The Banking System in England: Objectives

The Banking System in England
THE BANKING
SYSTEM
IN ENGLAND
D Objectives:
After studying this chapter you should be able to understand:
2.1
The evolution of the Bank of England
The hub of the banking system;
The establishment of the bank;
The nationalisation of the bank;
2.2
Functions of the Bank of England
Governments bank;
Bankers' bank;
Lender of last resort;
Carrying out the governments monetary policy;
Control of the currency issue;
2.3
Present - day role of the Bank of England
2.4
Banking today
2.1 The evolution of the Bank of England

The hub of the banking system
In every country where there is a developed banking system, the main bank,
the hub of the system, is the Central Bank.
In the United Kingdom, the central bank is the Bank of England, which was
established in 1694.
Most of the central banks functions are quite different from those of the
commercial and other banks and, being the Governments bank and the
bankers bank, it has a controlling influence over all the other banks as a
whole.
The history of the Bank is naturally one of interest, but also of continuing
relevance to the Bank today. Events and circumstances over the past three
hundred or so years have shaped and influenced the role and responsibilities
of the Bank. They have moulded the culture and traditions, as well as the
expertise, of the Bank, which are relevant to its reputation and effectiveness
as a central bank in the early years of the 21st century. At the same time,
much of the history of the Bank runs parallel to the economic and financial
history, and often the political history in a broader sense, of the United
Kingdom.
In the 19th Century the Bank took on the role of lender of last resort,
providing stability during several financial crises.
World War I: 1914 - 1918 - During World War I the National Debt jumped
to 7 billion. The Bank helped manage Government borrowings and resist
inflationary pressures.
Gold - In 1931 the United Kingdom left 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.
The establishment of the Bank of England
The Bank of England was established under charter with the very privileged
position of being the first joint-stock banking company.1
D.P. Whiting - Elements of banking, Macdonald & Evans Ltd., London 1985, p. 42
This meant that it could have a large number of shareholders and was not
restricted to being a partnership, as were the other banks.
From the beginning, the Bank of England accepted money on deposit,
issued its own notes and made loans in the same way that the other banks
did and was able to increase its business more rapidly than them.
Because many banks had to close their doors, confidence in the banking
system and in the system of credit creation was greatly affected, and
legislation was introduced, especially, to encourage the establishment of
larger banking units on the one hand and to control the note issue on the
other.
Its law2, had three provisions:
a) To divide the Bank of England into two separate departments, the
Banking Department and the Issue Department.
b) To permit the Bank to make a fiduciary issue of 14 million of notes to
be backed by Government securities.
c) Ultimately to centralise the note issue in the hands of the Bank of
England by gradually extinguishing private note issues as the private
banks became bankrupt or amalgamated with other banks.
Thus, the Bank of England gradually assumed responsibility for the
currency supply and as the holder of the countrys gold reserves, apart from
the relatively small fiduciary issue, it had to hold gold as backing for the
note issue.
The Bank of England started in 1694 as a commercial bank and then in the
second half of the nineteenth century gradually stopped competing with the
other banks and concentrated on its new role as the first central bank in the
world.
Nationalisation of the Bank of England
The Bank was nationalised in 1946, when the conduct of the Bank was
placed in the hands of a Court of Directors headed by the Governor of the
Bank of England. The Crown appoints the Directors and the Governor and
senior officers work in close liaison with the Treasury.
The Bank Charter Act 1844
Operational independence May 1997

