Financial institutions

Businesses that distribute or deal in money are called finan­cial institutions. New institutions that meet new financial needs are appearing almost every day. The most familiar institutions are commercial banks, savings banks, savings and loan associations, mutual savings banks, credit unions, in­vestment banks and so on.

A commercial bank is a privately owned profit-making corporation. It serves both individuals and businesses by offer­ing checking and savings accounts, loans, and credit cards. It also deals in some brokerage, insurance, and financial ad­vice.

The commercial bank is the most important source of short term loans for businesses. Sometimes the borrowers pledge collateral to back up the loan. Such loan is a secured loan. Companies with a good financial position are given the prime rate of interest which is the lowest commercial interest rate.

The commercial bank offers its customers accounts of two types: demand deposits and time deposits. A demand deposit makes the money in it available to depositors immediately, while a time deposit requires depositors to leave their money with the bank for a stated period of time.

Most banks offer their customers various savings certifi­cates, called certificates of deposit. Savers may put their money into thirty day, six month, or two and a half year certificates. The highest interest is paid to the customers who deposit their money for a longer period.

Banking services are not free and banks charge fees for them. Many banks assess a service fee if an account balance falls beneath a particular minimum, such as $200.

Technological innovations and increased competition in the face of deregulation are changing the face of banking nowadays. Banks and other financial institutions are using com­puter technology now. One of the innovations is the electronic funds transfer which transfers money from individuals to the bank, from bank to bank, and from city to city through an electronic system.

Large banks are installing automatic teller machines out­side their buildings. A customer can get cash, make loan pay­ments, or transfer money from one account to another at any time of the day or night. The key to the automatic teller machine is a debit card which helps to make transfers directly to and from a customer's checking account.

Some large retailers are installing point-of-sale terminals which allow a retail customer to transfer funds from his bank account to the merchant's account.

Electronic funds transfer is making it easy for commercial banks to accept deposits outside their home states. Groups of banks are setting up automatic teller machine networks for the customers to use their debit cards to withdraw cash, transfer funds and check balances in other states.

Nowadays the banking industry is becoming less regulated. This process is stimulating the diversification of banks, and service and price competition. Financial supermarkets are ap­pearing all over the United States. These new financial institu­tions are handling all types of financial transactions. They are selling life insurance to their customers, buying and selling their homes and are lending them money in addition to the traditional services of stock and bond transactions.

The competition that results from deregulation is urging the banks to offer more and better services to their customers.

V. Milovidov «English for Financial

Management Experts»

Exercise 4. Answer the following questions.

1. What are the businesses called that distribute or deal in money?

2. What are the most familiar financial institutions?

3. What services does a commercial bank offer to its customers?

4. What do the borrowers do sometimes to back up the loan?

5. What types of accounts do commercial banks offer to their customers?

6. What does the interest rate depend on?

7. What kind of technology are banks using now?

8. What are the electronic funds transfer doing with money?

9. What new services are the automatic teller machines providing for the customer?

10. What innovation makes it easy for the customer to handle all kinds of financial transactions outside his home state?

11. What process in modern banking is urging the banks to diversify?

Exercise 5. Fill in the blanks with adjectives many and much:

1. ___________insurance companies protect their customers against risk.

2. It takes one___________money to join a credit union.

3. Startinga business without financial support from the bank may cause you

trouble.

4. Banks in the USA are subject to____________government regulations.

5. Savings and Loan Associations attract____________small savers who

do not want to have any risk.

Exercise 6. Substitute the words in the statement with the given synonyms.

Statement: There are many commercial banks that offer their customers a wide range of financial services.

Example: There are a lot of commercial banks that offer their customers a wide range of financial services.

financial institution clients individuals and businesses

provide for banking render

different were a number of

Statement: Banks are now using computer technology to perform various financial transactions.

Example: Financial institutions are now using computer technology to perform various financial transactions.

	business		electronic
	numerous deals these at present		employing methods handle

Exercise 7. Translate into English.

