BANKS

Banking could be a profession to be proud of if only the corruption that goes with it could be eliminated

 

 

A bank is an institution that provides financial service, particularly taking deposits and extending credit.

 

Currently the term bank is generally understood as an institution that holds a banking license. Banking licenses are granted by bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without meeting the legal definition of a bank, a so called non-banking financial company.

 

 

Nat West, the National Westminster Bank

 

 

Banks have a long history, and have influenced economies and politics for centuries.

 

The word bank is derived from the Italian banca, which is derived from German language and means bench. The terms bankrupt and "broke" are similarly derived from banca rotta, which refers to an out-of-business bank, having its bench physically broken. Money lenders in Northern Italy originally did business in open areas, or big open rooms, with each lender working from his own bench or table.

 

Traditionally, a bank generates profits from transaction fees on financial services and from the interest it charges for lending. In recent history, with historically low interest rates limiting banks' ability to earn money by lending deposited funds, much of a bank's income is provided by overdraft fees and riskier investments.

 

 

Banks in the economy

 

Role in the money supply

 

A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or issuing financial instruments in the money market or a capital market. The bank then lends out most of these funds to borrowers.

 

However, it would not be prudent for a bank to lend out all of its balance sheet. It must keep a certain proportion of its funds in reserve so that it can repay depositors who withdraw their deposits. Bank reserves are typically kept in the form of a deposit with a central bank. This behaviour is called fractional-reserve banking and it is a central issue of monetary policy. Some governments (or their central banks) restrict the proportion of a bank's balance sheet that can be lent out, and use this as a tool for controlling the money supply. Even where the reserve ratio is not controlled by the government, a minimum figure will still be set by regulatory authorities as part of bank regulation.

 

 

Size of global banking industry

 

Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5 trillion. This follows a 19.3% increase in the previous year. EU banks held the largest share, 50% at the end of 2005, up from 38% a decade earlier. The growth in Europe’s share was mostly at the expense of Japanese banks whose share more than halved during this period from 33% to 13%. The share of US banks also rose, from 10% to 14%. Most of the remainder was from other Asian and European countries.

 

The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The large number of banks in the US is an indicator of its geographical dispersity and regulatory structure resulting in a large number of small to medium sized institutions in its banking system. Japan had 129 banks and 12,000 branches. In Western Europe, Germany, France and Italy had more than 30,000 branches each. This was twice the number of branches in the UK. [1]

 

 

Barclays Bank

 

 

Bank crises

 

Banks are susceptible to many forms of risk which have triggered occasional systemic crises. Risks include liquidity risk (the risk that many depositors will request withdrawals beyond available funds), credit risk (the risk that those that owe money to the bank will not repay), and interest rate risk (the risk that the bank will become unprofitable if rising interest rates force it to pay relatively more on its deposits than it receives on its loans), among others.

 

Banking crises have developed many times throughout history when one or more risks materialize for a banking sector as a whole. Prominent examples include the U.S. Savings and Loan crisis in 1980s and early 1990s, the Japanese banking crisis during the 1990s, and the bank run that occurred during the Great Depression, and the recent liquidation by the central Bank of Nigeria, where about 25 banks were liquidated.

 

 

Regulation

 

The combination of the instability of banks as well as their important facilitating role in the economy led to banking being thoroughly regulated. The amount of capital a bank is required to hold is a function of the amount and quality of its assets. Major banks are subject to the Basel Capital Accord promulgated by the Bank for International Settlements. In addition, banks are usually required to purchase deposit insurance to make sure smaller investors are not wiped out in the event of a bank failure.

 

Another reason banks are thoroughly regulated is that ultimately, no government can allow the banking system to fail. There is almost always a lender of last resort—in the event of a liquidity crisis (where short term obligations exceed short term assets) some element of government will step in to lend banks enough money to avoid bankruptcy.

 

 

The Halifax bank and building society

 

 

Profitability

 

Large banks in the United States are some of the most profitable corporations, especially relative to the small market shares they have. This amount is even higher if one counts the credit divisions of companies like Ford, which are responsible for a large proportion of those company's profits. For example, the largest bank, Citigroup, which for the past 3 years has made more profit than any other company in the world, has only a 5% market share. Now if Citigroup were to be as dominant in its industry as a Home Depot, Starbucks, or Wal Mart in their respective industries, with a 30% market share, it would make more money than the top ten non-banking U.S. industries combined.

