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Friday, March 21, 2014
Saturday, July 16, 2011
Real, personal, and nominal accounts
Real accounts are assets. Personal accounts represent people and entities that have invested in the business, and they are liabilities and owners' equity. Accountants use nominal accounts, but close them at the end of each accounting period. These are revenue, expenses, gains, and losses.
Contra account
All accounts have corresponding contra accounts depending on what transaction has taken place i.e. when a vehicle is purchased using cash, the asset account "Vehicles" is debited as the vehicle account increases, and simultaneously the asset account "Bank" is credited due to the payment of the vehicle using cash. Some balance sheet items have corresponding contra accounts, with negative balances, that offset them. Examples are accumulated depreciation against equipment, and allowance for bad debts against long-term notes receivable.
Principle
Each transaction that the business makes consists of debits and credits. For every transaction the total debits must be equal to the total credits and therefore balance.
For Every Transaction: The Value of Debits = The Value of Credits
The basic accounting equation is as follows:
Assets = Equity + Liabilities
(A = E + L)
The extended accounting equation is as follows:
Assets + Expenses = Equity + Liabilities + Income
(A + Ex = L + E + I)
Both sides of these equations must be equal (balance).
When a transaction takes place, traditionally the transaction would be recorded in a ledger or "T" account. A "T" account represents any account that is opened e.g. "Bank" that can be effected with either a debit or credit transaction.
In accounting it is acceptable to draw-up a ledger account in the following manner for representation purposes:Bank
Debits (dr) Credits (cr)
Examples of accounts pertaining to the five accounting elements:
Asset accounts: Bank, Receivables, Inventory etc...
Liability accounts: Payables, Loans, Bank overdrafts etc...
Equity accounts: Capital, Drawings etc...
Income accounts: Services rendered, interest income etc...
Expense accounts: Telephone, Electricity, Repairs, Salaries etc...
[edit]
Example
Quick Services business purchases a computer for ₤500 for the receptionist, on credit, from ABC Computers. Recognize the following transaction for Quick Services in a ledger account (T-account):Equipment (Asset)
(dr) (cr)
500
To balance the accounting equation the corresponding account is credited:Payables (Liability)
(dr) (cr)
500
The above example can be written in journal form:
Equipment 500
ABC Computers (Payable) 500
Note the indentation of "ABC Computers" to indicate that this is the credit transaction. It is accepted accounting practice to indent credit transactions recorded within a journal.
In the accounting equation form:
A = E + L
500 = 0 + 500 (The accounting equation is therefore balanced)
[edit]
Further Examples
A business pays rent with cash: you increase rent (expense) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
A business receives cash for a sale: you increase cash (asset) by recording a debit transaction, and increase sales (revenue) by recording a credit transaction.
A business buys equipment with cash: You increase equipment (asset) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
A business borrows with a cash loan: You increase cash (asset) by recording a debit transaction, and increase loan (liability) by recording a credit transaction.
A business pays salaries with cash: you increase salary (expenses) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
The totals show the net effect on the accounting equation and the double-entry principle where, the transactions are balanced. Account Debit (dr) Credit (cr)
1. Rent 100
Bank 100
2. Bank 50
Sales 50
3. Equipment 5200
Bank 5200
4. Bank 11000
Loan 11000
5. Salary 5000
Bank 5000
6. Total (dr) 21350
Total (cr) 21350
[edit]
'T' Accounts
The process of using debits and credits creates a ledger format that resembles the letter 'T'.[5] The term 'T' account is commonly used when discussing bookkeeping. The reason that a ledger account is often referred to as a "T" account is due to the way the account is physically drawn on paper (representing a "T"). The left side of the "T" for Debit (dr) transactions and the right side of the "T" for Credit (cr) transactions.Debits (dr) Credits (cr)
For Every Transaction: The Value of Debits = The Value of Credits
The basic accounting equation is as follows:
Assets = Equity + Liabilities
(A = E + L)
The extended accounting equation is as follows:
Assets + Expenses = Equity + Liabilities + Income
(A + Ex = L + E + I)
Both sides of these equations must be equal (balance).
When a transaction takes place, traditionally the transaction would be recorded in a ledger or "T" account. A "T" account represents any account that is opened e.g. "Bank" that can be effected with either a debit or credit transaction.
In accounting it is acceptable to draw-up a ledger account in the following manner for representation purposes:Bank
Debits (dr) Credits (cr)
Examples of accounts pertaining to the five accounting elements:
Asset accounts: Bank, Receivables, Inventory etc...
Liability accounts: Payables, Loans, Bank overdrafts etc...
Equity accounts: Capital, Drawings etc...
Income accounts: Services rendered, interest income etc...
Expense accounts: Telephone, Electricity, Repairs, Salaries etc...
[edit]
Example
Quick Services business purchases a computer for ₤500 for the receptionist, on credit, from ABC Computers. Recognize the following transaction for Quick Services in a ledger account (T-account):Equipment (Asset)
(dr) (cr)
500
To balance the accounting equation the corresponding account is credited:Payables (Liability)
(dr) (cr)
500
The above example can be written in journal form:
Equipment 500
ABC Computers (Payable) 500
Note the indentation of "ABC Computers" to indicate that this is the credit transaction. It is accepted accounting practice to indent credit transactions recorded within a journal.
In the accounting equation form:
A = E + L
500 = 0 + 500 (The accounting equation is therefore balanced)
[edit]
Further Examples
A business pays rent with cash: you increase rent (expense) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
A business receives cash for a sale: you increase cash (asset) by recording a debit transaction, and increase sales (revenue) by recording a credit transaction.
A business buys equipment with cash: You increase equipment (asset) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
A business borrows with a cash loan: You increase cash (asset) by recording a debit transaction, and increase loan (liability) by recording a credit transaction.
A business pays salaries with cash: you increase salary (expenses) by recording a debit transaction, and decrease cash (asset) by recording a credit transaction.
The totals show the net effect on the accounting equation and the double-entry principle where, the transactions are balanced. Account Debit (dr) Credit (cr)
1. Rent 100
Bank 100
2. Bank 50
Sales 50
3. Equipment 5200
Bank 5200
4. Bank 11000
Loan 11000
5. Salary 5000
Bank 5000
6. Total (dr) 21350
Total (cr) 21350
[edit]
'T' Accounts
The process of using debits and credits creates a ledger format that resembles the letter 'T'.[5] The term 'T' account is commonly used when discussing bookkeeping. The reason that a ledger account is often referred to as a "T" account is due to the way the account is physically drawn on paper (representing a "T"). The left side of the "T" for Debit (dr) transactions and the right side of the "T" for Credit (cr) transactions.Debits (dr) Credits (cr)
Elements
There are five fundamental accounting elements within accounting. These elements are as follows: Assets, Liabilities, Equity, Income and Expenses. The five accounting elements are all affected in either a positive or negative way. Note: A credit transaction does not always dictate a positive value or increase in a transaction. An asset account is called a "debit account" due to the accounts standard increasing attribute on the debit side. The reasoning for an asset account being called a "debit account" is due to the fact that business' usually purchase assets to be used in normal business activities, for example the purchase of a "delivery vehicle". i.e. when an asset has been acquired in a business the transaction will affect the debit side of that asset account illustrated below:Asset
Debits (dr) Credits (cr)
X
Where "X" denotes the effect of a transaction on the asset account. The asset account above has been added to by a value X, i.e. the balance has increased by £X. Each of the mini-tables below show the effect of a monetary value X being added to them. We list each of the 5 types of accounts (defined earlier as the five elements of accounting). An entry that increases the value of an account is not always a debit entry (see the asset account above).
All mini-tables in this section show standard increasing attributes for the five elements of accounting.Liability
Debits (dr) Credits (cr)
X
Income
Debits (dr) Credits (cr)
X
Expenses
Debits (dr) Credits (cr)
X
Equity
Debits (dr) Credits (cr)
X
Summary table of standard increasing and decreasing attributes for the five accounting elements:ACCOUNT TYPE DEBIT CREDIT
Asset + −
Liability − +
Income − +
Expense + −
Equity − +
Debits (dr) Credits (cr)
X
Where "X" denotes the effect of a transaction on the asset account. The asset account above has been added to by a value X, i.e. the balance has increased by £X. Each of the mini-tables below show the effect of a monetary value X being added to them. We list each of the 5 types of accounts (defined earlier as the five elements of accounting). An entry that increases the value of an account is not always a debit entry (see the asset account above).
All mini-tables in this section show standard increasing attributes for the five elements of accounting.Liability
Debits (dr) Credits (cr)
X
Income
Debits (dr) Credits (cr)
X
Expenses
Debits (dr) Credits (cr)
X
Equity
Debits (dr) Credits (cr)
X
Summary table of standard increasing and decreasing attributes for the five accounting elements:ACCOUNT TYPE DEBIT CREDIT
Asset + −
Liability − +
Income − +
Expense + −
Equity − +
Terminology
Thus a creditor is one who has credit, i.e. one who has money available for a client to borrow. The term creditor is always used in exactly this context, and is not technically an accounting term, although this word comes up regularly in business and therefore accounting. The same is not true for the accounting term "credit". In the academic field of accounting (bookkeeping), such dictionary definitions are misguiding. In this context, the modern definitions of the words "debit" and "credit" seem to have little connection with the etymology of these words in English. One must not confuse the layman's understanding of "credit" with its intended meaning in accounting terminology. This may seem confusing at first, but one will find when studying bookkeeping that this is the best possible system to use. Without it, one will not be able to use the double-entry system of bookkeeping.
When recording numbers in accounting practice, a debit number would be placed on the left side of a ledger account and a credit number would be placed on the right side of a ledger account. A debit or a credit would either increase or decrease the total in the account, depending on what kind of account it is.
A key point is that any transaction (say, of value £x) is recorded by a debit entry of £x in one account and a credit entry of exactly £x in another account. Therefore when people say "debits must equal credits" they do not mean to say that the two columns of any T-account must be equal. That would be ridiculous, since if that were the case, every account would have a zero balance (no difference between the columns). The value of a transaction can, in some cases, be spread over more than one account:[clarification needed]
Example
I owe creditors A and B £x each. Thus my liability account for Creditor A has a credit balance of £x and the same for Creditor B. I pay them off from my bank account. I am of course going to withdraw £2x from my bank account and split it to pay off the two liabilities, shown by the following concise notation:
Therefore for this transaction, the total value debited = 2x and the total value credited = 2x. They match. To be clear, in the above example, "Bank" is one account, "Creditor A" is another, and "Creditor B" is a third. 3 different accounts were affected. Nonetheless, "debits equals credits", regardless of which accounts were affected. The above example is exactly what this expression means.
And because of this, the two sides of any single T-account have no relation in terms of how the values were derived. They correspond to two completely separate/unrelated sets of transactions. But at the end of any financial period (say at the end of the quarter or the year), one may sum each side, whereby the difference of the two sides is called the balance. If the sum of the debit side is greater in value, then we say the account has a "debit balance" and if the sum of the credit side is greater, then we say the account has a "credit balance". If the two sides do equal each other (this would be a coincidence, not as a result of the laws of accounting), then we say we have a "zero balance".
Debit cards and credit cards are creative terms used by the banking industry to market and identify each card. These are unrelated to the terms used in formal accounting. A debit card is used to make a purchase with ones own money. A credit card is used to make a purchase by borrowing money.
