In this post we will be looking at the meaning of corporate banking, requirements for opening a corporate account in Nigeria, Features and Services of Corporate Banking in Nigeria.
INTRODUCTION
To open and operate a business account in Nigerian banks is an entirely different method from running an individual account in terms of its requirements and documentations. To be able to own a business account, the business must be duly registered in accordance with the Companies and Allied Matters Act (CAMA), which is the principal law that regulates companies in Nigeria. Most banks have different procedures for opening a corporate bank account, but the requirements are still the same across all the banks. Most of the banks operating in Nigeria provide a wide range of services to their clients with multiple features like ability to transfer funds from Nigeria to other country, trade facilities, debit and credit card, internet banking, and multi-currency account. A business bank account allows one to easily keep track of expenses, manage employees’ salary, convey finances to investors, receive payments, and plan the company’s budget. Corporate banking in Nigeria plays a pivotal role in keeping businesses thrive and has boosted the economic status quo of the country. The Gross Domestic Product (GDP) of Nigeria is largely defined by the impact of businesses (small, medium, or large-scale) on Nigeria’s economy, which stems from savings and investment through corporate banking.
WHAT IS CORPORATE BANKING?
Corporate banking can be defined as the subset of business banking involving a range of banking services exclusively offered to corporate customers. These services may include the provision of credit, cash management facilities, payment processing, credit products, and hedging strategies to large corporations. Most of these corporations are publicly traded. Corporate banking teams provide financial services like cash management, The term “corporate banking” is often used erroneously by non-finance people when talking about the provisioning of banking services to corporations (broadly); however, there is much more nuance when it comes to banking for businesses.
REQUIREMENTS FOR OPENING A CORPORATE ACCOUNT IN NIGERIA.
- Completed corporate account opening form signed by the company’s designated signatories and the directors of the company.
- Certified true copies of incorporation documents.
- Residential address of the directors.
- Passports photograph of the signatories.
- Bank Verification Number of directors.
- Board Resolution from the Board of Directors authorizing the opening of the account and approving the account signatories.
- Certified Memorandum and Articles of Association (Memart)
- Special Control Unit Against Money Laundering (SCUML) registration where applicable.
- Special requirements such as business permit, residence permit, etc. for foreign nationals.
- Two (2) duly filled reference forms by corporate account holders.
- Legitimate identification document of the directors such as international passport, driver’s license, etc.
- Tax Identification Number (TIN) for the company
- Utility bill of business addresses such as the Power Holding Company of Nigeria (PHCN), water bill, Lagos Waste Management Authority (LAWMA), etc.
FEATURES OF CORPORATE BANKING IN NIGERIA
- Liability: Under the law, companies are largely recognized, and considered individual/separate legal entities, so the contents of the corporate account are proprietary to the company. This translates to understanding the level of independence to corporate accounts. Also, it is an indicator for the exclusive data privacy right of a company for the content of its corporate account to be protected.
- Clientele: Commercial banks through its corporate banking services, serves small-to medium-scale businesses and large companies.
- Bankers: Corporate banking is reputed with a high level of experience in the banking industry in Nigeria. Therefore, corporate bankers in large commercial banks in Nigeria like Guaranty Trust Bank (GTB), Access Bank, Zenith Bank, First Bank of Nigeria, United Bank for Africa (UBA), etc are well paid.
- Credit Rating: The credit history of companies in some cases, is made from the conduct or functioning of corporate accounts. This characteristic has effects on the interest rates of a company’s extended loans, valuation, and share prices of the company.
- Authority: In Nigeria, corporate banking accounts can be opened following the consensus approval of the company’s board of directors. What this means is that there must be a corporate resolution between the individuals involved before the company’s treasurer could be able to open a corporate account.
SERVICES OF CORPORATE BANKING IN NIGERIA.
- Commercial Services: Commercial banks provide services in the range of portfolio analysis, leverage analysis, debt, and equity restructuring, analyses of real assets, etc. Also, other services, like underwriters for public offerings (IPO) and asset management services, are important to corporate customers. Corporate banking services are operated by the investment arm of the commercial banks in Nigeria.
- Credit Services: Loans and related credit facilities are offered to corporate customers. The largest share of profits for commercial banks in Nigeria is amassed from these credit facilities. This is because of the significantly high interest rates imposed on the loans due to the prevalent high-end risk in proving loans to corporate customers.
- Fixed Asset with Financing Services: A fixed asset with financing services is of importance to corporate customers involved in capital-intensive businesses or investments like heavy machinery manufacturing, transportation, information technology, etc. Therefore, commercial banks facilitate customized loans and lease agreements for the purchase of heavy equipment, machinery, and other large projects.
- Treasury Services: This is a service used by multinational companies in Nigeria to manage their working capital requirements, such that facilitating their currency conversion.
- Employer Services: Commercial banks, through corporate banking, provide services like the selection of retirement plans and healthcare plans, including payroll facilities for employees.
CONCLUSION
Corporate banking in Nigeria has been the method of keeping businesses afloat in the country, with many incentives exclusively designed for these businesses. Every business needs to take into consideration strengths and weaknesses regarding monetary strategy and business goals before opting for corporate banking services.