Who does not want to be a Banker?

The prime core activity for commercial banks is transformation. Transformation involves borrowing money from customers with surplus funds and lending money to other customers with a need for funds. Or to explain it differently: to trade money.

To borrow, or ‘buy’ money, the bank has to pay a price: interest. The bank then on-lends, or ‘sells’ the money for a higher interest. Under normal circumstances, long term interest rates are higher than short term interest rates.

Therefore banks have a simple strategy in transformation: borrow short and lend for long maturities. For many bank transformation is the main source of income, often up to approx 70% of total bank income.

Bankers are money traders wearing a nice suit, enjoy an expensive office, and make easy money. Who doesn’t want to be a Banker?

If you want to know more about banking, I invite you to do my Banking Fundamentals Course at Udemy.

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