Analysis of the UK Banking System

Analysis of the UK margeing SystemA strong and efficient avering trunk is a key to progress in a country.To achieve an efficient a affirming concerning constitution cardinal should analyze the internal and external f interpretors of that country. For this issue I arrest chosen ENGLAND cambering administration to know its internal and external factors approach by its curses? what kinds of banks be operating in uk?,what kinds of activities atomic number 18 performed by them?what are the sources of pay in uk?what is the evolution of banking in uk?what is the role of commutation bank in uk?etcFirst of whole a question raise in our mind what is meant by system?System is an integrated collection of assorted part of a body which performed specific function for example banking system of uk it has many banks in parts which perform various functions like commercialised-grade banking, investing banking,specialized banking and primordial bank collectively known as banking system of uk.In uk banking system it has a central bank which is blaspheme of England .IT is the head of either the banks it project and regulate the affair of all schedule banks like HSBC, Barclay buzzword and kinglike BANK OF SCOTLAND all these banks deals in day to day functions of receiving deposits and advancing pay to the public. argoting system stability depend upon the external factors such as bring home the baconnce ,national income,industrial growth and development,goernment policies and internal factors such as bank ability to pass the deposit safely to the borrowers normally industrial sector.Benefits of a strong banking system in uk is that it will channelize the idle notes from the hands of depositor to the one who needful such monetary resource to invest It in that place which is expedient for the development of the uk.Strong banking system of uk is playing an historic role in change magnitude the saving of the people by providing incentives by giving them attr supple engagement rates.The banking system of uk is similarly helpful for the creation of new industries by providing finances to the industrial sector.The banking system of uk is also providing finances for the promotion of trade and commerce. wedges tender finance to the industry and the public as well and charge come to on it and earn profit for the bank.A question comes in our mind are banks main(prenominal) finance provider for the industry externally or ahead of time(a)(a) sector contribute in it the most.i have gone through an phrase of colin mayer.in this article he compare the enthronization activities and sources of getting the finance in venture capital in some countries like uk, germany japan and other countries he concluded that the souces of cash in hand and investment differ in antithetical countries due to fiscal system,economic condition, geographical factors and sectors difference.For example the amount of fund required in germany and japan ar e mainly cover from banks,corporation sources in Israel and award cash in hand sources in UK.Sources of finance analysisIn ENGLAND 44% OF THE funds ARE COVER FROM BANKS BUT MAIN SOUCE IS PENSION FUNDS WHICH SHOWS 49% FINANCIAL SOURCING MEAN IN INDUSTRY.Following data displays the sources of external finance for the industry in the foursome diferrent countries,showed some important facts. In Germany, banks provide the main source of finance for the VC industry, and bonus funds. By contrast, in the ENGLAND pension funds provide the main source of finance for the VC industry, other asylumal investors, and individual investors PLAY AN IMPORTANT ROLE IN FINACEING THE INDUSTRY OF many COUNTRIES as many companies as banks. Contrary to popular views, government atorities also play an important role for ( naturally local authority) backing plays a to a greater extent important role in the United Kingdom than it does in Germany, and is minimum in the other countries.Table 1. Sources of external funds for the VC industryThis put back reports sources of funds of VC firms in Germany, Israel, Japan and the United Kingdom based on binary and not mutually exclusive responses to a question of whether or not a particular fund uses a certain source. adorn A displays the proportion of funds that report victimization a devoted source. Panel B displays the percentage of funds using one, two, three, or four or more sources.Mean values which are statistically antithetic from those of the United Kingdom at the 10% level.Mean values which are statistically different from those of the United Kingdom at the 5% level.Sources of funds for the Israeli VC are banks from the above figure it is shown, with industrial corporations (typically from the United States) existence the single most popular source of funds. In Japan, non banking financial institutions (e.g., securities firms, opinion card or leasing companies and mortgage institutions) are the single most important catego ry of finance among Japanese funds, followed by banks and insurance companies.9 It is quite universal in Japan for the owners/providers of finance for Japanese VC funds to be all affiliated with the alike bank-centered merged group, or to be otherwise link to each other. In over half of the Japanese funds in our sample, at least three of the five declamatoryst shareholder providers of finance are related to each other or affiliated with the same group.VC funds in Germany tend on average to use fewer sources