Banks

What is a bank?
A bank is an organization, usually a corporation, that accepts deposits, makes (grants) loans, issues credit and debit cards, pays, cheques, and performs some other services.

How does a bank act?
A bank acts as an intermediary between suppliers of funds (depositors) and users of funds (borrowers).

Why did bank come into existence?
Banks take over the major risks related to monetary transactions and provide the main element of security for both depositors and borrowers.

What main types of banks exist?
Saving Banks – sometimes called thrift institutions are usually financial institutions that accept consumer deposits and make primary consumer loans and residential mortgages.
Commercial Banks – gather funds from depositors and inter-bank markets and invest them principally in both personal and commercial loans.
Investment Banks – manage dealing and investment securities for customers and for their own trading account.

How do banks earn money?
The principal component of bank earnings is interest. To determine the banks profitability we need to know the differential between the interest paid and interest earned. Fees are another source of bank income.

Bank structure
The structure of the bank depends on its size. There is always a head office, sometimes called headquarters. Each bank usually has a branch network. Branches are organized in a special way because they serve as selling points (these are the places which serve customers and make the principal profit of the banks).
The most important part of any branch is a front office with a lot of counters where customers open or close their accounts, deposit or withdraw money, etc. Then there is a back office where transactions are processed.

Bank accounts
Current account – pays very low interest but on the other hand the bank usually does not charge any fees for running it.
Deposit account – money deposited by a customer can earn much higher interest, but he cannot withdraw his money at any time without losing interest. He has to give notice which depends on the period of a time deposit account.
Giro account – a type of current accounts. The interest is not very high but is usually slightly higher than in typical current accounts. In our country it is an account to which salaries are typically paid(they are directly transferred from the companies for which the customers work). This is a simple system allowing payments of rent, gas, water and electricity bills, TV and radio charges.

A bank loan
…is an agreed sum of money lent by a bank to a customer to be repaid at a later date, usually with interest (a contract between a buyer (a borrower) and a seller (a lender)).

Telephone banking
As the banking hours do not always match customers working hours, the banks have introduced new services in order to help their customers to gain access to their accounts whenever it suits them – day or night.
There are business lines for companies and private entrepreneurs and private lines for individuals. These lines give customers access to their accounts 24 hours a day, 7 days a week, enabling them to:

• check their balances, both business and personal
• transfer money between accounts
• check particular payments
• pay bills or invoices from suppliers
• obtain a list of the scheduled and confirmed transactions
• order cheque books, pay-in books and statements

Bank services in Britain
One of the world’s most important financial centers is the City. In the heart of the City stands the Bank of England. It is the central bank for all the other banks and its main business is to act as the bank to the government and to issue banknotes.

Commercial banks, such as National Westminster and Barclays bank, have about 12,000 branch offices in all the large and small towns in England and Wales, but not in Scotland because Scotland has its own banks. They offer a large number of services, for example they provide loans and help exporters and importers transfer money, to and from other countries, introduce automatic teller machines, hold current and deposit accounts etc.

Credit Cards
Commercial banks will give credit cards to people who they think will be good customers. A credit card allows you to buy goods or services in shops, hotels, at railway stations and so on without paying cash or writing a cheque. You just show your card to the shopkeeper, he makes a copy of your card number, sends the bill to the bank, and the bank pays.

Each month, the bank sends you a statement which shows how much you have “spent” with you card and the minimum amount which you must pay back.

At the post office
There are several counters at the post office. You can find the counters for “Stamps”, “Telephone”, “Telegrams” and “Parcels”. There are also counters where you can send money and hand in you pools coupons. At the beginning of each month there are queues because people pay their rent, their insurance and various other bills.

You must be careful of writing a complete address on the parcels as well as on the envelopes. &It is necessary to add the post code, too. When sending a parcel you must go to the post office because the clerk weighs it and tells you what charge you have to pay. Sending a letter (not a registered one) you needn’t to go to the post office. You must put the right stamp in the top right-hand corner of the envelope and then put it into a letter box in the street.

If you want to make a telephone call you must know the phone number first. You can either look it up in the telephone directory or to ask for the information at directory enquiries. If there is and automatic connection you must dial direct and use the code number. If not you must dial the operator at the telephone exchange and ask for making the connection. The price of your call depends on the time of day and if the call is local or not.