Beruflich Dokumente
Kultur Dokumente
By Quinn Molteni
What is a Bank?
A Unique Business
o
Types of Banks
o
Commercial banks
Institutions commonly thought as banks.
Retail banks
& other thrift institutions such as mutual savings
banks, savings & loans, & credit unions developed
to help individuals not served by commercial
banks save money, acquire loans, & invest.
Central banks
Governmental banks that manage, regulate, &
protect both the money supply & the banks
themselves.
Banking today
Mergers
o
Competition
o
Bank
Country
Citigroup
United States
Mizuho Financial
Group
Japan
UBS
Switzerland
Sumitomo Mitsui
Financial Group
Japan
Deutsche Bank
Group
Germany
Mitsubishi Tokyo
Financial Group
Japan
HSBC Group
United Kingdom
United States
BNP Paribas
France
Bayer
Germany
Banks &
Economics
Creditworthine Guaranteeing
ss
the money
Evaluating the In the US,
banks & the
creditworthines
government
s of customers,
work together
whether large
to form the
industries or
banking
governments
system & to
or individual
make sure the
customers, is
money supply
another
is adequate,
banking
appropriate, &
function that
The substance of
society
Banking
institutions
perform more
than moving
money through
the economy,
they also provide
a common
system that
people will trust.
Money at Work
The Spread
Other Funds
Assets &
Liabilities
Tests of Bank
Profitability
An asset is anything of
value.
A liquid asset is anything
that can readily be changed,
like cash
A liability, in financial terms,
is a cash obligation.
A banks liabilities exceed its
reserves.
o Return of equity
(ROE), which
measures how well a
bank is using equity
(also called
stockholders equity).
Net income Total equity
= Return on equity
New Services
Credit cards
Innovative lending
o New types of lending are also available to consumers
Technology tools
o Automated teller machines (ATMs)
The first of the high-tech revolutions for consumers
o Smart cards
Credit, debit, or other types of cards that have embedded
microchips.
o Online banking
Whether called Internet banking, electronic banking, home
banking , or PC banking, online banking allows customers
to perform transaction from their home computers.
Depository Intermediaries
Commercial Banks
A big distinction between
commercial banks & other
depository institutions is
that commercial banks are
owned by stockholders
who expect a profit on
their investments. Today
commercial banks may
work with both businesses
& individuals. Commercial
banks that specialize only
in business banking are
sometimes called
wholesale banks.
Credit Unions
o These are also owned
by depositors, but
there are a couple of
key differences
1. Users of credit unions
must be members,
which is usually based
on some type of
association
2. Credit unions are notfor-profit financial
institutions that exist to
benefit the members
Nondepository Intermediaries
Insurance
Companies
o Surprisingly
insurance
companies are
financial
intuitions, you
might not think
so, but they are
o Insurance
companies
make money on
the policies
they sell, which
protect against
financial loss
and/or build
income for later
use.
Trust
Companies/
Pension Funds
Companies
that administer
pension or
retirement funs
also perform
financial
services. These
companies
manage
money for a
fee and
promise in
return to
provide future
income.
Loan
Currency
Brokerage
companies exchanges
houses
o Loan companies,
o Currency
Brokers are
sometimes
exchanges do not
called finance
make loans or
people who
companies, are
receive deposits.
execute orders
not banks.
o Currency
o They don't
exchanges are
to buy and sell
receive deposits,
private
stocks & other
& they should
companies that
not be confused
cash checks, sell
securities.
with banks,
money orders, or
savings & loan
They are paid
perform other
associations, or
exchange
commissions.
credit unions.
services.
o they are private
o They charge a
Their service is
companies who
fee, usually a
to help
lend money &
percentage of the
make a profit on
amount
investors do as
interest.
exchanged.
What is currency?
