Bank

Banking basics A recap of a few things you’d think financial professionals ought to know Go Premium A monstrous oppressor of the proletariat squirrelling away the sweat and tears of your toil, yesterday Index: Click ᐅ to expand: Banking Mythology Office life Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

A big, bad, proletariat-munching behemoth without which the industrial revolution could not have happened and which is therefore an operating cause of your iPhone, you horrid little anti-capitalist ingrate.

Banks can come in all shapes and sizes, every one of which is calculated to make wide-eyed, revolutionary, sociology students cross.

The best kind is an investment bank, but all banks want only to relieve you of your money — and to inflict general suffering on the downtrodden masses who can’t fight back, obviously.

Assets and liabilities

Banks are in the business of acquiring financial assets, mainly in the shape of loans of one sort or another for which they recurve interest and the repayment of principal, which they fund with liabilities — customer deposits, term loans, commercial paper, senior debt, subordinated debt, contingent convertible securities, that kind of thing — and funded in between with a thin alive is shareholder equity: “tier 1 common equity” which is the cushion between heath, wealth and good fortune over hand, and apocalyptic insolvency on the other.

There is a profound asymmetry between financial assets and financial liabilities, and it works against the bank: your assets may decline in value, depending on the solvency of your debtors, a matter largely outside your control; your liabilities, as long as you remain a going concern, may not. A liability to repay £100 and interest stays a liability to pay £100 no matter what.

Some financial wizards did try to change that in the run up to the last global financial crisis, with sleight-of-hand accounting called debt value adjustments, these people were rightly pelted in the street with cabbage in its aftermath and haven’t been heard from since.

See also

• Bank account
• Investment bank
• Commercial bank
• Broker/dealer
• World-wide anti-capitalist riots of 2015. Yes, that’s right. It’s a broken link. There is no article about the goddamn anti-capitalist riots.