commercial bank

noun

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)

Examples of commercial bank in a Sentence

Recent Examples on the Web

The central bank’s governor, John Mangudya, in an interview at his gated mansion outside Harare, said the government might borrow money from commercial banks to pay off some of the arrears and unlock assistance from development banks for the rest. — Gabriele Steinhauser, WSJ, "Looming Election Is Vital for Zimbabwe," 15 June 2018 Existing central-bank money comes in two flavours: notes and coins available to anyone; and reserve and settlement accounts open only to commercial banks, already in electronic form (though not based on blockchain) and used for interbank payments. — The Economist, "A primer on blockchain-based versions of central-bank money," 15 Mar. 2018 Another 200 billion yuan is being unleashed for the country’s city-level commercial banks and other smaller lenders, and those funds are to be used to expand lending to small businesses, the central bank said in the statement. — Chao Deng, WSJ, "China Eases Credit Policy as U.S. Tariffs Near," 24 June 2018 The Bank of Nova Scotia, one of Canada’s largest commercial banks, said in a recent study that discounts on Canadian oil will cost the oil sector several billion dollars in 2018. — Alan Freeman, Washington Post, "Two of Canada’s biggest provinces are feuding over an oil pipeline. Trudeau is caught in the middle.," 25 May 2018 Sewing jointly heads the private and commercial bank with Frank Strauss, who the company is also considering naming sole head of that unit, people familiar with the matter said. — Fortune, "Deutsche Bank Is Leaning Toward Christian Sewing as Next CEO," 8 Apr. 2018 Prior to that position, Wines was president and CEO of CNL Bank, a $1.6 billion commercial bank. — Marcia Heroux Pounds, Sun-Sentinel.com, "Banking executive to lead Broward initiative to house the homeless," 27 June 2018 For the rest of the banking system — a hodgepodge of smaller commercial banks, postal savings banks and other savings institutions — the central bank’s move frees up $31 billion. — Keith Bradsher, New York Times, "China Moves to Shore Up Economy as Slowdown and Trade Fight Loom," 24 June 2018 By comparison, commercial banks typically have suffered losses of between 1 and 3 percent on consumer loans. — Peter Whoriskey, courant.com, "Unsolicited checks can be a lifeline and an albatross," 2 July 2018

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.

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Statistics for commercial bank

Last Updated

15 Oct 2018

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The first known use of commercial bank was in 1910

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More Definitions for commercial bank

commercial bank

noun

Financial Definition of commercial bank

What It Is

A commercial bank is a financial institution that offers checking accounts, demand deposits, business and personal loans, savings vehicles and a variety of other related financial services.

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

commercial bank