Essential Banking Operations and Financial Instruments

Asset Operations

Includes: credit, loan, bill of exchange, bank guarantee, leasing, renting, factoring, and confirming.

Asset Definition

These are operations carried out by financial institutions by making financial resources available to their customers, who are obliged, on expiry of the agreed term, to repay the amounts received plus the interest and commissions agreed in the contract.

Liability Operations

Includes: current account, savings account, fixed-term deposit, and pension plan.

Liability Definition

These are operations carried out by banks by attracting financial resources from their clients, with the obligation to return the amounts received in exchange for remuneration known as interest.

Banking Definitions

Current Account

A deposit that allows the financial institution to hold money with the obligation to return it immediately when the customer requests it.

IBAN

The International Bank Account Number is the international code that identifies a bank account.

Fixed-Term Deposit

The money provided to the institution is not subjected to fluctuations and is usually remunerated at a fixed interest rate, although it may also be remunerated in kind.

Guarantees

Personal Guarantees

This is called a personal guarantee because it does not take into account any specific asset that acts as a payment guarantee.

Real Guarantees

These are transactions secured, in addition to the assets of the client and guarantors, with a preferential right over a specific asset.

Loan and Interest Terms

Bank Loan

A financial operation in which a financial institution delivers to the customer a fixed amount of money at the beginning of the operation.

Fixed vs. Variable Interest Rates

• Fixed: The rate remains constant throughout the life of the loan.
• Variable: The rate varies throughout the loan, adapting to the circumstances of the money market.

Contractual Services

Bank Guarantee

A contract by which a financial institution undertakes to be liable for the economic obligations contracted by another towards a third party, in the event that the customer fails to do so.

Leasing

A contract whose purpose is to assign the use of immovable property acquired by a financial institution for the purpose of renting it to a future user.

Renting

A contract for the assignment of the use of goods, which includes the necessary services for the correct operation and conservation of the goods assigned.

Factoring

Consists of the assignment of a company's trade credits to a financial institution to take care of their collection.

Confirming

The opposite of factoring.

Trade Discount

A contract in which a financial institution advances to its customer the amount of an unmatured loan owed by a third party, minus the corresponding interest, expenses, and commissions.

Additional Services and Savings

Banking Services

Includes: electronic banking, direct debits, transfers, safe deposit box rental, and foreign exchange operations.

Pension Plan

Long-term savings instruments aimed at supplementing the social security retirement pension.

Neutral Operations

Includes: bank transfer, taking effects for your discount, and currency collected.