of funds than do VCs in other countries (Table 1, Panel B). By contrast, funds in Israel, Japan and the United Kingdom tend to use many sources of finance in particular, intimately a third of the UK funds report using at least four different sources.10 Relying simply on bank finance is also rattling common in Germany over 60% of the VC funds that raise money from banks use this source exclusively the be figure for the United Kingdom is about one-third, and for Israel abo ut one-fifth. Surprisingly, despite the typical characterization of the Japanese economy as bank dominated (like Germany), unaccompanied one-seventh of the Japanese VC funds in our sample rely exclusively on bank finance.EVOLUTION OF BANKING IN UK AND ITS DEVELOPMENT STAGES The birth of ripe UK confidesStrange as it may seem, UK banking terminate trace its origins back to the days of the Roman conquest. During the period of the Roman conquest of Britain, Romans conducted two forms of banking caper one, called argentarii, of a professional nature the other, called feneratores, of an amateur nature run by the elite group nobles of the Roman Empire.What was said to characterise this institution was the two-fold service of (a) receiving deposits and (b) advancing credit. sophisticated UK banks evolved in the 1530s., it was not really until approximately 400 years ago, during the mid-1600s, that capital of the United Kingdom really started to make its position as a financial pric ker of importance when silversmith bankers started to emerge, following King Charles I seizure of gold deposited in the Tower of London and the English Civil War, as a safe-haven (away from the clutching arms of the Crown) for the gentry and aristocracy to deposit their money and valuables. short after this period (circa. 1677), there were a recorded 44 goldworker bankers in London acting as keepers of running cash who ran their calling on a ain liability basis. However, strict legal controls on how big goldsmith bankers could become (because of the strict individualized liability basis), in concert with poor transportation and communication, combine to restrict the growth of these into national UK banks evidenced of this can be seen in the fact that in 1784 the total number of UK banks pass by 100 but only 7 had more than one office.The breaking wind of changeFollowing a number of prominent UK bank collapses in the early 1820s, parliament finally relaxed the laws governi ng who could own banks to allow for juncture railway line banking (1826) A notable exception to this was the establishment of the swan of England as a joint stock bank some 200 years before this legislation.Importantly, joint stock banking allowed the owners of UK banks to spread the risk among a number of proprietors. This, combined with the Industrial Revolution, better transportation and faster means of communication all resulted in a growth of more national banks in the UK. heavy(a) among these was the foundation, in 1833, of the National Provincial pious platitude of England (later to become National Westminster Bank NatWest), the first UK bank established with the specific agenda of being a national bank.Although UK banks began to expand nationally during this period, the function they (did and could) strained did not. Consequently, it was also around this conviction that another division in UK banks began to emerge namely the formation of the fine-looking Three ban king sectorsClearing eminent way Banks even as lately as 1900 there were a reported 250 toffee-nosed and joint stock banks operating in the UKMerchant Banks andOther financial institutions such as Building Societies which came into being following 1874 legislationThe Bank of England founded in 1694 to act as the governings banker and debt-manager. Since then its role has developed and evolved, centred on the management of the nations currentness and its position at the centre of the UKs financial system.The floor of the Bank is very engagementing one. Events and flock over the last three hundred or so years have change and influenced the role and responsibilities of the Bank. They have adopted the culture and traditions, as well as the expertise, of the Bank which are relevant to its reputation and effectiveness and responsibilities a central bank in the early years of the 21st century.The history of the Bank passed different situation and circumstances of to the economic a nd financial history, political history, of the United Kingdom.If you want to get adpressed to the Banks history and are visiting London, the Banks Museum provides a unique insight into the history of the Bank and its business, alongside a great deal of material about the Bank today.Key moments in the Banks history a brief goKing William Queen MaryWhen William and Mary came in 1688, public finances were not strong. The system of money deposit and advancing it(credit) was in not working efficiently. At that time a national bank was compulsory to mobilize the saving and investment,the nations resources.MR Willium PetersonWilliam Paterson proposed a loan of 1,200,000 to the Government. In return the subscribers would be able to in somatic the governor and Company of the Bank of England.The Royal pick outThe money was raised in a some weeks and the Royal film was sealed on 27th July 1694. The Banking started life as the Governments banker and debt-manager, with 17 clerks and 2 g atekeepers. In 1734 the Bank moved to