 

In the past 10 years in the United States, banks have taken many measures to ensure that they remain profitable while responding to ever-changing market conditions. First, this includes the Gramm-Leach-Bliley Act, which allows banks again to merge with investment and insurance houses. Merging banking, investment, and insurance functions allows traditional banks to respond to increasing consumer demands for "one stop shopping" by enabling cross-selling of products (which, the banks hope, will also increase profitability). Second, they have moved toward risk-based pricing on loans, which means charging higher interest rates for those people who they deem more risky to default on loans. This dramatically helps to offset the losses from bad loans, lowers the price of loans to those who have better credit histories, and extends credit products to high risk customers who would have been denied credit under the previous system. Third, they have sought to increase the methods of payment processing available to the general public and business clients. These products include debit cards, pre-paid cards, smart-cards, and credit cards. 

 

These products make it easier for consumers to conveniently make transactions and smooth their consumption over time (in some countries with under-developed financial systems, it is still common to deal strictly in cash, including carrying suitcases filled with cash to purchase a home). However, with convenience there is also increased risk that consumers will mis-manage their financial resources and accumulate excessive debt. Banks make money from card products through interest payments and fees charged to consumers and companies that accept the cards.

 

The banks' main obstacles to increasing profits are existing regulatory burdens, new government regulation, and increasing competition from non-traditional financial institutions.

 

 

 

THE TOP TEN BANKS

 

Top ten banking groups in the world ranked by tier 1 capital in 2004 (in U.S. dollars)

  1. Citigroup — 73 billion

  2. HSBC — 71 billion

  3. Royal Bank of Canada — 68 billion

  4. Credit Agricole Group — 63 billion

  5. Royal Bank of Scotland — 43 billion

  6. Mitsubishi Tokyo Financial Group — 40 billion

  7. Mizuho Financial Group — 39 billion

  8. HBOS — 36 billion

  9. BNP Paribas — 35 billion

 

Top ten banking groups in the world ranked by assets in 2004 (in U.S. dollars)

 

  1. UBS — 1,533 billion

  2. Citigroup — 1,484 billion

  3. Mizuho Financial Group — 1,296 billion

  4. HSBC Holdings — 1,277 billion

  5. Cr้dit Agricole — 1,243 billion

  6. BNP Paribas — 1,234 billion

  7. Deutsche Bank — 1,144 billion

  8. Royal Bank of Scotland — 1,119 billion

  9. Bank of America — 1,110 billion

 

 

Lloyds TSB Bank, the black horse sign

 

 

 

Top ten bank holding companies in the world ranked by profit in 2003 (in U.S. dollars)

  1. Citigroup — 21 billion

  2. Bank of America — 15 billion

  3. HSBC — 10 billion

  4. Royal Bank of Scotland — 8 billion

  5. Wells Fargo — 7 billion

  6. UBS AG — 6 billion

  7. Wachovia — 5 billion

  8. Merrill Lynch — 4 billion

 

Top ten bank holding companies in the U.S. ranked by deposits (in U.S. dollars)

 

As of June 30, 2004. These are U.S. deposits only. This is not a ranking of the largest U.S.-based global banks.

 

  1. Bank of America Corp. — 526 billion

  2. Wells Fargo & Co. — 256 billion

  3. Wachovia Corp. — 238 billion

  4. Citigroup Inc. — 193 billion

  5. Bank One Corp. — 150 billion (1)

  6. U.S. Bancorp — 112 billion

  7. SunTrust Banks, Inc. — 78 billion

  8. BB&T Corporation — 67 billion

  9. National City Corp. — 64 billion

 

 

 

Swinging bank sign

 

 

 

LINKS & REFERENCE

 

List of the world's ten largest banks at the end of 2004

FDIC bank market share data

EH.Net Encyclopedia

List of the world's ten largest banks by assets in 2004

Financial Ombudsman

https://en.wikipedia.org/wiki/Financial_Ombudsman_Service

http://www.financial-ombudsman.org/

https://en.wikipedia.org/wiki/Financial_Ombudsman_Service

BBC News business Barclays LIBOR rate fixing scandal fines

New York Times 2013 May 5 magazine Robert Diamonds next life

http://www.nytimes.com/2013/05/05/magazine/robert-diamonds-next-life.html

http://www.bbc.co.uk/news/business-18671255

 


 

 

MONEY FINDER

 

