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Financial services refers to services provided by the finance industry. A service is the non-material equivalent of a good. A service provision is an economic activity that does not result in Ownership, and this is what differentiates

The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A credit card is part of a system of Payments named after the small Plastic card issued to users of the system Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss A stock broker or stockbroker is a qualified and regulated professional who buys and sells shares and other securities through Market makers or The government sponsored enterprises (GSEs are a group of Financial services corporations created by the United States Congress. As of 2004, the financial services industry represented 20% of the market capitalization of the S&P 500 in the United States. "MMIV" redirects here For the Modest Mouse album see " Baron von Bullshit Rides Again " Market capitalization/capitalisation (aka market cap, mkt cap or capitalized/capitalised value) is a measurement of Corporate or Economic The S&P 500 is a Stock market index containing the stocks of 500 Large-Cap Corporations all of which are from the United States. [1]

Contents

History of financial services

In the United States

The term "financial services" became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies operating in the US financial services industry at that time to merge. The United States of America —commonly referred to as the The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act,, is an Act of the United States Congress The 1990s collectively refers to the years between and including 1990 and 1999 In the USA almost every company now which previously described themselves as a bank, insurance company, or brokerage house, now describes themselves in some way as a financial services institution.

Companies usually have two distinct approaches to this new type of business. One approach would be a bank which simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings. A brand is a collection of Images and ideas representing an economic producer more specifically it refers to the descriptive verbal attributes and concrete symbols such as a Income, refers to consumption opportunity gained by an entity within a specified time frame which is generally expressed in monetary terms Outside the U. S. , e. g. , in Japan, non-financial services companies are permitted within the holding company. For a topic outline on this subject see List of basic Japan topics. In this scenario, each company still looks independent, and has its own customers, etc.

In the other style, a bank would simply create its own brokerage division or insurance division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company.

Banks

Main article: Bank

A "commercial bank" is what is commonly referred to as simply a "bank". A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A commercial bank is a type of Financial intermediary and a type of Bank. The term "commercial" is used to distinguish it from an "investment bank", a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or stock (equity). Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest Software for Fixed assets management and Stock control developed in 2004.

Banking services

The primary operations of banks include:

Private banking

The providing of banking services to very wealthy individuals and families. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking services. [2]

Services are provided by a bank or a division of a financial services company.

This table displays the results of the Ultra high net worth (US$30m+) category of the 2006 private banking awards:[3]

Rank 06 Company Rank 05
1. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been JPMorgan Private Bank 1
2. JPMorgan Chase & Co ( is the largest Banking institution in the United States by deposits and market capitalization and is one of the oldest operating Goldman Sachs 3
3. The Goldman Sachs Group Inc, or simply Goldman Sachs ( is a large global Bank holding company that engages in Investment banking securities UBS 2
4. Citigroup Private Bank 4
5. Citi Private Bank provides personalized wealth management services for affluent clients who include many Entrepreneurs families and senior corporate executives Credit Suisse Private Banking 5
6. The Credit Suisse Group () is a Financial services company headquartered in Zurich, Switzerland. HSBC Private Bank 7
7. HSBC Holdings plc ( (,,,) is a Public limited company incorporated in England and Wales, headquartered in London. Pictet & Cie 6
8. Merrill Lynch n
9. Merrill Lynch & Co Inc () is a global financial services firm Rothschild 8
10. ABN Amro Private Banking 10

Ranking: 'n' denotes 'nominated'

Capital market banks

Capital market banks underwrite debt and equity, assist company deals (advisory services, underwriting and advisory fees), and restructure debt into structured finance products. Software for Fixed assets management and Stock control developed in 2004. Structured finance is a broad term used to describe a sector of Finance that was created to help transfer Risk using complex legal and corporate entities Prominent amongst them include:

