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What types of bank are there? Are they engaged in the same? Are they targeting the same type of customer?
The answer is no. Although for the ordinary consumer who opens a current account and draws money from the ATM with his card, it may seem that, not all banks have the same purpose or work with the same financial products .
n the classification of banks, something very important is the type of owner they have, since that will put them in one category or another. The main types of banks that are known are:
Private banks, what are they and how do they work?
Private banks are banks in which the shareholders of the same are several private entities or even individuals with a large investment. This type of bank became famous some years ago
Public banks, what are they and how do they work?
When it comes to public banks, this type of bank is entirely state-owned. These banks are the best known and usually have all their lives there. A good example of this type of bank is the Bank of Spain or the European Central Bank.
Mixed banks, what are they and how do they work?
Mixed banks, as their name suggests, are banks that have private capital and, in turn, have public capital. These types of banks are also well known and those that people use normally. The government of Spain. It gives capital injections to these banks through FROB.
Bank types according to their activity
Central bank or issuer:they are the entities that are called “bank of banks”, that are in charge of directing and supervising the operation of the financial system of a country. It is called an issuer when among its functions, in addition, are those of setting monetary policy, issuing currency and maintaining the reserves of a country.
Most of the banks that you know fall into this category. Commercial banks are dedicated exclusively to commercial banking operations , such as deposits, loans or loans . They are activities related to saving and financing, but not to investment. Or at least in theory.
Investment Banks:investment banks are dedicated to offering investment products, both to companies and individuals. Among its functions are to participate in operations of merger and acquisition of companies, raising capital, buying and selling securities in different markets, market research and reporting, treasury management and strategic advice and control of operations and technology.
Corporate banking:they are entities that direct their business to clients that are companies, offering specific products so that they can develop their activity. Examples of products aimed at companies are the lines of credit, the discount of effects (promissory notes, bills of exchange), the operation of payments and income through checks and the issuance of receipts for the collection of services.
Consumer or Retail Banks : these are banks whose products are directed to a customer profile of an individual. Examples of consumer banking or retail products are personal loans, mortgages for the purchase of real estate, credit cards, guarantees for housing rentals, current or term accounts and deposits.
As its name suggests, mortgage banks are entities that have specialized in the mortgage market . Its activity focuses on the granting of mortgages for the purchase and / or reform of homes, garages, commercial premises and real estate of all kinds.
Savings banks are non-profit financial entities with a marked social character. Having been in the eye of the hurricane in the 2008 crisis, the number of savings banks in Spain has been drastically reduced since then. Most became banks after complex mergers and acquisitions processes with other banks and banks.
- Second-tier banks : those that channel financial resources to the market through other financial institutions that act as intermediaries. They are used, fundamentally, to channel resources to productive sectors.
- Development Bank : Its main objective is to facilitate access to financing for individuals and corporations.
- Current banks : they are the common wholesalers with which the general public operates. Its usual operations include deposits in account, savings account, loans, collections, payments and collections for third party accounts, custody of items and securities, security deposit boxes, financial, etc.
- Specialized bank : they have a specific credit purpose.
- Issuing bank : currently they are preserved as official banks, these banks are those that issue money.
The ethical bank , also known as social banking or alternative banking , is a set of financial institutions whose products are not conditioned solely the criterion of maximum profit and speculation . They invest in the real economy 1 and, in some cases, they even have an internal structure based on cooperative participation.
A zombie bank it is a financial institution with a negative net economic value (less than zero), but it continues to operate because its ability to pay its debts is sustained by implicit or explicit government credit. The term was used for the first time by Edward Kane in 1987 to explain the danger of tolerating a large number of insolvent lender associations and applied to the emerging Japanese crisis of 1993 .
The zombie institutions face the banking panic of unsecured depositors and margin calls (adjustment of the guarantee margins) of competitors in derivative transactions . They engage in high risk bets that weaken industrial profit margins and spread insolvency to healthy competitors. If their insolvency is not resolved, more and more institutions are in difficulties and the crisis erupts when the government’s decision to implement a bailout plan is questioned
These types of treasury banks are known among companies and not so much on a person-to-person basis. These banks are in charge of giving companies capital injections, in order to help them resurface. This type of entities does not have offices open to the public.