Wholesale Banking
The wholesale banking division in a commercial bank is responsible for providing financial services to large corporate, institutional, and government clients. In order to fully serve the financial requirements of these clients, the bank offers a variety of services that extend beyond the traditional deposit and loan functions. A wholesale bank offers services to a variety of organizations, ranging from manufacturing corporations to retail department stores, from pharmaceuticals manufacturers to utility companies, from city to foreign governments. To promote efficiency, the wholesale banking area is often divided according to industry type, industry size, and geographical lines, often with complex interconnecting relationships.
Services offered by wholesale divisions of commercial banks include loans, depository services, cash management assistance, investment advice, advisory treasury services, and systems analysis, to name a few. Some large banks offer hundreds of fee-based, non-loan services to clients on the principle that in a successful bank-client relationship the client comes to the bank for most if not all of its financial service needs, not just to deposit or withdraw money or request loan funds. Banks try to actively involve themselves in all financial aspects of the client's business, not only fulfilling requests but anticipating them.
Other Banking Areas
You will find opportunities in many other areas within commercial banking. Banks, like other corporations, need people to work in human-resource management, marketing, and other non financial areas. These areas are discussed at length in their respective chapters which follow. We limit discussion here to areas in commercial banks where financial skills are used.
Credit Management
Personnel in credit management analyze the credit risk of potential loan clients, working in support of and in conjunction with the loan officers. In some banks, this department is also responsible for reviewing the bank's entire loan portfolio to assess quality and inherent risk. Many bank trainees start in this department, where they get experience in fundamental financial analysis as well as exposure to many other facets of the bank's business.
Treasury
This department is involved in many activities commonly associated with corporate finance, including managing the bank's own asset portfolio, which is comprised of the major assets of outstanding loans, security investments, reserve position, and related money market assets. Traders, often placed in the treasury department, are responsible for managing the bank's liquidity needs. As commercial banks rely less on deposited savings for liquidity, traders must buy liquidity in various money markets, including the Federal Reserve.
Portfolio And Trust
The portfolio and trust department manages asset portfolios for such clients as corporate employee-benefits funds, pension plans, profit-sharing plans, foundations, charitable organizations, endowments, and very wealthy individuals. The job of the portfolio and trust area is to recommend, select, and manage the assets (such as stocks, bonds, etc.) so that they will continue to produce expected returns. Since the portfolio may be protecting, for instance, the retirement fund of thousands of people, the portfolio manager usually chooses safe rather than high-risk-high-return investments.
As a manager in the trust department, you would need marketing ability as well as financial analysis ability. Portfolio management is a highly competitive field-banks face competition not only from other banks but from investment counselors in other financial-service sectors. You would make frequent sales calls to potential clients not only to stress the security and maximum returns which the bank provides, but also to present other services which the bank offers, such as cash management assistance and detailed tax and financial management reporting.
Investment Banking
As an extension of the bank's role as financial consultant, the investment banking segment of a commercial bank provides assistance with private securities placements for its clients, as well as advice on mergers and acquisitions. It is also involved in the underwriting of municipal securities, a process similar to investment banking activities.
Operations
Bank operations is the area which involves the actual delivery and accounting procedures necessary to provide the services offered by the bank. It has been rapidly expanding in recent years, and will continue to do so, due partly to the commercial bank's need to compete with other financial services by expanding its own service offerings, and partly in response to technological developments. Operations employees can work in support of the bank itself and on a consulting basis to large corporate or institutional clients. The operating services a bank is able to provide often keep clients loyal or help attract new ones. Cash management, a substantial area of operations, is one important service banks offer to their clients. People who work in operations must work closely with those in systems analysis, and often need to combine their financial skills with other areas of expertise, such as accounting and computer systems analysis.