In May 1997 the Government gave the Bank responsibility for setting
interest rates to meet the Government's stated inflation target.
Managing the modern bank
The 1998 Bank of England Act made changes to the Bank's governing body
too. The Court of Directors, as it's known, is now made up of the Bank's
Governor and 2 Deputy Governors, and 16 Non-Executive Directors.
Channels of communication.
There are regular channels of communication between the Bank of England
and the other financial institutions in London, and through these, it is able to
discuss problems as they arise and seek compliance with its wishes. These
channels include the two Committees of the London Clearing Bankers, the
Accepting Houses Association, the Discount Market Association, the
Finance Houses Association and a number of other groups representing
financial institutions.
The Bank today
The Bank of England is the central bank of the United Kingdom. Sometimes
known as the 'Old Lady' of Thread needle Street, the Bank was founded in
1694, nationalised in 1946, and gained operational independence in 1997.
Standing at the centre of the UK's financial system, the Bank is committed
to promoting and maintaining a stable and efficient monetary and financial
framework as its contribution to a healthy economy.
The Bank's roles and functions have evolved and changed over its three
hundred-year history. Since its foundation, it has been the Government's
banker and, since the late 18th century, it has been banker to the banking
system more generally - the bankers' bank. As well as providing banking
services to its customers, the Bank of England manages the UK's foreign
exchange and gold reserves and the Government's stock register.
Interest rates decisions are taken by the Bank's Monetary Policy Committee.
The Monetary Policy Committee has to judge what interest rate is necessary
to meet a target for overall inflation in the economy.
The Bank is also responsible for maintaining stability in the financial
system - a healthy financial system is vital to the proper functioning of the
economy. The Bank analyses and promotes initiatives to strengthen the
financial system, and monitors financial developments in trying to identify
potential threats to financial stability. It also undertakes work on the

arrangements for handling financial crises should they occur, and is the
financial system's 'lender of last resort' in exceptional circumstances. In this
task, the Bank co-operates closely with the Treasury and the Financial
Services Authority, the regulator of banks and other financial institutions in
the United Kingdom.
Much of the Bank's work involves liaison and co-operation with the
Government institutions and other central banks. Given London's position as
a large international financial centre, the Bank's work addresses
international as well as domestic developments. The Bank participates in
many international forums involved in promoting the health of the world
economy and global financial system.
The Bank also works to ensure that the UK financial system provides
effective support to the rest of the UK economy and that the UK remains an
attractive location for the conduct of international financial business. This
involves work on issues such as firms' access to finance and, over recent
years, the introduction of the Euro and the evolution of the Euro financial
markets and infrastructure.
2.2 Functions of the Bank of England
The main functions3 of the Bank of England are:
The Governments bank
The Bank of England is responsible for running accounts for all of the
Government Departments and it has been the Banks general policy not to
maintain accounts for individuals and firms in the private sector (the nonGovernment sector of the community).
The bankers bank
By maintaining accounts with the Bank of England, the other banks are able
to settle transactions with one another and with the institutions in the public
sector, and also to maintain current account balances, which form part of
their liquid reserves.
Being able to draw cheques on the Bank or being able to pay with cheques
that have been drawn on the Bank facilitates the day-to-day settlement of
transactions through the London and Provincial Clearing Houses.
D.P. Whiting - Elements of banking, Macdonald & Evans Ltd., London, 1985, p.47
Lender of last resort

