to be able to take payments from their customers in the form of cash, cheques, cards and electronic payments.
• They need to pay their staff.
• They need to pay suppliers.
• They need insurance policies.
• They need to manage their cash balances and make a return on them.
• If they export, they need foreign exchange.
• Larger exporters will often want to protect themselves against currency shifts, so they buy currency futures.
• Perhaps most important of all for some companies, they need to manage cash flow and create a whole range of sub-businesses — for handling processes such as leasing plant, equipment and cars, for instance — so that the parent firm doesn’t have to buy everything with hard-earned cash.
• They may also need upfront cash when they win a big order. Banks can help through services such as invoice factoring, when the bank pays the company straight away for each invoice it issues — even if the customer actually takes 60 days to pay.

Banks earn big fees from all these services, although in turn they take on big risks.

Most banks categorise their business and corporate banking services according to the size of the client, which often determines the complexity of the services that are required. Most banks have two or three such categories:

• Business banking — deals with small businesses that have between one and, say, 250 employees. For some banks this means businesses that have a turnover of between zero and £5 million, although in some cases the upper limit can be as low as £1 million or as high as £20 million.
• Mid-tier banking — this usually deals with companies with a turnover of £5 million to £50 million (again, the upper limit can vary from £20 million to £200 million). These larger firms, usually employing hundreds of people, require more complex services and management.
• Corporate banking — these services tend to be available to companies with turnover above the upper limit that the individual bank places on the mid-tier. These are generally firms that employ thousands to tens of thousands of staff.

If I work in Business/Corporate Banking what will I be doing?

Business banking

Business bankers spend most of their time talking to the owners of companies. Company owners want a personal relationship with their bank and are mainly looking for payments services and loans. For ‘micro businesses’ — those millions of one-person companies — the services used are little different from those you would find with a retail current account. Companies with 10 to 100 staff will have more requirements for funding property or equipment, but the contact is often still with the owner.
With all of these relationships there is always the opportunity to help a client to develop their business, and once in a while someone will do really well. This is good for the business banking unit, but also for the rest of the bank, since the business owner will often have their personal accounts with the same bank.
Increasingly, banks want their business bankers to be advisers to their clients, so this is a hands-on job. Also, strong ties exist with the wealth-management and private banking units, since they too are keen to sell their services to rich entrepreneurs.

Mid-tier banking

With mid-tier clients, the banking relationship is usually set up by the owner but managed by an accounts and finance team. Funding and cash flow are often important for companies of this size, so working with them on these issues is a key part of the banker’s role. To pay the wages, for example, companies need to know that there is sufficient money in the bank. The bank in turn is more than willing to provide the cash for such purposes if it is needed — assuming, of course, that the risk is not too high. Banks want their customers to do well — after all, that’s how they make their money. But at the same time they must also protect their shareholders, so analysing and understanding the risks involved in lending is critical.

Corporate banking

Corporate bankers manage relationships with big firms, where managing cash and risk is crucial. The key figure in such relationships on the client side is the finance director (often called by the American term ‘chief financial officer’, or CFO).

Banks provide electronic banking services to the CFO’s treasury office. This department manages the money and ensures not only that there is sufficient to pay the bills but that all cash balances are invested properly. It has direct links to all the firm’s banks, and can piggyback the bank in trading foreign exchange and in investing cash on the wholesale markets. The treasury office will also work with the bank to manage risk, for example by buying futures and options to protect against currency movements or interest-rate changes.

Companies of this size also often require large-scale, long-term financing. Here, corporate banking starts to overlap with investment banking. For instance, when a company wants to build a new $1 billion production plant or research facility, it can either borrow the finance from its corporate bankers, or raise it on the markets via an investment bank. Here the two worlds collide, and banks and investment banks compete for business.

How do I get a graduate scheme / internship / entry level job or career in Business & Corporate Banking?

Obtaining a graduate scheme, internship or entry level role in business / corporate banking can be very challenging and competitive – though very achievable by getting your application, CV, interview and general approach right. You can guarantee that ninety percent of applicants for business / corporate banking roles will not know how to apply, so getting your application in the top ten percent makes things a lot more achievable.

Approaching the company in the right way will make all the difference. Combining the right approach with a strong interview (and in some cases assessment centre) writ a strong focused tailored CV will go a long way. Make sure you have gone through the free videos on this sight by entering your name and email address in the top right of this screen underneath the video. Once you have filled this in you will have instant access to everything you need to secure your career in business / corporate banking.

Back to Commercial, Corprate & Retail Banking

If you would like to add comments to this description, give any feedback or ask any questions about careers in banking & finance in this area please comment below