BANKS

A bank is a financial institution licensed by a government. Its primary activities include providing financial services to customers while enriching its investors. Many financial activities were allowed over time.

HISTORY

The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Jewish Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times.

TRADITIONAL BANKING ACTIVITIES

Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer and ATM.

Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to.

WIDER COMMERCIAL ROLE

The commercial role of banks is not limited to banking, and includes:

• issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)
• processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means
• issuing bank drafts and bank cheques
• accepting money on term deposit
• lending money by way of overdraft, installment loan or otherwise
• providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures
• safekeeping of documents and other items in safe deposit boxes
• currency exchange
• acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products

BANK ORGANISATION

Each Bank has it own organisation. There are some differences in the names of the areas or departments, but there is a basic common structure. There are divisions, which are composed of several departments, such as:

- Administration Division (planning, financial control, accounting and auditing, computer services, and so on)
- Banking Division (project finance, overdraft, and so on)
- Dealing Division (covers foreign exchange, currency)
- Corporate Finance Division (mergers, takeovers, acquisitions and divestment)
- Investment Management Division (pension funds, investment trusts)