Joint together

The Dutch ABN and the British Barclays announced their fusion, thus it will be the greatest bank-fusion of the whole European bank history.

In the course of the merger the biggest one bank will born in the World. The value of the deal is approximately $ 95 billion.

After the merger, the bank-giant will have 47 million client, as well as 27 million issued bank card, and the number of the its employees will 217 000. The Barclays deals in 50 countries, the ABN amro in 53.

The new bankname is: Barclay Plc, and the place of the business will be in Amsterdam.

FRANKFURT STOCK EXCHANGE

The origins of the Frankfurt Stock Exchange go back to the 9th century and a free letter by Emperor Louis the German to hold free trade fairs. By the 16th century Frankfurt developed into a wealthy and busy city with an economy based on trade and financial services.

In 1585 a bourse was established to set up fixed currency exchange rates. During the following centuries Frankfurt developed into one of the world's first stock exchanges - next to London and Paris. Bankers like Mayer Amschel Rothschild and Max Warburg had substantial influence in Frankfurt's financial trade.

In 1874 Frankfurt Stock Exchange moved into its new building at Börsenplatz.
It was only in 1949 after World War II that the Frankfurt Stock Exchange finally established as the leading stock exchange in Germany with consequently incoming national and international investments.

During the 1990s the Frankfurt Stock Exchange was also bourse for the Neuer Markt (German for New Market) as part of the world wide dot-com boom.
In 1993 the Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) became Deutsche Börse AG, operating businesses for the exchange.

From the early 1960s onwards the Frankfurt Stock Exchange took advantage of the close by Bundesbank which effectively decided on financial policies in Europe until the introduction of the Euro in 2002. Since then the exchange profits from the presence of the European Central Bank in Frankfurt am Main.

In 2002 and 2004 Deutsche Börse was in advanced negotiations to take over London Stock Exchange, which were broken off twice.

Today, with a total turnover of 5.2 Trillion € per year the Frankfurt Stock Exchange strengthens its position as the world's 3rd largest trade-place for stocks and the world's 6th largest by market capitalization.

Major listed companies in Frankfurt Stock Exchange
• Adidas
• Allianz
• BMW
• GPC Biotech
• SAP AG
• Daimler Chrysler
• IKB Deutsche Industri Bank
• C and C
• TSS Group
• Hannover Re

Stock exchanges will continue...

Other Banking Services – and methods of payment in foreign trade

Standing order:

Standing order is useful for fixed amount payments that are known to be due on certain dates, e.g: flat rent, car insurance or subscription fees. The client authorise bank in writing to make regular payments until it is withdrawn. Banks charge some money after each transactions.

Direct Debit:

It is an authority you give to the bank to makde regular payments from a current account to the account o fan organization called the originator eg: public utility companies, or suppliers.

Telebank:

It is a free 24-hour automatic and / or live voice service which makes banking easy from any touch tone phone and make a wide range of services available.

Mortgage:

It is a long term loan given by a bank or financial institution for the purpose of purchasing or renovating a house or buying land or other hight value assets. The money is repaid monthly over a period of years. In a mortgage by legal charge, the debtor remains the legal owner of the property, but the creditor gains sufficient rights over it to enable them to enforce their security, such as a right to take possession of the property or sell it. Flexible mortgage payment system exists, which means the payment are graduated, increasing for a period of time and then level off.

The process of the mortgage:
- mortgage specialist makes a pre-scoring
- if you are eligible for a loan and if you are creditworthy
- specialist calculates the proportion of own resources and the value of the collateral
- appraiser assess the value of the property
- you have to fill in an application form
- if this form is approved, the contract is signed
- you have to provide the following documents: ownership registration of the property, property appraisal, contract of sale stamped by Land Registry Office, uninterrupted employment history, verification of regulat income

Factoring:

Factoring is a flexible form of finance, which advances money to a company as and when it issues new invoices. Factoring can bridge the gap between raising an invoice and getting that invoice paid. Factoring provides the cash flow necessary for working capital and growth.
There are two major advantages of factoring over overdrafts or other forms of personal or business loans, these are:
Factoring is flexible in that the amount you can borrow grows directly with your sales. This is essential to enable companies to fund their growth, since you must usually pay your suppliers before you receive payments from your customers.
No other assets are needed to secure this funding.