If the London Money Market is short of funds, the Bank of England must
always come to its aid, through it will do so at its own price, i.e. it will
determine the rate of interest at which it is prepared to lend.
The Bank may choose to give either direct or indirect assistance in the
market or may force the Discount Houses to borrow at the Bank of
Englands Minimum Lending Rate for a period of seven days.
If the Bank decides to give direct assistance it will buy bills or Government
stocks from the Discount Houses.
Indirect assistance to the Discount Houses occurs when the Bank of
England buys the bills or stocks from the banks and thus enables them to
increase their lending to the Discount Houses.
Carrying out the Governments monetary policy
The Bank of England is the principal agent for the Government in pursuing
its monetary policy. Not only is it responsible for the fiduciary issue, but
also through its control and influence over the banks and other financial
institutions, it is able to restrain or increase the total money supply.
The main devices used by the Bank in carrying out the monetary policy are:
a) Varying its minimum rate of interest;
b) Open Market operations;
c) Special Deposits;
d) Adjustments to the reserve ratios of the banks and other financial
institutions;
e) Directives to the Banks.
A) The minimum rate of interest. Since the early nineteenth century the
Bank of England has been able to influence the level of interest rates in
the money market by changing the minimum rate of interest at which it
is willing to lend. Until recently, this minimum rate was known as Bank
Rate and changes in it had strong psychological effects upon not only
the money market but upon the community as a whole. A reduction in
the Bank Rate was regarded as signal that restraints upon economic
expansion were to be relaxed whereas a rise in Bank Rate heralded a
period of credit restriction. If interest rates are raised then borrowing is
discouraged and thus the credit creation process is slowed down. If
interest rates are reduced then borrowing becomes more worthwhile and
this stimulates the creation of new deposits.
B) Open Market operations. These amounts to the deliberate selling or
buying of Treasury bills and Government stocks in order to mop up
excess purchasing power on the one hand, or to increase purchasing
power on the other. By selling securities in the open market the
Government receives payment for them by cheques drawn by
individuals, firms and institutions in the private sector.
These cheques reduce the level of bank deposits and, as the deposits form
the major part of the money supply, the latter is reduced. Conversely, if the
Government buys securities cheques drawn on the Bank of England pay for
its purchases, and these are paid in as deposits with the commercial banking
system, thus increasing the money supply.
When the Government sells securities and bank deposits are reduced, so are
the cash holdings of the banks. They thus find it difficult to maintain their
cash and liquidity ratios and may have to reduce their lending by way of
loans and overdrafts, which will reduce bank deposits still further. Open
Market operations can therefore be very effective in reducing the
availability of credit to the community.
C) Special Deposits. Since 1960 the Bank of England has used the device
of Special Deposits in order to reduce the ability of the banks to lend by
way of loans and overdrafts. A call for Special Deposits takes the form
of a directive to the banks and some other financial institutions to pay
over a set proportion of their eligible liabilities in cash, to be frozen as
deposits with the Bank of England until such time as the bank decides to
repay them. A call for, say, 2 per cent Special Deposits may cause the
banks to reduce their less liquid assets in order to maintain their reserve
ratios. When Special Deposits are repaid they have the opposite effect
upon the liquidity of the banks, and upon their ability to create new
deposits.
D) Reserve ratios - Since the 70s, all banking institutions have had to keep,
day by day, a minimum of 12 per cent of eligible liabilities in the form
of eligible reserve assets. These assets are mainly those whose supply
can be regulated by the Authorities and comprise balances with the Bank
of England commercial bills, call money with the London Money
Market, Treasury bills, Government stocks with less than a year to
maturity, local authority bills and company tax certificates.
E) Control of the currency issue - In conjunction with the Treasury, the

Bank of England determines the size of the fiduciary issue and is
responsible for the coinage. The note issue must be increased to meet
seasonal demands, e.g. at Christmas and during the summer holiday
period.
2.3 Present - day role of The Bank of England
The Bank of England is the national bank and central bank for Great Britain.
In these capacities the Bank has the functions described:
1. Banker to Government;
2. Sole note issuing bank in England and Wales;
3. It is the bankers bank;
4. Lender of last resort to the London money market;
5. Administers Government monetary policy;
6. Supervises other banks and associated financial institutions;
7. Management of the national Debt.
The Bank is organised into three main operational areas - Monetary
Analysis and Statistics, Financial Market Operations and Financial Stability,
supported by a Central Services area. This structure was introduced in June
1998 to reflect the Bank's new responsibilities in the light of the 1998 Bank
of England Act. In addition, the Co-ordination Unit for Europe is
responsible for co-ordinating the Bank's work on Europe, specifically in
relation to the Euro. The Centre for Central Banking Studies offers teaching
and technical assistance to other Central Banks and the Printing Works is
responsible for the printing of all Banks of England banknotes.
Monetary Analysis and Statistics
This area is made up of the following Divisions:
International Economic Analysis
Structural Economic Analysis
Monetary Instruments and Markets
Monetary Assessment and Strategy
Conjectural Assessment and Projections
Monetary and Financial Statistics Regional Agencies.
The Monetary Analysis divisions are responsible for providing the Bank
with the economic analysis it needs to discharge its monetary policy
responsibilities. Its economists conduct research and analysis of current and
prospective developments in the UK and international economies.
The Monetary and Financial Statistics Division compiles, publishes and
briefs on financial statistics; in particular the monetary aggregates and
banking statistics. Special studies directed at international harmonisation
and improvements to the statistics are also a feature of their work.
Financial Market Operations
Gilt-Edged and Money Markets
Foreign Exchange
Banking Services
Market Services
Risk Analysis and Monitoring
Registrar's Department
The Market Operations divisions - Gilt-Edged and Money Markets and