Thread-needle Street, gradually acquiring land and set forth to create the site seen today.Commercial functions of the banksThe Bank managed the accounts of that time Governments and made loans operational to finance spending at times of peace and war. A commercial bank took deposits and issued notes.The 18th CenturyDuring the 18th Century the Government borrowed more and more money. These outstanding loans were called the National Debt.1781 renewal of the Banks CharterDependency on the Bank of England was such that when its charter was renewed in 1781 it was define as the public ex chequer.The bankers bankBy now the Bank was acting as the bankers bank too. It was liable to fail if all its depositors decided to crawl in their money at the same time. just now the Bank made trustworthy it kept enough gold to pay its notes on demand.The Restriction stop consonantBy 1797 war with France had drained the gold reserves. The Government prohibited the Bank from paying claims of its notes in gold. This Restriction Period lasted until 1821.The nineteenth CenturyThe 1844 Bank Charter Act tied the note issue to the Banks gold reserves. The Bank was required to keep the accounts of the note issue separate from those of its banking operations and cite a weekly summary of both accounts. The Bank Return, as its called, is chill out published every week.Lender of last resortIn the 19th Century the Bank took on the role of lender of last resort, providing stability during several financial crises.The First macrocosm War 1914-18During the First World War the National Debt jumped to 7 billion. The Bank helped manage Government acceptation and resist inflationary pressures.GoldIn 1931 the United Kingdom odd the gold standard its gold and foreign exchange reserves were transferred to the Treasury. But their management was still handled by the Bank and this remains the case today.communisation 1946After the Second World War the bank w as nationalised. It remained the Treasurys adviser, agent and debt manager. pecuniary crisesDuring the 1970s, the Bank played a key role during several banking crises. The Bank was at the fore when monetary policy again became a central part of Government policy in the 1980s.Operational independence may 1997In May 1997 the Government gave the Bank responsibility for setting interest rates to meet the Governments stated inflation target. The was enshrined in the 1998 Bank of England Act.Managing the in advance(p) bankThe Banks governing body, the Court of Directors, as its known, is made up of the Banks Governor and 2 Deputy Governors, and 9 Non-Executive Directors (under the Banking Act 2009 on that point are different kinds of banks which are working in different parts of the world main banks are as follows all these banks are specialize in performing speacialized functions of banks.on the basis of different types of functions we have the following bankBank of England is the cent ral bank of England perform fuctions of monetory policy,fiscal policy.issue of notes,bankers banks,lender of last resort to other banksAlliance HYPERLINK http//www.alliance-leicester-group.co.uk/HYPERLINK http//www.alliance-leicester-group.co.uk/ Leicester plcestablish in the UK, provides personal and business customers a comprehensive range of mortgage, investment, personal banking and insurance products, cash transmission services and corporate banking facilities.BankHYPERLINK http//www.bank-of-ireland.co.uk/ of IrelandPersonal and business banking in Britain.British HYPERLINK http//www.bankfacts.org.uk/BankersHYPERLINK http//www.bankfacts.org.uk/ AssociationPrincipal representative body for banks active in the UK, with over 300 member banks from more than 60 countries.HSBC inner HYPERLINK http//www.banking.hsbc.co.uk/BankPersonal and business banking division of HSBC.BankHYPERLINK http//www.bankofireland.co.uk/ of Ireland Northern IrelandBank that provides private and corporate services universal.BankHYPERLINK http//www.bankofscotland.co.uk/ of ScotlandFinancial institution that provides personal banking, small-business banking and corporate services.BarclaysBank crannys personal banking, student banking and international corporate banking.Bermuda Monetary Authority accountable for the licensing of banks, deposit companies and investment businesses.Bradford HYPERLINK http//www.bradford-bingley-int.co.im/HYPERLINK http//www.bradford-bingley-int.co.im/ Bingley global hyponym of Bradford Bingley Building Society, a nest egg and loan bank.Bristol HYPERLINK http//www.bristol-west.co.uk/HYPERLINK http//www.bristol-west.co.uk/ WestSpecialists in mortgages, nest egg and investments.Cheltenham HYPERLINK http//www.cheltglos.co.uk/HYPERLINK http//www.cheltglos.co.uk/ GloucesterProvides mortgages, investments, savings and loans.HSBC Investment HYPERLINK http//www.cibm.hsbc.com/hsbcBankProvides the informatory and financing, equity securities, asset management, private banking and trustee, foreign exchange and capital markets trading, debt funding and treasury activities of the HSBC theme.Citibank UKProvides personal banking in the UK. co-operative HYPERLINK http//www.co-operativebank.co.uk/BankProvides banking services including Internet banking.BankNetProvides online Banking Service. A joint venture between MarketNet and Secure Trust Bank PLC.Coutts congregationInternational private banking arm of the Royal Bank of Scotland Group offering investment, fiduciary and banking products.First DirectMember