Corporate trust

Corporate trust

In the most basic sense of the term, A corporate trust is a trust created by a corporation.[1]

However, the term in the United States is most often used to describe the business activities of many financial services companies and banks that involve acting in a fiduciary capacity for investors in a particular security (ie. 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 Citi, Deutsche Bank, The Bank of New York Mellon, Wells Fargo ,One Investment Group and BNP Paribas Securities 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 Offered

Corporate trust providers offer a wide range of services, which include but are not limited to:


  1. ^ "Corporate Trust". WebFinance. January 1, 2007. Retrieved 2007-03-10. 
  2. ^ "Global Corporate Trust". The Bank of New York. January 1, 2007. Retrieved 2007-03-10. 

Wikimedia Foundation. 2010.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • corporate trust — noun a consortium of independent organizations formed to limit competition by controlling the production and distribution of a product or service they set up the trust in the hope of gaining a monopoly • Syn: ↑trust, ↑combine, ↑cartel •… …   Useful english dictionary

  • corporate trust — The function of servicing and maintaining records for debt securities issued by a corporation. Bloomberg Financial Dictionary …   Financial and business terms

  • Trust company — A trust company is a corporation, especially a commercial bank, organized to perform the fiduciary functions of trusts and agencies. It is normally owned by one of three types of structures: an independent partnership, a bank or a law firm, each… …   Wikipedia

  • Corporate law — (also company or corporations law) is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another under the internal rules of the firm.… …   Wikipedia

  • Corporate Office Properties Trust — Inc. (COPT) (NYSE: OFC) is a publicly traded real estate investment trust (REIT) corporation that specializes in office development, and describes itself as a fully integrated, self managed real estate investment trust that focuses on the… …   Wikipedia

  • Corporate election — refers to a Christian soteriological view that understands Christian salvation to be based on God choosing in Christ a people whom he destines to be holy and blameless in his sight. [1] Put another way, Election is the corporate choice of the… …   Wikipedia

  • Corporate communication — is the message issued by a corporate organization, body, or institute to its publics. Publics can be both internal (employees, stakeholders, i.e. share and stock holders) and external (agencies, channel partners, media, government, industry… …   Wikipedia

  • trust — n 1 a: a fiduciary relationship in which one party holds legal title to another s property for the benefit of a party who holds equitable title to the property b: an entity resulting from the establishment of such a relationship see also… …   Law dictionary

  • Corporate citizenship — is a term used to describe a company s role in, or responsibilities towards society. For this reason it is sometimes used interchangeably with corporate social responsibility, and in fact many companies including Microsoft, IBM and Novartis have… …   Wikipedia

  • Corporate personhood — refers to the question about which subset of rights that are afforded under the law to natural persons should also be afforded to corporations as legal persons. In Dartmouth College v. Woodward (1819), corporations were recognized as having the… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”