Foreign Exchange - plan and conduct the Bank's operations in the core
financial markets, in particular the money market in order to establish shortterm interest rates at the level required by monetary policy. They also
manage the UK's foreign exchange and gold reserves as agent for HM
Treasury and they conduct the current programme of Government gold
auctions. They contribute market analysis and intelligence to the Monetary
Policy Committee and the Financial Stability Committee from their
operational presence in the markets and, in line with the Bank's core
purpose; they seek to promote efficient structures in these markets.
The Banking and Market Services divisions provide banking services to the
Government and other customers, principally banks and other central banks.
They manage the note issue. They also play a key role in the provision of
safe and efficient payment and settlement services for the UK markets and
for the country as a whole.
The Risk Analysis and Monitoring division is responsible for integrating
management information on the risks arising from the Bank's operation in
the financial markets and for analysing the balance sheet implications of
those operations.
The Registrar's Department provides the principal stock registration service
for the Government and an execution-only postal brokerage service for
retail gilt investors.
Financial Stability
Domestic Finance
Financial Intermediaries
International Finance
Market Infrastructure
Regulatory Policy
The Financial Stability divisions have the main responsibility for

discharging the Banks remittal to maintain the stability of the financial
system as a whole. The Financial Stability Committee acts as a focus for the
Bank's work in this area. The Governor chairs the Committee.
The work of the Financial Stability divisions covers both UK and overseas
financial systems and markets, and the functioning of the international
financial system. The divisions identify, analyse and carry out research into
developments relevant to the structure and functioning of the financial
system domestically and internationally, make policy proposals and
encourage changes designed to increase its safety and effectiveness.
The divisions also contribute to the monetary policy process, for example
through the Bank's Deputy Governor for Financial Stability as a member of
the Monetary Policy Committee. The divisions' analysis is used to promote
public understanding of issues in financial stability through, for instance, the
regular Financial Stability Review.
Co-ordination Unit for Europe
The Co-ordination Unit for Europe is responsible for co-ordinating the
Bank's work on Europe, specifically in relation to the Euro. It monitors the
evolution of the Euro financial markets and supporting infrastructure; and
provides information on this (and other Euro-related matters) in the biannual
Practical Issues report. It leads the Bank's involvement in HMT's National
Changeover Plan work, focusing on the financial sector preparations. It co-
ordinates the Bank's involvement in the main official and private sector
Euro for; and provides a body of expertise on the European Central Bank.
Working with the Agents, it also monitors the use of the Euro in the UK.
Central Services
Personnel
Secretary's Department
Legal Unit
Finance and Resource Planning
Investment Unit
Management Services
Property Services and Security
The Central Services divisions encompass a range of support functions that

