Vocabulary

bank supervision Syn. oversight	надзор над банковской деятельностью
supervise v Syn. oversee	осуществлять надзор
bad loan	безнадежная ссуда
capital adequacy	достаточность капитала
capital requirements	1) требования к собственному капиталу (со стороны центрального банка); 2) потребности в капитале
minimum capital requirements	минимальная норма (ставка) обязательного резервирования
to be under-capitalized	испытывать недостаток собственных (резервных) средств
sovereign debt Svn. government debt	задолженность (суверенного) государства
sovereign risk	риск неплатежеспособности (суверенного) государства
bank soundness	надежность банка
principal n	основная сумма долга
securitise loans	перераспределять риск по ссудам с помощью выпуска на их основе ценных бумаг
securitisation n	секьюритизация: перераспределение риска с помощью трансформации банковских кредитов и других активов в виде рыночных ценных бумаг, предлагаемых инвесторам
to shift (to pass on) risk	передавать риск, перераспределять риск
collateral n Svn. security	обеспечение (об обязательстве)
to furnish a collateral	представить обеспечение
to lend on collateral	давать ссуду под залог
to serve as a collateral	служить обеспечением

Exercise 1. Translate the following into Russian.

actual riskiness of bank's assets; to write off loans; non-bank private sector; non-farm production; non-oil exports; exposure to credit; to shift credit risk away from banks; securitised loans; regulators; prudent bank manager; a banana republic; a junk status firm; a blue-chip company; disclosure; to keep banks safe and sound; to leave smb plenty of room to wiggle; to throw one's weight behind smth; to live up to one's claims; doubtful debt; unsecured loans; a loan backed by a collateral

Exercise 2. Translate the following into English.

проблемы безнадежных ссуд; резервировать капитал; нести риск; выплачивать проценты и основную сумму кредита; списывать задолженность по ссудам; хорошо управляемые банки; собственная система кредитного рейтинга; требования к капиталу регулирующих органов; иметь свободный капитал; надежный банк; подверженность кредитному риску; чрезмерная рискованность; сомнительная задолженность; служить обеспечением

Exercise 3. Translate the following paying attention to the underlined words.

New capital rules from the Basel committee of rich-country bank supervisors, enforceable from 2007 at the earliest, will make them more sensitive to the true creditworthiness of their borrowers and to their credit ratings. They may then be keener to make good profit.

The law (the USA Patriot Act passed in the aftermath of the terrorist attacks) is still hugely controversial. Civil libertarians argue that it infringes on people's privacy by giving law-enforcement agencies more power to get customer information from banks.

According to Moody's rating agency, German banks' "recurring earning power" — their ability to generate profits year in, year out, without special measures such as asset sales — is far lower than that of American or other European banks.

The case of Ishikawa Bank, a small regional bank, illustrates Japanese bank reform in practice. When the bank closed its books for the half-year ending September 2000, it reported a capital-adequacy ratio of 6%, far above the 4% required for domestically licensed banks. When the Financial Services Agency inspected the same accounts some months later it found a capital shortfall instead. A second inspection, just months later, found more large holes, and led to the bank's collapse.

• Text 2

Old Wounds A dispute over a bank failure finally comes to court

For many, the new year is a time to look forward. Not for the Bank of England. On January 12th Britain's central bank will be in court, defending its record as the regulator of the Bank of Credit and Commerce International (BCCI), a fraud-ridden bank that collapsed in 1991 leaving depositors across the world $10 billion poorer. The plaintiff is Deloitte & Touche, the bank's liquidator, representing 6,500 depositors in Britain. It claims that the Bank "knowingly or recklessly" failed to supervise BCCI properly in the 12 years before BCCI imploded, and is seeking Ј850m ($1.5 billion) in damages.

The case has come to court only after 11 years of legal tussling between the Bank and Deloitte. British newspapers are already relishing the thought that three former governors of the Bank, as well as other officials, might have to give evidence. Excerpts from 300,000 Bank documents, released to Deloitte on court orders, are expected to be aired.

Deloitte's task is not straightforward. The Bank is statutorily immune from suits based on negligence. So the case against it is of "misfeasance" in public office, a rare allegation that legal experts say is hard to establish. Deloitte's lawyers must show not just that the Bank acted unlawfully, but that it did so deliberately or recklessly, knowing that its decisions would cause loss to depositors. "The legal hurdles to success are very high," says a senior partner of a leading British law firm.

Deloitte, however, sets great store by the trove of documents released by the Bank and others, some of which were not seen by the inquiry by Lord Bingham (now Britain's senior law lord) into the BCCI affair in the early 1990s. It thinks that these demonstrate that the Bank acted in bad feith. The Bank, it says, licensed bcci to do business in Britain in 1979, even though it knew bcci did not meet the proper criteria. Deloitte also says that the Bank did not regulate BCCI adequately in subsequent years, despite evidence that shady dealings were afoot.

BCCI was founded in Pakistan by Aga Hassan Abedi, a savvy financier with a vision of creating a world-class retail bank focused on the developing world. It set up shop in London in 1972, catering for immigrants from South Asia. Backed by the ruling family of Abu Dhabi and Bank of America (which owned a 25% stake), and flush with petrodollars from newly rich Middle Eastern investors after the oil embargo in 1973, BCCI grew rapidly. By 1979 it had 45 branches in Britain alone; by 1982 it had 280 in 57 countries.

But some people became worried that BCCIs growth came with big risks. Bank of America, which had upped its stake to 45% in 1977, began selling its shares soon thereafter, having become concerned about imprudent lending. Bank documents show that some Bank of England officials were troubled by BCCI's over-reliance on Mr Abedi (an "essentially slippery customer," according to one memo) and by its risky lending. But the Bank licensed BCCI anyway, relying on assurances from authorities in Luxembourg, where BCCI had been incorporated in 1972.

Indeed, a critical piece of Deloitte's case is that the Bank consistently shirked its duty to supervise BCCI by claiming that it was a Luxembourg bank, even though London was its "operational headquarters and administrative nerve centre," according to another internal memo. Deloitte points to memoranda showing that the Bank maintained this line even after the authorities in Luxembourg themselves told the Bank that they could not properly oversee BCCI, and even as evidence mounted that BCCI was, in the words of one Bank employee, "the financial equivalent of the ss Titanic." Deloitte believes it can show that the Bank faced up to BCCI's sorry state and acted to close the bank only when American authorities threatened to indict BCCI's auditor, Price Waterhouse.

The Bank of England admits that it made mistakes over BCCI. But were its decisions truly dishonest, or merely poor? The Bank says that the reams of documents voicing concerns over BCCI's financial condition prove not misfeasance, but the Bank's open process and seriousness of purpose.

Furthermore, the Bank argues, dealing with BCCI was no simple matter. By 1988, it had 1.3m depositors worldwide and $15.7 billion in deposits. Whatever course of action the Bank might have chosen entailed considerable risks. Revoking BCCI's licence would have meant shutting it down, in effect. Taking on a lead supervisory role would have made the Bank liable for BCCI's Sprawling, murky operations from Colombia to Botswana.

So far, the liquidators have clawed back $7.8 billion of the money lost by depositors through lawsuits against BCCI's auditors and the government of Abu Dhabi, although at a cost of $ 1 billion. Success in this case would mean recouping a large chunk of the remainder, at a price: lawyers' fees on the two sides are expected to run as high as Ј100m. Whatever the outcome, though, the case looks likely to make bank supervision look a lot less dreary than usual. Win or lose, this is excitement the Bank of England could do without.

Note

law lords — судебные лорды (члены палаты лордов с судебными функциями)