The banking industry
(Reading)
Read the text below and write short headings (one or two words) for each paragraph.

Types of banking

1…………………………………………..
Commercial or retail banks are businesses that trade in money. They receive and hold deposits, pay money according to customers’ instructions, lend money, offer investment advice, exchange foreign currencies, and so on. They make a profit from difference (known as spread or margin) between the interest rates they pay to lenders or depositors and those they charge to borrowers. Banks also create credit because the money they lend from the deposits is generally spent (either on goods or services or to settle debts), and in this way transferred to another bank account – often by way of a bank transferee or a cheque (check) rather than they use of notes or coins – from where it can be lend to another borrower, and so on. When lending money, bankers have to find a balance between yield and risk and between liquidity a different maturities.
2………………………………………………
Merchant banks in Britain raise funds for industry on the various financial markets, finance international trade, issuer and underwrite securities, deal with take overs and mergers, and issue government bonds. They also generally offer stockbroking and portfolio management services to reach corporate and individual clients. Investment banks in the USA are similar, but they can only act as intermediaries offering advisory service, and do not offer loans themselves. Investment banks make their profits from the fees and commissions they charge for their services.
3……………………………………………..
In the USA, the Glass-Steagall act of 1944 enforced a strict separation between commercial banks and investment banks or stockbroking firms. Eat the distinction between commercial and investment banking has become less clear in recent years. Deregulation in the USA and Britain is leading to the creation of “financial supermarkets”: conglomerates combining the services previously offered by banks, stockbrokers, insurance companies, and so on. In some European countries» notable Germany, Austria and Switzerland” they have always been universal banks combining deposit and loan banking with share and bond dealing and investment services.
4………………………………………………
A country’ minimum interest rate is usually fixed by the central bank this is the discount rate, at which the central bank maces secured loans to commercial banks. Banks lend to blue cheap borrowers “very safe large companies” at the base rate or the prime rate; all other borrowers pay more, depending on their credit standing (or credit rating, or credit worthiness): the lenders estimation of their present and future solvency borrowers can usually get a lower interest rate if the loan is secured or guaranteed by some kind of asset known as collateral.
5……………………………………………….
In most financial centers, there also branches of lots of foreign banks, largely doing Eurocurrency business a Eurocurrency is any currency had outside its country of origin. The first significant Eurocurrency market was for USA dollars in Europe, but the name is now used for foreign currencies held anywhere in the world (egg. Yen in the USA, DM in Japan). Since the USA dollars is the world’s most important trading currency – and because the USA has for many years had a huge trade deficit – there is a market of many billions of Eurodollars, including the oil exporting countries “Petrodollars”. Although a central bank can determine the minimum lending rate for its national currency it has no control over foreign currencies. Furthermore, banks are not obliged to deposit any of their Eurocurrency assets at zero percent interest with the central bank, which means that they can usually offer better rates to borrowers and depositors than in the home country.





1a Vocabulary
Match up these terms with the definition below.
Cash card cash dispenser credit card home banking loan mortgage overdraft standing order current account (GB) or checking account (US) deposit account (GB) or time or notice account (US)

1. an arrangement by which a customer can withdraw more from a bank account than has been deposited in it, up to an agreed limit; interest on the debt is calculated daily.
2. a card which guarantees payment of goods and services purchased by the cardholder, who pays back the bank or finance company at a later date
3. a computerized machine that allows bank customers to withdraw money, check, their balance and so on
4. a fixed sum of money on which interest is paid, lent for a fixed period, and usually for a specific purpose
5. an instruction to a bank to pay fixed sums of money to certain people or organizations at stated times
6. a loan, usually to buy property, which serves as a security for the loan
7. a plastic card issued to bank customers for use in cash dispensers
8. doing banking transactions by telephone or from one’s own personal computer, linked to the bank via a network
9. one that generally pays little or no interest, but allows the holder to withdraw his or her cash without any restrictions
10. one that pays interest, but usually cannot be used for paying chouse (GB) or checks (US), and on which notice is often required to withdraw money.


1b Discussion
1 Which of the banking facilities listed I 1a do you use?
2 What other services do commercial banks offer in your country?
3 What changes have there been in personal banking recently?
4 What further changes do you foresee in the future?


2b Comprehension
Which the following there paragraphs most accurately and concisely summarizes the text, and what is wrong with the others?

