Allfinanz, also known as bancassurance, is the partnership or collaboration between a bank and an insurance company, allowing the insurance company to sell its products to the bank's client base.
The American Bankers Association (ABA) is a trade organization dedicated to serving the interests of commercial banks and other financial institutions. It is known for its advocacy, education, and publication efforts within the banking industry.
An 'Approved List' refers to a specific selection of investments that a mutual fund or other financial institution is authorized to invest in. It can be statutory, especially when fiduciary responsibilities are involved.
Asset Management involves the systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. This term is typically used in the financial world to describe the management of investments, aiming to grow their value over time and achieve higher returns.
A commercial institution that takes deposits and extends loans, concerned mainly with making and receiving payments, accepting deposits, and making short-term loans to private individuals, companies, and other organizations.
A bank deposit is a sum of money placed by a customer with a bank, which may attract interest and have specific accessibility terms. Deposits allow banks to extend loans to other customers, existing mainly on paper in the bank's books.
A bank holding company is an entity that owns or controls two or more banks or other bank holding companies. These companies must register with the Board of Governors of the Federal Reserve System, making them registered bank holding companies.
A banker's reference, also known as a status enquiry, is a report on the creditworthiness of an individual supplied by a bank to a third party. Such reports are often used by financial institutions or customers seeking insight into the financial reliability of individuals or entities.
The Borrowing Power of Securities refers to the ability of a client to borrow funds from a financial institution, using the purchased securities as collateral for the loan.
Capital allocation refers to the deployment of funds across various units or projects within an organization based on calculated potential returns and risks, often employing techniques like value-at-risk (VaR) and contributing to metrics such as shareholder value and Economic Value Added (EVA).
CHIPS is a U.S. bank clearinghouse for large-value dollar transactions, owned by financial institutions and operated by the Clearing House Payments Company. It facilitates the efficient settlement of large financial transactions between banks.
A clearinghouse is an essential financial institution that functions to facilitate the exchange, balancing, and settlement of payments or securities transactions, reducing the complexity and risk associated with such transactions.
A club deal is a specific type of financial arrangement whereby a small group of investors or financial institutions jointly fund a particular investment, typically in a syndicate arrangement. These deals are common in private equity, venture capital, and large-scale lending.
Banks that rank after lead managers in marketing a new issue, usually a Eurobond. They are typically chosen for their ability to place a substantial portion of the issue with their customers.
A consumer finance company is a type of financial institution that specializes in offering credit products and services to individuals who require loans for personal use.
A correspondent bank in a foreign country offers banking facilities to the customers of a bank in another country. These arrangements are usually the result of agreements, often reciprocal, between the two banks. The most frequent correspondent banking facilities used are those of money transmission.
Cost of funds refers to the interest cost paid by a financial institution for the use of money, including various liabilities such as money market accounts, passbook savings accounts, and CDs.
Credit risk refers to the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms. This concept is crucial for lenders and investors as it impacts the stability and profitability of financial institutions and markets.
A deposit account is a type of bank account held at a financial institution that allows the account holder to accumulate funds and earn interest, while typically requiring advance notice to withdraw money.
A discount house, typically a specialized financial institution or bank, focuses on operating in the discount market, primarily dealing with the discounting of bills of exchange, including Treasury bills.
US legislation that provided for comprehensive changes to the framework of financial regulation in the US following the crisis of 2007--08. Named after its sponsors, Senator Chris Dodd and Representative Barney Frank, the act introduced new capital requirements and risk limits for banks and created new government agencies to oversee consumer protection and the regulation of financial institutions and credit-rating agencies.
Legislation designed to assist large financial institutions to prevent failure and to signal to worldwide financial markets that the United States government would stand behind major American banks and other important financial entities to prevent disruptive collapses.
Exact interest is the interest paid by a bank or other financial institution, calculated on the basis of a 365-day year, as opposed to ordinary interest, which is based on a 360-day year.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in U.S. commercial banks and savings institutions.
Non-interest-bearing deposits held at the US Federal Reserve System that are traded between member banks. The Federal funds rate or Fed funds rate is the overnight rate paid on these funds.
Federal Savings and Loan Associations are federally chartered institutions with a primary responsibility to accept people's savings deposits and provide mortgage loans for residential housing. Their role and scope were broadened by the Depository Institutions Deregulation and Monetary Control Act of 1980. Accounts are insured up to $250,000 by the FDIC.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) was enacted as a comprehensive regulatory response aimed at addressing the crises in the savings and loans industry, implementing reforms, and improving enforcement mechanisms within financial institutions.
The G-10, or Group of Ten, is an advisory forum for the International Monetary Fund (IMF), established in 1962. It consists of finance ministers and central bank governors from 11 key economies, including Canada, France, Germany, Belgium, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States.
The interbank market is a global network of financial institutions engaged in lending and borrowing activities, primarily focused on short-term loans and foreign exchange transactions.
An intermediary acts as a go-between in various capacity including executive recruiters, brokers and financial institutions that facilitate investment decisions on behalf of others.
Intermediation refers to the activity performed by a bank, financial institution, broker or similar entity, acting as a go-between for two parties in a transaction. Intermediaries may accept some or all associated credit or commercial risks.
