Money and Banking: Banking System Overview

Central Bank

The central bank of the United Kingdom is the Bank of England. It is responsible for implementing monetary policy, promoting financial stability, and regulating and supervising the banking system. The Bank of England is also responsible for issuing banknotes and maintaining the stability of the financial system. It works closely with other regulatory bodies to ensure that the financial system operates in a safe and effective manner.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by the central bank include:

• Setting monetary policy
• Regulating and supervising the banking system
• Issuing banknotes
• Maintaining financial stability

Examples: Bank of England

Commercial Banks

Commercial banks in the UK are privately-owned banks that offer a range of financial services to individuals, businesses, and organizations. These services typically include deposit accounts, loans, mortgages, credit cards, and foreign exchange services. Commercial banks generate revenue through the interest charged on loans and by charging fees for various services.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by commercial banks include:

• Deposit accounts
• Loans
• Mortgages
• Creditcards
• Foreign exchange services

Examples: Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland Group

Investment Banks

Investment banks in the UK provide services such as underwriting and issuing securities, advising on mergers and acquisitions, and managing investment portfolios for individuals and institutions. They work with companies and other financial institutions to raise capital through the issuance of stocks and bonds.

Regulated by; Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by investment banks include:

• Underwriting and issuing securities
• Mergers and acquisitions advisory
• Investment portfolio management

Examples: Goldman Sachs International, JPMorgan Chase Bank, N.A., Morgan Stanley International Limited

Retail Banks

Retail banks in the UK are a subset of commercial banks that primarily offer services to individuals and small businesses. These banks provide basic financial services such as checking and savings accounts, credit cards, personal loans, and mortgages.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by retail banks include:

• Checking and savings accounts
• Credit cards
• Personal loans
• Mortgages

Examples: Santander UK, TSB Bank, Virgin Money

Foreign Banks

Foreign banks operating in the UK are banks that are based outside of the UK but have a presence within the country. They offer many of the same services as UK-based banks and may specialize in serving specific markets or regions.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by foreign banks include:

• Deposit accounts
• Loans
• Credit cards
• Foreign exchange services

Examples: Bank of America Merrill Lynch International Limited, Deutsche Bank AG London Branch, JPMorgan Chase Bank, N.A.

Credit Unions

Credit unions in the UK are member-owned financial cooperatives that offer many of the same services as banks. However, they are often smaller and more localized than traditional banks and may have more limited service offerings.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by credit unions include:

• Savings accounts
• Loans
• Credit cards
• Mortgages

Examples: London Mutual Credit Union, Bristol Credit Union, East Sussex Credit Union

Savings and Loan Associations

Savings and loan associations in the UK are institutions that specialize in accepting savings deposits and making loans. These institutions are often smaller than traditional banks and may focus on specific regions or markets.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by savings and loan associations include:

• Savings accounts
• Loans
• Mortgages

Examples: Penrith Building Society, Saffron Building Society, Yorkshire Building Society

Online Banking

Online banking in the UK refers to the provision of banking services via the internet or mobile devices. Online banks may offer many of the same services as traditional banks but with a focus on convenience and accessibility.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by online banks include:

• Checking and savings accounts
• Credit cards
• Loans
• Mortgages

Examples: Monzo Bank, Revolut, Starling Bank

Other Financial Institutions

Other financial institutions in the UK that offer deposit and loan services include a range of organizations that offer financial services such as deposit accounts and loans. These institutions may include building societies, finance companies, and peer-to-peer lenders.

Regulated by: Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Services typically offered by other financial institutions include:

• Deposit accounts
• Loans
• Mortgages

Examples: Funding Circle, OneSavings Bank, West Bromwich Building Society

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