- •Unit I the bank of england
- •From a National to a Central bank
- •1. Key terms
- •Answer the following questions in your own words:
- •Fill in the blanks in this passage, using words from the list given below:
- •Case Study.
- •Функції Банку Англії
- •V. Opposites and synonyms.
- •VI. Join the halves.
- •VII. Summarize the following passage in about 100 words and an appropriate
- •VIII. Write a memorandum.
- •The court of directors
- •The executive
- •IX. Meanings.
- •X. Make comments on the following charts, paying attention to the information given below
- •XI. Complete the following sentences using your own words:
- •XII. Study the text given below and explain in English the meaning of the following words and word combinations: a Stable Financial System
- •Issue Department
- •The Value of Money
- •Interest Rates
- •I. Key terms
- •II. Answer the following questions in your own words:
- •III. Fill in the blanks in this passage, using words from the list given below:
- •IV. Summarize the following text in English in about 50 words:
- •V. Join the halves.
- •VI. Meanings.
- •VII. Complete the sentences using your own words:
- •Unit II
- •The uk money and banking markets
- •The uk banking market
- •The British banking market structure
- •Key terms
- •Answer the following questions in your own words:
- •Memorize the following terms and use them in your own sentences:
- •Find in the text the following words and word combinations and translate the sentences in which they are used.
- •V. Synonyms and antonyms. Complete the following table:
- •VI. Fill in the blanks with prepositions and translate the text:
- •VIII. Translate the following sentences into English:
- •IX. Complete the text using these words: Types of Bank
- •X. Summarize the following text in English in about 100 words: комерційні банки: IX види та операції
- •XI. Study and translate the following scheme into English:
- •XII. How much do you know about banks? Decide if these statements are true or false.
- •The financial systeм Nature
- •II. Answer the following questions:
- •III. Fill in the blanks. Rewrite the passage filling in the blanks from the list of words below.
- •IV. Match the Ukrainian and English equivalents:
- •V. Read the passage below. Explain the meanings of the words and phrases which have been highlighted:
- •VI. Render the following text into English: Трансформаційні функції комерційних банків
- •VII. Choose the correct alternative to complete each sentence:
- •VIII. Complete the following sentences using words and word-combinations given below:
- •IX. Translate the following words and word-combinations into English and insert them in the sentences given below.
- •X. The following famous quotations are about credit and borrowing and lending. Can you complete them:
- •In business, one way to obtain ……… is to create the impression one already has it.
- •XI. Translate the following text into English without using a dictionary:
- •XII. Discussion topics:
- •XIII. As we have already seen, a bill of exchange might not be honoured, or the order might be cancelled. So, a letter of credit is a more binding method of payment. Documentary Credits
- •Unit III
- •Commercial banks
- •Retail and wholesale activities of financial institutions
- •I. Key terms
- •II. Answer the following questions:
- •III. Find in the text the following word combinations and translate the sentences in which they are used:
- •IV. Find English equivalents to the word combinations given below:
- •V. Complete the table:
- •VI. Fill in the blanks from the list of words below the text:
- •VII. Answer the following comprehension questions based on the text:
- •VIII. Sum up what the following text said about:
- •IX. Complete the sentences using your own words:
- •X. Complete the text using these words:
- •XI. Read the text and the dialogue following it. Find answers to the questions given below. Reproduce the dialogue with your partner. The structure of a Bank
- •The Dialogue
- •XII. Using the information in the text, say what is true and what is false. Correct the false sentences.
- •XIII. Fill in the blanks with proper words or phrases:
- •XV. Read and translate the text. Describe the bank’s management hierarchy. Study the chart following the text. Service operations of a small bank
- •Organization Chart for a Small Community Bank
- •XVI. Match the words above with the definitions which follow:
- •XVII. Fill the spaces with words from the box. Translate the text into Ukrainian:
- •XVIII. Render the following text into English:
- •I. Key terms:
- •II. Answer the following questions:
- •IV. Study the following text and translate the table into Ukrainian: The balance sheets of the retail banks
- •V. Translate the text in writing: Savings banks and the National Giro
- •VI. Reproduce the main idea of the text: The Bankers’ Clearing House
- •VII. Find in the text the following words and word combinations and translate the sentences in which they are used:
- •VIII. Find in the text the terms which match the following explanations:
- •IX. Scan the text. Translate it into Ukrainian. Don’t use the dictionary:
- •X. Join the halves.