underpin the Bank's activities and help to ensure that the Bank's reputation
is maintained. These include finance, IT, personnel, the Governors' private
offices, and media and public relations, legal and information services.
Printing Works
The Bank of England Printing Works is located on a purposely-built high
security site in Debden, Essex. It employs over 450 people and is
responsible for the printing of over 1 billion notes annually, together with
the manufacture of its own inks, printing plates and threads. In addition the
Printing Works provides technical and specialised security advice to a
number of central banks worldwide.
The notes are produced in a highly developed printing process which
combines high technology and quality craftsmanship, making the Bank one
of the most cost effective note producers world-wide.
The Printing Work's expertise has led to commercial sales in overseas
markets through Debden Security Printing Limited, the Bank's wholly
owned commercial subsidiary.
Audit
Internal Audit is an independent function authorised by the Court of
Directors to review the adequacy of the internal control systems within the
Bank and to test compliance with agreed procedures. It aims to provide an
independent view for senior management, to assist in the effective discharge
of their responsibilities and to provide a service to the organisation as a
whole.
Centre for Central Banking Studies
The Bank of England's Centre for Central Banking Studies offers technical
assistance, courses, workshops, seminars and comparative research on and
for central banks throughout the world. Its primary aims are to foster
monetary and financial stability worldwide, to promote the Bank's core
activities, and to provide opportunities for Bank of England staff to obtain
broader perspectives on their own areas of expertise. Its goal is to be
recognised internationally as a leading centre of intellectual excellence for
the study of practical central banking.
Governance of the Bank
The Bank of England Act 1998 provides for the appointment by the Crown
of the Governor, two Deputy Governors and 16 Non-Executive Directors of
the Bank who collectively make up what is know as the Court of Directors.
The Governor and Deputy Governors are appointed for five years and the
Directors for three years.
Under the Act, the responsibilities of Court are to manage the Bank's affairs
other than the formulation of monetary policy, which is the responsibility of
the Monetary Policy Committee. This includes determining the Bank's
objectives and strategy, and aiming to ensure the effective discharge of the
Bank's functions and the most effective use of the Bank's resources.
The Monetary Policy Committee
The Act establishes the Monetary Policy Committee as a Committee of the
Bank sets a framework for its operations. The Act provides that the Bank's
objectives in relation to monetary policy shall be to maintain price stability
and, subject to that, to support the Government's economic policies,
including its objectives for growth and employment. At least once a year,
the Government specifies the price stability target and its growth and
employment objectives in conformity with the Act.
Audit Committee
The functions of the Audit Committee are to:
Keep under review the internal financial controls in the Bank.
Receive reports from, and review the work of, the internal and
external auditors.
The Committee also considers and makes recommendations on the

appointment of the external auditors, and their fees, reviews the
annual financial statements prior to their submission to Court,
including consideration of the appropriateness of the accounting
policies and procedures adopted. The Committee reports its
conclusions to Court.
Management structure
Under the Court of Directors, the Bank's senior policy-making body is the
Governor's Committee, comprising the Governors and Executive Directors.
The internal management of the Bank is the responsibility of the
Management Committee, comprising the Deputy Governor (Financial
Stability), the Deputy Directors, the Finance Director and the Director of
Personnel.
2.4 Banking today
The banking sector in the United Kingdom has traditionally been highly
segmented. In its February issue of the Bank of England Quarterly Bulletin
every year the Bank of England lists all those banking institutions to which
it has granted a licence to operate as a bank in the United Kingdom. The list
(of over 450) is divided into seven sections, distinguished sometimes by
function and sometimes by nationality of ownership. As regards functions,
the major distinctions are between retail banks, British merchant banks,
other British banks and discount houses.
The first group provides deposit and loan facilities to the household or
personal sector, together with small and un-incorporated businesses. The
retail banks own the various payment mechanisms, and money transfer is a
major part of retail bank operations. In recent years, they have offered an
increasing range of financial services, based on the marketing idea of onestop shopping so that it is now possible, within an individual branch, to
buy and sell foreign currency, buy an insurance policy, open a personal
pension fund, invest in units trusts, and buy executor and other services.
British merchant banks provide a complete range of corporate financial
services. These range from accepting deposits and making loans, to advising
on alternative forms of finance, advising on risk management strategies,