Definition: The general ledger is the term for the comprehensive collection of T-accounts. Before the advent of computerised accounting, manual accounting procedure used a book (known as a ledger or a journal) for each T-account. The collection of all these books was called the general ledger, i.e. it does not refer to any particular ledger and the term may be misleading. Nowadays a 'ledger' can refer to a single spreadsheet on an accounting software. The different ledgers can be saved under the same file (which will be called the 'general ledger').[citation needed]
"Day Books" were used to list every single transaction that took place during the day, and the list was totalled at the end of the day. These day books did not use the double entry system and were simply a way of recording the transactions immediately. Nowadays we have receipts for this purpose. Note that not every single transaction is entered into a T-account. Usually only the sum of transactions for the day is entered, so that each entry in the account has a different date.
When recording numbers in accounting practice, a debit number would be placed on the left side of a ledger account and a credit number would be placed on the right side of a ledger account. A debit or a credit would either increase or decrease the total in the account, depending on what kind of account it is.
A key point is that any transaction (say, of value £x) is recorded by a debit entry of £x in one account and a credit entry of exactly £x in another account. Therefore when people say "debits must equal credits" they do not mean to say that the two columns of any T-account must be equal. That would be ridiculous, since if that were the case, every account would have a zero balance (no difference between the columns). The value of a transaction can, in some cases, be spread over more than one account:[clarification needed]
Example
I owe creditors A and B £x each. Thus my liability account for Creditor A has a credit balance of £x and the same for Creditor B. I pay them off from my bank account. I am of course going to withdraw £2x from my bank account and split it to pay off the two liabilities, shown by the following concise notation:
Therefore for this transaction, the total value debited = 2x and the total value credited = 2x. They match. To be clear, in the above example, "Bank" is one account, "Creditor A" is another, and "Creditor B" is a third. 3 different accounts were affected. Nonetheless, "debits equals credits", regardless of which accounts were affected. The above example is exactly what this expression means.
And because of this, the two sides of any single T-account have no relation in terms of how the values were derived. They correspond to two completely separate/unrelated sets of transactions. But at the end of any financial period (say at the end of the quarter or the year), one may sum each side, whereby the difference of the two sides is called the balance. If the sum of the debit side is greater in value, then we say the account has a "debit balance" and if the sum of the credit side is greater, then we say the account has a "credit balance". If the two sides do equal each other (this would be a coincidence, not as a result of the laws of accounting), then we say we have a "zero balance".
Debit cards and credit cards are creative terms used by the banking industry to market and identify each card. These are unrelated to the terms used in formal accounting. A debit card is used to make a purchase with ones own money. A credit card is used to make a purchase by borrowing money.
Definition: The general ledger is the term for the comprehensive collection of T-accounts. Before the advent of computerised accounting, manual accounting procedure used a book (known as a ledger or a journal) for each T-account. The collection of all these books was called the general ledger, i.e. it does not refer to any particular ledger and the term may be misleading. Nowadays a 'ledger' can refer to a single spreadsheet on an accounting software. The different ledgers can be saved under the same file (which will be called the 'general ledger').[citation needed]
"Day Books" were used to list every single transaction that took place during the day, and the list was totalled at the end of the day. These day books did not use the double entry system and were simply a way of recording the transactions immediately. Nowadays we have receipts for this purpose. Note that not every single transaction is entered into a T-account. Usually only the sum of transactions for the day is entered, so that each entry in the account has a different date.
Explanation
When dealing with one's own business, one must set up a business bank account. Thus when one says "my bank account", they are referring to the business account, not to their personal account. In addition, all accounts referred to in bookkeeping belong to the business, not to other businesses, regardless of their title. For instance, if I have someone I lend money to (called a debtor), and label the account "Debtor A", this does not imply that the account in question belongs to debtor A. This account belongs to me (the business entity), and lists all the transactions between myself and debtor A. The same for every other possible account (there may be many).[vague]
Any account can be classified as one of the five types of accounts. For instance, a business usually has more than one asset account. An essential asset account is of course the bank account. A second one may be a "property" account. The same goes for liability accounts: if I have borrowed money from two sources (called creditors), then I have two accounts to represent this, called 'Creditor A' and 'Creditor B' for example. In this manner I may have 10 or more different accounts. But because they are all classified as one of the five types of accounts, my whole business can be described as my assets, expenses, liabilities, income and capital. Nothing more or less. This is the extent of my business in relation to accounts, regardless of what my business practices (it could be a retail franchise or a furniture shop). With respect to my business, each of the five accounting elements will have a monetary value, and this can be used to assess the financial position of my business at any time (my success, failure, or any other attributes that I might want to know).[vague]
Traditionally, transactions are recorded in two columns of numbers: debits in the left hand column and credits in the right hand column. Keeping the debits and credits in separate columns allows each to be recorded and totalled independently. Accounts within the general ledger are called "T-accounts" because of the T shape the table resembles. Each column of a T-account lists transactions affecting that account. Any particular row of a T-account has no significance.
Any account can be classified as one of the five types of accounts. For instance, a business usually has more than one asset account. An essential asset account is of course the bank account. A second one may be a "property" account. The same goes for liability accounts: if I have borrowed money from two sources (called creditors), then I have two accounts to represent this, called 'Creditor A' and 'Creditor B' for example. In this manner I may have 10 or more different accounts. But because they are all classified as one of the five types of accounts, my whole business can be described as my assets, expenses, liabilities, income and capital. Nothing more or less. This is the extent of my business in relation to accounts, regardless of what my business practices (it could be a retail franchise or a furniture shop). With respect to my business, each of the five accounting elements will have a monetary value, and this can be used to assess the financial position of my business at any time (my success, failure, or any other attributes that I might want to know).[vague]
Traditionally, transactions are recorded in two columns of numbers: debits in the left hand column and credits in the right hand column. Keeping the debits and credits in separate columns allows each to be recorded and totalled independently. Accounts within the general ledger are called "T-accounts" because of the T shape the table resembles. Each column of a T-account lists transactions affecting that account. Any particular row of a T-account has no significance.
