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 automated clearing house (ACH) is a computer-based electronic network for processing transactions, usually domestic low value payments, between participating financial institutions. It may support both credit transfers and direct debits. The ACH system is designed to process batches of payments containing numerous transactions, and it charges fees low enough to encourage its use for low value payments. (Full article...)
Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.
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...)
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National bank has different meanings in different contexts. It often, but far from always, refers to the central bank of a country.
A bank run or run on the bank occurs when many clients withdraw their money from a bank, because they believe the bank may fail in the near future. In other words, it is when, in a fractional-reserve banking system (where banks normally only keep a small proportion of their assets as cash), numerous customers withdraw cash from deposit accounts with a financial institution at the same time because they believe that the financial institution is, or might become, insolvent. When they transfer funds to another institution, it may be characterized as a capital flight. As a bank run progresses, it may become a self-fulfilling prophecy: as more people withdraw cash, the likelihood of default increases, triggering further withdrawals. This can destabilize the bank to the point where it runs out of cash and thus faces sudden bankruptcy. To combat a bank run, a bank may acquire more cash from other banks or from the central bank, or limit the amount of cash customers may withdraw, either by imposing a hard limit or by scheduling quick deliveries of cash, encouraging high-return term deposits to reduce on-demand withdrawals or suspending withdrawals altogether.
A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time, as people suddenly try to convert their threatened deposits into cash or try to get out of their domestic banking system altogether. A systemic banking crisis is one where all or almost all of the banking capital in a country is wiped out. The resulting chain of bankruptcies can cause a long economic recession as domestic businesses and consumers are starved of capital as the domestic banking system shuts down. According to former U.S. Federal Reserve chairman Ben Bernanke, the Great Depression was caused by the failure of the Federal Reserve System to prevent deflation, and much of the economic damage was caused directly by bank runs. The cost of cleaning up a systemic banking crisis can be huge, with fiscal costs averaging 13% of GDP and economic output losses averaging 20% of GDP for important crises from 1970 to 2007. (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...)
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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...)
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In American finance, the FDIC problem bank list is a confidential list created and maintained by the Federal Deposit Insurance Corporation which lists banks that are in jeopardy of failing. The list is closely monitored, and if problems continue with a listed bank, the FDIC takes control of the bank; it may then sell the problem bank to a stronger one, or liquidate the bank and pay off the depositors. (Full article...)
Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business's calendar year. (Full article...)
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...)
ICBC became the world's largest bank by total assets in 2012 (based on year-end balance sheet) and has kept this rank ever since. It was ranked first on the Forbes Global 2000 list of the world's top public companies in 2015. On 31 December 2022, It was the third-largest bank in the world by market capitalization at $211 billion. It is one of the most profitable companies in the world, ranking fourth according to Forbes in 2022 . It has been designated a systemically important bank by the Financial Stability Board (FSB) since the start of the FSB's listing. (Full article...)
ABC has 320 million retail customers, 2.7 million corporate clients, and nearly 24,000 branches. It is China's third-largest lender by assets. ABC went public in mid-2010, fetching the world's biggest ever initial public offering (IPO) at the time, since overtaken by the Saudi Arabianstate-runpetroleum enterprise, Saudi Aramco. In 2011, it ranked eighth among the Top 1000 World Banks, by 2015, it ranked third in Forbes' 13th annual Global 2000 list and in 2017 it ranked fifth. In 2023, Agricultural Bank of China was ranked #4 in Forbes' Global 2000 (World's Largest Public Companies). It is considered a systemically important bank by the Financial Stability Board. (Full article...)
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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Chemical's logo, adopted from Manufacturers Hanover after the banks' merger
Chemical Bank was a bank with headquarters in New York City from 1824 until 1996. At the end of 1995, Chemical was the third-largest bank in the U.S., with about $182.9 billion in assets and more than 39,000 employees around the world.
On September 25, 2008, the United States Office of Thrift Supervision (OTS) seized WaMu's banking operations and placed it into receivership with the Federal Deposit Insurance Corporation (FDIC). The OTS took the action due to the withdrawal of US$16.7billion in deposits during a 9-day bank run (amounting to 9% of the deposits it had held on June 30, 2008). The FDIC sold the banking subsidiaries (minus unsecured debt and equity claims) to JPMorgan Chase for $1.9billion, which had been considering acquiring WaMu as part of a plan internally nicknamed "Project West". All WaMu branches were rebranded as Chase branches by the end of 2009. The holding company was left with $33billion in assets, and $8billion in debt, after being stripped of its banking subsidiary by the FDIC. The next day, it filed for Chapter 11 voluntary bankruptcy in Delaware, where it was incorporated. (Full article...)
Image 14Carved sign for The Standard Bank of Canada, in Brechin, Ontario. (from Standard Bank of Canada)
Image 15Sealing of the Bank of England Charter (1694), by Lady Jane Lindsay, 1905. (from Bank)
Image 16Bank of Finland strong box which moved to Helsinki with the bank when it relocated from Turku (from Bank of Finland)
Image 17Beethovenstraat branch in Amsterdam, 1970 (from AMRO Bank)
Image 18Statesman 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)