handling new securities issues and accepting bills issued by firms.
Other British banks are banks, which offer a range of banking services, but
usually limited in some way. Although they may be subsidiaries of retail
banks, they do not usually deal directly with the retail sector.
Discount houses perform a highly specialized and unique role in the UK
financial system. They deal almost exclusively with other banks and with
the Bank of England. They accept surplus funds on a very short-term, often
on an overnight basis, from banks and use the funds to buy and hold
treasury and commercial bills. They thus provide the first source of liquid
assets to the rest of the banking sector, so that any shortage or surplus funds
are immediately reflected in discount houses ability to buy bills, or need to
sell them.
At the centre of Britains banking and financial structure is the Bank of
England (see Annex no. 1).
The commercial banks, sometimes referred to as the high street banks
or the clearing banks, are large public limited companies having many
shareholders throughout Britain and in some cases in countries outside
Britain.
These banks operate through a network of branches covering the whole
England and Wales. All commercial banks are profit-seeking companies and
in order to earn money they provide various services to their clients.
Another major group of banks is that of merchant banks sometimes called
accepting houses or issuing houses. These banks are placed in the
City of London, though some have branch offices in other cities and also
some have offices in important overseas financial centres. The activities
these banks perform are very diversified including trading activities,
accepting financial commitments in exchange for a commission fee,
company financial advice.
Savings and lending institutions By the term of savings, we mean
refraining from spending. Any money, which we have saved and set aside
for use in the future, we refer to as our savings. Money is saved if it is not
spent, and it does not necessarily have to be placed in a bank, a building
society or any other financial institution or used to purchase stocks and
shares in order to justify the use of the term.
Sources of savings. In the United Kingdom, each individual saves on

average 8 per cent of his income. This may seem a very high proportion, but
it is not always realised that an individual saves not only by depositing
money and buying securities but also by paying premiums on an insurance
policy or by contributing to a superannuating scheme.
National savings. This term is used to identify or to name the part of
personal savings which is deposited with the National Savings Bank and
Trustee Savings Bank or is used to buy National Savings Certificates,
Premium Savings Bonds, or British Savings Bonds or is saved through the
Save as You Earn Scheme.
Functions of a savings bank. A savings bank accepts deposits and pays
interest on them. It may also provide payments mechanism, though this is
not essential function. For instance, on request, the National Savings Bank
will provide a depositor with a draft, which can be used in the same way a
cheque to settle a transaction, and the Trustee Savings Banks now provide
their customers with chequebooks.
The National Savings Bank provides two types of account facilities:
ordinary accounts and investment accounts. Ordinary accounts may be
opened for or by anyone over seven years of age with a maximum deposit of
10000 pounds.
The Co-operative and Trustee Savings Bank (mutual funds) offer a
complete service for personal customers and a limited service to smaller
business customers. These banks are primarily non-profit seeking
organisations, being concerned with providing a service for their customers
and seeking to cover only the costs of providing these services through the
fees they charge. In a similar way to the National Savings Bank, the Trustee
Savings Bank operates with two types of accounts, ordinary accounts and
special investment accounts, but in addition, an ordinary account holder
may also open a current account. Ordinary department depositors may open
a special investment account if they have a minimum of 50 pounds on
ordinary account. Whereas they receive a modest 4 per cent on ordinary
account, considerably higher rates are paid on investment accounts
depending upon the particular bank they are in account with and the yield
earned on the securities in which deposits are invested. Ordinary account
holders may have current account facilities if they wish, which involves
opening a separate account and being provided with a chequebook. Cheques
drawn for cash are free of charge but for others a charge may be made.
Building societies. A building society, like other financial institutions,

