Corporate Banking Flashcards
What are the divisions within corporate banking?
- Global Corporates
- Regional Corporate
- Financial institution & International Organization
- High local corporates
- Public sector/public corporate
What is a global corporate organization under corporate banking?
These are corporate organizations who are headquartered outside of Africa (except North Africa) with annual global sales greater than USD 500 million. Their parent company should own more than 50% of the local company.
What are the characteristics of the global corporate bank?
- Typically managed from a central point, most likely outside of Ghana
- Have a high NetWorth
- Price sensitive
- Cash rich
- Technologically inclined
- Very demanding
- Solution-oriented
What is the Chinese desk?
It is a partnership that was established between Bank of China in 2010, aiming to leverage the desk’s officers Chinese language and cultural skills to provide the banks products and services to Chinese corporates, as well as support to all the companies for transactions sent to China and strategic support to Chinese relationships on transactions
What are regional corporates according to corporate banking?
Companies in other African Countries but with headquarters in Africa and Sub-Saharan Africa
How would you describe the nature of regional corporates?
They typically import or export a lot, and they are net borrowers
What are high local corporates?
These are clients with turnovers of at least USD 20 million operating within the country
What are the liability products of corporate banking?
- Current/Demand account
- Savings account
- Call account
- Fixed Deposit
What are the features of current/demand account?
- It is a chequable account
- funds can be withdrawn by a client at any time
- They are a typically non-interest bearing
- it attracts a maintenance / service fee or commission
What are the features of savings account?
- no chequebook, typically
- restrictions on withdrawals with notice
- interest bearing
- no maintenance/ service fee or commission
What are the features of call account?
- internal account and it is not chequeable
- funds can be withdrawn by client with notice
- interest bearing
- no maintenance
What are the features of a fixed deposit account?
- no cheque
- issued to term
- interest bearing
- attracts fees for early withdrawal
What are the asset products of corporate banking?
- funded facility/ direct facility/ on-balance sheet
- non-funded/ indirect/off-balance sheet/contingent facility
- short-term & long-term facilities
- Working capital
- overdraft
Describe the overdraft product
- This is the commonest form of corporate borrowing
- The client is allowed to overdraw their account for up to 12 months
- Interest is charged on the balance drawn
Describe the short-term loans
- It is used to replenish short-term working capital needs, purchase short-term assets, to pay trade bills under advance payments etc.
- The facility is up to 12 months and may be renewed by mutual agreement
What are the features of medium- & long-term loans?
- They have a tenor of more than 12 months
- Early repayment is allowed with or without penalty
- They are typically secured with/ without a penalty
- Financial ratios and covenants are set to aid monitoring
- It is riskier and attracts higher interest
- maybe syndicated depending on the amount
