What is Commercial Banking

EU banks hold the largest share of 56% of the total global banking system, survey report of 2008/2009. The UK banking system has witnessed a substantial growth and change in recent years and its total assets have expanded rapidly since 1990. By accepting deposits and then loaning out money, banks are an integral part of the financial system because they essentially create money. UK banks make significant contributions to the economy of UK. It has witnessed a substantial growth and change in recent years and its total assets have expanded rapidly since 1990. Traditionally the banking sector was dominated by the big four banks, Barclays, Lloyds and NatWest. Now the banking system of UK has expanded and has provided vast services to its customers.

Despite the substantial structural changes and the significant increase of competition in the UK financial services sector in recent years, the UK banking sector remains relatively stable. Following the UK Building Societies Act 1986 a number of building societies converted into banks, especially between 1994 and 1997. A building society is a financial institution which offers banking and other financial services, especially mortgage lending, to its members. This act opened the way for competition between building societies and commercial banks by introducing the transfer of a building society into an investor-owned commercial company.

Loans mean that money can flow to where it is going to do the most good. Though Building Society banks are providing loans to its customers however A Mortgage bank specializes in originating or servicing mortgage loans to its customers and mortgage bankers can be very competitive in mortgage lending as they specialize in only lending.

In the past, commercial banks have not been greatly interested in real estate loans and placed only a small percentage of their assets in mortgages. Thus the banking services provided to the communities was very low as it provided minimal benefits to its customers. However, due to changes in banking laws and policies, commercial banks are now increasingly active in home financing. Changes in banking laws have allowed commercial banks to make home mortgage loans on a more liberal basis than ever before. Now the modern commercial banks in UK do investing, lending, brokerage, real estate, borrowing, advisory and many functions on a cosmic scale and in a very systematic manner giving the common people greater prospects in the community.

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