A bank is a financial institution that accepts
deposits from the public and creates a
demand deposit while simultaneously making
loans. Lending activities can be directly performed by the bank or indirectly through
capital markets.
Whereas banks play an important role in financial stability and the
economy of a country, most jurisdictions exercise a
high degree of regulation over banks. Most countries have institutionalized a system known as
fractional-reserve banking, under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure
liquidity, banks are generally subject to
minimum capital requirements based on an international set of capital standards, the
Basel Accords. (Full article...)
An industrial loan company (ILC) or industrial bank is a
financial institution in the
United States that lends money, and may be owned by non-financial institutions. They provide niche financial services nationwide. ILCs offer
FDIC-insured deposits and are subject to FDIC and state regulator oversight. All "FDIC-insured entities are subject to Sections 23A and 23B of the
Federal Reserve Act, which limits bank transactions with affiliates, including the non-bank parent company." ILCs are permitted to have branches in multiple states (which is permitted by many states on a reciprocal basis). They are regulated and supervised by state charters and insured by the
Federal Deposit Insurance Corporation. They are authorized to make consumer and commercial loans and accept federally insured deposits. Banks may not accept demand deposits if the bank has total assets greater than $100 million. ILCs are exempted from the
Bank Holding Company Act.
ILCs assist numerous charities and provide millions of dollars annually in grants, low interest loans, and service through the Community Reinvestment Act (CRA). Currently, only seven states offer an ILC bank charter. Most ILCs have been chartered by the Utah Department of Financial Institutions. Other states permitting ILCs include
California,
Colorado,
Minnesota,
Indiana,
Hawaii, and
Nevada. (Full article...)
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An advising bank (also known as a notifying bank) advises a
beneficiary (exporter) that a
letter of credit (L/C) opened by an
issuing bank for an
applicant (importer) is available. An advising bank's responsibility is to authenticate the letter of credit issued by the issuer to avoid fraud. The advising bank is not necessarily responsible for the payment of the credit which it advises the beneficiary of. The advising bank is usually located in the beneficiary's country. It can be (1) a branch office of the issuing bank or a
correspondent bank, or (2) a bank appointed by the beneficiary. An important point is the beneficiary has to be comfortable with the advising bank.
In case (1), the issuing bank most often sends the L/C through its branch office or correspondent bank to avoid fraud. The branch office or the correspondent bank maintains specimen signature(s) on file where it may counter-check the signature(s) on the L/C, and it has a coding system (a secret test key) to distinguish a genuine L/C from a fraudulent one (
authentication). (Full article...)
In addition to the bill payment facility, most banks will also offer various features with their electronic bill payment systems. These include the ability to schedule payments in advance to be made on a specified date (convenient for installments such as mortgage and support payments), to save the biller information for reuse at a future time and various options for searching the recent payment history. In many cases the payment data can also be downloaded and posted directly into the customer's
accounting or personal finance software. (Full article...)
According to the United States
Electronic Fund Transfer Act of 1978 it is "a funds transfer initiated through an electronic terminal, telephone, computer (including on-line banking) or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to
debit or
credit a consumer's account". (Full article...)
Transactions on deposit accounts are recorded in a bank's books, and the resulting balance is recorded as a
liability of the bank and represents an amount owed by the bank to the customer. In other words, the banker-customer (depositor) relationship is one of debtor-creditor. Some banks charge fees for transactions on a customer's account. Additionally, some banks pay customers
interest on their account balances. (Full article...)
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A merchant bank is historically a bank dealing in commercial loans and investment. In modern British usage it is the same as an
investment bank. Merchant banks were the first modern banks and evolved from medieval
merchants who traded in commodities, particularly
cloth merchants. Historically, merchant banks' purpose was to facilitate and/or finance production and trade of commodities, hence the name "merchant". Few banks today restrict their activities to such a narrow scope.
In modern usage in the
United States, the term additionally has taken on a more narrow meaning, and refers to a
financial institution providing capital to companies in the form of share ownership instead of loans. A merchant bank also provides advice on corporate matters to the firms in which they invest. (Full article...)
Different wire transfer systems and operators provide a variety of options relative to the immediacy and finality of settlement and the cost, value, and volume of
transactions.
