Float

RECENT NEWS
The Australian  May 27  Comment 
Pepper has flagged a potential float of the global non-bank lender that would be pitched as a growth stock with offshore exposure
The Australian  May 25  Comment 
Life insurance distributor Greenstone has lodged a float prospectus to raise between $809.7m and $984.2m.
The Australian  May 25  Comment 
Financial Times  May 21  Comment 
Car hire group seeking to raise €475m in bid to reduce debt
The Economic Times  May 18  Comment 
Centre will soon float tenders for setting up sewerage infrastructure for 68 urban local bodies situated along the banks of River Ganga.
Financial Times  May 17  Comment 
MySQUAR hopes to cash in on Myanmar’s economic revival
newratings.com  May 15  Comment 
MUNICH (dpa-AFX) - German chemical group Wacker Chemie AG's (WKCMY.PK, WKCMF.PK) subsidiary Siltronic AG is preparing for an Initial Public Offering and a subsequent listing on the Frankfurt Stock Exchange. The listing is expected to take...
The Australian  May 15  Comment 
The modulated housing company, Gateway Lifestyle, will raise $381.5m ahead of it listing on the stock exchange next month.
Insurance Journal  May 14  Comment 
A fire at an Indianapolis warehouse where floats are stored for the 500 Festival Parade has heavily damaged one of those floats. Indianapolis Fire Department spokeswoman Rita Reith says a fire on the city’s south side caused an estimated...
The Economic Times  May 13  Comment 
The JV, with Bose & Chakraborty as equity partners, will focus on creating intellectual properties for brands & explore rural youth marketing.
Financial Times  May 12  Comment 
First publicly traded such group in the UK




 
TOP CONTRIBUTORS

The float refers to profits earned by a financial institution on assets that do not belong to that institution, but are held in custody for a client or other purpose. The float is an important source of profitability in a number of industries, such as:

  • Retail banking: In the case of retail banking, customers' checking accounts often earn little or no interest. However, the bank can collectively invest the money its customers have deposited in higher-yielding investments such as mortgages. The bank then earns the difference between the interest paid on the mortgage and the interest paid to customers with deposits in checking accounts.
  • Insurance: The float refers to the time period between when premiums are collected and claims paid out. During this time, insurers invest the premiums and generate returns. Legendary investor Warren Buffett of Berkshire Hathaway (BRK) was originally attracted to the insurance business since he could use low-cost float to earn higher returns on his successful investments.
  • Retail Brokerage: In recent years, stock brokerage firms (particularly E*TRADE Financial (ETFC)) have made money by investing cash left in client trading accounts and earning a float on these assets.

===Ways that financial institutions earn , interest rates rise when loans are longer-term, to compensate the lender for tying up money and making it inaccessible (this difference in interest rates is known as the Yield Curve. For example, a savings account that allows you to withdraw money at any time would pay a small interest rate, but a CD that leaves you unable to access your money for a period of months or years would pay a higher rate. While an individual bank customer might add or withdraw money unpredictably, the bank as a whole can generally count on having stable deposits across all its customers. This allows the bank to pay short-term interest on checking accounts, but then earn higher, long-term interest on these deposits by lending it out for long-term loans (such as mortgages, which typically last 30 years).

  • Assuming risk. By pursuing riskier investments, a financial institution can earn greater returns on assets on deposit.
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