First summary:
Commercial banks hold customers’ deposits and make loans. Investment banks raise funds for industry. Deregulation in Britain and the US is leading to the creation of financial conglomerates similar to the universal banks that have always existed I German-speaking countries. A countries’ minimum interest rate is usually fixed; banks charge progressively higher rates to less secure borrowers. Many banks also do Eurocurrency business – lending foreign currencies, notably dollars, at lower rate than in the currencies’ home countries.

Second summary:
Commercial banks hold deposits and make loans. Merchants and investment banks arrange security issues and offer other investment services. Yet the traditional distinction between commercial and investment banks is now breaking down. Domestic interest rates are fixed by central banks. Many banks also have branches abroad that do Eurocurrencies business, making loans in other European currencies.



Third summary:
Commercial banks receive deposits, lend money, and provide other services. Merchant and investment banks lend money to industry. British and American banks are now joining together in conglomerates. The interest rates that banks charge depend on the borrowers’ creditworthiness. European banks also do a lot of Eurodollar and petrodollar business.


Translation:
Bancile comerciale detin controlul asupra depozitelor clientilor si ofera imprumuturi.Bancile de investitii maresc fondurile pentru industrie. Neregulele din Marea Britanie si SUA duc la crearea conglomeratelor financiare, asemanator cu bancile universale care au existat intotdeauna in tarile vorbitoare in limba germana. Dobinda minima a unei tari este de obicei fixa; bancile taxeaza dobinda progresiv creschinda pentru imprumuturile mai putin sigure. Multe banci conduc afaceri in valuta Euro-imprumutind valuta straina, in special dolari, la dobinzi mai mici decit in tarile de provenienta a valutei;

Bancile comerciale accepta depozita si dau imprumuturi. Comerciantul si bancile de investitii aranjeaza probleme de securitate si ofera alte servicii de investitii. Diferenta traditionala dintre bancile comerciale si bancile de investitii se descompune. Dobinzile din interiorul tarii sunt determinate de bancile centrale. Multe banci de asemenea au filiale prin strainatate, care conduc afaceri in valuta Euro oferind imprumturi in alte valute europene.

Bancile comerciale primesc depozite, imprumuta bani si presteaza alte servicii. Bancile comerciale si de investitii imprumuta bani in industrie. Bancile engleze si americane se unesc in conglomerate. Dobinzele pe care le impugn bancile depind de bonitatea celui care imprumuta banii. Bancile europene de asemenea conduc foarte multe afaceri euro-dollar si petrodollar.
2c Vocabulary

Find the words or expressions in the text 2a which the following.

1 to place money in a bank; or money placed in a bank
2 the money used in countries other than one’s own
3 how much money a loan pays, expressed as a percentage
4 available cash, and how easily other assets can be turned into cash
5 the date when a loan becomes repayable
6 to guarantee to buy all the new shares that a company issues, if they can not be sold to the public
7 when a company buys or acquires another one
8 when a company combines with another one
9 buying and selling stocks or shares for clients
10 taking care of all a client’s investments
11 the ending or relaxing of legal restrictions
12 a group of companies, operating in different fields, that have joined together
13 a company considered to be without risk
14 ability to pay liabilities when they become due
15 anything that acts as a security or a guarantee for a loan









2d Vocabulary

The text in 2a contains a number of common verb-noun partnerships (e.g. to lend money, to finance international trade). Match up the verbs and nouns below to make common collocations.
Charge advice
Do bonds
Exchange business
Issue currencies
Make deposits
Offer funds
Pay interest
Raise loans
Receive profits
Underwrite security issues


Role Play

Three different groups of inexperienced young business people in a small town require capital for the businesses. They apply to the local branch of Megabank.
The three groups of would – be borrowers must develop financial arguments that they think will convince the bankers. The group preparing the role of the bankers has to think off questions about the viability of the future businesses: will they be successful, and why? Or why might they not be successful?

The roles are:
1 A junior manager (and assistants) at the bank, responsible for new local small businesses. To lend or to lend, that is the question.
2 A group of young people who want to open a small specialist shop selling CDs of black music – jazz, soul, funk, reggae, rap, house, and any new trends.
3 A group of young people who want to buy an existing take – away pizza business (the lease on the premises, kitchens, the delivery scoters, and so on). The business is profitable and well known in the town, with loyal customers. The new owners can keep the same telephone number, and either keep or change the name.
4 A group of students who already operate a part time computing consultancy service, advising small businesses on what hardware and software to buy, and how to set up and Internet home page. They want to borrow money to buy more computers fore themselves, on which to try out elaborate new software programs.
Your teacher will give you further details about the roles (from the Teacher’s Book). You have to prepare your questions or arguments in a group, after with one or two members of the groups of borrowers will be chosen to negotiate with the bankers.












