Definition of commercial bank
: a bank organized chiefly to handle the everyday financial transactions of businesses (as through demand deposit accounts and short-term commercial loans)
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Recent Examples of commercial bank from the Web
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Sewing heads Deutsche Bank’s private and commercial bank division.
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The business of helping companies manage and move their cash is generally the province of big commercial banks like JPMorgan and Citigroup Inc., which use giant balance sheets and global footprints to help companies manage their day-to-day finances.
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During that time, Goldman Sachs decided to build out the debt capital markets business, largely territory dominated by the large commercial banks like JPMorgan Chase & Co. and Bank of America Corp.
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China Merchants Bank, a commercial bank, uses a bot on the popular Chinese app WeChat to handle 1.5m-2m queries every day, a workload equivalent to around 7,000 human staff.
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Rather, this huge sample is fairly representative of the U.S. commercial bank population on the whole—which totaled under 4,900 in the latest quarter, according to the Federal Reserve Bank of St. Louis.
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And its belated attempts to muscle its way into businesses such as consumer lending have failed to transform the company into a real competitor of commercial banks like JPMorgan Chase and Citigroup.
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Donnelly received $140,360 in contributions last year from commercial banks, the second-largest amount to a senator from that industry, according to the nonpartisan Center for Responsive Politics.
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Only two commercial banks based in Wisconsin — Green Bay’s Associated Bank, with about $30 billion, and Racine’s Johnson Bank, with $4.7 billion — have more than $3 billion in assets.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'commercial bank.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of commercial bank
1910
Financial Definition of COMMERCIAL BANK
commercial bank
What It Is
How It Works
Commercial banks are owned by shareholders and are run for a profit, which is largely obtained by lending at rates higher than they pay their depositors. Commercial banking is different from investment banking, which primarily raises money for businesses, facilitates mergers or acquisitions, and works for institutional investors.
A commercial bank must have a charter to operate, which will be issued by the federal government or by the state in which it plans to do business. States regulate and inspect state chartered banks, and the federal government regulates and inspects federally chartered banks.
In order to apply for a charter, the bank's "organizing group of founders" must provide a business plan, an overview of local zoning and business practice laws, and the names of directors and key executives. Each state has its own minimum capital requirements to issue a charter.
The organizing group is required to invest a minimum amount of its own money into the bank, making them primary shareholders. The remaining required funds will be raised by selling shares in the bank.
When a commercial bank receives a charter, it is a demonstration that the agency responsible for protecting the public from unsafe banking practices has done its job. Chartering requirements vary by the agency supplying the charter.
In some cases, a state-chartered bank is not required to be a member of the Federal Reserve System -- which allows them to borrow short-term funds from the Federal Reserve to meet reserve requirements.
If a bank requests a federal charter, however, it must become a member of the Federal Reserve System. All commercial banks must apply for deposit insurance with the FDIC, which protects depositors for up to $250,000 of losses if the bank fails.
Why It Matters
Commercial banks offer critical services that lubricate and facilitate economic activity throughout our entire financial system.
There are many alternatives to using commercial banks. Credit unions, savings and loans, and brokerage firms offer many of the services that commercial banks offer. Not all of these alternatives, however, have ATMs, accept certain checks, charge the same fees or offer competitive loans.
Source: Investing Answers
Law Dictionary
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Britannica.com: Encyclopedia article about commercial bank
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