Checking facts and ideas. Decide if the statements are true or false.

1. The bank lends the deposited money to customers who need capital.

2. Nowadays banks handle huge amount of money deposited in them.

3. The bank borrows the funds from the public for the specific purpose lending them again to the customers.

4. New banks services are proved to be constantly coming into life.

5. Retail banking involves business with other large banks.

6. Cash Ratio is the “bank’s insurance”.

 

Explain the difference between current and deposit accounts.

Banker`s services cover enormous activities today. A full list would include:

· Current account services

They are extended to anyone whom banks regard as reliable. A new depositor should be recommended by his employer or should present a reference. If this proves satisfactory the bank will accept a deposit from him which be entered in his current account. A cheque book will then be issued free of charge. Once the customer has received his cheque book he may use the cheques to order the banker to pay out sums of money from his current account. Money is being paid into and paid out of the account so often the customer finds convenient.

· Deposit account services

Companies and individuals can deposit cash resources that are not needed at present. They can withdraw the money either any day they need it or after a certain period in case of time deposits.

· Savings account services

It enables small savers to put money away for particular purposes, for example for holidays.

· Other services

Services in foreign trade payments

Granting loans

Investment management services

Economic information

Banker’s credit cards

Foreign exchange¹

Foreign exchange transaction²

Discounting bills of exchange³

Cash dispensers and automated teller machines⁴

Safe custody⁵

And many others

 

Words you need:

Foreign exchange¹- іноземна валюта

Foreign exchange transaction² - угода з іноземною валютою

Discounting bills of exchange³ - облік векселів

Cash dispensers and automated teller machines⁴ - автоматична касова машина та автомат з виплати готівки

Safe custody⁵ - зберігання банком цінностей клієнта

 

Divide the text into the logical groups and give them titles.

 

Single out the main points of the text. Use the following opening phrases.

The text looks at (the problem of…)

The text deals with the issue of..

It is clear from the text that…

Among other things the text raises the issue of…

The problem of…is of great importance

One of the main points to be singled out is

Great importance is also attached to…

In this connection, I’d like to say…

It further says that…

I find the question of…very important because…

We shouldn’t forget that…

I think that…should be mentioned here as a very important…mechanism of…

 

17. Give extensive answers to these discussion questions:

1. What is the nature of banking? How do banks earn their living?

2. What services do banks offer to individuals/corporations?

3. What kinds of banks exist? Describe their activities.

4. How can an individual get a bank loan?

5. What does the stability of a bank depend on?

6. What are the functions of central banks?

7. In what way do the discount houses earn money?

8. How is banking developing these days?

9. How do banks obtain funds?

10. Describe the banking system of Ukraine.

 

18. Prepare a short talk on the following:

a) Explain how banks earn profit, how they act as financial inter­mediaries, how they create new money.

b) Have you ever turned to a bank either as a depositor or a borrower? Have you ever done business with banks offering intermediation services?

c) Do you have a credit card or a debit card? What was the most recent purchase you made with your cards? Describe the sequence of connected events with the use of the cards.

d) If you have a bank account and heard that your bank was not honouring its obligations towards depositors, what would you do about your account?

Grammar exercises

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 travellers' 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 loan 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:

bench лавка

establishment установа

negotiate вести переговори

repayable який належить оплатити

bill of exchange переводний вексель

promissory note простий вексель

apart from окрім

link up зв’язувати

financial standing фінансове становище

to issue a letter of credit виставляти/виписувати акредитив

draft тратта, переводний вексель

trustee попечитель

guarantor гарант

leasing and factoring operations операції по лізингу и факторингу

interbank market межбанківський ринок

vice versa навпаки

to smooth out imbalances згладжувати, усувати диспропорції

maturity час погашення зобов’язання; час розрахунку

LIBOR ставка пропозиції (продавця) на лондонському межбанківському ринку депозитів

 

Read the text.

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 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 co-operation 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.

depositors, what would you do about your account?