How the Trading Floor Really Works

The Loan Portfolio and the Funding Department

Two other business units that exist in most banks are the lending business (also called the loan portfolio) and the funding department (also called the treasury department). The loan portfolio is the business unit which gives out loans to the clients of the bank, and the funding department is the business unit which manages the borrowing needs of the bank that are often closely related to the size of the bank’s loan portfolio.

Megabank could have pitched a UK pound denominated loan to Supermart instead of a bond when Supermart decided to buy a UK supermarket chain. Megabank would have done this if the loan team were interested in lending to Supermart. While historically people have thought of banks ...