Guide to Analysing Companies

Satellite banking
A way of organising a bank’s branch network so that it is
clustered around larger branches. Smaller branches provide a
limited range of services; big, complicated business is referred to
the larger branches.
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Savings and loan association
A main provider of mortgages to home owners in the United
States. The savings and loan associations (s&ls), often called
thrifts, lend long-term and often at a fixed rate of interest.
Their borrowing (that is, their deposits) became more short-
term in the 1980s as US financial markets were deregulated. In
return for being allowed to enter markets previously reserved
for banks, s&ls had to give up some of the advantages they
enjoyed over mortgages. Having to base their business on float-
ing rates of interest caused great difficulty for many s&ls.
Poor management and corruption were also to blame. Hun-
dreds of thrifts up and down the country became insolvent and
were forced to close their doors. The Federal Savings and Loans
Insurance Corporation, a government agency, was unable to
cover the claims of savers and also failed. The government was
left with no alternative but to step in with billions of dollars in
new money. These days, s&ls offer their customers retail prod-
ucts and services like any other bank and remain a potent force
in the country’s financial system.
Savings bank
A bank whose raison d’etre is (or at least was) the gathering of
deposits from small savers. Such banks limit the withdrawal
of deposits on demand. Traditionally, savings banks have had
little or nothing to do with businesses, and provide no money
transmission services. In many countries savings banks have
strong local roots, either as national banks with a regional struc-
ture or as separate regional institutions. Indeed, in parts of
Europe many still enjoy benefits because of their regional clout.
On both sides of the Atlantic, savings banks are often set up as
mutual institutions (and are therefore owned by their deposi-
tors) and not as limited companies. In return for greater access
to the capital markets, savings banks have become more
like their commercial cousins in recent years.