- •XI. Translate the text in writing: The Bankers' Clearing House
- •XII. Read and translate the following text: Easy money
- •XIII. Match these terms with their definitions:
- •XIV. Replace the underlined items with words or phrases from the text that have a similar meaning.
- •XV. Choose, the best explanation for each of these words or phrases from the text:
- •XVI. Find a word or phrase in the text that has a similar meaning.
- •XVII. Match the first half of each sentence with the most appropriate second half. Notice the words are used in each sentence to mark a contrasting idea. (These words are in italics.)
- •If possible, find the annual results of a bank in your country and report on its profitability.
- •XVIII. Prepare a brief summary of the text: Savings Banks and the National Giro
- •The changing environment and activities of the uk retail banks
- •XIX. Complete the text using these words:
- •XX. Make an overview of the following texts: current accounts
- •Interest-earning cheque accounting
- •Deposit accounts
- •Budget accounts
- •Loan accounts
- •Personal loan accounts
- •XXI. Add the words and expressions that complete the following sentences below:
- •XXII. Read and discuss the following text. Give answers to the questions below:
- •XXIII. Choose the right answer:
- •XXIV. Say what is true and what is false. Correct the sentences:
- •XXV. For each of the following phrases find the expression in the text or in the dialogue that explains it:
- •XXVI. After reading the text explain in detail explain in detail how to open a current account. Current accounts
- •XXVII. Read and translate the text. Describe to a partner how to open a deposit account. Deposit accounts
- •XXVIII. Match questions and answers:
- •XXIX. Act as an interpreter for a and b:
- •Paying-in slip
- •XXX. Translate into Ukrainian.
- •XXXI. Read the dialogue.Answer the questions which follow it. Reproduce the dialogue in pairs.
- •Choosing a bank account
- •XXXII. Read the text and write a précis in English in about 200 words:
- •Questions:
- •Unit IV Text a Wholesale banks
- •British merchant banks
- •Other British banks
- •Overseas banks
- •I. Key terms
- •II. Answer the following questions:
- •III. Find in the text the following words and word combinations and translate the sentences in which they are used:
- •IV. Fill in the blanks:
- •V. Rearrange the following sentences to make up a coherent and logical text about other British banks. The first sentence is given to help you: Other British banks (iso)
- •VI. Prepare a brief summary of the text:
- •VII. Translate the text in writing: The bill of exchange
- •The merchant banks
- •VIII. Read and retell the following text. Foreign banks
- •IX. After reading the following dialogue translate the passages concerning recent changes and the range of services provided by the bank:
- •X. Study the divisions of the bank and their areas of responsibilities:
- •XI. Look at the terms in the left-hand column. Match each one with its correct definition in the right-hand column:
- •XII. Scan the following text in about 100 words. Give the proper title to the text:
- •XIII. Read the following information:
- •If you represent Company c, look at the following instructions.
- •XIV. Choose words to complete each sentence. In some cases there is more than one possibility.
- •XV. Read the dialogue. Answer the questions which follow it: Part I. Application for credit
- •Part II. Granting the Loan on an Open Note
- •XVI. After reading the text answer the questions which follow it:
- •XVII. Choose the right answer:
- •XVIII. Say what is true and what is false. Correct the false sentences:
- •XIX. Translate the following text into English:
- •XX. Role-play
- •Text b The discount houses
- •I. Key terms:
- •II. Answer the following questions:
- •III. Find in the text the following words and word combinations and translate the sentences in which they are used:
- •IV. For each of the following words you should provide a word with the same or similar meaning and a word, which is opposite in meaning:
- •V. Join the halves.