The IFRS Foundation oversees the activities of the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee, and aims to develop globally accepted financial reporting standards.
A certificate of deposit with a minimum denomination of $100,000, commonly utilized by large institutions. Jumbo CDs often offer higher interest rates compared to smaller-denomination CDs.
A lead manager is a bank or other financial institution tasked with underwriting a new issue of bonds or heading a syndicated bank facility. This institution is often chosen due to a close relationship with the borrower or a successful track record in competitive bought deal contests.
The London Interbank Bid Rate (LIBID) is the interest rate at which banks bid for funds to borrow from one another in the London interbank market. It is considered the counterpart to the London Interbank Offered Rate (LIBOR).
Mandatory Liquid Assets (MLA) are specific financial reserves and assets that regulatory authorities require banks and financial institutions to maintain to ensure liquidity and financial stability.
The Medallion Stamp Program is a securities transfer process approved by the Securities Transfer Association. It enables participating financial institutions to guarantee signatures for the transfer of securities.
A Member Bank is a financial institution that is part of the Federal Reserve System, including all nationally chartered banks and state-chartered banks that meet certain standards and are accepted for membership.
A multi-tied adviser is a type of financial advisor who represents several financial institutions and can offer products from a limited range of providers.
A mutual company is a type of corporation where ownership and profits are distributed among its members or customers based on the volume of business they conduct with the company.
State-chartered banks owned by depositors and operated primarily for their benefit, with significant holdings in home mortgage loans.
A commercial bank whose charter is approved by the U.S. Comptroller of the Currency rather than by a state banking department. National banks are required to be members of the Federal Reserve System and to belong to the Federal Deposit Insurance Corporation (FDIC).
A nonbank bank is an institution that provides most of the services of a traditional bank but is not a member of the Federal Reserve System and does not have a charter from a state banking agency.
A nonperforming asset (NPA) is a classification used by financial institutions for loans or advances that are in default or are in arrears on scheduled payments of principal or interest. These assets are not effectual in producing income and thus pose a risk to the financial health of lending institutions.
A placed deal is a financial transaction in which a bank or a group of banks commit to marketing an entire new issue of bonds or similar securities without guaranteeing the success of the issuance.
Learn about the PRA, its role in financial regulation, the implications for banks and financial institutions, and the broad spectrum of activities it oversees.
Quantitative Easing (QE) is a monetary policy used by central banks to stimulate the economy when conventional monetary policy becomes ineffective. Primarily enacted during periods of low or zero interest rates, QE involves the creation of new money electronically to purchase government securities and increase the money supply.
A regional bank specializes in collecting deposits and making loans within a specific region of the country, differentiating it from money center banks which operate on a national and international level.
A Routing Transit Number (RTN) is a nine-digit numerical code used in the United States to identify a specific financial institution. These numbers are essential for various financial transactions, including fund transfers and direct deposits.
Savings and Loan Association (S&L) is a type of financial institution that specializes in accepting savings deposits and making mortgage loans.
A US financial institution that specializes in accepting savings deposits and making mortgage loans. They offer loans with a fixed rate of interest and have greater investment flexibility compared to UK building societies.
A signature guarantee is a written confirmation from a financial institution such as a bank or brokerage firm that a customer's signature is valid. It ensures the legitimacy of transactions involving the transfer of securities.
SLM Corporation, commonly known as Sallie Mae, is a publicly traded corporation that guarantees student loans and is actively traded on the secondary market. It purchases student loans from originating financial institutions and provides financing to state student loan agencies.
Stress testing is a method used in risk analysis that employs simulations to estimate the impact of worst-case scenarios. It is widely used by regulators, rating agencies, and financial institutions.
Structuring a deposit involves breaking down large financial transactions into smaller ones to avoid triggering scrutiny from financial institutions or authorities.
A syndicated bank facility, also known as a syndicated loan, is a very large loan provided to a single borrower by a consortium of banks and financial institutions, typically led by a lead bank.
A tender panel involves a group of banks that come together to competitively offer loan terms to a company, ensuring the borrower gets the best conditions for financing.
Thrift institutions, also known as savings banks and savings and loan associations, are financial institutions that primarily focus on accepting deposits and originating home mortgages. They play a critical role in providing financial services to individuals and communities.
The term 'Too Big to Fail' (TBTF) refers to organizations, particularly financial institutions, whose failure would pose a systemic risk to the economy. This concept gained prominence during the 2008-2009 financial crisis.
The Troubled Assets Relief Program (TARP) was a U.S. Treasury program established under the Emergency Economic Stabilization Act (EESA) of 2008 to stabilize the financial system during the financial crisis by purchasing troubled assets and providing capital to financial institutions.
An underwriter assesses risks and decides whether or not these risks can be insured, setting the appropriate premium charges, typically based on the frequency of past claims. Additionally, underwriters play a crucial role in financial transactions by guaranteeing to buy unsold shares during new issue offerings.
A group of financial institutions that collaborate to underwrite a new securities issue, ensuring the initial sale is facilitated efficiently.
Vault cash refers to the currency that a bank keeps on hand in its vault and ATMs to meet its day-to-day transaction needs.
Wall Street is synonymous with the financial markets and institutions of New York, housing the New York Stock Exchange and being the hub of major financial activities in the United States.
