Roles of Banks and Building societies.
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Ali Raza Unit 4 Finance for business Task 1 Introduction: in this task I am going to give some definitions and examples about some topics in finance in business. High street banks High streets banks are the local banks you see on high street or in town centre. All High Street Banks are public limited companies (PLC). So their liability is limited. They deliver financial service to the members of public and some local or national businesses. The types of services High Street Banks provides are credit and debit cards, mortgages, loans, investment, accounts, insurance, pensions and standard orders and direct debits. However, before they can become public to enable them to sell shares on the stock exchange. There are three legal requirements which are stated in the law to become a PLC. They have to have £700,000, have 25% of shares to be floated and have to have been existed or trading for at least five years. High Street Banks are more risky due to money being borrowed from government from tax payers and banks can get into serious debt and can even go bust. High Street banks increase and decrease the interest rate e.g.
H. J. Merck & Co. Building societies Building societies are similar to the high street banks but their role is different from them. Because they provide different type of services such as mortgages. Building societies began in UK in 19th century and they are similar to saving and loans institutions in United States. Building societies are known as mutual societies and they are owned by their investors. All the profits they make they have to share it with their customers they can share this by giving interest rate on some amount of money they have into their accounts for example 1% on Â£1000. Building societies their main aim is not to make profit for their shareholders whom can allow them to offer interest they want to their investors and borrowers but that interest rate cannot have much difference from their other competitors. Their main aim is not to make money but it donât allows them to offer any interest they want it has to be more then national bank is charging it cannot go lower than that. Examples: Barnsley Building Society (A trading name of Yorkshire Building Society) Permanent Building, Regent Street, Barnsley, South Yorkshire, S70 2EH Bath Building Society 15 Queen Square, Bath, Avon, BA1 2HN Beverley Building Society Britannia (Part of the Co-operative Financial Services)
The central bank of England BoE is part of the ESCB, but UK has not joined the euro but still it will take part in some of the ESCBâs activities. The London Stock Exchange The main stock exchange of the United Kingdom is about selling and buying stocks, bonds, shares and other financial instruments on daily basis. One of the oldest and largest exchanges in the world, its traces its origins back to 1773. The London Stock Exchange utilizes telecommunication and electronic resources to accept and execute trades. In 2000 the stock exchange transferred its role as UK listing authority with HM treasury to the financial services agency and shareholders voted for London stock exchange and helped it to become a public limited company. To be able to sell your companyâs shares on the stock exchange or to be on the stock exchange market your company needs to meet the requirements which are: 1. minimum capitalisation of Â£700,000, 2. at least 25% of shares from your company must be offered for sale to the public which means any person from public can buy the shares of your company and they once they have bought the shares they will have 25% control on the business or more if they have bought more shares. 3. Five years or more full trading accounts must be published.
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