The U.K. Banking Sector: Supervision and Structure

Abstract

Although banks offer a range of services and differ in the emphasis given to each type of business, they share the common feature of attracting deposits and using these funds to make profitable loans. A snapshot of this business is contained in a bank’s balance-sheet. The balance-sheet is merely a statement showing the sources of funds to the bank as liabilities and uses to which they are put as assets. Liabilities consist of deposits made with the bank and, to a smaller degree, of capital subscribed by the bank’s owners and reserves accumulated out of past profits. The assets are normally divided into liquid assets, investments (in public-sector stock), advances (loans) and capital goods. Thus a ‘typical’ balance-sheet would be: