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...)
Banking regulation and supervision refers to a form of financial regulation which subjects banks to certain requirements, restrictions and guidelines, enforced by a financial regulatory authority generally referred to as banking supervisor, with semantic variations across jurisdictions. By and large, banking regulation and supervision aims at ensuring that banks are safe and sound and at fostering market transparency between banks and the individuals and corporations with whom they conduct business.
Its main component is prudential regulation and supervision whose aim is to ensure that banks are viable and resilient ("safe and sound") so as to reduce the likelihood and impact of bank failures that may trigger systemic risk. Prudential regulation and supervision requires banks to control risks and hold adequate capital as defined by capital requirements, liquidity requirements, the imposition of concentration risk (or large exposures) limits, and related reporting and public disclosure requirements and supervisory controls and processes. Other components include supervision aimed at enforcing consumer protection, sometimes also referred to as conduct-of-business (or simply "conduct") regulation and supervision of banks, and anti-money laundering supervision that aims to ensure banks implement the applicable AML/CFT framework. Deposit insurance and resolution authority are also parts of the banking regulatory and supervisory framework. Bank (prudential) supervision is a form of "microprudential" policy to the extent it applies to individual credit institutions, as opposed to macroprudential regulation whose intent is to consider the financial system as a whole. (Full article...)
The Bank War was a political struggle that developed over the issue of rechartering the Second Bank of the United States (B.U.S.) during the presidency of Andrew Jackson (1829–1837). The affair resulted in the shutdown of the Bank and its replacement by state banks.
The Second Bank of the United States was established as a private organization with a 20-year charter, having the exclusive right to conduct banking on a national scale. The goal behind the B.U.S. was to stabilize the American economy by establishing a uniform currency and strengthening the federal government. Supporters of the Bank regarded it as a stabilizing force in the economy due to its ability to smooth out variations in prices and trade, extend credit, supply the nation with a sound and uniform currency, provide fiscal services for the treasury department, facilitate long-distance trade, and prevent inflation by regulating the lending practices of state banks. Jacksonian Democrats cited instances of corruption and alleged that the B.U.S. favored merchants and speculators at the expense of farmers and artisans, appropriated public money for risky private investments and interference in politics, and conferred economic privileges on a small group of stockholders and financial elites, thereby violating the principle of equal opportunity. Some found the Bank's public–private organization to be unconstitutional, and argued that the institution's charter violated state sovereignty. To them, the Bank symbolized corruption while threatening liberty. (Full article...)
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The Society for Worldwide Interbank Financial Telecommunication (Swift), legally S.W.I.F.T. SC, is a cooperative established in 1973 in Belgium (French: Société Coopérative) and owned by the banks and other member firms that use its service. SWIFT provides the main messaging network through which international payments are initiated. It also sells software and services to financial institutions, mostly for use on its proprietary "SWIFTNet", and assigns ISO 9362 Business Identifier Codes (BICs), popularly known as "Swift codes".
As of 2018, around half of all high-value cross-border payments worldwide used the Swift network, and in 2015, Swift linked more than 11,000 financial institutions in over 200 countries and territories, who were exchanging an average of over 32 million messages per day (compared to an average of 2.4 million daily messages in 1995). (Full article...)
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A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities. A bank usually fails economically when the market value of its assets declines to a value that is less than the market value of its liabilities. The insolvent bank either borrows from other solvent banks or sells its assets at a lower price than its market value to generate liquid money to pay its depositors on demand. The inability of the solvent banks to lend liquid money to the insolvent bank creates a bank panic among the depositors as more depositors try to take out cash deposits from the bank. As such, the bank is unable to fulfill the demands of all of its depositors on time. A bank may be taken over by the regulating government agency if its shareholders' equity are below the regulatory minimum.
The failure of a bank is generally considered to be of more importance than the failure of other types of business firms because of the interconnectedness and fragility of banking institutions. Research has shown that the market value of customers of the failed banks is adversely affected at the date of the failure announcements. It is often feared that the spill over effects of a failure of one bank can quickly spread throughout the economy and possibly result in the failure of other banks, whether or not those banks were solvent at the time as the marginal depositors try to take out cash deposits from these banks to avoid from suffering losses. Thereby, the spill over effect of bank panic or systemic risk has a multiplier effect on all banks and financial institutions leading to a greater effect of bank failure in the economy. As a result, banking institutions are typically subjected to rigorous regulation, and bank failures are of major public policy concern in countries across the world. (Full article...)
