Currency, Assets, Liabilities & EquityTransfers
You can receive currency transfers to Your accounts through:
SEPA-SCT, T2 (Target2), TIPS, Fedwire, Chips, KTT (Funds transfer through corresponding Banks and MT202) and many Instant Payment Systems
Securities through T2S, Clearstream, Euroclear, DTC
Settlements through RTGS, ACH/SEPA and
SWIFT MT 103/202, Swiftnet Instant, SWIFT gpi UETR, FX4Cash
How do Banks tranfer Funds?
- For a comprehensive view of Correspondent Banking Transfers please click here.
- For a comprehensive view of Instant Payment Systems please click here.
- For a comprehensive view of the RTGS System please click here.
The clearing process is a crucial step in the settlement of financial transactions, ensuring that the parties involved in a transaction are protected and that the transaction proceeds smoothly. Clearing involves the following steps:
Exchange of transaction information:
- The sending and receiving banks exchange transaction details, such as the amount, account numbers, and other relevant information-
- Netting of transactions: Clearing houses, such as the Automated Clearing House (ACH) in the United States, facilitate the process by acting as intermediaries between banks. They calculate the net amount owed by one bank to another, minimizing the amounts that change hands on a given day.
- Validation of funds: The clearing house ensures that funds are available for the transaction and records the transaction details
- Holding funds securely: Funds are held securely until the transaction is complete, and any discrepancies are investigated, with the clearing house acting as an intermediary
The settlement process occurs after the clearing process and involves the actual transfer of funds between banks. The main steps in the settlement process are:
- Reconciliation of records: Banks reconcile their records to determine the net amount owed by one bank to another
- Transfer of funds: Banks transfer funds between accounts held at central banks or other financial institutions to settle any outstanding balances
- Settlement confirmation: The settlement bank provides settlement confirmation to the merchant when a transaction has cleared, and funds become available
Payment Network and Intermediaries
Payment networks and intermediaries play a vital role in facilitating the clearing and settlement processes. Some examples of payment networks and intermediaries include:
- Clearing houses: Independent organisations, such as the ACH in the United States, that facilitate the clearing process by acting as intermediaries between banks
- Central Bank Sytems (RTGS): These gateways help authenticate and securely pass transaction data and funds among the parties involved in the transaction flow, such as banks
- Intermediary banks: These banks serve as middlemen between the issuing bank and the receiving bank, often in different countries, to facilitate international wire transfers
In summary, the clearing and settlement processes involve the exchange of transaction information, validation of funds, reconciliation of records, and the actual transfer of funds between banks. Payment networks and intermediaries, such as clearing houses, and intermediary banks or central banks, play a crucial role in facilitating these processes.
The clearing and settlement processes are subject to oversight by financial regulators. Regulators play an important role in ensuring that these processes are safe, sound, and efficient.
What can be transferred from Bank to Bank?
- Cash & Cash Equivalents: These are funds that can be accessed immediately or almost immediately. They include physical cash, deposits with other banks, and highly liquid securities like Treasury bills.
- Investments/Securities: These are financial instruments that the bank invests in to earn a return, such as government and corporate bonds, stocks, and other securities.
- Loans and Advances: These are the funds that a bank lends to its customers, and they generate interest income. They can include personal loans, mortgages, commercial loans, credit card balances, and overdrafts.
- Fixed Assets: These are physical properties owned by the bank, such as buildings, land, equipment, and furniture.
- Intangible Assets: These include non-physical assets like software, patents, trademarks, and goodwill.
- Other Assets: These can include accrued interest receivable, deferred tax assets, and derivative financial instruments among others.
- Deposits: These are funds that individuals and businesses keep in the bank. They include checking accounts, savings accounts, and time deposits. They are liabilities because the bank has an obligation to return these funds to the depositors on demand or at a specific maturity date.
- Borrowed Funds: These are funds that the bank borrows from other financial institutions, the central bank, or through issuing debt securities.
- Debt Securities: These are bonds or other forms of debt issued by the bank to raise funds. The bank is obligated to pay back the principal and interest to the bondholders.
- Other Liabilities: These include items like accrued expenses, accounts payable, deferred tax liabilities, provisions for loan losses, and derivative financial instruments.
- Subordinated Liabilities: These are debts that will only be paid after all other debts if the bank goes bankrupt.
- Common Stock: This is the equity that owners of the bank hold. They have voting rights and may receive dividends.
- Preferred Stock: This type of equity has a higher claim on earnings and assets than common stock but usually doesn't come with voting rights.
- Retained Earnings: These are the net earnings a bank has accumulated over the years and chosen to reinvest in the business rather than distribute as dividends.
- Treasury Stock: These are the bank's own shares that it has repurchased from the market.
- Other Comprehensive Income: These are gains and losses from various investments and derivatives that haven't been realized yet.
- Minority Interest: This is the part of the net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.