What is Wholesale Banking? Definition of Wholesale Banking, Wholesale Banking Meaning and Concept
Wholesale banking is one intended for large-scale operations, generally with large or important companies and organizations.
Also called wholesale banking, corporate banking, or business banking. This is so because this type of banking has among its clients institutions and business organizations, which is why they have a special and more personal attention than in commercial banking.
Wholesale banking, aimed at large volumes of money from important economic operations, can be divided into two segments:
- Investment banking : Financial structures, mergers and acquisitions (M&A), advice, etc.
- Business banking : Liability management (credit lines, factoring or confirming), fixed asset management (loans, leasing, renting, etc).
While commercial banking is aimed at small savers and investors, wholesale banking has its market fixed on those customers who, due to their volume, operations and size, need a more direct and private channel than the rest. This type of banking has fewer but more extensive operations, such as debt issuance, loans, tailor-made financing, sale of corporate bonds and, above all, investment banking with large assets.
The wholesale banking model
The wholesale banking model can be implemented in two ways:
- Commercial and private line : In this case, the bank proposes a single manager destined to operate for the organization that gives it the right to negotiate and process savings and financing privately. This line of business is used by large listed companies or high volume operations.
- General line : Even apart from commercial or retail banking, several organizations have private assistance but in common with several business units.
In general, wholesale banking plays a fundamental role in managing the flow of financing and investment in large organizations. In this sense, it has highly specialized staff oriented to large accounts. Also in operations that cannot be supplied by commercial banks, so that they have various institutional financing and investment agents and act as intermediaries between the two.