In the past, the custodian bank purely focused on custody, safekeeping, settlement, and administration of securities as well as asset servicing such as income collection and corporate actions. Yet, in the modern financial world, custodian banks have started providing a wider range of value-adding or cost-saving financial services, ranging from fund administration to transfer agency, from securities lending to trustee services. (Full article...)
ATMs are known by a variety of names, including automatic teller machines (ATM) in the United States (sometimes redundantly as "ATM machine"). In Canada, the term automated banking machine (ABM) is also used, although ATM is also very commonly used in Canada, with many Canadian organizations using ATM over ABM. In British English, the terms cashpoint, cash machine and hole in the wall are most widely used.[better source needed] Other terms include any time money, cashline, tyme machine, cash dispenser, cash corner, bankomat, or bancomat. ATMs that are not operated by a financial institution are known as "white-label" ATMs. (Full article...)
In the English language, banq and banc are coined words pronounced identically to the word "bank". Both terms have been adopted by financial services companies and others to satisfy legal restrictions on the usage of the word bank. The compoundbancorp (banc/bank + corp[oration]) is often used in the names of bank holding companies. For example, a hypothetical chartered bank named Bank of Manhattan might form a holding company named "Manhattan Bancorp", and a sister insurance business named "Banc of Manhattan Insurance". One well-known past example was Bank of America's investment banking entity, named Banc of America Securities (now part of Bank of America Merrill Lynch).
This practice originates from legal necessity: in the United States, the commerce departments of state governments generally prohibit or restrict the use of certain words in the names of corporations unless those corporations are legitimate chartered banks. For example, words prohibited by the state of Louisiana include bank, banker, banking, savings, safe deposit, trust, trustee, and credit union. (Full article...)
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The Diamond–Dybvig model is an influential model of bank runs and related financial crises. The model shows how banks' mix of illiquid assets (such as business or mortgage loans) and liquid liabilities (deposits which may be withdrawn at any time) may give rise to self-fulfilling panics among depositors. Diamond and Dybvig, along with Ben Bernanke, were the recipients of the 2022 Nobel Prize in Economics for their work on the Diamond-Dybvig model. (Full article...)
CGD now has presence in 23 countries spanning four continents through branches, representative offices or direct equity interests in local financial institutions. CGD is the largest Portuguese financial group, with the highest domestic market shares in key areas such as customer deposits, loans and advances to customers, mortgages, insurance, mutual funds and real estate leasing (11.4%). Based on assets, it ranks 109 in terms of the world’s major banks. CGD is the 69th largest European bank. (Full article...)
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The Bank of Estonia (Estonian: Eesti Pank) is the Estonian member of the Eurosystem and has been the monetary authority for Estonia from 1919 to 2010, albeit with a long suspension between 1940 and 1991, issuing the Estonian kroon. The bank doesn't translate its name to English but uses its Estonian name Eesti Pank in all English communications. (Full article...)
Through mergers, the oldest branch of the Bank of America franchise can be traced to 1784, when Massachusetts Bank was chartered, the first federally chartered joint-stock owned bank in the United States. Another branch of its history stretches back to the U.S.-based Bank of Italy, founded by Amadeo Pietro Giannini in 1904, which provided various banking options to Italian immigrants who faced service discrimination. Originally headquartered in San Francisco, California, Giannini acquired Banca d'America e d'Italia (Bank of America and Italy) in 1922. The passage of landmark federal banking legislation facilitated a rapid growth in the 1950s, quickly establishing a prominent market share. After suffering a significant loss after the 1998 Russian bond default, BankAmerica, as it was then known, was acquired by the Charlotte-based NationsBank for US$62 billion. Following what was then the largest bank acquisition in history, the Bank of America Corporation was founded. Through a series of mergers and acquisitions, it built upon its commercial banking business by establishing Merrill Lynch for wealth management and Bank of America Merrill Lynch for investment banking in 2008 and 2009, respectively (since renamed BofA Securities). (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...)
Bank One traces its roots to the merger of Illinois based First Chicago NBD, and Ohio-based First Banc Group (later Bank One), a holding company for the City National Bank in Columbus, Ohio. (Full article...)
Image 32Statesman 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 33Sealing of the Bank of England Charter (1694), by Lady Jane Lindsay, 1905. (from Bank)
Image 34An illustration of Northern National Bank as advertised in a 1921 book highlighting the opportunities available in Toledo, Ohio (from Bank)
Image 35Bank of Finland strong box which moved to Helsinki with the bank when it relocated from Turku (from Bank of Finland)