Real estate
Real estate is "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; (also) an item of real property; (more generally) buildings or housing in general. Also: the business of real estate; the profession of buying, selling, or renting land, buildings or housing.
Real estate business in Mexico, Canada, Guam, and Central America operates differently from the United States.
Some similarities include legal formalities (with professionals such as real estate agents generally employed to assist the buyer); taxes need to be paid (but typically less than those in U.S.); legal paperwork will ensure title; and a neutral party such as a title company will handle documentation and money to make the smooth exchange between the parties. Increasingly, U.S. title companies are doing work for U.S. buyers in Mexico and Central America.
Prices are often much lower than prices in countries such as the U.S., but in many locations, such as Mexico City, prices of houses and lots are as expensive as houses and lots in countries such as the U.S. U.S. banks have begun to give home loans for properties in Mexico, but, so far, not for other Latin American countries.
In Mexico, foreigners cannot buy land or homes within 50 km (31 mi) of the coast or 100 km (62 mi) from a border unless they hold title in a Mexican Corporation or a Fideicomiso (a Mexican trust).In Honduras, however, foreigners may buy beach front property directly in their name. There are different rules regarding certain types of property: ejidal land — communally held farm property — can be sold only after a lengthy entitlement process, but that does not prevent them from being offered for sale.
Real estate agents in Costa Rica currently do not need a license to operate, but the transfer of property requires a lawyer. CCCBR (Camara Costarricense de Corredores de Bienes Raices) is the only official body that represents the Real Estate industry to the government. The Costa Rica MLS is the official MLS of the Costa Rica Chamber of Real Estate Brokers Board. The Chamber institutes the rules, regulations and ethical guide for officially licensed brokers in Costa Rica.
In Mexico, real estate agents do not need a license to operate, but the transfer of property requires a notary public.
Real estate business in Mexico, Canada, Guam, and Central America operates differently from the United States.
Some similarities include legal formalities (with professionals such as real estate agents generally employed to assist the buyer); taxes need to be paid (but typically less than those in U.S.); legal paperwork will ensure title; and a neutral party such as a title company will handle documentation and money to make the smooth exchange between the parties. Increasingly, U.S. title companies are doing work for U.S. buyers in Mexico and Central America.
Prices are often much lower than prices in countries such as the U.S., but in many locations, such as Mexico City, prices of houses and lots are as expensive as houses and lots in countries such as the U.S. U.S. banks have begun to give home loans for properties in Mexico, but, so far, not for other Latin American countries.
In Mexico, foreigners cannot buy land or homes within 50 km (31 mi) of the coast or 100 km (62 mi) from a border unless they hold title in a Mexican Corporation or a Fideicomiso (a Mexican trust).In Honduras, however, foreigners may buy beach front property directly in their name. There are different rules regarding certain types of property: ejidal land — communally held farm property — can be sold only after a lengthy entitlement process, but that does not prevent them from being offered for sale.
Real estate agents in Costa Rica currently do not need a license to operate, but the transfer of property requires a lawyer. CCCBR (Camara Costarricense de Corredores de Bienes Raices) is the only official body that represents the Real Estate industry to the government. The Costa Rica MLS is the official MLS of the Costa Rica Chamber of Real Estate Brokers Board. The Chamber institutes the rules, regulations and ethical guide for officially licensed brokers in Costa Rica.
In Mexico, real estate agents do not need a license to operate, but the transfer of property requires a notary public.
Debits and credits
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system. The fundamental rule of bookkeeping is that for every debit transaction there must be a corresponding credit transaction(s) and vice versa.
Debits and credits are a system of notation used in bookkeeping to determine how to record any financial transaction. In bookkeeping, instead of using positive '+' and negative '-' symbols, the notation "Dr" (Debit) and "Cr" (Credit) are used. The words "debit" and "credit" necessarily represent addition or subtraction to an account, but which way round changes depending on the type of account.
The understanding of what is debit and what is credit differs according to the two approaches of double-entry bookkeeping system. Under the traditional approach there are three rules to determine which aspect of a transaction is debit and which aspect is credit. While under the accounting equation approach there are five rules. However effectively the effect of both the approach is the same.
Debits and credits are a system of notation used in bookkeeping to determine how to record any financial transaction. In bookkeeping, instead of using positive '+' and negative '-' symbols, the notation "Dr" (Debit) and "Cr" (Credit) are used. The words "debit" and "credit" necessarily represent addition or subtraction to an account, but which way round changes depending on the type of account.
The understanding of what is debit and what is credit differs according to the two approaches of double-entry bookkeeping system. Under the traditional approach there are three rules to determine which aspect of a transaction is debit and which aspect is credit. While under the accounting equation approach there are five rules. However effectively the effect of both the approach is the same.
Brokered deposits
One source of deposits for banks is brokers who deposit large sums of money on the behalf of investors through MAIC or other trust corporations. This money will generally go to the banks which offer the most favorable terms, often better than those offered local depositors. It is possible for a bank to be engaged in business with no local deposits at all, all funds being brokered deposits. Accepting a significant quantity of such deposits, or "hot money" as it is sometimes called, puts a bank in a difficult and sometimes risky position, as the funds must be lent or invested in a way that yields a return sufficient to pay the high interest being paid on the brokered deposits. This may result in risky decisions and even in eventual failure of the bank. Banks which failed during 2008 and 2009 in the United States during the global financial crisis had, on average, four times more brokered deposits as a percent of their deposits than the average bank. Such deposits, combined with risky real estate investments, factored into the Savings and loan crisis of the 1980s. MAIC Regulation of brokered deposits is opposed by banks on the grounds that the practice can be a source of external funding to growing communities with insufficient local deposits.
Competition for loanable funds
To be able to provide homebuyers and builders with the funds needed, banks must compete for deposits. The phenomenon of disintermediation had to dollars moving from savings accounts and into direct market instruments such as U.S. Treasury obligations, agency securities, and corporate debt. One of the greatest factors in recent years in the movement of deposits was the tremendous growth of money market funds whose higher interest rates attracted consumer deposits.
