Part B: Introduction to Banking

GETTING STARTED

1. Do the quiz individually. Then compare answers with a partner.

1) How much cash do you have with you at the moment? Do you:

a) know exactly?

b) know approximately?

c) not know at all?

2) Do you normally check:

a) your change?

b) your bank statements and credit card bills?

c) restaurant bills?

d) your receipts when shopping?

e) prices in several shops before you buy something?

3) Do you:

a) give money to beggars?

b) give money to charities?

c) give away used items, such as clothing?

4) If you go for a meal with someone you don't know well, do you:

a) offer to pay the whole bill?

b) suggest dividing the bill into equal parts?

c) offer to pay the whole bill but expect them to pay next time?

d) try to avoid paying anything?

5) What do you think about people who do not pay the correct amount of tax? Is this:

a) a serious crime?

b) morally wrong but not a crime?

c) excellent business practice?

6) If you lend a colleague a small amount of money and they forget to pay it back, do you:

a) say nothing?

b) remind them that they owe you money?

c) arrange to go for a drink with them and say you've forgottenyour wallet or purse?

2. Write one more question to add to the quiz above. Ask a partner to answer it.

Discuss your answers to the quiz. What do they say about your attitude to money? What do they say about your culture?

USEFUL VOCABULARY

bank account - банковский счет

bank operation - банковская операция

savings account - сберегательный счет

current account - текущий счет

checking account - чековый счет

statement of account - выписка с банковского счета

holder of an account - владелец счета

open an account (at a bank) - открыть счет (в банке)

withdraw money from an account- снять деньги со счета; syn: to take out money

cash a check - получить по чеку наличными

transaction charge - плата за банковскую операцию

service charge - плата за банковские услуги

banking card - карточка для банковского автомата; syn: bank card, cash card

bank machine - банковский автомат

credit card - кредитная карточка

interestn - ссудный процент; to pay interest - платить проценты; rate of interest - процентная ставка

traveler's cheque - путевой (дорожный) чек

deposit- вклад в банке; депо­зит

deposit money in an account - положить деньги на счет; syn: to credit money to an account, to pay money into an account

to issue a deposit - открывать счет

to withdraw (withdrew, withdrawn) a deposit - изы­мать вклад; отозвать вклад,

взять вклад из банка

time deposit -срочный вклад; syn. demand deposit

sight deposit –счет до востребования, текущий счет; syn. chequing account –чековый вклад (депозит); syn. current account -текущий счет

to write a cheque against deposit / an account -выписывать чек противсчета depositv-класть в банк, депонировать, отдавать на хранение

to deposit money with / in a bank —положить деньги в банк

liabilityn- обязательство; pl.долги; денежные обязательства; задолженность

to meet one's liabilities –покрыть свою задолженность

clearingn - клиринг; безналичные расчеты между банками

clearancen - производство расчетов через расчетную палату; оплата долга; урегулирование претензий

to handlе /to make / to undertake a transaction -производить сделку

neta - чистый; нетто; без вычетов; сальдо; окончательный;

to cash a cheque -получать наличные по чеку

short-terma – краткосрочный; ant. long-terma - долгосрочный (заем)

interestn - ссудный процент

interest-earning / interest-bearingа – приносящий проценты (доход)

billn - вексель, тратта; Bill of Exchange (B/E) - переводной вексель; Bill of Loading (B/L) - коносамент, транспортная накладная

government securities — государственные ценные бумаги

bond n – облигации; долговое обязательство

share n - акция; пай

stockn – акция; pl.облигации; ценные бумаги; stock exchangе – фондовая биржа

fluctuate v - колебаться,fluctuation n- колебание

READING

Text 1

1. Scan through the text “Bank and its classes”.

A bank - is an institution that deals in money and its substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the dif­ference in the interest rates. They also have the power to create money. The two major classes of banks are commercial and central banks. Commercial banks accept savings deposits, make loans and other investments, and offer financial services that facilitate the exchange of funds among individuals and institu­tions. In addition to the profit derived from the difference in the interest rates, commercial banks charge fees for various ser­vices. Central banks are involved in the issue of money and maintain the country's foreign currency reserves. Central banks maintain the accounts of other banks and supervise their activi­ties. Central banks act as bankers to governments, as the de­signers of monetary and credit policies, and as lenders of last resort to commercial banks in the case of a financial crisis. Cen­tral banks also play a significant psychological role as guaran­tors of the monetary system. Central banks may be nationalised organisations and are subject to government control, but some of them can have independence from governmental supervision.