Central bank wire transfer systems, such as the
Federal Reserve's
Fedwire system in the United States, are more likely to be
real-time gross settlement (RTGS) systems, as they provide the quickest availability of funds. This is because they post the gross (complete) entry against electronic accounts of the wire transfer system operator. Other systems, such as the
Clearing House Interbank Payments System (CHIPS), provide
net settlement on a periodic basis. More immediate settlement systems tend to process higher monetary value
time-critical transactions, have higher transaction costs, and have a smaller volume of payments. A faster settlement process allows less time for
currency fluctuations while money is in transit. (Full article...)
Worldwide, credit union systems vary significantly in their total assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with hundreds of thousands of members and assets worth billions of US dollars. In 2018, the number of members in credit unions worldwide was 375 million, with over 100 million members having been added since 2016. (Full article...)
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The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a
financial crisis that took place in the United States over a three-week period starting in mid-October, when the
New York Stock Exchange suddenly fell almost 50% from its peak the previous year. The panic occurred during a time of economic
recession, and there were numerous
runs affecting
banks and
trust companies. The 1907 panic eventually spread throughout the nation when many state and local banks and businesses entered
bankruptcy. The primary causes of the run included a retraction of
market liquidity by a number of New York City banks and a loss of confidence among
depositors, exacerbated by unregulated
side bets at
bucket shops.
The panic was triggered by the failed attempt in October 1907 to
corner the market on
stock of the
United Copper Company. When the bid failed, banks that had lent money to the cornering scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the
Knickerbocker Trust Company, New York City's third-largest trust. The collapse of the Knickerbocker spread fear throughout the city's trusts as
regional banks withdrew
reserves from New York City banks. The panic then extended across the nation as vast numbers of people withdrew deposits from their regional banks, causing the 8th-largest decline in U.S. stock market history. (Full article...)
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The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, (
Pub. L.Tooltip Public Law (United States)106–102 (text)(PDF), 113
Stat.1338, enacted November 12, 1999) is an
act of the
106th United States Congress (1999–2001). It repealed part of the
Glass–Steagall Act of 1933, removing barriers in the market among
banking companies,
securities companies, and
insurance companies that prohibited any one institution from acting as any combination of an
investment bank, a
commercial bank, and an
insurance company. With the passage of the
Gramm–
Leach–
Bliley Act, commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. Furthermore, it failed to give to the SEC or any other financial regulatory agency the authority to regulate large investment bank holding companies. The legislation was signed into law by President
Bill Clinton.
A year before the law was passed,
Citicorp, a commercial bank
holding company, merged with the insurance company
Travelers Group in 1998 to form the conglomerate
Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included
Citibank,
Smith Barney,
Primerica, and
Travelers. Because this merger was a violation of the Glass–Steagall Act and the
Bank Holding Company Act of 1956, the
Federal Reserve gave Citigroup a temporary waiver in September 1998. Less than a year later, GLBA was passed to legalize these types of mergers on a permanent basis. The law also repealed Glass–Steagall's conflict of interest prohibitions "against simultaneous service by any officer, director, or employee of a securities firm as an officer, director, or employee of any member bank." (Full article...)
Credit Suisse was founded in 1856 to fund the development of
Switzerland's rail system. It issued loans that helped create Switzerland's
electrical grid and the
European rail system. In the 1900s, it began shifting to
retail banking in response to the elevation of the middle class and competition from fellow Swiss banks
UBS and
Julius Bär. Credit Suisse partnered with
First Boston in 1978 before buying a controlling share of the bank in 1988. From 1990 to 2000, the company purchased institutions such as
Winterthur Group, Swiss Volksbank, Swiss American Securities Inc. (SASI), and
Bank Leu. (Full article...)
The
ECB Governing Council makes
monetary policy for the
Eurozone and the
European Union, administers the
foreign exchange reserves of EU member states, engages in foreign exchange operations, and defines the intermediate monetary objectives and key interest rate of the EU. The
ECB Executive Board enforces the policies and decisions of the Governing Council, and may direct the national central banks when doing so. The ECB has the exclusive right to authorise the issuance of
euro banknotes. Member states can issue
euro coins, but the volume must be approved by the ECB beforehand. The bank also operates the
TARGET2 payments system. (Full article...)