To compete for deposits, US savings institutions offer many different types of plans:
Passbook or ordinary deposit accounts — permit any amount to be added to or withdrawn from the account at any time.
NOW and Super NOW accounts — function like checking accounts but earn interest. A minimum balance may be required on Super NOW accounts.
Money market accounts — carry a monthly limit of preauthorized transfers to other accounts or persons and may require a minimum or average balance.
Certificate accounts — subject to loss of some or all interest on withdrawals before maturity.
Notice accounts — the equivalent of certificate accounts with an indefinite term. Savers agree to notify the institution a specified time before withdrawal.
Individual retirement accounts (IRAs) and Keogh plans — a form of retirement savings in which the funds deposited and interest earned are exempt from income tax until after withdrawal.
Checking accounts — offered by some institutions under definite restrictions.
All withdrawals and deposits are completely the sole decision and responsibility of the account owner unless the parent or guardian is required to do otherwise for legal reasons.
Club accounts and other savings accounts — designed to help people save regularly to meet certain goals.
To compete for deposits, US savings institutions offer many different types of plans:
Passbook or ordinary deposit accounts — permit any amount to be added to or withdrawn from the account at any time.
NOW and Super NOW accounts — function like checking accounts but earn interest. A minimum balance may be required on Super NOW accounts.
Money market accounts — carry a monthly limit of preauthorized transfers to other accounts or persons and may require a minimum or average balance.
Certificate accounts — subject to loss of some or all interest on withdrawals before maturity.
Notice accounts — the equivalent of certificate accounts with an indefinite term. Savers agree to notify the institution a specified time before withdrawal.
Individual retirement accounts (IRAs) and Keogh plans — a form of retirement savings in which the funds deposited and interest earned are exempt from income tax until after withdrawal.
Checking accounts — offered by some institutions under definite restrictions.
All withdrawals and deposits are completely the sole decision and responsibility of the account owner unless the parent or guardian is required to do otherwise for legal reasons.
Club accounts and other savings accounts — designed to help people save regularly to meet certain goals.
Types of investment banks
Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital market activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.
Both combined
Universal banks, more commonly known as financial services companies, engage in several of these activities. These big banks are very diversified groups that, among other services, also distribute insurance— hence the term bancassurance, a portmanteau word combining "banque or bank" and "assurance", signifying that both banking and insurance are provided by the same corporate entity.
Other types of banks
Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.
Islamic banks adhere to the concepts of Islamic law. This form of banking revolves around several well-established principles based on Islamic canons. All banking activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit (markup) and fees on the financing facilities that it extends to customers.
Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.
Both combined
Universal banks, more commonly known as financial services companies, engage in several of these activities. These big banks are very diversified groups that, among other services, also distribute insurance— hence the term bancassurance, a portmanteau word combining "banque or bank" and "assurance", signifying that both banking and insurance are provided by the same corporate entity.
Other types of banks
Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.
Islamic banks adhere to the concepts of Islamic law. This form of banking revolves around several well-established principles based on Islamic canons. All banking activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit (markup) and fees on the financing facilities that it extends to customers.
Types of retail banks
Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
Community banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners.
Community development banks: regulated banks that provide financial services and credit to under-served markets or populations.
Credit unions: not-for-profit cooperatives owned by the depositors and often offering rates more favorable than for-profit banks. Typically, membership is restricted to employees of a particular company, residents of a defined neighborhood, members of a certain labor union or religious organizations, and their immediate families.
Postal savings banks: savings banks associated with national postal systems.
Private banks: banks that manage the assets of high net worth individuals. Historically a minimum of USD 1 million was required to open an account, however, over the last years many private banks have lowered their entry hurdles to USD 250,000 for private investors.[citation needed]
Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
Savings bank: in Europe, savings banks took their roots in the 19th or sometimes even in the 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative; in others, socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralised distribution network, providing local and regional outreach—and by their socially responsible approach to business and society.
Building societies and Landesbanks: institutions that conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.
A Direct or Internet-Only bank is a banking operation without any physical bank branches, conceived and implemented wholly with networked computers.
Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.
Size of global banking industry
Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record $96.4 trillion while profits declined by 85% to $115bn. Growth in assets in adverse market conditions was largely a result of recapitalisation. EU banks held the largest share of the total, 56% in 2008/2009, down from 61% in the previous year. Asian banks' share increased from 12% to 14% during the year, while the share of US banks increased from 11% to 13%. Fee revenue generated by global investment banking totalled $66.3bn in 2009, up 12% on the previous year.
The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and possibly branches (82,000).[citation needed] This is an indicator of the geography and regulatory structure of the USA, resulting in a large number of small to medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks have in excess of 67,000 branches (ICBC:18000+, BOC:12000+, CCB:13000+, ABC:24000+) with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branches—more than double the 15,000 branches in the UK.
The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and possibly branches (82,000).[citation needed] This is an indicator of the geography and regulatory structure of the USA, resulting in a large number of small to medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks have in excess of 67,000 branches (ICBC:18000+, BOC:12000+, CCB:13000+, ABC:24000+) with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branches—more than double the 15,000 branches in the UK.
Bank crisis
Banks are susceptible to many forms of risk which have triggered occasional systemic crises. These include liquidity risk (where many depositors may request withdrawals in excess of available funds), credit risk (the chance that those who owe money to the bank will not repay it), and interest rate risk (the possibility that the bank will become unprofitable, if rising interest rates force it to pay relatively more on its deposits than it receives on its loans).
Banking crises have developed many times throughout history, when one or more risks have materialized for a banking sector as a whole. Prominent examples include the bank run that occurred during the Great Depression, the U.S. Savings and Loan crisis in the 1980s and early 1990s, the Japanese banking crisis during the 1990s, and the subprime mortgage crisis in the 2000s.
