Among recent innovations in financial management, the concept of the corporate bank ranks high for a number of prominent companies that have changed their attitude toward finance from basically reactive to decidedly proactive. The corporate bank has altered the status of their finance teams from largely staff to nearly line and has facilitated a new and dynamic approach to managing financial assets, liabilities, and risk — one that actively strives to contribute to overall corporate performance.
But all managers do not understand the concept of the corporate bank. Some are deeply suspicious of active financial management, believing it to be the sure road to massive loss — a belief sustained by publicity about those that have failed. But these accounts, while newsworthy, represent only the rare and preventable exceptions. They should not be allowed to obscure a corporate bank’s purpose and its potential contributions.
What gave rise to the corporate bank? What exactly is it? What are its basic functions? What is its role in financial policy? How does it work with operating divisions? How should its performance be assessed? How is it controlled? What are the tradeoffs and costs in setting it up? These are the main questions I address in this article.
Growth of the Corporate Bank
The concept of the corporate bank has its roots in the late 1960s when the French automobile group, Renault,... To read the complete article, login or sign-up using the form below.
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