Classifying currency:
o Some economists make some
other distinctions, dividing the
term currency between coin, called
metallic currency, and paper
money or credit instruments, called
paper currency.
o other terms for paper currency are:
government currency is money
printed by a government
in some countries banks issue
notes against their reserves
called bank notes, which are
referred to as bank currency
checks are also a form of
currency, and they are called
deposit currency, because of
how their value is redeemed
The growth of
American
currency
Colonial cash
o
Portrait on front
George Washington
Thomas Jefferson
Abraham Lincoln
Alexander Hamilton
Andrew Jackson
Ulysses S. Grant
Benjamin Franklin
Banks in the
Young United
States
Banking in different
countries
Australia
Austria
Bangladesh
Canada
China
US.
Australia
History
First bank in Australia was the Bank of New South Wales Bank
of New South Wales opened these branches:
o
Victoria (1851)
Fiji (1901)
Tasmania (1910)
Four pillars
Currently, Australian banking sector
is dominated by four major banks:
o Australia & new Zealand banking
group
o Commonwealth bank of Australia
o National Australia bank
o Westpac banking corporation
1990: commonwealth government
of Australia announced the
adoption of a four pillars policy &
would reject any mergers between
the four banks
A number of leading commentators
have argued that the four pillars
policy is built upon economic
fallacies & works against the
nations better interest.
Mutual banking in
Australia
Foreign banks
Foreign banks wishing to have a branch in
Australia must obtain a banking authority
issued by APRA under banking act, either
to operate as a wholesale bank through an
Australian branch or to conduct business
through an Australian-incorporated
subsidiary
According tot eh foreign investment review
board, foreign investment in the Australian
banking sector needs to be consistent with
the banking act, the financial sector (share
holdings) act 1998 & banking policy
including prudential requirements
There are a number of foreign subsidiary
banks how ever only a few have a retail
banking presence:
o HSBC bank Australia
o Bank of Cyprus Australian limited
o Beirut Hellenic bank
o & Citibank Australia
Regulation
Australia's banking regulation is
extensive and detailed. It is split
mainly between the Australian
Prudential Regulation Authority
(APRA) and Australian Securities
and Investments Commission
(ASIC).
APRA is responsible for the licensing
and prudential supervision of
Authorized Deposit-Taking
Institution (ADIs) (banks, building
societies, credit unions, friendly
societies and participants in certain
credit card schemes and certain
purchaser payment facilities), life
and general insurance companies
and superannuation funds.
Austria
Banking system
The two largest joint-stock banks are
the Creditanstalt-Bankverein & the
sterreichische Lnderbank
o nationalized 1946
o Shares representing 40% of the
nominal capital of the two were
sold to public in 1957
o January 12, 1997: coalition partners
agreed to sell CreditanstaltBankverein to indirectly stateowned bank Austria, which is
dominated by the Social
Democratic Party (SPO)
International monetary fund reports
that in 2001 currency & demand
deposits were equal to $52.9 billion;
same year, M2 & M1 savings deposits,
small time deposits, & market money
mutual funds was $171.2 billion
Bangladesh
History
The Pakistani banking system at
independence (august 14, 1947)
contained of 2 branch offices of the
previous State Bank of Pakistan as well
as 17 commercial banks, 2 of them
controlled by Bangladeshi interest & 3 by
outsiders other than West Pakistanis
All banking systems were focused in
urban areas
The recently independent government
instantly assigned the Dhaka branch of
the State Bank of Pakistan as the central
bank & renamed it the Bangladesh Bank
o Responsible for:
regulating currency
Controlling credit & monetary policy
Administering exchange control &
official foreign exchange reserves
Canada
Origins
Recent history
1980s & 1990s: largest banks
acquire almost all significant trust
& brokerage companies in Canada.
o Also started their own mutual
fund & insurance businesses
o Consequently, Canadian banks
broadened out to become
supermarkets of economic
services
2 other famous developments in
Canadian banking are:
o presentation of ING Bank of
Canada (which mostly depends
on a branchless banking model)
o Non-bank mortgage origination
companies
Canadian banks
Regulation
China
Supervisory
bodies
o the Bank of
China (BOC)
o the China
Construction
Bank (CCB)
o the Agricultural
Bank of China
(ABC)
o the Industrial &
Commercial Bank
of China (ICBC).
