Classification

of banksAccording

to

services rendere

d

• Universal Banks• Commercial Banks• Central Banks• Savings and

Mortgages Banks• Building and Loan

Association• Development

Banks

• Trust Company• Investment Banks• Rural Banks• Cooperative

Banks• Off-shore Banking

Unit• World Bank and

IMF

Universal Banks

• Provides a wide variety of financial services, including both commercial and investment services.

• It can exercise all the legal powers of an investment house including:– Underwriting– Invest in equities of non-allied

undertakings.

• Accepts demand and time deposits, makes loans to individuals and organizations, and provides services such as documentary collections, international banking, trade financing.

• A large proportion of commercial banks’ deposits is payable on demand, it prefers to make short-term loans instead of the long-term ones.

Commercial Banks

Central Bank• Has a wide range of responsibilities,

from overseeing monetary policy to implementing specific goals such as:– currency stability, low inflation and full

employment.

• Central banks also generally issue currency, function as the bank of the government, regulate the credit system, oversee commercial banks, manage exchange reserves and act as a lender of last resort.

Savings and Mortgages Bank

• Accumulates small savings of depositors and invest them, together with capital, in bonds, real estate mortgages and other forms of security.

• Its primary purpose is to encourage savings deposit which are not withdrawn by checks but by passbook and withdrawal slip.

Building and Loan Association• Organized and operated for mutual

benefit of members. Only members can borrow, secured by real estate, pledge of shares and other eligible papers.

• Its stocks are payable on regular and equal payments.

• The objective is to encourage industry, frugality and home building among its stockholders.

Development bank• Designed to provide medium- and

long-term capital for productive investment, often accompanied by technical assistance, in poor countries.

• The form (share equity or loans) and cost of financing offered depend on their cost of obtaining capital and their need to show a profit and pay dividends.

Trust Company

• Acts as fiduciary, agent or trustee on behalf of a person or business entity.

• For the purpose of:– Administration–Management– The eventual transfer of assets to a

beneficial party.

• The entity acts as a custodian for trusts, estates, custodial arrangements, asset management, stock transfer, beneficial ownership registration and other related arrangements.

• Does not own the assets its customers assign to its management, but it may assume some legal obligation to take care of the assets on behalf of other parties.

• Specializes in large and complex financial transactions such as:– Underwriting– Acting as an intermediary between a securities

issuer and the investing public– Facilitates mergers and other corporate

reorganizations– Acting as a broker and/or financial adviser for

institutional clients.

• Many investment banks also have retail operations that serve small, individual customers.

Investment Bank

• Rural Bank is a small bank in rural communities.

• Rural banks are the ones helping farmers through the stages of production--from providing loans for inputs and irrigation to harvest.

• It receives deposit to increase its loan fund and usually grants small loans that are generally secured by equipment, land, products and other eligible collaterals.

Rural Bank

• Is organized and owned by cooperatives to provide financial and credit services to its members.

• It includes cooperative RBs.• It can receive financial aid from the

government and the BSP in behalf of the cooperative bank, primaries and federations.

Cooperative Bank

Off-shore Banking Unit

• A foreign bank with local offices but transacts only with non-Philippine based clients and expatriates.

• The main function of an OBU is to accept deposits in dollars and other foreign currencies. It can also grant loans but only in dollars and other foreign currencies.

World Bank and the International Monetary Fund• It was established as a major source

of development funds to help reconstruct the WW-II damaged economies of Western Europe through long-term loans at the end of the second world war.

• IMF was founded to ensure an international monetary system that would support and promote free trade and investment against the various form of protectionism.

MEMBERS۞Degay, Jane۞Mina, Chicris۞Arellaga, Wennie۞Gabol, Christine۞Na-ag, Danica۞Bentres, Maryrose۞Bay-an, Michael

۞Waacon, Abigail۞Cerdeñola, Christian۞Bumanghat, Raul۞Mariano, Alpha Iris۞Mayam-o, Maythird۞Soto, Christian Ralph

-end-