HSBC Group.HalifaxFinancial institution that provides personal financial services including mortgages, long-term savings accounts, home, motor and creditor insurance, sell banking, consumer credit and share dealing.Hamilton Direct HYPERLINK http//www.hdb.co.uk/BankDivision of HFC Bank PLC which provides unsecured personal loans and credit card products in the UK.Julian Hodge HYPERLINK http//www.jhb.co.uk/BankHYPERLINK http//www.jhb.co.uk/ GroupBanking and financial services group owned by the Carlyle Trust.Legal HYPERLINK http//www.landg.com/HYPERLINK http//www.landg.com/ popular Assurance SocietyInsurance company offering financial products including mortgage, investment, savings and home, life and health insurance.Leeds City Credit UnionFinancial co-op offering savings and loans products to employees of selected employers in the Leeds area.Lloyds HYPERLINK http//www.lloydstsb.com/homepage/0,1001,general,00.htmlBankFinancial institution that provides personal banking, small-business banking and corporate services.LombardFinancial institution that provides personal banking, small-business banking and corporate services.National Savings HYPERLINK http//www.nationalsavings.co.uk/HYPERLINK http//www.nationalsavings.co.uk/ Investments champion of the largest savings organisation in the UK that offers savings and investment products guaranteed by the Government to personal savers and investors while contributing toward s the Governments funding needs.NatWestFinancial institution that provides personal banking, small-business banking and corporate services.Northern RockBank that offers savings accounts, deposit accounts, residential mortgages, investment mortgages and offshore savings accounts.PrudentialProvider of portfolio management services, financial advice, mortgages and personal loans.Royal HYPERLINK http//www.rbos.co.uk/BankHYPERLINK http//www.rbos.co.uk/ of ScotlandBank specializes in corporate, private and offshore banking, as well as retail banking and private motor insurance.Scotiabank GroupInternational Canadian banking group that provides retail, commercial, corporate, investment and international banking services to customers around the globe. grinInternet bank, part of the Co-operative Bank PLC.Standard HYPERLINK http//www.standardbank.com/BankHYPERLINK http//www.standardbank.com/ LondonInternational merchandiser bank of the Standard Bank Group that offers specialist banking servic es and promotes trade, investment and business flows with an emerging market focus on a worldwide basis.Standard Chartered HYPERLINK http//www.standardchartered.com/BankInternational commercial banking group providing consumer, corporate and institutional banking and treasury products and services with a focus on emerging markets in Asia, the sub-continent, the Middle East, Africa and Latin America.Standard Life HYPERLINK http//www.standardlifebank.com/BankSubsidiary of The Standard Life Assurance Company that provides mortgages, savings and online banking.Triodos HYPERLINK http//www.triodos.co.uk/BankUK forking of the Dutch trust bank that offers savings accounts and investments products financing projects with social and environmental benefits.Virgin Direct Personal Financial Service Ltd.Bank that offers savings accounts, deposit accounts, residential mortgages, investment mortgages and offshore savings accounts.WoolwichFinancial services organization that provides mortgages, lo ans, investments, banking and insurance products and services.LIST OF BANKS OF ALL THE BANKS IN ENGLAND OPERATING bank 2010Uk major banksTHERE ARE 116 BANKS OPERATE IN UK ACCORDING TO FSA websiteThere are three types of banks, High Street Banks, Building Societies, andDirect Banks. High Street Banks are the main banks, such as Royal Bank ofScotland, HSBC, NatWest, Citibank, and Barclays. Building Societies such asWoolich, Abbey National, and Halifax were created for those who wanted tosave in enact to buy a set up and offer pretty much the same services as theother banks. Direct Banks such as Co-op (Smile.co.uk) and First Directdont have branches, but you can bank at First Direct at the Post Officeand Co-op bank at their grocery outlets. They are telephone banks whichhave grown in popularity over the last few yearsDifferent Types of Banks* High Street Banks and Building SocietiesHigh Street banks and building societies are commercial banking businesseswhose firsthand market is c onsumer finance. These are the most common banksyou will encounter.* Investment BanksAn investment bank is a financial company, securities firm or brokeragehouse that purchases new issues of securities from private corporations andoffers them to their clients. They form a syndicate in sanctify to sell thesesecurities to their customers and the general public.* Private BanksPrivate Banks typically provide a more personal and customised set ofservices than high street banks. Marketed to individuals with large incomesor high personal wealth, opening a private bank account usually requires avery large minimum deposit.* Online-Only BanksOnline-only banks offer the same services as traditional High Street banksor building societies through electronic banking and the Internet. Theynormally do not have branches for their clients to use. Besides online-onlybanks however, a number of High Street banks also offer online services.The banking system in the UK is highly concentrated with the top 10 banks having over 90% of market share.