II. Answer the following questions:

1. What is an 'acceptance'?

2. List the main areas of activity currently undertaken by British merchant banks.

3. Why have many British merchant banks felt it necessary to reappraise their strategy in recent years?

4. What types of activities are undertaken by 'other British banks'?

5. How important are overseas banks within the UK Financial system?

6. Examine the main types of activities undertaken by the overseas banks in the UK.

III. Find in the text the following words and word combinations and translate the sentences in which they are used:

underwriting role; acceptance; short-term corporate finance; bill of exchange; non-intermediary service; upon maturity; contingent liability; reputable bank; default risk; management consultancy services; foreign exchange market; eurocurrency market; derivatives market; unit and investment trusts; capital markets; specialist market niches; regional basis; market making activities; stockbroking activities; disparate range of institutions; mergers; takeovers.

IV. Fill in the blanks:

investment; service; supported; alliances; raised; assets; development; engagement; longer-term; directions; corporate; proportion; accepting; certificates; merchants; banking; creditworthiness; borrowers; underwriting; thrust; adjunct to; finance; management; advantage; medium-term; activities

Many British merchant banks originated as _____ in the nineteenth century, developing banking services as an _____ their merchanting business. Since the main _____ of their banking services was the business of _____ bills, they acquired the name "accepting houses." Their knowledge about their trading areas gave them a distinctive _____ in evaluating the _____ of potential _____ abroad in the early days. With diversification in business over the years, today they deal primarily with the _____ sector and engage in wholesale _____. Their primary sources of funds are time deposits and _____ of deposit (CDs), whereas on the _____ side they mainly concentrate on _____ lending. Unlike commercial banks, early on they were engaged in _____ financing such as _____ financing. For example, for the development of the Americas, British colonies, and other developing territories, which were _____ by some £3.6 billion between 1870 and 1913, about 40 percent of loans were _____ by London accepting houses. Reflecting their heavy _____ in international banking, their foreign-currency-denominated assets are about 30 percent of total assets, twice as large as the _____ for retail banks.

Nonetheless, their major contribution to corporate _____ comes from their _____ banking activities, _____ not only sterling securities but also Eurocurrency bonds and equity. For the last few decades, they have diversified their _____ in a number of _____ including investment fund _____, merger and acquisition _____, factoring, leasing, as well as the formation of _____ with stockbroking and stockjobbing firms.