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 ¨ READ AND DISCUSS - English_for_Finance_and_Banking - Studbook
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English_for_Finance_and_Banking

¨ READ AND DISCUSS

 

1. a) Supply the articles where necessary.

    b) Write down 3-5 questions about the texts.

    c) Say a few words about services provided by commercial banks.

 

a) A bank was originally ... bench set up in the marketplace for ... exchange of money. In a commercial sense, a bank is ... establishment where money is received on deposit to be repaid on demand or at notice, as may be arranged, and where loans are negotiated, bills discounted, and general financial business transacted. The main functions of ... modern commercial bank are:

=    to receive money on current accounts repayable on demand, or on deposit accounts repayable subject to an agreed notice;

=    to lend money by granting ... loans and ... overdrafts or discounting bills of exchange and ... promissory notes.

Apart from these two chief functions – linking up lenders and borrowers of capital – the bank performs many other functions:

=    ... obtaining and giving information as to ... financial standing of customers:

=    transferring funds for... payments or... investments;

=    making foreign currency transactions;

=    issuing letters of credit, drafts and traveler’s cheques;

=    undertaking duties of ... agents, trustees and guarantors;

=    performing leasing and factoring operations and others.

A very important part of any efficient banking system is ... inter­bank market.

Some banks get more ... deposits than requests for loans, and vice versa. The interbank market smooths out these imbalances by providing ... way for … bank with too many deposits to pass them on to ... bank with too many losin requests. In London there are different interbank markets for different currencies and for deposits with different maturities. Of these, ... Eurodollar interbank market is particularly important, and LIBOR (the London interbank offered rate) is … key dollar rate for all the world's international borrowing and lending.

 

Words you may need:

sense – зміст, смисл

establishment – заклад  

on deposit – на депозит

on demand – за вимогою

negotiate – вести переговори

bill – вексель

repayable – який підлягає оплаті

bill of exchange – переказний вексель

promissory note – простий вексель   

apart from – окрім

link up – зв’язувати

financial standing – фінансовий стан

to issue a letter of credit – виставляти/виписувати акредитив

draft – тратта, переказний вексель

trustee – попечитель

guarantor – гарант

leasing and factoring operations – операції по лізингу та факторингу

interbank market – міжбанківський ринок

vice versa – навпаки

to smooth out imbalances – згладжувати диспропорції

maturity – термін погашення зобов’язання

LIBOR – ставка пропозиції (продавця) на лондонському міжбанківському ринку депозитів

 

2. a) Supply the articles where necessary.

    b) Write down 3-5 questions about the texts.

    c) Say a few words about services provided by commercial banks.

 

Bank Accounts

 

When money in placed in … bank it is said to be “deposited”.

The money may be put into ... account from which it can be drawn at any time, or into ... account which can only be drawn upon after certain notice has been given. In British banking, these types of accounts are known as current accounts and deposit accounts respectively. In ... USA, the corresponding terms are "demand deposits" and "time/or notice deposits".

A person uses a current account to provide … safe way of keeping his money, and having it easily available when he wishes to spend it.

Payments are made from current accounts, and money is withdrawn from them by means of cheques (... very small interest is paid on these accounts).

A deposit account is used for saving money, and … period of notice must be given before money can be withdrawn from a deposit account, especially when ... amount to be withdrawals is fairly big. A higher rate of interest is paid by the bank on money on deposit accounts compared with current ones. A cheque book is provided for the customer when he opens this account. The terms "cash deposits" and “savings deposits” are sometimes used to denote the deposits continually turned over in ... settlements of debts and those not held for current business, but as investments or savings.

 

Words you may need:

place – розміщувати, поміщати

respectively – відповідно

demand deposit – безстроковий вклад

available – доступний

time deposit – терміновий вклад

denote – позначати

turn over – обертатись

 

3.a) Supply the prepositions where necessary.

b) Write down 3-5 questions about the text.

 

The Nature of Banking

 

The nature ... banks can best be understood ... examining both their long-established functions and new emerging roles. The former include the provision of payment services and intermediation services. The latter include the merging ... investment and commercial banking activities. The banking firm is recognized as a major force … the financial markets. As intermediaries they collect the deposits of the household sector, held ... the form of demand and savings deposits, and recycle them ... real investment capital. They perform maturity transformation – lending long and borrowing short. Banks provide the real sector ... funds, the major source of financing for the industrial sector. Besides, banks are viewed now as evaluators of investment opportunities available ... both the primary and secondary markets. The bank's role is to screen potential projects, to determine expected return and risk ... the not-always-objective data presented ... the demanders of funds.

What differentiates banks from other financial intermediaries? First, banks issue liabilities that are media of exchange in that the transactions velocities of chequable deposits tend to be much higher than the transactions velocities of other assets. Second, banks differ ... other financial intermediaries with regard ... the nature of the assets they hold. While most of the assets held ... mutual funds are publicly traded, bank assets tend not to be  traded ... securities markets.

 

Words you may need:

nature – природа, характер

emerge з’являтись, виникати

the former/the latter – перший /останній з двох

savings deposit – ощадний вклад

to lend long – надавати довгострокові позики

to borrow short – отримувати короткострокові позики

real sector – реальний сектор

evaluator – оцінювач

screen – сортувати, проводити перевірку

expected return – очікувана прибутковість

to issue liabilities – видавати боргові зобов’язання

media of exchange – засоби обміну

velocity – швидкість

chequable deposit – депозит, який може вилучатись за допомогою чеків

publicly traded – ті, що продаються та купуються на фондовій біржі

4. a) Open the brackets putting the verbs in the correct form.

b) Say what you have learnt from the text about international banks.

 

Basic principles of commercial banking best (to demonstrate) in the case of international banks. These institutions are the dominant traders in the Euromarkets and the foreign exchange markets and are very active in some domestic credit and bond markets. The Eurocurrency market (to consist) of banks, commonly referred to as "Eurobanks", which accept deposits and ((to lend) in foreign currencies. Most of the banks active in the Eurocurrency market also (to trade) extensively in the foreign exchange markets. The Eurobanks concerned include some of the largest banks in the world.

Eurobanks are typically London branches of these large international banks and primarily (to engage) in intermediation in short-term deposits denominated in currencies other than Sterling. Eurosterling dealing (to take) place outside of British jurisdiction. The large American and Japanese banks (to dominate) the Eurocurrency business, but major British banks also (to be) very active throughout the 1980's. Some of the large world commercial banks also (to form) "consortium" banks as special purpose joint ventures set up to deal in the Eurocurrency market. From the parent bank's point of view, the Eurobank branch or consortium (to be) able to operate outside the range of domestic banking regulations and therefore (to achieve) considerable cost economies due to the absence of reserve requirements and other regulatory costs. International cooperation on capital adequacy standards (to begin) to erode this privileged position. As a result, the global financial intermediation activities of international banks are now increasingly subject to some form of international control. A further advantage of Eurobanking (to stem) from the scale of borrowing and lending in this market. This means that major economies of scale can be realized by banks. These factors explain why Eurocurrency deposit and lending rates fall within the equivalent domestic values. Thus the Eurosterling loan rate (to be) lower than the British domestic bank loan rate and the Eurosterling deposit rate (to be) higher than the British deposit rate. The resulting very narrow profit margin in the Eurocurrency market is only possible due to the transaction and regulatory cost savings achievable in this market compared with equivalent domestic markets.

 

 

 

5.Look through the text and name the facts which are new to you.

 

A crucial aspect of the development of a country’s domestic banking system and financial markets is the payment system, which is used by enterprises and individuals to discharge obligations incurred in a market economy. Payment systems are the foundations on which stable and efficient economy can be built. The principal objective of the payments system is to support the country’s economy. Moreover, the payment system is one of the first paces where financial difficulty fail to meet their payment obligations.

The payment system is the apparatus through which obligations resulting from economic activity are discharged by transfers of monetary value. Obligations can be discharged through the payment system using cash or deposits held in banks. In the case of payments made using bank deposits, it is necessary to use some form of payment instrument, such as a paper or electronic credit or debit payment, to move funds. For a debit payment, such as a check, the receiver of money (the payee) initiates an instruction to the bank holding the deposit of the sender of money (the payer), ordering the paying bank to pay. This is done by representing a check, which must be honoured by the payer, who is the customer of the paying bank, once the check is authenticated.

For a credit payment, such as a payment order, the party making the payment initiates an instruction to his bank to pay money to the intended receiver by initiating a payment order.

When using deposit money in banks to make payment, the process for discharging an obligation can be divided into two parts. The first part is clearing, the process by which payment information is conveyed between the payer and payee and between the banks holding the accounts of the two parties to the transactions. Once a payment is initiated, clearing should take place quickly and reliably in order to minimize financial risk as funds are being transferred. Commercial banks play an important role as intermediaries in the clearing process because they provide account services to the public.

The second part of the process for discharging an obligation using deposit money in banks is settlement in which the actual transfer of monetary value associated with the payments is made. Banks play a role in settlement because it is through the accounts held on their books that the transfer of monetary value occurs. Commercial banks settle for the non-bank public and sometimes for other banks with which they have correspondent account relationships.

The central bank, where all commercial  banks hold accounts, is often used by commercial banks as the settlement entity for interbank transfers.

Clearing and settling payments can be complex. Therefore, an efficient payment system requires a high degree of cooperation and coordination among banks, which usually occurs through a clearing house. A clearing house is a legal entity, owned and controlled jointly by its member banks. Its primary function is to coordinate the exchange and settlement of payments among its members.

The activities of the clearing house might be limited simply to coordinating the physical exchange of payments among banks, for example, by organizing efficient and speedy transportation of payment documents. Clearing houses may also provide processing services to their members, in which case they may operate fairly large data processing and data communications systems to process payment instructions. Payment systems face a number of risks, like liquidity risk, credit risk, cross-currency settlement risk and systemic risk.

Thus confidence in a payment system is crucial in a market oriented economy. In the long term each country is likely to need a safe and efficient payments system for households; legislation governing payments; and a sound financial sector, including financially and operationally sound banks.

 

Words you may need:

crucial – вирішальний, критичний

to discharge obligations – виконувати зобов’язання

payee – одержувач платежу

to initiate an instruction – давати вказівку

payer – платник

to honour the check – сплатити чек

payment order – платіжне доручення

convey – передавати

correspondent account – кореспондентський рахунок

systemic – системний

 

 

 

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