Whether you are a new start business or your enjoying healthy growth and increasing sales, or you’re considering expansion, unpaid invoices can really constrain your business. If you are thinking about expanding, the last thing you need is unreliable cash flow. This is where the right factoring provider can help you.
It's a fact of business that many customers delay settling invoices for as long as possible. In many cases you may have to wait 60 days or longer before invoices are settled. This all adds up to bad news when you still need to pay your staff and suppliers on time.
Without the right amount of cash flow when you need it, you may well have to divert precious resources to chasing payment when you should be chasing new business.

Documentary Letter of Credit:

It is a reliable and safe method of payment, and it protects the seller as well as the buyer. It is an undertaking given by a bank at the request of a customer to pay a particular amount in an agreed currency to a beneficiary on condition that the beneficiary presents stipulated documents within a prescribed time limit.

How does a L/C work?
1. The buyer (importer) asks his bank to issue or open a L/C in favour of the seller for the amount of the purchase. There is usually a special application form, which the buyer fills in and sends to his bank. It states all the main points of the parties and the action.
2. The importer’s bank will then select a bank in the exporter’s country to act as its agent, and will notify them that the credit has been opened.
3. The agent bank will notify the exporter that a credit has been opened, and they may add their own confirmation by promising to see that the conditions of payment against the documents will be fulfilled. If they confirm the letter, the L/C is a confirmed credit.
4. The buyer (exporter) ships the goods before the credit expires and sends the shipping documents to the agent bank that checks the documents against the conditions and pays him.
5. The agent bank will then send the documents and debit the importer’s bank with the cost and charges.
6. The importer’s bank then checks the documents, pays the agent bank and sends the documents to the importer so that he can claim the goods.

Types of the Letter of Credit
1. Irrevocable: The buyer cannot cancel the credit.
2. Confirmed: A bank in the seller’s country pays the credit.
3. Sight or straight credit: Immediate payment of the full amount on presentation of the documents. (Cash payment)
4. Acceptance credit: Payment of the full amount at maturity. The contract specifies payment at a future date with a bill of exchange. After presentation of the documents, the bill can be discounted in order to obtain the credit amount (less discount) immediately.
5. Deferred payment credit: Payment of the full amount at maturity. The contract specifies payment at a future date without a bill of exchange; therefore there is no possibility of discounting. It can be accepted as security for an advance.
6. Red clause credit: Under it the seller can obtain an advance from the correspondent bank, but it is the issuing bank that assumes liability. This advance is intended to finance the manufacture or purchase of the goods, which are going to be delivered under the documentary credit.
7. Revolving credit: When the goods are to be delivered in part shipments (instalments) at specified intervals, payment can be made under a revolving credit, which covers the value of each instalment as it is delivered. After the utilization of the first amount the next portion becomes automatically available.
8. Negotiation credit: (or commercial letter of credit) Payment of the credit amount will be made by any bank, not only by the advising bank. (Negotiation means the purchase and sale of bills of exchange.)
9. Transferable credit: The beneficiary may transfer his claim under that credit to a third party. If the credit is divisible and transferable, the amount can be paid to several beneficiaries.
10. Back-to-back credit: It is used when a middleman wishes to transfer to a supplier his claim under a documentary credit, which is not transferable. The middleman’s bank, accepting the first credit issued in the middleman’s favour, opens a second credit in favour of the supplier.

The Stock Exchange

Stock Exchange

The Stock Exchange is a highly organised financial market where bonds, stocks and shares are bought and sold. It is a free market because the prices of securities move in response of supply and demand. When a company invites the public to invest in it, the money is put to permanent use. Therefore the money cannot be returned to the investors because it has been used. The only way that the shareholders can get their money back is by selling their shares to someone else through the Stock Exchange.
If you want to buy or sell shares you can go to the local branch of your bank and tell them what and how many shares you want to buy. The bank will turn to a broker, who goes to the SE on your behalf. The broker works for you on a commission, which is a small percentage of what the shares cost.
A security is a written or printed document acknowledging the investment of money. It covers all kinds of investment with which the SE is concerned. The reward paid is called a dividend, because the profit is divided up among the shareholders.

