Corporate Banking vs Investment Banking – Difference Between Corporate Banking and Investment Banking

When determining the type of financial institution that will best suit the needs of your business, it is best to fully evaluate what each one has to offer. Then look at what you are in need of from a financial institution. The one that best fits and covers your needs is the one that you would need to evaluate further. Some businesses look at corporate banking vs investment banking for their specific needs.

Corporate Banking Vs Investment Banking - The Differences

Investment Banking

Investment banking assists in the creating of capital. Investment banks will act as agent for their clients and aid in growing their portfolio. They will also work with corporations during mergers or acquisitions and will also guide their clients when working with derivatives and equity securities. Investment banks do not take deposits. They are not the traditional bank in that a customer will deposit and withdraw funds from their accounts at will. Investment bankers must be a licensed broker in the United States and are therefore expected to follow SEC and FINRA regulations.

Function

There only two main sides to investment banking: the selling side and the buying side. The selling side consists of trading securities or monetary gain or portfolio gain. It also includes the promoting of securities or the research and underwriting. The buying side of investment banking involves advising clients on investment services.

An investment bank is further split into two sectors or functions, private or public. The private sector deals with inside investment information and is not to be disclosed to the public. The public sector gives necessary information to the public pertaining to financial investments. These two sectors never cross and always remain separate to ensure that sensitive data is not leaked to the public.

Corporate Banking

Corporate banking is also known as corporate financing. Corporate banking takes care of large scale corporations and businesses. They handle most if not all of their financial needs. Corporate bankers will work with corporations around the globe from a variety of industries. Governments and mega-industry corporations will need corporate banks for their financial needs.

They will handle a wide array of banking needs. This will include the issuing of loans and setting up portfolios. It will also include aiding the corporations in lowering taxes by investing in overseas subsidiaries. Corporate banks will also help by managing any changes in the foreign exchange rates to ensure that corporations get the most for their money.

Main Function

The main function of the corporate banker is the increase the value of the corporations they are representing. In other words, they handle the overall worth of the company, this includes the income and assets. The banker will monitor portfolios of their clients and  ensure that any financial risks are minimized. Bankers will typically help their clients raise money or assets through loans.

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