Bank Features Commercial banks manage deposit accounts, such as checking and savings accounts, for individuals and businesses. They make loans to the public using the money held on deposit. Investment banks differ strongly, these Institutions facilitate the buying and selling of stocks, bonds and other Investments, as well as helping companies to go public with Initial public offerings (PIP).
Risk Tolerance Investment banks have a higher risk tolerance due to their business model and the relative weakness of government regulation in the industry. Commercial banks are much less tolerant of risk. Panic can ensue if families and businesses lose their checking and savings accounts, so commercial banks have an implied fiduciary duty to act in the best interest of their clients, not to mention the tight strings attached to commercial banks Benefits of Combination Banks mix commercial and investment activities to realize significant benefits.
Acting as an investment bank, an institution can help a company sell an PIP, then use Its commercial division to extend a generous line of credit to the new corporation. The onerous loan allows the new company to finance rapid growth and boost Its stock price. The bank can then reap the benefits of Increased trading revenue and snag more commissions from future stock offerings.
Considerations The problem with mixing investment and commercial banking is that institutions have historically gone too far to prop up weak and undeserving companies, leading to bubbles and disastrous busts. Mixed-business banks have the ability to create excitement and hype surrounding particular companies while injecting large sums of capital to prop up their stock valuations. Without paying attention to the fundamental strength of sectors and individual companies, however, this behavior is almost guaranteed to end in disaster.
Investment bank Commercial bank Don’t take deposits Take deposits Don’t provide loan Provide a lending service to their customers Have a few hundreds core customers or less May have millions of customers Provide a very bespoke service Provide a very standardized service Don’t provide transactional day to day services Provide transactional day to day services : Current, checking, saving accounts Credit and debit card Mortgages and personal loans insurances divestment and capital markets products such as debts and equity instruments.
Don’t provide strategic advice to companies. A retail bank will explain all the service available to a company but it’s not usually within their remit to provide strategic advice on what the company should do. List of Commercial Bank in Malaysia Affine Bank Bertha Alliance Bank Embank Bertha COMB sank Bertha Hong Leone Bank Bertha Malay Banking Bertha (Mbabane) Public Bank Bertha RIB Bank Bertha List of Investment Bank in Malaysia Affine Hang Capital (Following merger between Affine Investment Bank and Hang.
