Corporate banking, also called corporate financing, is a specialized branch of finance that deals specifically with corporations and their needs. The job of a corporate banker is to enhance the business value of the corporation – its overall worth, not just income – and minimize its risks. Managerial finance, which deals with the financial needs of all firms, is a similar but more generalized field.
A corporate banker or financier is expected to make a variety of long-term and short-term decisions regarding the corporation’s financial future. Most short-term decisions involve dealing with cash flow, managing inventory and general questions of credit and debt. Long-term decisions that a corporate banker would be responsible for involve what investments the company will make and what dividends would be paid out to shareholders. Some corporations use specialized investment bankers to design their investment portfolios and raise appropriate capital.
The various short-term responsibilities of a corporate banker can be grouped together under the heading of working capital. This involves managing working capital and deciding how to handle the corporation's short-term finances. Meanwhile the long-term responsibilities can be gathered together under the heading of capital investment, which involves making decisions related to the corporation's fixed assets and its capital structure.
A corporation deals with significantly larger sums of money than individuals or smaller firms, and as a result there are a number of specialized tools and analysis disciplines that have evolved to deal solely with the needs of corporations. Many of these disciplines have limited use outside of the corporate field. Therefore it is a clear benefit to the firm to have someone who is familiar with those tools.
Risk management is a process that involves measuring what risks the corporation has to take and how to minimize the downsides of taking risks. Many large firms will have their own risk management team, but since most financial risk a business is exposed to is a result of corporate financial decisions, it is important for a corporate banker to be familiar with the discipline.
If someone is interested in becoming a corporate banker, there are a number of related qualifications for which they can study. These include financial qualifications such as a master's degree in finance or a chartered financial analyst, business qualifications such as master's of business administration, or certifications in business management and accounting.
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