A commercial bank is a bank that offers a wide range of financial services to individuals, as well as to businesses. It is one of the most important elements of the financial market. Commercial banks are regulated by banking law. The purpose of commercial banking is to provide a safe and secure environment for storing money and making loans.
What exactly is a commercial bank? Definition of the term
A commercial bank is a financial institution that provides services to both individuals and businesses. The most important tasks of a commercial bank include collecting deposits from its customers, making loans and providing other financial services. In recent years, commercial banks have become even more popular due to their accessibility – many of them have branches in different parts of cities, and can be easily found online. What’s more, commercial banks offer a wide range of services, so there is something for everyone.
Despite the fact that commercial banks enjoy a high degree of public trust, there are several risks associated with their operation. The biggest of these is the so-called bankruptcy risk – this means a situation in which the bank is unable to meet its bonds to its customers. Another risk is the so-called interest rate risk – it means a situation in which banks have to bear higher costs due to increased interest rates on deposits. However, despite these risks, commercial banks are still very popular and respected by the public. This is mainly due to their wide range of services and accessibility.
Objectives of commercial banks
Commercial banks have many goals, but their main objective is to generate profits for their shareholders. To achieve this, banks invest in various businesses and offer a wide range of services. Commercial banks are among the most important financial institutions in the economy. They invest in businesses, help individual customers save money and provide loans for the purchase of homes and cars.
Banks also invest in financial markets to generate additional income for shareholders. Banks have been in business for many years and have experience in investing and offering financial services. Therefore, banks must work hard and be flexible to market changes in order to succeed.
Commercial bank – principles of operation
Commercial banks offer a wide range of services, such as personal and business accounts, payment cards, cash and mortgage loans, loans, bank deposits. Customers of commercial banks can also take advantage of additional services, such as insurance, leasing or financial consulting.
Commercial banks operate on the basis of several basic principles:
– The first principle is the so-called “deposit protection principle,” according to which the deposits of individuals are safe and protected from possible bank failure. For this purpose, an Economic Council is established by the Council of Ministers.
– The second principle determines the “minimum reserve requirement,” that is, the percentage of cash each bank must hold in order to be sure of the profitability of its operations and the safety of its customers. Currently, this rate is 10%.
– The next rule is the “sales commission,” which is the fee that each bank must pay when selling a financial product such as a deposit or making a loan. This commission is set by the bank and can range from 0% to as much as 10%.
– The last rule is the “handling fee“, which is charged by the bank for performing a financial operation such as currency exchange or transfer. This fee is set individually by each bank and can range from a few to tens of pennies.
Examples of commercial banks in Poland
In recent years there has been an increase in the importance of commercial banks in Poland. These banks play an important role in the economy, as they provide loans to businesses and collect the savings of the public. There are several large commercial banks in Poland, such as PKO Bank Polski, mBank and ING Bank Slaski.
PKO Bank Polski is the largest bank in Poland in terms of customers and assets. PKO BP offers its customers a wide range of financial services, such as personal and business accounts, payment cards, deposits, mortgages and cash loans. In 2018, PKO BP handled nearly 19 million personal accounts and 1.2 million business accounts.
mBank is the second largest bank in Poland in terms of the number of active personal accounts. mBank offers modern financial services to its clients via the Internet and telephone. mBank offers attractive terms and conditions for business people – it is one of the best banks for companies in Poland.
ING Bank Slaski is one of the most innovative banks in Poland. ING BSK offers its clients a rich package of financial services on very attractive terms. Thanks to innovative technological solutions, it is possible to easily and quickly maintain a personal or business account via the Internet or telephone.
Commercial banks play an important role in the economy, as they enable companies to obtain capital for business development and accumulate the savings of the public. It is worth noting the offerings of several large commercial banks in Poland, such as PKO Bank Polski, mBank and ING Bank Slaski, to choose the best one for you.