- •VI. Read about the history of Alexanders. Ask comprehension questions on the text. Alexanders Discount p.L.C.
- •VII. After having read the text below you should be able to answer the questions following the text: Building societies
- •VIII. Analyse the following charter:
- •IX. Make an overview of the following text in English: Other deposit-taking intermediaries
- •Investing financial intermediaries
- •Insurance companies
- •Investment trusts
- •X. Find the terms which match the following definitions:
- •Unit V federal reserve banks
- •Organization of the Banks
- •Monetary Policy Role
- •Supervision and Regulation
- •Government Services
- •Depository Institution Services
- •Key terms
- •Answer the following questions in your own words:
- •III. Fill in the blanks in this passage, using words from the list given below:
- •IV. Case Study:
- •Monetary Policy and the Economy
- •The ultimate targets of monetary policy
- •V. Read the text and prepare your comments on the supply of Federal Reserves, using the given below picture. Supply of Reserves
- •Trading of Reserves
- •VI. Opposites and Synonyms.
- •VII. Join the halves.
- •VIII. Summarize the following passage in about 100 words and give an appropriate title
- •IX. Write a memorandum.
- •X. Read the passage below and explain the meanings of the words and phrases which have been highlighted.
- •XI. Analyze the following text. Make up a plan of it; give the translation of the underlined words and word combinations. Open Market Operations
- •XII. Interpretation of data.
- •XIII. Find in the text given below answers to the following questions:
- •XIV. Give a brief report on the given material Techniques of Open Market Operations
- •Repurchase Agreements
- •Federal Reserve System outright transactions Billions of dollars
- •Matched Sale-Purchase Transactions
- •Federal Reserve System temporary transactions
- •XV. Case study.
- •A typical day in the conduct of open market operations
- •The discount window
- •Interest rates
- •XVI. Analyze the texts. Complete a list of advantages and disadvantages for the borrower of each of the types of credit. Types of Credit
- •Adjustment Credit
- •Adjustment borrowing and the spread of the federal funds rate over the discount rate Seasonal Credit
- •Extended Credit
- •Emergency Credit
- •Unit VI
- •I. Key terms:
- •II. Answer the following questions:
- •III. Find in the text the following word combinations:
- •IV. Explain the following word combinations and use them in your own sentences:
- •V. Fill in the blanks. Rewrite the passage filling in the blanks from the list of words below.
- •Financial institutions: their role in business
- •Commercial Banks
- •Table 1. Top 15 Commercial Banks in the United States (Based on Total Assets)
- •VI. Summarize the following passage in about 100 words: Young Americans Bank
- •VII. Choose the right answer:
- •VIII. Do it in English making use of the active vocabulary: Порівняння банківської структури сша та інших країни
- •X. Express the main idea of each of the paragraphs in the following text in English:
- •XI. Act as an interpreter for a and b:
- •Other Banking Institutions Thrifts and Credit Unions
- •Limited-Service Banks
- •I. Key terms:
- •II. Answer the following questions:
- •III. Find in the text the corresponding English terms:
- •IV. Summarize the functions of savings banking institutions in about 150 words.
- •V. Find in the text the words which correspond to the following explanations:
- •VI. Explain the meaning of the following word combinations and use them in your own sentences:
- •VII. Complete the table:
- •VIII. Do it in English making use of the active vocabulary: Кредитні спілки
- •IX. Make an overview of non-banking institutions. Use comprehension questions given below: Nonbanking Financial Institutions
- •X. Complete the sentences:
- •XI. Match the words and the word combinations given on the left with their dictionary definitions given on the right:
- •XII. Explain the following word combinations and use them in your own sentences:
- •XIII. Role play:
- •XIV. The following are some of the more obvious and important differences in terminology between British and American English in the area of finance.
