bg thu tin thuong mai chapter 8 5643

CHAPTER 8: Banking Banks in the UK; commercial bank facilities (current accounts, deposit accounts, credit cards, standing orders, loans and overdrafts); international banking, bills of exchange; documentary credits Banks in the UK merchant banks • encourage larger organization to use their services • offer the facilities similar to those of the commercial banks • specialize in areas of international trade and finance, discounting bills, confirming credit status of overseas customers through confirming houses, acting in the new issue market, and in the bullion and Euro-bond market • Be involved in shipping, insurance, and foreign exchange markets commercial banks • Be particularly interested in private customers’ accounts, encouraging them to use their current account, deposit account, savings account, and credit facilities • lend money, against securities, in the forms of overdrafts and loans, pay accounts regularly by standing orders, and transfer credits through the bank Giro system • Be available to customers with their numerous branches throughout the UK, their low charges, and the laws which govern the way each organization handles its affairs Commercial bank facilities in the UK Current accounts Deposit accounts Credit cards Standing orders and direct debits Loans and overdrafts Current accounts • be used by anyone in the UK provided they can supply a reference or references • Its advantage: cheque payments • when paying by cheque, it is required to provide a cheque card, which makes the banks responsible for the cheque passed, up to the limit stated on the card • The card also acts a cash card allowing money to be drawn from cash dispensers even when the bank is closed • When depositing cash or cheques, a paying-in slip is used to record the deposit, its counter foil, with the bank’s stamp and cashier’s initials, being proof that the deposit was made Deposit accounts • Pay interest to a maximum established by the bank • The customer can be asked to give notice of withdrawal, and can only withdraw on a withdrawal slip handed in at the branch where the account is kept • There are numerous savings accounts on which interest is paid according to the credit balance in the account and the period it is left for • With some of these accounts there are penalties for withdrawing money before the agreed date Credit cards • offer credit facilities to customers making purchases in shops • can be used for automatic debiting when a customer pays for goods in a shop • is also internationally recognized Standing orders and direct debits • Customers making regular payments, such as rent, or mortgage repayments, can ask the bank to transfer the money to the payee on a particular day every month Loans and overdrafts • Loans and overdrafts for large amounts are usually allowed on a formal agreement • A loan will usually be covered by a negotiable security, e.g shares, with repayment specified on the agreement The money for a loan is immediately deposited in the customer’s account • With an overdraft, the customer is given permission to overdraw an account up to a certain limit • In addition, there is a wide range of other financial and investment services the bank offer • The other services the banks offer include acting as trustees and executors, offering insurance, foreign exchange, and discounting services, and negotiating documents Specimen letters Administrative letters A Opening a current account Specimen letters Administrative letters B Change of signature Specimen letters and form: bill of exchange transactions Request to a bank to accept a bill Specimen letters and form: bill of exchange transactions Non-payment of a bill Documentary credits • Letters of credit (L/C) have been used for centuries in one form or another to enable travelers to obtain money from overseas banks • The process begins with the traveler asking his bank to open a letter of credit in his favour, i.e for a specific amount which is debited to his account The bank then drafts a letter which will allow him to draw money on overseas banks with whom the home bank has agreement The foreign banks will then draw on the home bank to recover their payments • This method of obtaining money has now generally been replaced by Euro cheques, traveller’s cheques, and credit cards But documentary credits-letters of credit accompanied by documents-are wildly used in the import/export trade Two types of documentary credit: revocable and irrevocable The importer agrees to pay by documentary credit, and tell his bank that he will so by completing an application form which names the exporter and states: the amount to be paid; the documents concerned; what the consignment consist of: whether the shipment is c.i.f, f.o.b., etc.: details of dispatch and any other documents involved, e.g certificate of origin, consular invoice, certificate of quality; and the length of time the credit will be available The availability of the credit should take account of how much time it will take to prepare and ship the goods 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 The agent bank will notify the exporter the credit has been opened, and they may add their own confirmation, i.e they will promise to see that the conditions of payment against the documents will be fulfilled If they confirm the letter, the L/C is known as a confirmed credit and the agent bank as the confirming bank • The exporter ships the goods before the credit expires and sends the shipping documents (bill of lading, insurance certificate, invoice, etc.) to the agent bank who check the documents against the conditions and pay him; or they may have asked him to draw a bill of exchange on them, and will discount the bill for him so he can get his money immediately • The agent bank will then send the documents and debit the importer’s bank with the cost and charges, which are calculated as a percentage of the total amount of the invoice, plus an extra charge if the letter is confirmed • 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 Specimen letters and forms: a documentary credit transaction From the importer to his bank Specimen letters and forms: a documentary credit transaction Application form for documentary credit Specimen letters and forms: a documentary credit transaction From the importer to the exporter Specimen letters and forms: a documentary credit transaction From the agent bank to the exporter Specimen letters and forms: a documentary credit transaction Notification of documentary credit Specimen letters and forms: a documentary credit transaction From the exporter to the agent bank Specimen letters and forms: a documentary credit transaction From the exporter to the importer Specimen letters and forms: a documentary credit transaction From the importer’s bank to the importer Specimen letters: a documentary credit transaction (2) From the importer to the exporter Specimen letters: a documentary credit transaction (2) From the exporter to the importer Points to remember Merchant banks and commercial banks in the UK offer similar services, but commercial banks encourage private account holders to use their facilities, as well as commercial concerns Commercial bank facilities include current accounts, deposit accounts, credit cards, standing orders, loans and overdrafts The two main methods used in settling overseas accounts-bills of exchange and documentary credits-involve banks at home and abroad Bills of exchange can be at sight, i.e payable on presentation, or after sight, payable at a stipulated date in the future The exporter can send the bill to the importer direct or to his bank with the documents and will obtain either payment on presentation, or acceptance against the bill The advantage of a bill is that the bill can be cancelled, or not paid on the due date a confirmed irrevocable documentary credit cannot be cancelled (unlike a revocable credit) and the importer’s bank and its agent can guarantee payment The importer is protected by the bank checking documents and can get a certificate of quality to ensure that the goods are up to standard The exporter is assured of payment, and, with discounting facilities, does not have to wait for his money if the bank agrees that he can draw against the credit ... The other services the banks offer include acting as trustees and executors, offering insurance, foreign exchange, and discounting services, and negotiating documents Specimen letters Administrative... in areas of international trade and finance, discounting bills, confirming credit status of overseas customers through confirming houses, acting in the new issue market, and in the bullion and... offer credit facilities to customers making purchases in shops • can be used for automatic debiting when a customer pays for goods in a shop • is also internationally recognized Standing orders