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CHAPTER ONE
An Overview of Banks and the
Financial Services Sector

Banks and Other Financial Service Competitors

Definition
History
Type
Functions
Services offered
Challenges faced

Chapter 1, Rose and Hudgins

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What is a Bank?
 A bank can be defined in terms of
1) Economic function
 Transferring funds from savers to borrowers

(financial intermediaries)
 Paying for goods and services

2) Services it offers
 Checking accounts, savings plans and loans

 But, expanded to security underwriting, insurance

protection, merging companies etc.

3) legal basis for existence (regulations)
A bank is any business offering deposits subject to
withdrawal on demand and making loans of a
commercial or business nature
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The Different Kinds of Banks Today

 Commercial Banks: Sell deposits and make loans to

businesses and individuals
e.g. Sonali Bank Limied, Brac Bank, DBBL, MTBL, Bank Asia
 Savings Banks: Attract savings deposits and make
loans to individuals and families
 Cooperative Banks: Help farmers, ranchers, and
consumers acquire goods and services
e.g. Dhaka Mercantile Co-operative Bank Limited
 Mortgage Banks: Provide mortgage loans on new
homes and housing projects

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The Different Kinds of Banks Today

Community Banks: Smaller, locally focused

commercial and savings banks
Money Center Banks: Largest commercial
banks based in leading financial centers
Investment Banks: Underwrite issues of new
securities on behalf of their corporate
customers (IPO)
e.g. AB Bank, Dhaka Bank, One Bank, SCB and many more.

Merchant Banks: Supply both debt and

equity capital to businesses
List of Merchant Bankers in Bangladesh:
https://www.sec.gov.bd/home/merchantbanks
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The Different Kinds of Banks Today

InternationalBanks: Commercial banks

present in more than one nation
e.g. Commercial Bank of Ceylon PLC, SCB, HSBC

Wholesale Banks: Large commercial banks

serving corporations and governments
Retail Banks: Smaller banks serving
primarily households and small businesses
Bankers’ Banks: Supply services (Check
clearing and security trading) to banks
e.g. United Bankers’ bank in Minnesota, USA
TIB (The Independent Banker’s Bank) in Texas, USA
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The Different Kinds of Banks Today

MinorityBanks: Focus primarily on

customers from minority groups
e.g. International Bank of Commerce, Laredo, Texas, USA
This bank is the largest Hispanic-owned bank in the continental United
States, at $10.1 billion in assets.

National Banks: Function under federal

charter (NCBs)
State Banks: Function under charters of the
state e.g. Janata Bank Limited, BASIC Bank Limited
Insured Banks: Maintain deposits backed by
federal deposit insurance plans

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The Different Kinds of Banks Today

Member (Scheduled) Banks: Belong to the

Federal Reserve System
AffiliatedBanks: Wholly or partially owned
by a holding company
Fringe Banks: Offer payday and title loans,
cash checks and other services.
e.g. First Cash Financial Services, Pawn Trader

Universal Banks: Offer virtually all financial

services available in today’s marketplace
e.g. Bank of America, HSBC

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.