- •XV. Speak on the following topics:
- •Unit VII the banking system of ukraine
- •Structure of the banking system of ukraine
- •I. Key terms:
- •II. Answer the following questions:
- •III. Study the following information: Selected data on banks of Ukraine
- •IV. Find in the text the following words and word combinations and translate the sentences in which they are used:
- •V. Find English equivalents to the words and word combinations given below:
- •VI. Translate the following text into English: Організація внутрішнього аудиту в комерційних банках України та взаємозв'язок з зовнішніми аудиторами
- •VII. Translate the text in writing: Banking system
- •VIII. Read and discuss the following texts: Monetary policy: The nbu further reduces the discount and reserve requirement rates
- •Financial markets: Although the amount of bad credits has decreased, it is still quite high
- •Bank activity bases concerning automation of electronic payments
- •I. Key terms:
- •II. Answer the following questions:
- •III. Find in the text the following words and word combinations and translate the sentences in which they are used:
- •IV. Study and present the information given in the text: opening a bank account
- •V. Read and retell the following text: Rise and development of the banking system of Ukraine
- •VI. Write a resume of the text given below: Banks and the Association of Ukrainian Banks
- •Unit VIII the national bank of ukraine
- •Issuing centre
- •The National Bank of Ukraine determines the foreign exchange policy.
- •I. Key terms
- •II. Answer the following questions in your own words:
- •III. Fill in the blanks in this passage, using words from the list given below:
- •IV. Case Study.
- •V. Opposites and synonyms.
- •VI. Join the halves.
- •VII. Summarize the following text in about 100 words and give an appropriate title.
- •Herald of the National Bank of Ukraine, May 2000
- •VIII. Read the memorandum (memo) written by the Kyiv National University teacher, who is responsible for the students practicing at one of the nbu departments (International Banking Department).
- •1) Memo 1
- •2) Memo 2
- •IX. Read the passage below and explain the meanings of the words and phrases, which have been underlined. Cash Circulation and Settlements Sphere
- •X. Make a chart using the following data, given by the nbu (20xx).
- •XI. Write a memo to your supervising teacher, in which you should comment on the envisioned monetary parameters, shown in the table.
- •XII. Complete the sentences using your own words:.
- •XIII. Match the words and word combinations given on the left with their dictionary definitions given on the right.
- •XIV. Point all possible advantages and disadvantages (if may be) of the bills of exchange (b/e) given bellow. Bills of Exchange
- •2) Study the letter:
- •XVI. A) Study the text given below and make your comments on it: Role of the Central Bank in Interbank Settlement
- •XVII. Study the Bank’s following tables, add the data on the Bank of England, and the nbu and state what is different and what is not in their performance.
- •Unit IX bank supervision
- •Organization of Effective Bank Supervision
- •Introduction to the Legal Framework
- •I. Key terms
- •II. Answer the following questions in your own words:
- •III. Fill in the blanks:
- •IV. Translate into English
- •V. Study the following text and make up a plan, covering all crucial points
- •IV. Opposites and Synonyms.
- •VII. Join the halves.
- •VIII. Summarize the following passage in about 100 words and give an appropriate title.
- •Introduction to the Camel Rating System
- •IX. Write a memorandum.
- •X. Read the passage below and explain the meanings of the words which have been highlighted.
- •Study the following notes and prepare an oral presentation
- •Component ratings
- •Analysis of Capital
- •Risk Assets
- •Analysis of asset quality
- •XII. When you have considered these problems, express your thoughts in writing.
- •XIII. Asking about credit rating.
- •Using an Enquiry Agency
- •Replying to enquiries about credit rating
- •Refusing to reply
- •Replying favorably
- •Letter to a referee
- •Questions
- •Enquiry Agent's reply
Component ratings
Rating 1
strong performance
significantly higher than average performance
Rating 2
satisfactory
average or above average performance
adequately provides for safe and sound operation
Rating 3
performance flawed to some degree
considered fair
neither satisfactory nor average but is characterized by below average quality
Rating 4
marginal performance
significantly below average
weaknesses could evolve to threaten viability of bank
Rating 5
unsatisfactory
critically deficient and needs immediate attention
such performance could threaten the viability of the institution
Text B
Analysis of Capital
In general terms, the function of bank capital is to support the volume, type and character of the bank's business, to provide for the possibilities of losses that may arise, and to enable the bank to continue to fulfill the reasonable credit needs generated within the community that it serves. Inasmuch as it is generally agreed that depositors are not meant to assume risks emanating from the operation of the bank, capital should be sufficient to absorb shrinkage in asset value and other losses that may be incurred.
