Bank System Information

Merchant Banks have their roots in the banking activitythe merchants were involved in, as an extension of their owntrading. They used to help foreign governments to get loans, toaccept bills of exchange. Nowadays, they offer services includingcorporate finance, foreign exchange dealings, security trading. National Savings is a saving scheme supported by thegovernment which aids government borrowing using a set of saving instruments. Some of these are the fixed-interest and index-linked Savings Certificates. 

The National Savings, at the very beginning, offered deposit services to customers, through PostOffice branches. It does not make loans.Discount Houses are specific to Britain and are animportant element of the British monetary system. They are between the Bank of England and the rest of the banking sector;they promote the orderly flow of funds between the authorities andthe banks. They receive the liquid money of the banking sector,lend to the government for the weekly offer of Treasury Bills.

They trade on the wholesale money market. Investment institutions collect the savings from the persons and corporation sectors; they invest them in securities andin different assets. Some of them are: insurance companies,insurance brokers, pension funds, unit trusts, investment trusts.Special financial institutions operate in the public sector and in the private one. They offer loan finance and equity capital.The latter include finance houses, leasing houses, factoringcompanies, venture capital companies

Banking and financial market operations involve specialinstitutions and financial markets; they act within a legislativeframework and offer specialized services to individuals,companies, governments. Let’s present some of them.

The Bank of England is the central bank of the kingdom. Itacts as a banker to all the other banks and government; it issues the bank notes; it manages the national debt; it lends money to all the banking institutions; it regulates the monetary and creditconditions and supervises the banking system.The commercial banks are ruled by the Banking Act of 1987 andare allowed to take deposits and lend money on the retail andwholesale markets. They offer banking services.

Retail banks offer their services to the individuals andmedium sized businesses. They operate through branches whichoffer cash deposits, withdrawal facilities as well as possibilities of transferring funds. They provide facilities to different types of account such as current accounts, deposit accounts; they offer loans and different financial services.International banking is developing. 

Foreign banks have branches everywhere, especially in the large cities and importanttowns of the countries. London is famous for this. There are bankswhich operate mainly overseas and are specialized in particular areas of the world: Far East, Asia, South Africa, and SouthAmerica