| Most subscribers own banking stocks, so let's | | | | lend it out at a higher rate. Assuming they |
| examine how banks work and what drives their | | | | get it back, the difference is how they make |
| profits. | | | | their money. But before explaining this |
| | | | measure, let's look at a typical bank's |
| The Romans did more than popularise | | | | structure. |
| bloodsports and central heating. They also | | | | |
| pioneered a banking network that extended | | | | We all know about retail banking, where the |
| throughout much of Europe, Asia and parts of | | | | products consist of home loans, credit cards, |
| Africa. Jesus, as we now know, didn't think | | | | personal loans and priority and private |
| much of it and bankers have been suffering | | | | banking. Irritating queues and broken ATMs |
| from low self-esteem ever since. | | | | are also among the product offerings. |
| | | | |
| But that hasn't stopped many subscribers from | | | | Business banking usually concerns small to |
| buying bank shares. Most investors own either | | | | medium sized businesses, typically with needs |
| a regional banking stock or one of the big | | | | of less than $50m, with larger clients |
| four, and many own both. | | | | handled by corporate or institutional |
| | | | banking. |
| So, to give you a better understanding of | | | | |
| their attractions as an investment, we're | | | | Finally, the newest and most rapidly growing |
| going to explain over the coming issues what | | | | area of a bank's activities is wealth |
| drives a bank's profit. | | | | management. This area handles funds |
| | | | management, financial planning and trustee |
| Banking basics | | | | services on behalf of clients. |
| | | | |
| The basics of banking haven't changed much | | | | The biggest and most recent change in the way |
| since Jesus threw the moneychangers out of | | | | that banks have operated has occurred with |
| the temple. Banks take your money, paying you | | | | the switch from relying on interest margins |
| a rate of interest for the privilege, and | | | | to fee income. |