The risk asset ratio is an objective measure of the amount of shrinkage that can be absorbed by a bank's capital structure and is to be used in rating bank capital. This ratio defines the relationship of gross capital to those assets which contain some potential for loss (i.e. risk assets) without attempting to specify the loss inherent in any given risk asset or risk asset category.
The risk asset ratio is calculated from the bank's most recent Consolidated Report of Condition (including foreign and domestic subsidiaries, when applicable) and is defined as follows:
Risk Asset Ratio = Gross Capital Funds
Risk Assets
The term gross capital funds includes total equity capital, the reserve for possible loan losses and subordinated notes and debentures. Risk assets are defined as total assets plus reserve for possible loan losses less cash and due from banks, U.S. Treasury securities, obligations of U.S. Government agencies, trading account securities, and Fed funds sold and securities purchased under agreements to resell.
Since the risk asset ratio does not distinguish the degree of risk associated with differing asset structures, it is to be used in tandem with the quality of assets rating to arrive at the final rating of bank capital. The following tables provide the ratio guidelines and the limiting conditions, which are to be used in arriving at the overall capital rating.
Analysis of asset quality
In rating asset quality, the system is designed to distinguish the degree of risk inherent in classified assets by ascribing weights to each category of classification, thereby providing a more reliable measure of the impact of risk on bank capital.
The following weights are to be used:
Classification |
Weights |
Substandard Doubtful Loss |
20% 50% 100% |
Total weighted classifications equal the aggregate of 20 percent of assets classified substandard, 50 percent of doubtful and 100 percent of loss.
The ratio of weighted classifications to gross capital funds (as defined above) is the primary criterion to be used in determining the quality of assets.
Analysis of earnings
Earnings are to be rated based upon their level (quantity) and their composition (quality). Both aspects of earnings must be appraised to derive the final rating. The quantitative aspect is to be evaluated by analyzing the bank's return on assets relative to its peer group mean or average. The peer group approach is utilized in appraising the quantitative aspect of earnings because income and expense items vary greatly depending upon the size and nature of a bank's operations. The preliminary assessment derived from peer group analysis is then modified, if necessary, to reflect the quality or composition of the bank's net income. This step is essential. No rating is to be assigned to earnings without a careful consideration of the quality of earnings.
The quantitative aspect of earnings is evaluated through an analysis of the bank's return on assets (defined as net income divided by the average total assets) relative to the three-year mean for its particular peer group. The following total asset level cutoffs define the nationwide peer groups to be used for the earnings analysis:
under $50 million
$50 million to $100 million
$100 million to $300 million
$300 million to $1 billion
$1 billion to $5 billion
over $5 billion
A three-year mean return on assets is derived for each peer group and a three-year average return on assets is calculated for each peer group bank. This permits the determination of cutoffs, or benchmark ratios, based upon the three-year peer group array against which an individual bank's return for any given year can be compared. Cutoffs that divide the three-year peer group array into the highest 1 5 percent, the top 50 percent, the next 35 percent, and the bottom 15 percent will be used to set the ratio benchmarks. These benchmarks will then be used as standards against which an individual bank's return on assets for any given year will be evaluated. The use of three-year data to set standards diminishes the immediate effect of an industry-wide decline in earnings on the standards of performance, thus making the earnings criteria more stable and less subject to cyclical changes.
In practice, the examiner will compare a bank's most recent full year's return on assets with the benchmarks to determine a bank's preliminary earnings rating. Interim year-to-date earnings, especially for examinations conducted later in the year, must also be considered in assigning a final rating. As discussed below, the quality or composition of earnings is also a factor to be weighed in arriving at a final earnings rating.