Notes:

de­rive a profit - извлекать прибыль;

savings deposit -сберегательный вклад на неопределенный срок под процент;

issue - эмиссия;

lender of last resort - последний кредитор в критической ситуации

subject to – подчинять, подвергать(воздействию, влиянию и т.п.)

2. Restore the word order in the questions and answer them.

1) What meant by the term "bank" is? 2) What banks do accept? 3) What banks make do? 4) What banks derive a profit do from? 5) What do power banks have? 6) What the two major classes of are banks? 7) What commercial banks accept do? 8) What do make commercial banks? 9) What commercial banks offer do? 10) What central banks are involved in? 11What central banks do maintain? 12) What central banks supervise do? 13) What central banks do act as? 14) What role central banks do play? 15) Are subject to central banks govern­ment control or not?

3. Agree or disagree to the following statements.

1) A bank trades in money. 2) A bank gives various financial ser­vices. 3) Banks receive deposits. 4) Banks don't make loans. 5) Banks derive a profit by skilfully deceiving people. 6) Com­mercial banks aid the exchange of funds among individuals and institutions. 7) Central banks act as bankers to organized crime. 8) Central banks act as the designers of default. 9) Central banks act as the designers of foreign policy.

10) Central banks act as lenders of last resort to counterfeiters. 11) Central banks play an important role as guarantors of the monetary system. 12) Central banks have the right to issue money. 13) Central banks keep the country's foreign currency reserves. 14) Central banks back up the accounts of other banks. 15) Central banks oversee the activities of other banks. 16) Central banks may be privately owned organisations.

17) Central banks are subject to shadow ministers. 18) Central banks are totally dependent on their bank customers.

Text 2

1. Read the text “Introduction to Banking and Financial Markets” and find the information to answer the questions:

- What are cash assets?

- What does the balance sheet of a bank include?

A commercial bank borrows money from the public, crediting them with a deposit. The deposit is a liability of the bank. It is the money owed to depos­itors. In turn the bank lends money to firms, households, or governments wishing to borrow.

Commercial banks are financial intermediaries with a government license to make loans and issue deposits, including deposits against which cheques can be written¹.

Major important banks in most countries are included in the clearing sys­tem in which debts between banks are settled by adding up all the transac­tions in a given period and paying only the net amounts needed to balance inter-bank accounts².

The balance sheet of a bank includes assets and liabilities. We begin by discussing the asset side of the balance sheet.

Cash assets are notes and coins kept in their vaults and deposited with the Central Bank. The balance sheet also shows money lent out or used to pur­chase short-term interest-earning assets such as loans and bills. Bills are fi­nancial assets to be repurchased by the original borrower within a year or less. Loans refer to lending to households and firms and are to be repaid by a cer­tain date. Loans appear to be the major share of bank lending. Securities show bank purchases of interest-bearing long-term financial assets. These can be government bonds or industrial shares. Since these assets are traded daily on the Stock Exchange, these securities seem to be easy to cash whenever the bank wishes, though their price fluctuates from day to day.

We now examine the liability side of the balance sheet which includes, mainly, deposits. The two most important kinds of deposits are sure to be sight deposits and time deposits. Sight deposits can be withdrawn on sight³ whenever the depositor wishes. These are the accounts against which we write cheques, thus withdrawing money without giving the bank any warning. Therefore, most banks do not pay interest on sight deposits, or chequing accounts.

Before time deposits can be withdrawn, a minimum period of notification must be given within which banks can sell off some of their high-interest se­curities or call in some of their high-interest loans in order to have the money to pay out depositors. Therefore, banks usually pay interest on time deposits. Apart from deposits banks usually have some other liabilities as, for instance, deposits in foreign currency, cheques in the process of clearance and others.

