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Money matters: 5 different types of banks and the services you can expect

Know where to put your hard-earned cash
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Whether you are an entrepreneur, a tycoon or an employee, you definitely must have had an encounter with a bank. After all, it is a good place for you to safe-keep your funds.

Unknown to many, banks are classified into three tiers based on their assets, and can be further classified into six categories based on their functions and services.

Tier 1 is composed of universal and commercial banks--the banks with the biggest assets. Tier 2 is composed of thrift banks or those with medium-sized assets, and tier 3 that is composed of rural and cooperative banks.

Universal banks offer the widest variety of services among all financial institutions in the Philippines today. In addition, only banks under this category can engage in the functions of an investment house such as underwriting. Universal banks can also invest in equities of non-allied undertakings.

Example: Land Bank of the Philippines, Banco de Oro, Bank of the Philippine Islands, Chinabank, Hong Kong Shanghai Banking Corporation, Union Bank of the Philippines

Commercial banks offer the same variety of banking services offered by a universal bank. However, it cannot engage in underwriting and other functions of an investment house.

Example: Asia United Bank, Bank of Commerce, East West Bank, Export and Industry Bank, Philippine Bank of Communications, Philippine Veterans Bank

thrift bank accumulates the savings of its depositors and invests it. Most thrift banks are known to provide short-term working capital, and medium- and long-term financing to businesses engaged in agriculture, services, industry, housing and allied services, especially to small and medium enterprises.

Example: Robinsons Savings Bank

Rural banks are commonly found in far-flung areas that cannot be reached by bigger banking institutions. These privately-owned banks provide basic financial services to the small but growing economies in the countryside. More often than not, the rural banks are the ones helping farmers through the stages of production--from providing loans for inputs and irrigation to harvest.

Example: One Network Bank

Cooperative banks are similar in nature to rural banks. It is only differentiated by it’s ownership as cooperative banks are owned by cooperatives or a federation of cooperatives.

Example: Cooperative Bank of Iloilo

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