In the most basic sense of the term, a corporate trust is a trust created by a corporation.[1]
The term in the United States is most often used to describe the business activities of many financial services companies and banks that act in a fiduciary capacity for investors in a particular security (i.e. stock investors or bond investors). For example, instead of borrowing funds from a bank, a company might borrow funds from the general public in the form of a bond. When a bank lends money to a company, it may often inspect the company's financial statements to ensure that the company follows the rules (known as covenants) of the loan agreement, and may also attempt to negotiate a settlement if the company has problems and stops repaying its loan.
In the situation of a public bond issuance (the company borrowing from anyone in the general public who chooses to lend the funds), there would be no one clear person who would be capable to monitor the loans on their own, and the investors would find it difficult to agree and communicate their agreement to the company to settle any problems with the loan repayments. Therefore, they agree as a condition of their bond borrowing to appoint a financial institution, known as a "corporate trustee", to be the responsible party for monitoring compliance with the loan terms, acting in interests of the general public who have purchased the bond. Another aspect of this service, which is often performed by a different party, is the distribution of the repayment from the company to the bondholders, this function is known as a "paying agent". In fact, modern bonds often appoint many different financial institutions to have special roles, based on their area of expertise (such as corporate trustee with an expertise in bankruptcy who is only called in if the company stops paying back the bond). Financial institutions receive fees for their services.
A corporation with little or no financial expertise may seek the services of a financial institution (often a corporation as well) through the creation of a corporate trust. By doing so, they are entrusting the finances of their corporation to that particular financial institution.[2]
Services offerededit
Corporate trust providers offer a wide range of services, which include but are not limited to:
corporate, trust, this, article, multiple, issues, please, help, improve, discuss, these, issues, talk, page, learn, when, remove, these, template, messages, examples, perspective, this, article, deal, primarily, with, united, states, represent, worldwide, vie. This article has multiple issues Please help improve it or discuss these issues on the talk page Learn how and when to remove these template messages The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject You may improve this article discuss the issue on the talk page or create a new article as appropriate June 2014 Learn how and when to remove this message This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Corporate trust news newspapers books scholar JSTOR June 2014 Learn how and when to remove this message Learn how and when to remove this message In the most basic sense of the term a corporate trust is a trust created by a corporation 1 The term in the United States is most often used to describe the business activities of many financial services companies and banks that act in a fiduciary capacity for investors in a particular security i e stock investors or bond investors For example instead of borrowing funds from a bank a company might borrow funds from the general public in the form of a bond When a bank lends money to a company it may often inspect the company s financial statements to ensure that the company follows the rules known as covenants of the loan agreement and may also attempt to negotiate a settlement if the company has problems and stops repaying its loan In the situation of a public bond issuance the company borrowing from anyone in the general public who chooses to lend the funds there would be no one clear person who would be capable to monitor the loans on their own and the investors would find it difficult to agree and communicate their agreement to the company to settle any problems with the loan repayments Therefore they agree as a condition of their bond borrowing to appoint a financial institution known as a corporate trustee to be the responsible party for monitoring compliance with the loan terms acting in interests of the general public who have purchased the bond Another aspect of this service which is often performed by a different party is the distribution of the repayment from the company to the bondholders this function is known as a paying agent In fact modern bonds often appoint many different financial institutions to have special roles based on their area of expertise such as corporate trustee with an expertise in bankruptcy who is only called in if the company stops paying back the bond Financial institutions receive fees for their services Large corporate trust providers include Zions Bank BOK Financial Corporation U S Bank Citi Deutsche Bank The Bank of New York Mellon Wells Fargo One Investment Group and BNP Paribas Securities Services 1 Reasons editA corporation with little or no financial expertise may seek the services of a financial institution often a corporation as well through the creation of a corporate trust By doing so they are entrusting the finances of their corporation to that particular financial institution 2 Services offered editCorporate trust providers offer a wide range of services which include but are not limited to Escrow services Public finance Project finance Corporate finance Money market services Loan agency and administration services Structured finance Document custody servicesReferences edit Corporate Trust WebFinance January 1 2007 Retrieved 2007 03 10 Global Corporate Trust The Bank of New York January 1 2007 Retrieved 2007 03 10 Portal nbsp Companies Retrieved from https en wikipedia org w index php title Corporate trust amp oldid 1221020169, wikipedia, wiki, book, books, library,
