Definition of Universal Bank

As a consequence of the globalizing trend that persists in the economy In the world, important changes began to take place in banking at the universal level, that is, in the set of financial institutions corresponding to each economy.

A Bank that arises from the demands of a globalized economy

Then, before the requirements imposed by this globalized world, what has been called Universal Banking emerged, which is a institution that according to what the law General de Banks is authorized to carry out all those financial operations carried out by financial institutions specialized banks, such as commercial banks, mortgage banks, investment banks, money market funds, and leasing companies financial, among others.

Main operations carried out

Among the main operations that they are able to carry out are the following: financing from working capital, receipt of deposits, both at sight and fixed term, granting of consumer loans, granting of mortgage loans, issuance of mortgage securities, financing medium and long-term investment projects, when necessary, intervene in the capital market, carry out leasing operations financial, granting guarantees, opening letters of credit when it deems appropriate, acting as an intermediary in the exchange market and the sale to the public of titles or securities.

Proposed advantages

Meanwhile, this type of banking offers a series of considerable advantages over specialized banking because it will tend to stimulate efficiency and competitiveness through cost reduction, not only at the operations level but also in marketing, infrastructure, computing and human resources.

On the other hand, because it puts in favor of the clients the possibility that in the same institution find a wide range of products and services, difficult to find all together in the same place.

In addition, facilitates economic development, since it can channel a good amount of long-term financing resources, allowing the development of credit instruments that adjust to each economic need.

And two very important questions in this type of field, on the one hand, it offersUltimate flexibility for the institution in question in terms of adapting to changes in the macroeconomic and financial context and on the other hand, reduce liquidity risk that is unleashed by the insufficiency of long-term fund-raising to finance operations in the same period.

The relevance of banks in the economy

Banks are entities whose purpose is to safeguard the savings of their customers and channel them into various sectors that demand credit to carry out various economic activities that will have a positive impact on the development of the economy of a nation.
The business is to capture savings with an interest rate and lend it at a higher rate.
In other words, banks are very important and necessary economic institutions in the economic functioning of any nation.

Now, the aforementioned reason for lending money is what provides the banks with the highest profitability, however, it has a side risky for the financial system, to lend what they have given us as a safeguard, and of course, to be able to return it in a timely manner when the client requests it.

It is because of this situation that the activity of banks is specially regulated to guarantee confidence and transparency. Let's think about the catastrophe that means that the banks could not collect the borrowed money and for Therefore, the saver could not obtain when they want the savings that they left deposited there, a horror.

Unfortunately there have been real samples of this state of affairs in which the system collapses due to poor regulation and administration. Argentina, in 2001, had to implement a popularized method such as corralito when financial institutions fell because they could no longer support convertibility (one peso = one dollar). Savers had timely deposited dollars but when the crisis broke out and the corralito was imposed, the amount of money they could withdraw from the bank was limited. their accounts, and then directly the measure was expanded and aggravated when the client could not directly recover their dollars and had to file an amparo measure in the Justice.
Most of these resources ended favorably for the savers, but the banks returned Argentine pesos and not dollars, as all the affected savers had deposited at the time.

The activity of banks is certainly ancient, since the Middle Ages they have been accompanying the economic life of men and women. nations, of course that over the years and the consequent evolution they have been mutating and expanding their functions in relation to demands.