Policy banks
The three new policy banks
that were established to take
over the governmentdirected spending functions
of the four state-owned
commercial banks are:
o The Agricultural Development
Bank of China (ADBC)
o The China Development Bank
(CDB)
o The Export-Import Bank of
China (Chexim)
Second tier
commercial
banks
Surprisingly there arent just
the big four state-owned
commercial banks, there are
additional smaller
commercial banks. The
largest ones in this group
include:
o The Bank of Communications
o The China CITIC Bank
o The China Everbright Bank
o The Hua Xia Bank
o The China Minsheng Bank
o The Guangdong Development
Bank
o The Shenzhen Development
Bank
o The China Merchants Bank
o The Shanghai Pudong
Development Bank &
Industrial Bank
Trust &
Investment
Corporations
United states
Regulatory agencies:
Federal reserve
system
Its the central banking system of the US
Federal deposit
insurance
corporation
This corporation
Charter
Regulate
Supervise
all national banks & the federal branches &
agencies of foreign banks in the United States.
Office of thrift
supervision
Administered temporarily
Antebellum history
Early attempts to
create a national bank
Jacksonian era
1837-1863: free
banking era
Bond security provision that did not limit a number of banks regulated by this
law, but all notes the bank issued had to be backed by state bonds deposited at
the state auditor's office and meet certain capital requirements Prior to opening
a bank, subscriptions for a minimum amount of capital funds were required.
Person subscribing for a stock commonly paid in some of the funds and promised
to provide additional funds up to the amount subscribed.
2. Any bond security provision was to be deposited with the state on a dollar-fordollar basis as a condition for the issuance of banknotes. In effect this means
that all the notes issued by a particular banks were backed and redeemable by a
specific quantity of specie gold or silver, and used as checks in transactions
nowadays. Hence the banknote value was the value of the bank assets. In a case
of a bank failure, the state representing auditor would close the bank, sell the
bonds, and use the proceeds to reimburse bondholders.
The free banking reforms were seen as a part of a greater struggle for liberty
and hence much was expected from them. Free banking replaced special interest
legislation with a systematic rule of law,in a form of highly idiosyncratic,
flexible, personalized charter conditions. It was expected that the elimination of
the privilege associated with the Safety Fund System 1929 would decrease
legislative corruption and log rolling, the number of banks would increase and
they would be more rationally located, and the end effect of more available
credit would encourage commercial and manufacturing businesses.
Numerous banks that started during this period proved to be unstable, and many
shut. It is widely believed that as a result of light governmental regulation, many
dishonest bankers appeared and created a phenomenon called "wildcat
banking, which is believed to be the main cause of the downfall of Free Banking.
Wildcat banking saw institutions defraud the public by issuing notes they could
not redeem in specie (gold or silver).
Rise of
investment
banks- Civil War
Early 20 century
th
J.P Morgan
George F. Baker
James Stillman.
McFadden Act
Credit unions
New deal-era
reforms
During the 1930s, the U.S. and the rest of the world
experienced the Great Depression.
Emergency
Banking Act
Creation of FDIC
& FSLIC
Abandonment of
the gold standard
Glass-Steagall act
of 1933
Banking act of
1935
Bretton woods
system
Automated teller
machines
Nixon shock
Deregulation of
the 1980s & the
1990s
Legislation passed by the federal government
during the 1980s, such as the Depository
Institutions Deregulation and Monetary
Control Act of 1980 and the GarnSt. Germain
Depository Institutions Act of 1982, reduced
the distinctions between banks and other
financial institutions in the United States.
Expansion of FDIC
insurance 1989
Interstate banking
Repeal of the
glass-steagall Act
Late-2000s
financial crisis
Expansion of FDIC
insurance 2008-2010
Dodd-Frank Act
Test
1. What is a bank?
2. How is banking done today?
3. How do banks spread the wealth?
4. How do bank work for you?