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SPECIALIZED BANK SERVICES

SPECIALIZED BANK SERVICES. 9. 9.1 International Banking 9.2 Insurance and Brokerage 9.3 Cash Management 9.4 Trusts. Lesson 9.1 INTERNATIONAL BANKING. GOALS. Identify three types of financial institutions engaged in international banking

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SPECIALIZED BANK SERVICES

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  1. SPECIALIZED BANK SERVICES 9 9.1 International Banking 9.2 Insurance and Brokerage 9.3 Cash Management 9.4 Trusts

  2. Lesson 9.1INTERNATIONAL BANKING GOALS Identify three types of financial institutions engaged in international banking Describe international services offered by banks

  3. STRUCTURE OF INTERNATIONAL SERVICES • Foreign banks • U.S.-based international banking • Other types of international operations • Special considerations • Financial risk • Currency risk • Country risk

  4. INTERNATIONAL SERVICES • Trade financing • Letters of credit • Drafts and wires • International collections • Foreign currency exchange • Trade consulting • U.S. export-import (Ex-Im) bank • Overseas private investment corporation (OPIC) • Small business administration (SBA)

  5. Lesson 9.2INSURANCE AND BROKERAGE GOALS Explain the effects of the Gramm-Leach-Bliley Act of 1999 List typical insurance and brokerage products available from financial institutions

  6. A NEW ERA • The old world: Glass-Steagall Act • The new world: Gramm-Leach-Bliley ACT (GLBA) • Limits and regulation

  7. PERSONAL INSURANCE PRODUCTS • Auto insurance • Credit insurance • Disability insurance • Life insurance • Health insurance • Homeowner’s insurance • Mortgage disability insurance • Title insurance

  8. BUSINESS INSURANCE • Commercial liability • Short-term disability • Long-term disability • Health insurance • Officers’ liability • Property • Workers’ compensation

  9. BROKERAGE SERVICES • Brokerage refers to bringing together parties interested in making a transaction, such as buying and selling shares of stock. • A broker charges a fee to execute the transaction. • Banks now offer full investment services.

  10. Lesson 9.3CASH MANAGEMENT GOALS Explain why banks are in a good position to offer cash management services List several cash management services banks perform for businesses

  11. SYSTEM IN PLACE FOR CASH MANAGEMENT • Every business needs to disburse and collect cash to complete business transactions. • Banks are in a good position to provide cash management services to businesses for a number of reasons. • Experience • Business knowledge • Technology • Industry expertise

  12. CASH MANAGEMENT • Accounting services • Bank collection services • Information services • Credit card services • Capital services

  13. ACCOUNTING SERVICES • Payroll • Accounts payable • Accounts receivable

  14. BANK COLLECTION SERVICES • Deposit service • Lockbox service • Zero-balance accounts • Automated Clearing House (ACH) Network

  15. INFORMATION SERVICES • Electronic Data Interchange (EDI) • Computer-to-computer exchange of business information • Banks can advise and provide services

  16. CREDIT CARD SERVICES • Credit card processing • Stored-value card • Credit analysis

  17. CAPITAL SERVICES • Capital investments • Financing • Factoring

  18. Lesson 9.4TRUSTS GOALS Explain what trust services are Identify important types of trust services banks provide

  19. WHAT ARE TRUST SERVICES? • A trust is an arrangement by which one party holds property on behalf of another party for certain defined purposes. • The donor, or settlor, is the person who creates a trust. • The beneficiary is the person for whose benefit the property is held. • Corpus, or res, refers to the property that is held.

  20. TRUST SERVICE PRODUCTS • Retirement planning • Estate planning • Estate settlement • Testamentary trust • Charitable remainder trust • Living trust

  21. RETIREMENT PLANNING • IRA • 401(k) plan • Variable annuity

  22. ESTATE PLANNING • Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. • An estate is the total property, real and personal, that an individual owns. • The cornerstone of any estate plan is a will, a document by which the individual gives instructions as to what is to happen upon his or her death in regard to property and remains. • Probate is a court proceeding that settles an estate’s final debts and formally passes legal title to property from the decedent to his or her heirs.

  23. ESTATE SETTLEMENT • Identifying and valuing the estate assets • Paying creditors, estate expenses, and taxes • Preparing and filing the necessary tax documents with federal and/or state authorities • Distributing assets to beneficiaries

  24. TESTAMENTARY TRUST • Testamentary trusts are established by a will and take effect at the donor’s death. • They receive the assets of the estate to hold and manage for the benefit of the heirs.

  25. CHARITABLE REMAINDER TRUST A charitable remainder trust (CRT) is an irrevocable trust designed to convert the highly appreciated assets of a trustor into a lifetime income stream without generating estate and capital gains taxes.

  26. LIVING TRUST A living trust is a legal document that provides an expedient way to transfer property at a person’s death.

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