Britain: An official handbook > 1977

360 BRITAIN 1977: AN OFFICIAL HANDBOOK
bank notes. The note issue is fiduciary, that is to say, it is no longer backed by
gold but by government and other securities. The Scottish clearing and
Northern Ireland banks have limited rights to issue notes; these issues, apart
from an amount specified by legislation for each bank, must be fully covered
by holdings of Bank of England notes. The provision of coin for circulation
is the responsibility of the Royal Mint, a government department.
The Deposit The primary business of the deposit banks is the receipt, transfer and encash-
Banks ment of deposits. The principal deposit banks are the six London clearing
banks, three Scottish clearing banks and two Northern Ireland banks. Mergers
have resulted in the formation of six banking groups, four based in London
and two in Scotland. The two Northern Ireland banks are owned by London
clearing banks, but two groups of banks based in the Irish Republic also
operate in Northern Ireland.
In April 1976 sterling sight and time deposits with these banks from non¬
bank customers amounted to £24,700 million and accounted for over 70
per cent of the total of such deposits with all banks in Britain, that is including
the accepting houses, overseas banks and other British banks. The deposit
banks provide full banking services throughout Britain, and operate through
some 14,000 branches. Several of them have interests in British overseas and
Commonwealth banks, and in other banks which have been formed specially
to compete in international markets. They have also acquired substantial
interests in hire-purchase finance houses, and some have set up their own
unit trusts.
Membership of the London Bankers’ Clearing House, which has consisted
of the London clearing banks together with the Bank of England, was
extended towards the end of 1975 when the Co-operative Bank and the
Central Trustee Savings Bank also became members. In 1975 cheques,
drafts, bills and bankers’ effects passing through the interbank debit clearing
system averaged in value nearly £I49»^55 million monthly, while the average
monthly value of the credit transfer clearing was over £1,840 million.
Current account balances with the deposit banks are repayable on demand
and no interest is paid on them, but on deposit account balances interest is
paid at a rate below individual banks’ base rates. The deposit banks’ more
liquid assets consist of cash, balances at the Bank of England, money at call
(mainly loans to discount houses), and their holdings of Treasury and com¬
mercial bills. The banks also hold a proportion of their assets as portfolio
(mainly British Government securities) or trade investments.
The banks’ profits are largely earned through their advances to customers
partly in the form of overdrafts and partly in the form of loans (with or
without collateral security). In April 1976 advances by the London clearing
banks amounted to about 60 per cent of their total deposits.
The bank giro, a credit transfer scheme, and the direct debiting system, by
which a creditor with the prior approval of the debtor may claim money due
to him direct from the latter’s banking account, have helped to improve the
money transmission services. Some banks have automatic cash dispensing
machines in operation. Credit cards are in widespread use for the settlement
of accounts in retail shops; and cheque cards enable the card holder to cash
a cheque up to £30 at any office of the major British and Irish banks, and at
offices of many banks overseas.
National Giro
The Post Office National Giro, which was introduced in 1968 to provide a
low-cost current account banking and money transfer service, is operated