Equities:

I. Gilt-edged securities (government stocks) are bonds issued by the government of the UK. The name conveys the impression of reliability. The investors are entitled to a fixed rate of interest (yield) at fixed dates (redemption date) on the nominal value.
II. Local authority bonds are issued by local authorities and the money invested represents a loan to the authority.
III. Debentures are issued by companies when the investor lends money to the company, and for his loan he is entitled to receive money in return, the interest. It is also a kind of bond. Debenture holders have no involvement in the management of the company.
IV. Shares or stock certificates are documents stating that the owner has a share in a specific company because he has invested money in it. They entitle the holder to participate in the ownership of a company and to receive its profits if there are any. (dividend) There are two main types of shares:
 Preference shares: Their holders have the right to receive dividends before ordinary shareholders. Normally preference shares pay a fixed rate of dividend but only if sufficient profits are available to make a payment. They carry no voting rights.
 Ordinary shares (equities): They represent a share in the ownership of a company. Each share is entitled to an equal proportion (dividend) of the company’s profit. The amount of dividend to be paid is decided by the directors of the company and is dependent upon the profitability of the firm. Ordinary shares are known as ‘blue chips’.

The Stock Exchange ‘animals’

They are ‘bulls’, ‘bears’ and ‘stags’. They are called speculators rather than investors because they trade in the market for short-term benefits, not long-term gains.



 Bulls believe that the price will rise, so they buy shares and hope to sell them later for a profit.
 Bears think that prices will fall so they sell shares and hope to buy them back at a lower price. (When prices are thought to be rising, the market is described as bullish; when they are falling, it is called bearish.)
 Stags specialize in buying carefully selected amounts of newly issued shares before they are traded on the SE. If they are lucky, they sell these shares as soon as they are traded and make a large, quick profit.

First step - About Banking

Banking, so charming word, what does it mean in practice ?

Banking is the business of dealing in money and instruments of credit. Banks were traditionally differentiated from other financial institutions by theri principal functions of making loans and collecting deposits but their services and activities have diversified over the years. The banking environment has become really competitive and most banks offer a wide range of financial services, not just basic banking. Nowdays, they invest in stock markets, and provide counselling, deal with insurance and pension schemes etc.

Where do their profits stem from ?

In a variety of ways: they charge interest on loans, which has a higher rate than the interest they pay on deposits. The difference between these two rates is called interest spread. Besides, banks make investments, trade with securities, foreign currencies. In the course of this process they charge fees and commissions for transactions and other customer services.

Take a look at retail banking

Retail banking provides services for the general public and small-scale businesses. They collect deposits, handle deposit and current accounts, make mortgages, give term loans, offer overdraft facilities, operate cash dispensers, and night safe facilities, transfer money and exchange foreign currency. They also issue cash substitutes: credit cards, cheque book and traveller’s cheques.

The other form of banks is merchant or wholesale banks specialise in services for the corporate sector like large-scale enterprises and governments. Deals with factoring, leasing finance projects that have a promising recovery rate, assess the risk involved, rpovide venture and developement capital, provide corporate advisory services.

Savings Banks

They offer a safe playe for people to deposit small amount of money and earn interest on it. They do not normally have other banking services. Similarly, mutual savings bank are savings banks owned by depositors.

Savings and Loans Associations ( Thrifts [United States] )

They are financial organisations formed to lend money mainly int he form of mortgages for house or flat purchasing and building. Now they have interest bearing account.

Credit Union / Credit Societies

Similarly to Mutual Savings Banks, are owned and operated by their members and usually organised by a union or people living or working at the same place. They are non-profit, member service, depository institutions who make low interest loans. Some of them offer life insurance and chequebooks.

Investment Banks:

They are sternly profit-oriented commercial banks, who lend money and make investments, sell stocks and shares to members of the public. Also offer advice on mergers, takeovers, and have similar services to those of merchant banks.

Brokerage Houses:

They can buy or sell securities, currency, insurance, property and serve with investment advice.

Unit Trust, and Mutual Funds:

They are companies they collect money from small investors, called unit-holders, and invest in stocks and shares of many different companies. Investors recieve interests and dividends.


The major banking services:

- Credit facilities: consumer / personal loans, secured and unsecured loans
- Overdraft, mortgages
- Financing house purchase and improvement
- Payment services: issue credit cards, chequebooks, traveller’s cheques, set up standing orders, direct debits, remittance services, case to case transfers
- Current account, deposit account, savings accounts
- Regular account balance statement
- Insurance and endowment policy
- Cash withdrawal (POS), cash dispenser (ATM)
- Enquiry on account balance
- Collect deposits in domestic and foreign currency
- Manage existing portfolios
- Investment advice
- Mobilebank services – call centres
- Private banking
- Home banking
- Hire purchase
- Leasing
- Lease purchase
- Forfeiting
- Factoring
- Risk analysis
- Foreign currency transfers and exchange
- Pension fund
- Securities trading