See also: Mergers & acquisitions

Bank cards

Bank cards include both credit cards and debit cards. Barclays Capital is a leading global investment bank. It is the investment banking division of Barclays plc which has a balance sheet of over £1 The Bear Stearns Companies Inc, based in New York City, was one of the largest global Investment banks and securities trading and brokerage This article deals with Salomon Brothers For other uses of the name Salomon see Salomon. Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 Deutsche Bank AG (literally "German Bank" ˈdɔɪtʃə,) is an international Universal bank with a broad private clients franchise headquartered in The Goldman Sachs Group Inc, or simply Goldman Sachs ( is a large global Bank holding company that engages in Investment banking securities ING Groep NV () (known as ING Group) is a Financial institution of Dutch origin offering Banking Insurance and JPMorgan Chase & Co ( is the largest Banking institution in the United States by deposits and market capitalization and is one of the oldest operating Lehman Brothers Holdings Inc ( (pronounced ˈliːmən was a global financial-services firm prior to its bankruptcy and sale in 2008 Merrill Lynch & Co Inc () is a global financial services firm Morgan Stanley ( is a global Financial services provider headquartered in New York City New York United States UBS AG ( SWX: UBSN) is a diversified global financial services company with its main headquarters in Basel & Zürich, Switzerland DA Davidson & Co is an employee-owned broker -dealer based in Great Falls, Montana, United States. A credit card is part of a system of Payments named after the small Plastic card issued to users of the system A debit card (also known as a bank card) is a plastic card which provides an alternative payment method to Cash when making purchases Bank Of America is the largest issuer of bank cards.

Credit card machine services and networks

Companies which provide credit card machine and payment networks call themselves "merchant card providers". American Express ( sometimes known as " AmEx " or " Amex " is a diversified global Financial services company headquartered in Barclaycard is a global credit provider ( Credit cards and Loans ' owned by Barclays plc in the UK. Capital One Financial Corp ( is a McLean Virginia -based Bank holding company specializing in Credit cards, home loans, Auto loans The Discover Card is a major Credit card, issued primarily in the United States. HSBC Holdings plc ( (,,,) is a Public limited company incorporated in England and Wales, headquartered in London. Intelligent Finance ( IF) is an offset Bank operating in the United Kingdom, a division of Bank of Scotland plc which is part of HBOS plc MasterCard Worldwide ( is a multinational corporation based in Purchase, New York, USA. Washington Mutual Inc (abbreviated to WaMu) ( is a savings bank holding company and the former owner of Washington Mutual Savings Bank, which was the These include:

Investment services

Asset management

Main article: Investment management

Asset management is the term usually given to describe companies which run collective investment funds. BA Merchant Services LLC is a wholly owned subsidiary of Bank of America specializing in handling credit, debit, stored value, and First Data Corporation is a Payment processing company based in Greenwood Village Colorado. Heartland Payment Systems Inc ( is a Payroll service provider and the 6th largest credit card processor in the United States specializing in small to mid-sized restaurants US Bancorp ( is a Financial services Holding company, headquartered in Minneapolis, Minnesota. Barclays PLC is a major global financial services provider operating in Europe, North America, the Middle East, Latin America, Australia HSBC Holdings plc ( (,,,) is a Public limited company incorporated in England and Wales, headquartered in London. A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than those feasible for most individual investors

The following is Global Investor’s 2005 ranking of the top 10 investment managers by assets under management:[4]

Rank Company Assets under management
(US$million)		 Country
1. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been Barclays Global Investors 1,400,491 UK
2. Barclays Global Investors is an investment management subsidiary of U State Street Global Advisors 1,367,269 US
3. State Street Global Advisors (SSgA is the investment management division of State Street Corporation and the world’s largest institutional asset manager Fidelity Investments 1,299,400 US
4. Fidelity Investments is a provider of investment products and services Capital Group Companies 1,050,435 US
5. The Capital Group Companies is one of the world’s largest Investment management organizations with assets in excess of $1 The Vanguard Group 852,000 US
6. For the anarchist group see Vanguard Group (anarchist. Vanguard is a United States Investment management company that manages Allianz Global Investors 790,513 Germany
7. SE (formerly AG,,) is a large Financial services provider headquartered in Munich, Germany. JPMorgan Asset Management 782,646 US
8. JPMorgan Chase & Co ( is the largest Banking institution in the United States by deposits and market capitalization and is one of the oldest operating Mellon Financial Corporation 738,294 US
9. Mellon Financial Corporation, ( was one of the world's largest money management firms Deutsche Bank Asset Management 723,366 Germany
10. Northern Trust Global Investments 589,800 US

Hedge fund management

Hedge funds often employ the services of "prime brokerage" divisions at major investment banks to execute their trades. Northern Trust Corporation is a leading provider of investment management asset and fund administration fiduciary and banking solutions for corporations institutions and individuals A hedge fund is a private Investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment Prominent hedge funds include:

Custody services

Custody services and securities processing is a kind of 'back-office' administration for financial services. BlackRock Inc ( is a major American investment management firm Bridgewater Associates is a global investment manager that manages approximately $160 billion in assets Citadel Investment Group is a Hedge fund management firm based in Chicago, Illinois, founded by billionaire trader Kenneth C Deutsche Bank AG (literally "German Bank" ˈdɔɪtʃə,) is an international Universal bank with a broad private clients franchise headquartered in Renaissance Technologies is a Hedge fund management company Renaissance was started by James Simons in 1982 SAC Capital Advisors (SAC Capital Partners SAC Capital Management is a $16 billion dollar group of multi-strategy multi-discipline Hedge funds founded by Steven A Soros Fund Management LLC, founded by George Soros, is a privately held Corporation providing financial services and investment strategies for various funds including Assets under custody in the world was estimated to $65 trillion at the end of 2004. [5] Firms engaged in custody services include:

Insurance

Main article: Insurance

Insurance brokerage

Insurance brokers shop for insurance (generally corporate property and casualty insurance) on behalf of customers. JPMorgan Chase & Co ( is the largest Banking institution in the United States by deposits and market capitalization and is one of the oldest operating PNC Financial Services ( is a US -based Financial services Corporation, with Assets (as of December 31, 2006) of Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss An insurance broker (agent sources (brokes contracts of insurance on behalf of their customers Significant companies in this sector of the financial services market include:

Insurance underwriting

Personal lines insurance underwriters actually underwrite insurance for individuals, a service still offered primarily through agents, insurance brokers, and stock brokers. Marsh & McLennan Companies Inc ( MMC) is a US -based global Professional services and Insurance brokerage firm Wachovia Corporation ( based in Charlotte North Carolina, is a diversified Financial services holding company provided via its operating subsidiaries a broad Wells Fargo & Co ( is a diversified Financial services company headquartered in San Francisco California, United States with operations around the Hiscox Ltd ( is a Bermuda -incorporated Insurance provider listed on the London Stock Exchange. An insurance broker (agent sources (brokes contracts of insurance on behalf of their customers A stock broker or stockbroker is a qualified and regulated professional who buys and sells shares and other securities through Market makers or Underwriters may also offer similar commercial lines of coverage for businesses. Activities include insurance and annuities, life insurance, retirement insurance, health insurance, and property & casualty insurance. An annuity contract is a Financial product typically offered by a Financial institution, that may accumulate value and take a current value and pay it out over Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the The term health insurance is generally used to describe a form of Insurance that pays for medical expenses Property insurance provides protection against most risks to Property, such as fire theft and some weather damage Some well known insurers include:

Reinsurance

Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses. SE (formerly AG,,) is a large Financial services provider headquartered in Munich, Germany. The Allstate Corporation is the largest publicly held personal lines insurer in the United States and the second-largest of all personal lines insurers in the AXA () is a French global insurance companies group headquartered in Paris and founded in 1985 by Claude Bébéar. Berkshire Hathaway ( for supervoting shares and for nonvoting shares is a conglomerate Holding company headquartered in Omaha, Nebraska Chubb Corporation ( is the 6th largest property and casualty insurer in the World Aviva plc ( has a corporate lineage dating back to 1696 and is the world's fifth-largest Insurance group the largest insurance group in the UK and the second-largest Fraternal Forestry is a term for a movement of Fraternal organizations (or friendly societies) marked by a confusing history of merger separation and charitable activity The Government Employees Insurance Company, usually known by the Acronym GEICO, is an American Auto insurance company MetLife Inc is the holding corporation for the Metropolitan Life Insurance Company or MetLife for short Enumclaw Insurance Group is an Insurance company doing business in the U Nationwide Mutual Insurance Company & Affiliated Companies is a group of large U The New York Life Insurance Company (NYLIC is the largest mutual life-insurance company in the United States, and one of the largest life insurers Safeco Corporation ( was the 23rd largest American national Insurance company State Farm Insurance is a group of Insurance and Financial services companies Zurich Financial Services Group is a major Financial services group based in Zürich, Switzerland. Reinsurance is a means by which an Insurance company can protect itself against the risk of losses with other insurance companies Firms in this sector include:

