I. Key terms:

Clearing system	клірінг, розрахунки шляхом взаємного заліку вимог - the offsetting of liabilities and sales between two parties;
Factoring	факторинг, придбання права та стягнення боргів - a business activity in which a company takes over responsibility for collecting the debts of another. Typically the client debits all its sales to the factor and receives immediate payment from it less a charge of about 2% to 3% and interest for the period of trade credit given to the customer;
Leasing	лізинг, здача в оренду - an agreement between the owner of property (lessor) to grant use of it to another part (lessee) for a specified period at a specified rent. Leasing of business equipment, for example, may have tax advantages because the leasing company may receive tax relief on depreciation or investment allowances, that it can pass on to the lessee.
Giro	система жиро - a system of payment in which a customer of one bank can make payments to a customer in another bank without the use of cheques. The customer fills in a form;
Subsidiary	дочірня компанія, філія - generally a company controlled by another, parent company;
Inventories	запаси товарів, сировини і готової продукції - a term for stock of raw materials, work in progress and finished goods;
Thrifts (US) Thrift institutions	ощадні інститути - a general term covering non-bank institutions receiving deposits and making loans;
Advance	кредит, позичка; авансовий платіж - a loan; to loan money; to lend money;
Syndication	синдикування - to subject a credit or the issue of a security to management or underwriting by a syndicate (a group of banks or other financial institutions formed to provide a credit or to underwrite or manage an issue of security);
Credit card	кредитна картка – a plastic card that enables the user to buy goods and services on credit (e.g. Visa and Mastercard). The account is held by the issuer of the card and a credit limit is established. The user receives a statement each month and must pay off a minimum amount (if not all) of the debt at that time. Credit card operators usually charge a very high rate of interest.

II. Answer the following questions:

1. List the names of the British clearing banks.

2. What is their main business activity?

3. What banks dominate in retail banking business throughout the UK?

4. Name the fundamental functions of the clearing banks.

5. What kind of retail deposit facilities is offered to individuals and organizations primarily through branch network?

6. What kind of deposits is included in wholesale deposits offered by clearing banks?

7. Is there a difference between lending facilities offered to personal customers and corporate customers?

8. In what way does Girobank operate and what services does it offer?

9. Describe the operation of other retail banks mentioned in the text.

10. What is the main source of funds for the retail banks?

11. What is the lending doctrine of the retail banks?

III. After reading and translating the text:

1. Outline the key characteristics of the retail banks.

2. Name 10 different types of services by a typical retail bank for its personal customers.

3. State 10 different types of services provided by a typical retail bank for its corporate customers.

The group of retail banks comprises a rather diverse set of institutions which vary substantially in terms of size.

Some of the institutions, notably the London clearing banks, have been es­tablished as banks for a very long time: others for a relatively short lime, one example being the Abbey National which has been a bank only since July 1989, a consequence of its conversion from a mutual building society to plc status. In 1997, Halifax plc was formed, as the building society became a retail bank.

The scope of the activities of the institutions varies substantially. The largest clearing banks, for example, all have very extensive wholesale activities, while those of the Yorkshire Bank, for instance, are much more limited. Abbey National plc, unsurprisingly in view of the recent conversion from mutual building society status, has activities that are more akin to building societies than to the other banks in the group. (The Banking Department of the Bank of England has a very different set of activities from the other retail banks in the group.

Despite these differences, all the institutions offer banking services at a retail level, which involves large numbers of low-value transactions. All the institutions have large branch networks, although in the case of Girobank plc, its branch network consists of post offices rat her than being under its direct control.

Services

Their most important function, which the large branch networks support, is to offer current accounts, the major purpose of which - from the point of view of the account-holder – is that they allow the settlement of debts by means of the transfer of funds from one account to another. To allow these transfers of funds, the retail banks have to provide, in conjunction with the current accounts, domestic payments services. To achieve this, they offer cheque payment services (supported by cheque guarantee cards to improve accept­ability), bank giro credit facilities, direct debits, standing orders, electronic funds transfer (via the Bankers' Automated Clearing Service, now shortened to BACS) and by the Clearing House Automated Payments System (CHAPS)), together with debit and credit card facilities.

Although current accounts, and the associated payment mechanisms, repre­sent the most important function of the retail banks, note the wide range of other banking services that they also provide. Directed particularly at personal customers, these services include;

• A range of savings accounts;

• Personal loans, both secured and unsecured;

• Mortgage loans;

• Overdraft facilities;

• Automated teller machines (to allow cash dispensing and other banking services out of normal banking hours);

• Home blinking by telephone (to allow transactions to be initiated away from brandies and outside normal banking hours);

• Travellers' cheques and foreign currencies;

• Advice on taxation and financial matters;

• Executor and trustee facilities;

• ‘Private banking’ for individuals with incomes of about £35.000 or over and net assets of about £75,000-£100,000 and over.

• Directed particularly at corporate customers, the services include:

• Overdraft facilities and loans, ranging from short-term working capital facilities to long-term secured loans;

• Cash management schemes;

• Electronic banking, using electronic data interchange (EDI) techniques:

• Leasing and hire purchase, often through subsidiaries;

• Export and import financing facilities:

• Payroll services;

• International financial transfers;

• Financial management advice.

Naturally, not all the retail banks will be offering all these services. In particu­lar, some of the retail banks will he concentrating on services to personal and small business customers. Furthermore, the activities listed above relate to banking services, although the retail banks arc increasingly offering a range of 'non-banking' services, including unit trust operations, insurance broking, stockbroking and file provision of personal equity plans. These, together with advice and executor and trustee business (products dating back over half a century) are the non-funds based products. Profit margins arc often higher on such products, the provision of which is not sub­ject to the controls on liquidity and capital adequacy.