1. Существуют ли бесплатные банковские услуги? Нет, бесплатных банковских услуг не бывает. 2. Многие банки устанавливают плату за услуги. 3. Компании с хорошим финансовым положением получают некоторые привилегии. 4. Много ли денег на вашем расчетном счете? Да, много. 5. В моем справочнике один коммерческий банк и три страховые компании.

Exercise 8. Listening.

Before you listen discuss the following statements. How do you think whether they are true or false? Then listen and check if you were right.

1. The earliest kind of money was used about 3,000 years ago.

2. Shells were used a kind of fiat money.

3. The first metal coins appeared in Greece.

4. The first coins were round.

5. Paper money first appeared in China.

6. The idea of paper money traveled quickly to Europe.

Exercise 9. Read the Dialogue.

Dan and Sally, university tutors, are discussing their financial problems

D: Hello, Sally!

S: Hi, Dan! Happy to see you again. How are things with you?

D: Not bad. And how are you doing?

S: I've a problem, you know. I've just wrecked my new automobile. Had an accident. And I need money to have it repaired.

D: Oh, I think I can help you. Haven't you heard about the credit union that we formed?

S: Why, no! Could you tell me what it is?

D: It was a great idea! The members of our department pooled their money and now anyone can apply for a loan if necessary.

S: And may I join the union?

D: Of course you may. As a rule, a credit union consists of members of a specific group, such as university employees. And we belong to the same university.

S: Great! And how much do I have to pay?

D: Well, we require a minimum deposit - something about 100 dollars. And our credit union pays a higher interest rate than many other financial institutions pay on similar accounts.

S: That also sounds good. And who manages the pool?

D: I do.

S: Fine! Then I'll have my car repaired pretty soon!

Words and phrases to remember

how are things with you?/how are you doing? - как дела?

pool - общий фонд

to pool - создавать общий фонд

to apply for - обращаться за чем-либо

to join - вступать

to require - требовать

that sounds good! - это (звучит) хорошо

to manage - управлять; успешно справляться с чем-либо

pretty soon - очень скоро

Exercise 10. Make up similar dialogues.

1. You are starting a new business and apply for funds to a commercial bank.

2. Your company has a good reputation and a commercial bank provides the prime rate for you.

3. You deposit some of your money into a bank which offers you accounts of two types. Choose one of them.

Exercise 11. Translate the following sentences

1. Правительственные предписания ограничиваю спектр услуг которые может предлагать банк.

2. Государственный банк запрещает выплачивать проценты по расчётному счёту.

3. Финансовые учреждения предлагают новые виды вкладов.

4. Некоторые банки экспериментируют со счетами.

5. Многие компании устанавливают в своих зданиях банкоматы.

6. Федеральное правительство использует электронную систему передачи средств.

Exercise 12. Put the verb in brackets into the right form

1. Large commercial banks (install) automatic teller machines nowadays.

2. Customers usually (use) their debit cards to transfer money from their checking account to the merchant's account.

3. As a rule a customer (pay) a fee of forty cents for each transaction outside the state.

4. Financial supermarkets (appear) all over the USA these days.

5. The customers often (look) around for the highest return on their savings or the lowest rate they can get on a loan.

6. Small banks now (compete) with larger banks by finding a special need and meeting it.

Exercise 13. Make up sentences after the following models

Model: to open a checking account

I am thinking of opening a checking account.

1. to use the electronic funds transfer system.

2. to transfer money outside the state.

3. to provide new services to my customers.

4. to buy 100 shares of stock.

5. to sell some bonds.

6. to plan a number of financial transactions.

7. to assign my major customers a personal banker.

Model: to balance my checkbook at last

I am going to balance my checkbook at last.

1. to drop unprofitable services.

2. to ask for financial advice

3. to wait on customers

4. to install an automatic teller machine in my shopping center

5. to attract more customers by providing less expensive services

6. to pay a fee of a dollar for this banking transaction

7. to use my debit card to a better purpose

Exercise 14. Read the text