Key words:

1a

1. overdraft
2. credit card
3. cash dispenser
4. loan
5. standing order
6. mortgage
7. cash card
8. home banking
9. current account
10. deposit account

2c.
1. deposit
2. Eurocurrency
3. interest rate
4. liquidity
5. maturity
6. underwrite securities
7. takeover
8. merger
9. stock broking
10. offering portfolio management
11. deregulation
12. conglomerate
13. blue chip borrowed
14. solvency
15. collateral asset


2d
1. charge – interest
2. do – business
3. exchange – currency
4. issue – bonds
5. make – profits
6. offer – advice
7. pay – loans
8. raise – found
9. receive – deposits
10. underwrite - security issues









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Băncile comerciale din Marea Britanie strânge fonduri pentru industrie, pe diverse pieţe financiare, finanţarea comerţului internaţional, eliberarea şi subscrie titluri de valoare, se ocupă cu preluari si fuziuni, şi emite obligatiuni de stat.Ele ofera de asemenea , în general,servicii bursiere şi de gestionare a portofoliului pentru clienţi corporativi şi individuali bogat. Băncile de investiţii din Statele Unite ale Americii sunt similare, dar acestea pot acţiona numai ca intermediari care oferă servicii de consultanţă, şi nu oferă împrumuturi ei înşişi. Bancile de investitii fac profiturile lor din taxe şi comisioane le percepe pentru serviciile lor


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In Statele Unite, actul de Glass-Steagal din 1934 a pus in aplicare o separare strictă între băncile comerciale şi băncile de investiţii sau firme bursiere.Insa distincţia dintre bancile comerciale si de investitii a devenit mai puţin clar în ultimii ani. Dereglementarea în SUA şi în Marea Britanie conduce la crearea de supermarketuri financiare: conglomerate combinind serviciilor oferite anterior de către bănci, brokeri, companii de asigurări,si asa mai departe .Astfel unele ţări europene (în special Germania, Austria şi Elveţia) au fost întotdeauna băncile universale combinind depozitul şi creditul bancar cu o cota si ocupinduse de obligatiuni si servicii de investitii.
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Rata minimă a dobânzii unei ţări este fixată de obicei de către banca centrală. aceasta este rata de discount, la care banca centrală face garantate împrumuturi pentru băncile comerciale .Bancile comerciale împrumuta debitorilor blue chip (companii foarte mari în condiţii de siguranţă) la rata de bază sau rata de prima ; toti alţi împrumutători plătesc mai mult, în funcţie de bonitatea lor (sau de rating de credit, sau bonitatea): estimarea creditor de solvabilitate lor prezente şi viitoare. Debitorii pot obţine, de obicei, o rată a dobânzii mai mica în cazul în care împrumutul este securizat sau garantat de către unele active fel , cunoscut sub numele de garanţie.
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In cele mai multe centre financiare, există, de asemenea, o mulţime de filiale ale unor bănci străine, care în mare măsură fac afaceri in Eurocurrency. Eurocurrency este orice valuta deţinuta în afara ţării sale de origine. prima piaţă semnificativă pentru eurocurrency a fost de dolari SUA în Europa, dar numele este utilizată în prezent pentru monede străine care sint detinute oriunde in lume (yeni în SUA, DM în Japonia). Deoarece dolarul US este moneda comerciala cea mai importanta - şi pentru că SUA are de mulţi ani a avut un deficit comercial uriaş - există o piaţă de multe miliarde de Eurodollari, inclusiv ţările exportatoare de petrol „petrodolari” Deşi o bancă centrală poate determina rata minima de imprumut pentru moneda sa naţională nu are nici un control asupra valutei straine. In plus, băncile nu sunt obligate să depună pentru oricare din activele Eurocurrency lor la 0% dobândă cu banca centrală, ceea ce înseamnă că le pot oferi, de obicei, rate mai bune de la debitori şi deponenţilor decât în ţara de origine.




Butmalai Ion/ Vodeaniuc Vadim