borrows money and lends it out at higher rates of interest than it pays for it.
It accepts funds in the form of shares and deposits. Shareholders actually
participate in the affairs of the societies as much that in the event of
financial difficulties the power to return their share capital would be
restricted whereas depositors are creditors and, as such, have a prior claim
over the shareholders in the event of liquidation. The rate of interest on
deposits is usually per cent below that on shares and as there is
comparatively little difference in practice in the ability to withdraw fairly
sizeable sums on demand, the majority of money is on share account to
attract the higher rate of interest. The shareholders are the owners of the
societies but they are paid interest as mentioned above, not dividends. The
societies are in effect mutual societies in as much many of the shareholders
are also borrowers on mortgage.
Commercial banks
Types of deposits. In a similar way to the savings banks, the commercial
banks accept deposits from their customers, but unlike the savings banks,
the majority of the total sum deposited with them is from industrial and
commercial depositors. This does not mean that the commercial banks have
few private customers, but sums of money involved are much greater for
firms than for individuals.
Commercial banks offer two main types of account to depositors: current
accounts and deposit accounts. Current account holders receive no interest
on their accounts, but they can draw cheques on them and use the credit giro
service, and they can withdraw some or all of their balances on demand.
Deposit account holders, on the other hand, do receive interest on their
accounts but do not normally draw cheques on the accounts or use the credit
giro system for paying in credits, and technically, they are required to give
seven days notice of their intention to make withdrawals from their
accounts.
Present - day commercial banks offer a wide range of services from those
suitable for individual customers who have modest expectations and
requirements of their bankers, through to the complicated requirements of
the large multi-national companies with banking operations on a worldwide
basis.
Annex No. 2 illustrates the broad areas of operations and services offered by
a large, modern banking company and its associated companies and
subsidiary companies.
Progress test
1) When was the Bank of England established?

2) What were the provisions of the Bank Charter Act 1844?
3) Was the Bank of England always a Central Bank?
4) When was the Bank of England nationalised?
5) What are the channels of communication between the Bank of England
and the other financial institutions?
6) List of functions of Bank of England.
7) What is meant by the term Lender of Last Resort?
8) Define (a) Direct and (b) Indirect assistance to the Discount
Houses.
9) Which tools can the Bank of England use in carrying out the
Governments monetary policy?
10) Define Open Market Operations.
11) What are Special Deposits?
12) What is the minimum reserve ratio?
13) What does savings mean?
14) In what ways does an individual save?
15) What are National Savings?
16) What are the functions of a savings bank?
12)
What is a Trustee Savings Bank?
ANNEX No 1
BUILDING
SOCIETIES
Members of Building
Societies Association
Examples: Halifax,
Abbey National
Nationwide, Provincial
NATIONALIZED
BANKS
MERCHANT BANKS
Members of Accepting
Houses Committee
Examples: Rothschid's,
Hambros, Baring
Brothers.
COMMERCIAL
BANKS
Barclays, Lloyds,
Midland, National
Westminster
Wiliams and Glyn's
and Scottish banks
National Savings Bank

and National Girobank
THE BANK OF
ENGLAND
Members of Finance
Houses Association.
Examples: Forward
Trust, UDT,
Mercantile Credit.
Co-operative Bank and

Trustee Savings Bank
Bank of Japan, Bank of

America, Royal Bank of
Canada, and around 300
other foreign bank offices
Grindlays Bank,
Standard and
Chartered Bank etc.
MUTUAL BANKS
BRIT. OFFICES FOR

FRGN. BANKS
BRITSH BASED
OVERSEAS
BANKS
Types of financial organizations in Britain
FINANCE
COMPANIES
ANNEX No 2
General
management
team at
Head Office
Domestic
International
Bank branches
throughout
Britain including
any subsidiary
bank companies
Includes any
overseas branches
or subsidiary
foreign banks
owned by the
British clearing
bank
Merchant and
wholesale
banking
Specialized bank
companies
created to be able
to operate in this
highly specialized
area
Installment
credit services
Related financial
services
Most banks now

own a finance
company which
will offer both
personal and
company finance
arrangements
Banks are now active

in such areas as:
insurance services
unit trust sales
computer services
executor & trustee
appointments
The broad areas of operations in a modern banking group

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The Banking System in England

The evolution of the Bank of England

The hub of the banking system;

The establishment of the bank;

The nationalisation of the bank;

Functions of the Bank of England

Lender of last resort;

Carrying out the governments monetary policy;

Control of the currency issue;

Present - day role of the Bank of England