Commerical Banks And Investment Banks Flashcards
What do commercial banks provide
Retail banking services to household and business customers
What are commercial banks licensed to do
Licensed deposit-takers
Licensed to lend money (and ‘create’ money in the form of bank loans etc)
Aims of commercial banks
Create a profit
What does a commercial bank’s business model rely on
Reviewing a higher interest rate on the loans (or other assets) than the rate it pays out on its deposits (or other liabilities)
What does an investment bank provide
A wide range of specialised services for companies and large investors
What type of services do investment banks provide
- underwriting and advising on securities issues and other forms of capital raising
- advice on mergers and acquisitions
- trading on capital markets
- research and private equity investments
What does an investment bank do
Trade and invests on its own account.
Deals mainly with corporate customers.
What do private banks provide
Wealth management services to high net worth individuals
Different types of investment banks
- some owned by larger banks
- some part of investment banks
- some are self-standing private banks
Who owns building societies
Their members (customers) and not shareholders
What do building societies historically focus on
Offering mortgages and savings products