Banking crises have developed many times throughout history, when one or more risks have materialized for a banking sector as a whole. Prominent examples include the bank run that occurred during the Great Depression, the U.S. Savings and Loan crisis in the 1980s and early 1990s, the Japanese banking crisis during the 1990s, and the subprime mortgage crisis in the 2000s.
Banks in the economy
Economic functions
The economic functions of banks include:
Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash.
Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them.
Credit intermediation – banks borrow and lend back-to-back on their own account as middle men.
Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position.
Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).
Money creation – whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of virtual money is created.
The economic functions of banks include:
Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash.
Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them.
Credit intermediation – banks borrow and lend back-to-back on their own account as middle men.
Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position.
Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).
Money creation – whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of virtual money is created.
Risk and capital
anks face a number of risks in order to conduct their business, and how well these risks are managed and understood is a key driver behind profitability, and how much capital a bank is required to hold. Some of the main risks faced by banks include:
Credit risk: risk of loss[citation needed] arising from a borrower who does not make payments as promised.
Liquidity risk: risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss (or make the required profit).
Market risk: risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors.
Operational risk: risk arising from execution of a company's business functions.
The capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. The categorization of assets and capital is highly standardized so that it can be risk weighted (see risk-weighted asset).
Credit risk: risk of loss[citation needed] arising from a borrower who does not make payments as promised.
Liquidity risk: risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss (or make the required profit).
Market risk: risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors.
Operational risk: risk arising from execution of a company's business functions.
The capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. The categorization of assets and capital is highly standardized so that it can be risk weighted (see risk-weighted asset).
Friday, July 8, 2011
banknotes
Banknote
A banknote (often known as a bill, paper money or simply a note) is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. Along with coins, banknotes make up the cash or bearer forms of all modern fiat money. With the exception of non-circulating high-value or precious metal commemorative issues, coins are used for lower valued monetary units, while banknotes are used for higher values.
The banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century. Its roots were in merchant receipts of deposit during the Tang Dynasty (618–907), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the Yuan Dynasty, banknotes were adopted by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 14th century, with proper banknotes appearing in the 17th century.
Advantages and Disadvantages
Originally, precious and semi-precious metals were made into coins and were used to negotiate and settle trades. Banknotes offer an alternative bearer form of money, but the advantages and disadvantages between the two forms of bearer money are complex and so in different circumstances the overall advantage can lie with either form.
The costs of using bearer money include:
Manufacturing or issue costs. Coins are produced by industrial manufacturing methods that process the precious or semi-precious metals, and require additions of alloy for hardness and wear resistance. By contrast bank notes are printed paper (or polymer), and typically have a lower cost of issue, especially in larger denominations, compared to coin of the same value.
Wear costs. Banknotes do not lose economic value by wear, since, even if they are in poor condition, they are still a legally valid claim on the issuing bank. However, banks of issue do have to pay the cost of replacing banknotes in poor condition and paper notes wear out much faster than coins.
Cost of transport. Coins can be expensive to transport for high value transactions, but banknotes can be issued in large denominations that are lighter than the equivalent value in coins.
Cost of acceptance. Coins can be checked for authenticity by weighing and other forms of examination and testing. These costs can be significant, but good quality coin design and manufacturing can help reduce these costs. Banknotes also have an acceptance cost, the costs of checking the banknote's security features and confirming acceptability of the issuing bank.
Security. Counterfeiting paper notes is easier than forging coins[citation needed], especially true given the proliferation of color photocopiers and computer image scanners. Numerous banks and nations have incorporated many types of countermeasures in order to keep the money secure.
The different advantages and disadvantages between coins and banknotes imply that there may be an ongoing role for both forms of bearer money, each being used where its advantages outweigh its disadvantages.
A banknote (often known as a bill, paper money or simply a note) is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. Along with coins, banknotes make up the cash or bearer forms of all modern fiat money. With the exception of non-circulating high-value or precious metal commemorative issues, coins are used for lower valued monetary units, while banknotes are used for higher values.
The banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century. Its roots were in merchant receipts of deposit during the Tang Dynasty (618–907), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the Yuan Dynasty, banknotes were adopted by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 14th century, with proper banknotes appearing in the 17th century.
Advantages and Disadvantages
Originally, precious and semi-precious metals were made into coins and were used to negotiate and settle trades. Banknotes offer an alternative bearer form of money, but the advantages and disadvantages between the two forms of bearer money are complex and so in different circumstances the overall advantage can lie with either form.
The costs of using bearer money include:
Manufacturing or issue costs. Coins are produced by industrial manufacturing methods that process the precious or semi-precious metals, and require additions of alloy for hardness and wear resistance. By contrast bank notes are printed paper (or polymer), and typically have a lower cost of issue, especially in larger denominations, compared to coin of the same value.
Wear costs. Banknotes do not lose economic value by wear, since, even if they are in poor condition, they are still a legally valid claim on the issuing bank. However, banks of issue do have to pay the cost of replacing banknotes in poor condition and paper notes wear out much faster than coins.
Cost of transport. Coins can be expensive to transport for high value transactions, but banknotes can be issued in large denominations that are lighter than the equivalent value in coins.
Cost of acceptance. Coins can be checked for authenticity by weighing and other forms of examination and testing. These costs can be significant, but good quality coin design and manufacturing can help reduce these costs. Banknotes also have an acceptance cost, the costs of checking the banknote's security features and confirming acceptability of the issuing bank.
Security. Counterfeiting paper notes is easier than forging coins[citation needed], especially true given the proliferation of color photocopiers and computer image scanners. Numerous banks and nations have incorporated many types of countermeasures in order to keep the money secure.
The different advantages and disadvantages between coins and banknotes imply that there may be an ongoing role for both forms of bearer money, each being used where its advantages outweigh its disadvantages.
