What is Banking Institution?

A banking institution (also referred to as a universal or commercial bank) can range from a large financial institution with a prominent brand name and an international presence to a small organization with a local company.

A banking institution’s financing activities generally involve various types of lending, such as corporate finance, housing, project finance, retail, short-term finance, small-medium enterprises, trade, and others. Alternatively, the focus of a banking institution maybe only on specific transactions with clients that meet certain requirements and within certain industry sectors. Banking institutions may also provide financial products with a focus on environmental business opportunities.

A banking institution’s exposure to environmental and social risks varies significantly due to the clients within its portfolio. Some banking institutions usually have prominent brands in their markets or globally and are particularly susceptible to reputational risk. Banking institutions are also driven to improve their environmental and social risk management capabilities to reduce credit and liability risks arising from social and ecological issues. Several banking institutions have publicly committed themselves to sustainable banking, and many have voluntarily adopted the principles established under various sustainability initiatives.