Apart from private banking, UBS provides
wealth management,
asset management and investment banking services for private, corporate and institutional clients with international service. UBS manages the largest amount of private wealth in the world, counting approximately half of
The World's Billionaires among its clients. UBS also maintains
a global investment bank and is considered a primary
market maker. The bank also maintains numerous underground
bank vaults, bunkers and storage facilities for gold bars around the
Swiss Alps and internationally. Partly due to its banking secrecy, it has been at the centre of
numerous tax avoidance investigations undertaken by U.S., French, German, Israeli and Belgian authorities. UBS operations in Switzerland and the United States were respectively ranked first and second on the 2018
Financial Secrecy Index. (Full article...)
Barclays plc (/ˈbɑːrkliz/, occasionally /-leɪz/) is a British multinational
universal bank, headquartered in
London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services.
Barclays traces its origins to the
goldsmith banking business established in the
City of London in 1690. James Barclay became a partner in the business in 1736. In 1896, twelve banks in London and the English provinces, including
Goslings Bank,
Backhouse's Bank and
Gurney, Peckover and Company, united as a
joint-stock bank under the name Barclays and Co. Over the following decades, Barclays expanded to become a nationwide bank. In 1967, Barclays deployed the world's first
cash dispenser. Barclays has made numerous corporate acquisitions, including of London, Provincial and South Western Bank in 1918,
British Linen Bank in 1919, Mercantile Credit in 1975,
the Woolwich in 2000 and the North American operations of
Lehman Brothers in 2008. (Full article...)
HSBC traces its origin to a
hong trading house in
British Hong Kong. The bank was established in 1865 in Hong Kong and opened branches in
Shanghai in the same year. It was first formally incorporated in 1866. In 1991, the present parent legal entity, HSBC Holdings plc, was established in
London and the historic Hong-Kong-based bank from whose initials the group took its name became that entity's fully-owned subsidiary. The next year (1992), HSBC took over
Midland Bank and thus became one of the largest domestic banks in the United Kingdom. (Full article...)
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The Bank of France (
French: Banque de France, the name used by the bank to refer to itself in all English communications) is the French member of the
Eurosystem. It was established by
Napoleon Bonaparte in 1800 as a private-sector corporation with unique public status. It was granted note-issuance monopoly in Paris in 1803 and in the entire country in 1848, issuing the
French franc.
Charles de Gaulle's government nationalized the bank in 1945 after several governance changes in the meantime. It remained France's sole
monetary authority until end-1998, when France adopted the
euro as its currency.
The Bank of France long held high prestige as an anchor of financial stability, especially before the monetary turmoil that followed
World War I. In 1907, Italian economist and statesman
Luigi Luzzatti referred to the Bank of France as "the centre of the world's monetary power." (Full article...)
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The Laurentian Bank of Canada (LBC; French: Banque Laurentienne du Canada) is a
Schedule 1 bank that operates primarily in the province of
Quebec, with commercial and business banking offices located in Ontario, Alberta, British Columbia, and Nova Scotia. LBC's Institution Number (or
routing number) is 039.
The institution was established as the Montreal City and District Savings Bank in 1846. Shares for the bank were publicly listed on the
Montreal Stock Exchange in 1965 and the
Toronto Stock Exchange in 1983. In 1987, the institution was renamed the Laurentian Bank of Canada. (Full article...)
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The Central Bank of the Russian Federation (
Russian: Центральный банк Российской Федерации), which brands itself as Bank of Russia (
Russian: Банк России) and is also commonly referred to in English as the Central Bank of Russia (CBR), is the
central bank of the
Russian Federation. The bank was established on July 13, 1990. It claims the legacy of the
State Bank of the Russian Empire (1860-1920) and of the Soviet
Gosbank (1921-1992), even though both institutions covered a significant larger territorial scope.
Image 21Statesman
Jan van den Brink was instrumental in the merger of Amsterdamsche Bank and Rotterdamsche Bank in 1964, and remained on the bank's board until 1978 (from AMRO Bank)
Image 22This 15th-century painting depicts money-dealers at a banca (bench) during the
Cleansing of the Temple. (from Bank)