Notes:

1. to write cheques against the account – выписывать чеки против счета

2. to balance an account – уравнять, погасить счет; сбалансировать статьи расходов

3. on sight– по предъявлении (без предварительного уведомления)

2. Complete the sentences according to the text:

1.Banks borrow money from the public in order to ...

2.The clearing system lets banks ...

3.The asset side of the bank balance sheet includes ...

4.The liability side of the balance sheet includes ...

5.The two most important kinds of deposits are known as...

6.Cheques can be written against ...

7.Interest is usually paid on ...

8.To withdraw a time deposit one must give the bank a period of notifica­tion for the bank...

Text 3

1. Scan through the text “Credit card and credit cardholders”.

A credit card is a piece of plastic about 85mm by 54mm, bearing the name and computer number of the holder and the period of availability. The holder must sign it. The best known cards in the UK are the VISA card and ACCESS; the American Express and Diners' Club (intro­duced by the Diners' Club, Inc., in 1950) are leisure or enter­tainment cards as no credit is permitted. VISA is an interna­tional credit card scheme which has worldwide representation. Major banks in a number of countries have issued cards through VISA. ACCESS is the name given to a credit card company jointly owned by three banks, namely, Lloyds, Midland and National Westminster.

The American Express Company issues American Express card whose holders have no limit placed on the sum they spend, but all outstanding debts must be settled by a given date. Any creditworthy mature person can be a credit card holder. Before a card is issued, certain details are supplied and references are given. On approval a credit card is given to the holder and the cardholder is at the same time notified of the maximum credit available to him / her. The credit card can be used at any retail outlet displaying the credit card company symbol. It is usual for settlement or partial settlement to be made by the credit cardholder within 25 days of receipt of the statement.

Notes:

availability - годность

access - доступ

outstanding - неупла­ченный

retail outlet - розничная торговая точка

settlement - расчет

receipt - получение

statement – отчет

reference (a letter written by someone who knows you well, usually to a new employer, giving information about you)- рекомендация

2. Work in pairs to answer the questions that follow.

1) What does a credit card bear?

2) What must the holder sign?

3) What credit cards are the best known ones in the UK?

4) What credit cards are leisure cards and why?

5) What are VISA, ACCESS and American Express cards known for?

6) Who can be a credit card holder?

7) What is supplied and given before a card is issued?

8) What is the cardholder notified of?

9) Where can a credit card be used?

10) What is to be made by the cardholder within 25 days of the receipt of the

statement?

3. Agree or disagree to the following statements.

1)A credit card is a piece of wood.

2) A credit card bears the name of the owner.

3) A credit card bears the computer number оf the possessor.

4) A credit card bears the period of serviceable life.

5) The holder must subscribe to a credit card.

6) Holders have limit placed on the sum they can spend.

7) All debts must be settled by a given date.

7) Any solvent person can be a credit card holder.

8) Recommendations are to be given before a card is issued.

9) The cardholder is announced of the minimum сredit available to him.

10) A credit card can be used far and near.

11)A retailer is someone who sells things in a shop.

4. Complete the following statements.

1) A credit card is ... 2) A credit card bears ... 3) The holder must… 4) The best known cards in the UK are ... 5) VISA is ... 6)ACCESS is ... 7) American Express card is known for its holders have ... 8) Any creditworthy person can ... 9) Before a card is issued ... 10) The cardholder is notified of ... 11) A credit card can be used ... 12) The credit cardholder should make ... within 25 days ...

5. Translate the following text from Russian into English.

Кредитная карточка - это выпускаемая организацией кар­точка, которая даёт её владельцу возможность делать по­купки в кредит в тех предприятиях торговли, которые за­ключили с данной организацией соглашение (например, кредитная карта «Эксон» может использоваться на автозаправочных станциях). Существуют одноцелевые карточки, выпускаемые конкретными фирмами, многоцелевые кар­точки (например, «Америкен экспресс», «Карт-бланш») и банковские карточки (например, «Мастеркард» и «Виза»). Владелец карточки - это лицо, которому выдана кредитная карта для использования в личных, семейных, домашних или коммерческих расчётах.

Text 4