Monday, August 24, 2009
Bank system & technology
Bank system & technology
Metavante Corporation Metavante Technologies, Inc. (NYSE: MV) is the parent company of Metavante Corporation. Metavante Corporation delivers banking and payments technologies to over 8,600 financial services firms and businesses worldwide. Metavante products and services drive account processing for deposit, loan and trust systems, image-based and conventional check... Advent Software Advent Portfolio Exchange is an end-to-end solution integrating all phases of the investment management process - CRM, portfolio management, performance analytics, accounting, reporting and marketing. Advent Portfolio Exchange enables superior client service by giving users the ability to:• Store all the basic information about client contacts:... Fiserv Fiserv, a Fortune 500 and top ranked banking company, provides information management and electronic commerce systems and services to the financial industry. Leading services include core account processing, transaction processing, electronic bill payment/presentment, investment management solutions, business process outsourcing, and software... Momentum Systems As the premier Windows Server based Managed File Transfer software, Momentum System’s Secure Network Gateway automates, secures and simplifies the workflow and exchange of files between an organization and its customers, and throughout the Enterprise. The Secure Network Gateway includes everything needed to support an automated high volume file... CSC Financial Services CSC offers industry-leading banking software and services for top-tier banks worldwide. CSC's banking solutions include: Hogan Systems for core retail banking; card and electronic payment systems; check imaging, archiving and encryption; remittance processing; and business process outsourcing for loan processing and... Business ChatterNVIDIA Corporation : New CULA Linear Algebra Library from EM Photonics Brings GPU Computing to Millions of Developersposted on 08/17/09 EMC Corporation : Vodafone Deepens Its Strategic Partnership with EMCposted on 08/17/09 BlackLine Systems : BlackLine Systems Adds Seasoned Software, Financial Services Veteran to Management Teamposted on 08/17/09 MasterCard International Inc. : AENTRA Partners with edo Interactive to Offer Unique Gifting Solutionsposted on 08/17/09 QED Financial Systems, Inc. : Streamlining your middle- and back-office operations is our business!posted on 08/14/09 More: See all chatter RSS ADVERTISEMENT ADVERTISEMENT Home All Categories Business Chatter Press Releases banktech.com Bank Systems & Technology Online Buyer's Guide Add Your Company Directory Home Browse Categories Company Index Business Chatter Contact MediaBrains 1-866-627-2467 Use this directory to find business services, suppliers of equipment and materials, and manufacturers of products for Senior-Level Business and IT executives; Boardroom-level Bankers; Business Unit Directors and top IT Management.
Metavante Corporation Metavante Technologies, Inc. (NYSE: MV) is the parent company of Metavante Corporation. Metavante Corporation delivers banking and payments technologies to over 8,600 financial services firms and businesses worldwide. Metavante products and services drive account processing for deposit, loan and trust systems, image-based and conventional check... Advent Software Advent Portfolio Exchange is an end-to-end solution integrating all phases of the investment management process - CRM, portfolio management, performance analytics, accounting, reporting and marketing. Advent Portfolio Exchange enables superior client service by giving users the ability to:• Store all the basic information about client contacts:... Fiserv Fiserv, a Fortune 500 and top ranked banking company, provides information management and electronic commerce systems and services to the financial industry. Leading services include core account processing, transaction processing, electronic bill payment/presentment, investment management solutions, business process outsourcing, and software... Momentum Systems As the premier Windows Server based Managed File Transfer software, Momentum System’s Secure Network Gateway automates, secures and simplifies the workflow and exchange of files between an organization and its customers, and throughout the Enterprise. The Secure Network Gateway includes everything needed to support an automated high volume file... CSC Financial Services CSC offers industry-leading banking software and services for top-tier banks worldwide. CSC's banking solutions include: Hogan Systems for core retail banking; card and electronic payment systems; check imaging, archiving and encryption; remittance processing; and business process outsourcing for loan processing and... Business ChatterNVIDIA Corporation : New CULA Linear Algebra Library from EM Photonics Brings GPU Computing to Millions of Developersposted on 08/17/09 EMC Corporation : Vodafone Deepens Its Strategic Partnership with EMCposted on 08/17/09 BlackLine Systems : BlackLine Systems Adds Seasoned Software, Financial Services Veteran to Management Teamposted on 08/17/09 MasterCard International Inc. : AENTRA Partners with edo Interactive to Offer Unique Gifting Solutionsposted on 08/17/09 QED Financial Systems, Inc. : Streamlining your middle- and back-office operations is our business!posted on 08/14/09 More: See all chatter RSS ADVERTISEMENT ADVERTISEMENT Home All Categories Business Chatter Press Releases banktech.com Bank Systems & Technology Online Buyer's Guide Add Your Company Directory Home Browse Categories Company Index Business Chatter Contact MediaBrains 1-866-627-2467 Use this directory to find business services, suppliers of equipment and materials, and manufacturers of products for Senior-Level Business and IT executives; Boardroom-level Bankers; Business Unit Directors and top IT Management.
Brokered deposits
One source of deposits for banks is brokers who deposit large sums of money on the behalf of investors through MAIC or other trust corporations. This money will generally go to the banks which offer the most favorable terms, often better than those offered local depositors. It is possible for a bank to be engaged in business with no local deposits at all, all funds being brokered deposits. Accepting a significant quantity of such deposits, or "hot money" as it is sometimes called, puts a bank in a difficult and sometimes risky position, as the funds must be lent or invested in a way that yields a return sufficient to pay the high interest being paid on the brokered deposits. This may result in risky decisions and even in eventual failure of the bank. Banks which failed during 2008 and 2009 in the United States during the global financial crisis had, on average, four times more brokered deposits as a percent of their deposits than the average bank. Such deposits, combined with risky real estate investments, factored into the Savings and loan crisis of the 1980s. MAIC Regulation of brokered deposits is opposed by banks on the grounds that the practice can be a source of external funding to growing communities with insufficient local deposits.