Since the return on assets ratio alone does not always present a wholly reliable picture of a bank's earnings performance, the quantitative evaluation must be modified, if appropriate, to reflect the quality or composition of net income. Judgment must be brought to bear in determining the adequacy of transfers to valuation reserves and the extent to which securities transactions, tax effects, or any other unusual items contribute to net income. The quantitative evaluation may be modified upward or downward in a manner consistent with the definitions below in the event that an analysis of the composition of net income supports such an adjustment. Other things equal, net income that reflects, to an overly large degree, inadequate loan loss provisions, substantial tax credits, outsized securities gains, or significant nonrecurring income items, is generally of lower quality than net income of similar magnitude that derives basically from operations and has not been materially influenced in any of the foregoing ways. Thus, earnings that are judged to be of inferior quality may be downgraded from the rating suggested in the preliminary assessment, since an inability to generate sufficient income from operations constitutes a serious deficiency and must be properly reflected in the final earnings rating.
Analysis of liquidity
Liquidity must be evaluated on the basis of a bank's capacity to promptly meet the demand for payment of its obligations and to readily fulfill the reasonable credit needs emanating from the community or communities which it serves. Since banks of varying sizes operate under vastly different circumstances attendant to local, regional, national and international markets, analyses of liquidity will vary greatly from bank to bank depending upon the magnitude, nature and scope of a bank's operations. Thus, no single ratio or formula adequately captures and summarizes the many-faceted dimensions of liquidity for all sizes and categories of banks. Instead, liquidity must be judged with regard to a bank's ultimate ability to fund its obligations and commitments. In practice, then, the examiner must review the bank's current liquidity position and ask how liquidity would be affected by certain events in the bank's relevant economy or service area that might reasonably be expected to occur given the nature of the bank's operations and past experience. Thus. scenarios that include reductions in the level of deposits or shocks within the money markets should be considered and analyzed for their likely effect on an institution's liquidity position. Similarly, consideration should be given to the expected impact on funding requirements emanating from the bank's responsibility to provide for the credit needs arising from the market which it serves.
An individual bank's liquidity, therefore, is rated (1 through 5) with respect to (a) the volatility of deposits; (b) the degree of reliance on interest-sensitive funds; (c) availability of assets readily convertible into cash; (d) accessibility to money markets; (e) overall effectiveness of asset-liability management strategies and policies; (f) compliance with internal liquidity policies; and (g) the nature, volume and anticipated usage of credit commitments. It is recognized that these factors will have varying degrees of relevance for different banks depending on their size and particular financial structure, and that any evaluation of liquidity must necessarily address an individual bank's unique circumstances.
Analysis of management
Inasmuch as management is rated on the effectiveness with which it conducts the bank's business, the responsibilities with which it is charged vary in complexity depending on the conditions inherent in any given situation. These conditions are affected by size and type of business and, for a given bank, will vary through time. Therefore, management that is competent to effectively discharge responsibilities under given conditions may be less than competent as these conditions are altered by size, type of business, or through time. Management should, then, be rated accordingly.
Management's performance is evaluated against a wide variety of objective and subjective factors. In addition to evaluating performance in light of adequacy of capital and liquidity, asset quality and profitability, management is also rated with respect to (a) technical competence, leadership, and administrative ability; (b) compliance with banking regulations and statutes; (c) ability to plan and respond to changing circumstances; (d) adequacy of and compliance with internal policies; (e) depth and succession; (f) tendencies toward self-dealing; and (g) demonstrated willingness to meet the legitimate banking needs of the community. Management is rated in accordance with the following guidelines.
Questions:
What are your views on this topic?
What is the function of bank capital?
What does the term gross capital funds include?
How can we assess risk inherent in classified assets?
How do we rate earnings?
What do you know about liquidity?
Do you agree that sound management equals sound banking? Explain it in more detail.