House bank one calls the bank, with which a customer completes a large part of his financial transactions. Usually particularly small and medium-size enterprises exhibit a close connection to a certain house bank. Large enterprises like those for example the DAX belonging enterprises use the house bank concept only within the range cash of the management as well as in the exchange.

Advantages and disadvantages of the house bank concept

A long-term co-operation between a bank and a small or centralconstant enterprise leads usually to the fact that the bank is familiar better with the conditions of an enterprise, which better can measure chances and risks and therefore if necessary rather is ready for a granting of credit or can this for better conditions offer, than this can do with a less bank for prevention of risk reasons, trusted with the enterprise. In addition frequently a better consultation can be ensured - for example with the security of risks of change of interest. Due to the dependence, which can develop thereby opposite a specific bank and/or even opposite a certain bank employee, also smaller enterprises co-operate frequently with at least a second bank.

With stock exchange-oriented enterprises a smaller dependence exists opposite an individual bank due to the transparency of the capital market with financing matters. In many large enterprises it belongs however nevertheless to the basic principles of the finance management to avoid dependence on individual banks as far as possible as business relations will maintain to several banks. DAX enterprises co-operate frequently with twenty to thirty banks. The classical house bank concept plays no more role for these enterprises up to the exchange and the cash management.

Cash management and exchange

Both the cash management and the exchange of an enterprise can be completed rationally only if an enterprise with as few a banks as possible co-operates. An enterprise, which maintains addresses for example in completely Germany with own bank accounts, simplifies its cash management clearly, if these are connected with a bank maintained and by a Zerobalancing procedure. Thus it is ensured that liquidity is concentrated daily on a central bank account and thus by the finance management of an enterprise able is to take up either free liquidity optimally at the money market or to adjust short term liquidity under covering by borrowing. This procedure is used also by enterprises, which are active in the entire EUR area. Here it is therefore economically meaningful to co-operate with or two banks.

Same applies to the exchange. Payment dates are usually prepared by accounting systems and conveyed electronically to a bank for the execution of the payments. In order to keep small the number of interfaces, in addition likewise usually with only one bank one co-operates. Internationally active enterprises, which have to carry many foreign currency payments out, hand over for example frequently independently of the currency which can be paid their orders to pay to a bank and leave it their systems to implement these either from the appropriate foreign currency accounts of the enterprise and to load the EUR equivalent the EUR account of the enterprise. The complexity reduction, which is reached by it, can be clarified most simply thereby if one regards the alternative to it. Accepted, an enterprise has regularly payments in euro to carry out in US Dollar and Swiss Franconia then it could separately complete the exchange with US-American in each case theoretically for each of these currencies, Swiss and a bank settled in the euro-area. This would mean however the fact that her with each payment run payment dates at three banks too to hand over and with three different bank systems would have to co-ordinate their accounting systems. For most enterprises it is more rational to complete this over only one bank.

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