See also: Underwriting

Intermediation or advisory services

Stock brokers (private client services) and discount brokers

Stock brokers assist investors in buying or selling shares. General Re is a Reinsurance company It is a subsidiary of Berkshire Hathaway Corporation For the film see Lloyd's of London (film. Lloyd's of London is a British Insurance market Munich Re AG, in German Münchener Rück AG ( is the world's largest Reinsurance company with over 5000 customers in 160 countries For the Swiss Re Tower London see 30 St Mary Axe Swiss Re ( is the world’s largest reinsurer, now that it has acquired GE Insurance Towers Perrin is a professional services firm that helps organizations improve performance through effective people risk and financial management Primarily internet-based companies are often referred to as discount brokerages, although many now have branch offices to assist clients. These brokerages primarily target individual investors. Examples of discount brokerages include:

Full service and private client firms primarily assist execute trades and execute trades for clients with large amounts of capital to invest, such as large companies, wealthy individuals, and investment management funds. TD AMERITRADE Holding Corporation ( is the ownerof TD AMERITRADE Inc Edward D Jones Sr ( July 29, 1893 - October 10, 1982) was an investment banker born in St E*TRADE FINANCIAL Corporation ( is a Financial services company based in New York NY United States Fidelity Investments is a provider of investment products and services Scottrade is a privately owned discount Retail brokerage firm headquartered in St TradeKing is a privately held FINRA-member discount brokerage firm with headquarters in Boca Raton Florida and subsidiary offices in Charlotte NC FOLIO fn, Inc is a brokerage and investment company serving Investors Financial advisors and financial institutions around the world ShareBuilder Corporation, (also ShareBuilder Securities Corporation is a United States based online stock brokerage firm founded in 1996 (as NetStock Zeccocom is an American online investor portal. Zecco stands for "Zero Commission Cost" Examples include:

Conglomerates

A financial services conglomerate is a financial services firm that is active in more than one sector of the financial services market e. Deutsche Bank AG (literally "German Bank" ˈdɔɪtʃə,) is an international Universal bank with a broad private clients franchise headquartered in The Goldman Sachs Group Inc, or simply Goldman Sachs ( is a large global Bank holding company that engages in Investment banking securities Merrill Lynch & Co Inc () is a global financial services firm Morgan Stanley ( is a global Financial services provider headquartered in New York City New York United States Smith Barney is a division of Citigroup Global Capital Markets Inc UBS AG ( SWX: UBSN) is a diversified global financial services company with its main headquarters in Basel & Zürich, Switzerland g. life insurance, general insurance, health insurance, asset management, retail banking, wholesale banking, investment banking, etc. Retail banking refers to banking in which Banking institutions execute transactions directly with consumers rather than corporations or other banks

A key rationale for the existence of such businesses is the existence of diversification benefits that are present when different types of businesses are aggregated i. e. bad things don't always happen at the same time. As a consequence, economic capital for a conglomerate is usually substantially less than economic capital is for the sum of its parts. In Finance, mainly for financial services firms economic capital is the amount of Risk capital, assessed on a realistic basis which a firm requires to cover the In Finance, mainly for financial services firms economic capital is the amount of Risk capital, assessed on a realistic basis which a firm requires to cover the

Financial Crime

UK

Fraud within the financial industry costs the UK an estimated £14bn a year and it is believed a further £25bn is laundered by British institutions. [6] and is the responsibility of the Financial Services Authority

Market share

The financial services industry constitutes the largest group of companies in the world in terms of earnings and equity market cap. The Financial Services Authority ( "FSA") is an independent non-governmental body Quasi-judicial body and a company limited by guarantee that regulates However it is not the largest category in terms of revenue or number of employees. It is also a slow growing and extremely fragmented industry, with the largest company (Citigroup), only having a 3 % US market share. Market share, in Strategic management and Marketing, is the percentage or proportion of the total available Market or Market segment that is [7] In contrast, the largest home improvement store in the US, Home Depot, has a 30 % market share, and the largest coffee house Starbucks has a 32 % market share. The Home Depot ( is an American Retailer of Home improvement and construction products and services Starbucks Corporation ( is an international Coffee and coffeehouse chain based in Seattle Washington.