ABBEY NATIONAL

AGRICULTURAL BANK CHINA

ALLIANCE & LEICESTER

ALLIED IRISH

ALTERNATIVE INVESTMENTS

AMERICAN EXPRESS

ANGELS

ANZ BANK AUSTRALIA

ASIA PACIFIC ECONOMIC COOPERATION

BANCO BRADESCO

BANK OF AMERICA

BANK OF CHINA

BANK OF TOKYO JAPAN

BANK ONE USA

BANKS

BARCLAYCARD

BARCLAYS - UK

BAYERISCHE LANDESBANK - Germany

BNP PARIBAS GROUP - France

BILLIONAIRES

BRISTOL & WEST

BRITISH NATIONAL BUSINESS ANGELS

BRITISH VENTURE CAPITAL FIRMS

BUILDING SOCIETIES A - Z

BUSINESS PLAN -  MARKETING

CAHOOT

CANADIAN IMPERIAL BANK - Canada

CHASE MANHATTAN - US

CHINA CONSTRUCTION BANK

CITIBANK - US

COMEICA BANK - US

CREDIT CARDS - DEBT RELIEF

CREDIT LYONNIAS - France

CREDIT SUISSE

DEUTSCHE BANK - Germany

DIAMONDS

DOW JONES

DRAGONS DEN 2006

DRESDNER BANK - Germany

ECONOMICS

ELECTRONIC MONEY TRANSFERS

EMERALDS

ENTREPRENEUR

EQUITY HOUSES

FINANCIER

FIRST DIRECT

FLEET - US 

FLOATATIONS

FORBES 100 RICHEST

FORBES 500

FOREX INVESTMENTS

FORTUNE 500

FOUNDATIONS - GATES

FREE TRADE ZONES

FTSE

FUJI BANK - JAPAN

GOLD

GOLDMAN SACHS

HALIFAX

HBOS - HALIFAX BANK of SCOTLAND

HOLDING COMPANY

HONG KONG STOCK EXCHANGE

HSBC

HSBC BANK USA - UK

HSBC - HK

IDENTITY THEFT PREVENTION

IMPERIAL BANK - US

INDUSTRIAL COMMERCIAL BANK CHINA

INSURANCE

INVESTORS INDEX

IMF

ITAU UNIBANCO

J PIERPOINT MORGAN

JOHANNESBURG STOCK EXCHANGE

KLEINWORT BENSON

LA SALLE BANK - US

LIFE ASSURANCE

LOANS

LONDON STOCK EXCHANGE - MARKET

LLOYDS

MADRID STOCK EXCHANGE

MARKET CAPITALISATION

MAYBANK - Malaysia

MILLIONAIRES

MITSUBISHI UFJ FINANCIAL

MONEY

MONEY LAUNDERING

MORTGAGES

NASDAQ

NATIONAL AUSTRALIA BANK GROUP

NATIONAL LOTTERY

NATIONAL WESTMINSTER BANK

NATIONAL BUSINESS ANGEL NETWORK

NATIONAL CITY BANK - US

NEW YORK STOCK EXCHANGE

OFFSHORE BANKING

OMX AB HELSINKI

PENSIONS

PLATINUM

PLCs

RBS ROYAL BANK OF SCOTLAND

ROYAL BANK CANADA

RUBIES

SANTANDER BANCO

SANWA BANK - Japan

SAPHIRES

SAVINGS

SHAREHOLDERS

SHARES, STOCKS, DIVIDENDS

SHELL COMPANIES

SIAM COMMERCIAL BANK - Thailand

SILVER

SOCIETE GENERALE - France

SOUTHERN BANK BERHAD - Malyasia

STANDARD CHARTERED BANK - UK

STATE STREET BANK - US

STOCKS AND SHARES

SUMITOMO MITSUI BANK - Japan

SWISS BANK ACCOUNTS

TAX HAVENS

THAI FARMERS BANK - Thailand

THE AMERICAN DOLLAR

THE ARAB INVESTMENT COMPANY

THE CHINESE YUAN

THE DINAR

THE EURO

THE INDIAN RUPEE

THE JAPANESE YEN

THE POUND STERLING

THE RUSSIAN ROUBLE

THE SOUTH AFRICAN RAND

THE SWISS FRANC

TOKYO STOCK EXCHANGE

TORONTO DOMINION BANK - Canada

TRUSTS

UBS AG - Switzerland

UNION BANK OF CALIFORNIA

US BANKCORP

VAT - VALUE ADDED TAX

VENTURE CAPITAL

VISA

WALL STREET

WELLS FARGO - US

WEST DEUTSCHE LANDESBANK - Germany

WESTPAC

WORLD BANK

WORLD TRADE ORGANIZATION

WOOLWICH

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