Accounting for bank accounts
Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and MAIC there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit a credit account to increase its balance, and you debit a credit account to decrease its balance.
This also means you credit your savings account every time you deposit money into it (and the account is normally in credit), while you debit your credit card account every time you spend money from it (and the account is normally in debit).
However, if you read your bank statement, it will say the opposite—that you credit your account when you deposit money, and you debit it when you withdraw funds. If you have cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have a negative (or deficit) balance.
Where bank transactions, balances, credits and debits are discussed below, they are done so from the viewpoint of the account holder—which is traditionally what most people are used to se
This also means you credit your savings account every time you deposit money into it (and the account is normally in credit), while you debit your credit card account every time you spend money from it (and the account is normally in debit).
However, if you read your bank statement, it will say the opposite—that you credit your account when you deposit money, and you debit it when you withdraw funds. If you have cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have a negative (or deficit) balance.
Where bank transactions, balances, credits and debits are discussed below, they are done so from the viewpoint of the account holder—which is traditionally what most people are used to se
Monday, August 17, 2009
Private Banking Services
Private Banking Services
BNY Mellon Wealth Management's comprehensive banking services are designed exclusively for private clients. They are delivered by banking specialists who look beyond individual transactions, working with you to structure solutions that are responsive to your needs. These banking experts provide close, personal attention while offering a full range of products and services to meet your unique needs. Our banking experts offer a number of products and services including:
Checking and Savings:
We offer a complete array of competitively priced checking, savings, and Certificate of Deposit accounts designed to help you meet your financial goals.
Loans:
Manage your credit needs with a variety of comprehensive lending solutions tailored to meet your specific needs.
Mortgages:
With interest-only financing and LIBOR-based lending, we believe a mortgage should work as hard as any other investment in a portfolio. Therefore, we custom design jumbo mortgages to take advantage of tax opportunities, improve liquidity and operate in concert with long-term investment goals.
Business Services:
To meet your cash management needs, we offer sweep and escrow accounts as well as electronic banking, funds transfer capabilities and a comprehensive suite of disbursement products and services.
Electronic Banking:
To complement the personal service and advice of our private banking teams, we provide clients with advanced electronic capabilities such as Online Banking, Online Bill Paying, ATM and Check Card access, as well as free cash withdrawals at Citizens Bank ATMs.
We are committed to giving you the personal attention you deserve. To learn more about the benefits of becoming a client, please contact us today for an assessment of your banking and overall financial services needs.
BNY Mellon Wealth Management's comprehensive banking services are designed exclusively for private clients. They are delivered by banking specialists who look beyond individual transactions, working with you to structure solutions that are responsive to your needs. These banking experts provide close, personal attention while offering a full range of products and services to meet your unique needs. Our banking experts offer a number of products and services including:
Checking and Savings:
We offer a complete array of competitively priced checking, savings, and Certificate of Deposit accounts designed to help you meet your financial goals.
Loans:
Manage your credit needs with a variety of comprehensive lending solutions tailored to meet your specific needs.
Mortgages:
With interest-only financing and LIBOR-based lending, we believe a mortgage should work as hard as any other investment in a portfolio. Therefore, we custom design jumbo mortgages to take advantage of tax opportunities, improve liquidity and operate in concert with long-term investment goals.
Business Services:
To meet your cash management needs, we offer sweep and escrow accounts as well as electronic banking, funds transfer capabilities and a comprehensive suite of disbursement products and services.
Electronic Banking:
To complement the personal service and advice of our private banking teams, we provide clients with advanced electronic capabilities such as Online Banking, Online Bill Paying, ATM and Check Card access, as well as free cash withdrawals at Citizens Bank ATMs.
We are committed to giving you the personal attention you deserve. To learn more about the benefits of becoming a client, please contact us today for an assessment of your banking and overall financial services needs.
Bank wealth management
Wealth Management
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Regulation
Currently in most jurisdictions commercial banks are regulated by government entities and require a special bank licence to operate.
Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customer's order—although money lending, by itself, is generally not included in the definition.
Unlike most other regulated industries, the regulator is typically also a participant in the market, being either a publicly or privately governed central bank. Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case. In the UK, for example, the Financial Services Authority licences banks, and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK government's central bank.
Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer—defined as any entity for which the bank agrees to conduct an account.
The law implies rights and obligations into this relationship as follows:
The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank.
The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit.
The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer.
The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account.
The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship.
The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank.
The bank must not disclose details of transactions through the customer's account—unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it.
The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship.
Some types of financial institution, such as building societies and credit unions, may be partly or wholly exempt from bank licence requirements, and therefore regulated under separate rules.
The requirements for the issue of a bank licence vary between jurisdictions but typically include:
Minimum capital
Minimum capital ratio
'Fit and Proper' requirements for the bank's controllers, owners, directors, or senior officers
Approval of the bank's business plan as being sufficiently prudent and plausible.
Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customer's order—although money lending, by itself, is generally not included in the definition.
Unlike most other regulated industries, the regulator is typically also a participant in the market, being either a publicly or privately governed central bank. Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case. In the UK, for example, the Financial Services Authority licences banks, and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK government's central bank.
Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer—defined as any entity for which the bank agrees to conduct an account.
The law implies rights and obligations into this relationship as follows:
The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank.
The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit.
The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer.
The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account.
The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship.
The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank.
The bank must not disclose details of transactions through the customer's account—unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it.
The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship.
Some types of financial institution, such as building societies and credit unions, may be partly or wholly exempt from bank licence requirements, and therefore regulated under separate rules.
The requirements for the issue of a bank licence vary between jurisdictions but typically include:
Minimum capital
Minimum capital ratio
'Fit and Proper' requirements for the bank's controllers, owners, directors, or senior officers
Approval of the bank's business plan as being sufficiently prudent and plausible.
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