Brand equity

Each year, BusinessWeek and Interbrand publish their 100 Best Global Brands study, ranking the financial value of brands. BusinessWeek is a business Magazine published by McGraw-Hill. Interbrand, a division of Omnicom, is a branding consultancy Interbrand was founded in 1974 as Novamark by John Murphy, a former employee of Dunlop, in Brand equity refers to the Marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the The following are the financial services companies in this list, ranked by this study for 2006:[8]

Rank Brand Brand value
(US$billion)		 Annual
change		 2005
Rank		 Country
of origin
11 Citigroup 21. Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been 46 7% 12 U.S.
14 American Express 19. The United States of America —commonly referred to as the American Express ( sometimes known as " AmEx " or " Amex " is a diversified global Financial services company headquartered in 64 6% 14 U.S.
21 Merrill Lynch 13. The United States of America —commonly referred to as the Merrill Lynch & Co Inc () is a global financial services firm 00 8% 25 U.S.
28 HSBC 11. The United States of America —commonly referred to as the HSBC Holdings plc ( (,,,) is a Public limited company incorporated in England and Wales, headquartered in London. 62 11% 29 U.K.
33 J.P. Morgan 10. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located John Pierpont Morgan ( April 17, 1837 &ndash March 31, 1913) was an American financier banker and art collector who 21 8% 34 U.S.
36 Morgan Stanley 9. The United States of America —commonly referred to as the Morgan Stanley ( is a global Financial services provider headquartered in New York City New York United States 76 0% 33 U.S.
37 Goldman Sachs 9. The United States of America —commonly referred to as the The Goldman Sachs Group Inc, or simply Goldman Sachs ( is a large global Bank holding company that engages in Investment banking securities 64 13% 37 U.S.
42 UBS 8. The United States of America —commonly referred to as the UBS AG ( SWX: UBSN) is a diversified global financial services company with its main headquarters in Basel & Zürich, Switzerland 73 15% 44 Switzerland
87 ING 3. Switzerland (English pronunciation; Schweiz Swiss German: Schwyz or Schwiiz Suisse Svizzera Svizra officially the Swiss Confederation ING Groep NV () (known as ING Group) is a Financial institution of Dutch origin offering Banking Insurance and 47 9% 87 Netherlands

Glossary

Glossary for reading financial services rports:

[9]

Acronyms

See also

Notes

  1. ^ Contrary Investor
  2. ^ http://www.investorwords.com/5946/private_banking.html investorwords. The operating leverage is a measure of how revenue growth translates into growth in Operating income. In financial and business Accounting, earnings before interest and taxes (EBIT is a measure of a firm's profitability that excludes interest and income tax expenses Gross income is commonly defined as the amount of a Company 's or a Person 's income before all deductions or any taxpayer’s income except that which is specifically The term write-off (or write-down describes a reduction in recognized value Net Interest Margin ( NIM) is a measurement of the difference between the Interest income generated by banks or other financial institutions and the amount of interest Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives B anking F inancial S ervices and I nsurance (also known as BFSI) is an industry name The European Financial Services Roundtable (EFSR is a European organization located in Brussels, Belgium, of financial service companies to provide a voice on policies A financial analyst (or securities analyst, research analyst, equity analyst, investment analyst) is a person who works with Financial analysis In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds Financialization is a relatively new term used to discuss the emergence of a new form of Capitalism in which financial leverage and exotic instruments tends to override The government sponsored enterprises (GSEs are a group of Financial services corporations created by the United States Congress. The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic Financial analysis of an organization is misleading when it is used to misrepresent the organization its situation or its prospects Thomson Financial 's standard league tables are rankings of Investment Banks in terms of the dollar volume of deals they work on com
  3. ^ Euromoney
  4. ^ Barclays Global Investors
  5. ^ Prudential: Securities Processing Primer
  6. ^ "Watchdog warns of criminal gangs inside banks", Guardian. Retrieved on 2007-11-30. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 1700 - Battle of Narva — A Swedish army of 8500 men under Charles XII defeats  
  7. ^ The Opportunity: Small Global Market Share, Page 11, from the Sanford C. Bernstein & Co. Strategic Decisions Conference - 6/02/04
  8. ^ BusinessWeek/Interbrand 2006 Global Brand Survey
  9. ^ Guide: Financial terminology from Annuities to to Zero-coupon bonds
  10. ^ CardReport: Charge-off
  11. ^ The Street

References

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