- •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
Insurance companies
The assets of all insurance companies are grater than those of pension funds, but for the purposes of the Insurance Companies Act 1982, a distinction is made between the short-term and long-term insurance business of insurance companies. Broadly, short-term business is renewable annually, e.g. house or motor insurance.
Together, the two 'footings' (balance sheet totals) come to £466bn, much larger than the total for building societies and slightly larger than the £44 3.5bn for pension funds. When we include the investment trusts and unit trusts, the aggregate size of these 'institutions' exceeds £1,000 bn., most of which are assets located in the UK.
General Insurance
This comprises insuring such items as:
Houses - contents and structure;
Motor vehicles;
Aviation;
Marine;
Public liability;
Personal accident;
Unemployment.
This is usually short-term business, with policies renewable annually and often up-rated annually. However, there are two classes of long-term insurance which are included here, i.e:
Permanent health insurance - say for 20 years from the age of 30:
Critical illness — or 'dread disease'- cover.
Life assurance
Here, the word 'assurance' is used, because death - unlike theft or accident - is a certainty, so that the policy will always be the subject of a claim - except when it has been lost and the deceased's executors are unaware of its existence. There are several main types of life insurance products:
Whole life assurance
Whole life assurance pays a lump sum at death.
Term assurance
Term assurance pays a lump sum if death occurs before a date stated in the policy (say) before 20 years of the date of the policy. If death occurs after that date, then nothing is paid because the policy has expired. However, the assured has had the protection for that period. Mortgage protection policies are term life cover
Endowment assurance
Here the sum assured is payable at a certain date, e.g. 13 October 1998 or prior death.
Annuity
An annuity is the reverse of an assurance policy which pays a lump sum after a stream of annual or monthly premiums. With an annuity, the purchaser pays a lump sum now7, and receives a stream of income payments until his/her death. Joint annuities for husbands and wives or for partners can be bought but they are more expensive because payments will continue until the death of the second survivor. For people's peace of mind - 'what if I die the month after I bought the annuity?' - most annuities can be guaranteed for five years, so that if early death occurs then payments will continue for five years after the date of purchase.
Prices of annuities - the yield per year per £1,000 spent - depend on the age of the purchaser and current levels of interest rates. The older the buyer and the higher the yields on fixed-interest rate securities, the more income each £1,000 will buy
Personal pensions
In 1988 great changes took place in their legal basis. Those pension contracts taken out before July of that year are termed 'retirement annuities' and many of these will continue until their owners purchase special kinds of annuities from which they will draw their pensions. This could continue until 2030 or later.
Personal pensions replaced the older products and began to be sold in 198S. They are particularly suitable for self-employed people and those workers with no occupational pensions. Most providers of personal pensions are life assurance companies rather than pension funds.
Additional voluntary contributions (AVCs)
These, before 1988, could be provided by pension funds for their members to 'top up' their pensions to the maximum possible level. Since 1988, new AVCs must be 'money purchase' schemes, usually provided by life assurance companies, rather than allowing members to buy extra years of service for their pension schemes provided by their employers.
Profits
Apart from term life assurance, holders of whole life, endowment policies and annuities can share in the profits of the company or organisation providing the cover. Traditionally, profits have been declared annually or every three or five years, and added to the sum assured in what are known as reversionary bonuses. These cannot be taken away, so that assurers adopt a very conservative attitude when 'declaring' (announcing) them. A second type of bonus is paid on maturity - the terminal bonus - and this fluctuates in line with conditions in the stock and property markets. In the 1990s, many companies have been reducing their terminal bonuses, while others have even been unable to declare reversionary bonuses at the level of previous years.
These uncertainties of the trend of profits have caused some companies to cease to sell 'with profits' endowment policies. Instead, they have begun to sell 'unit-linked' endowment policies, which are divided into units whose value fluctuates in line with market trends. In other words, their value can fall, unlike the traditional 'with profits' endowment or whole life policy.
Types of insurance company
Some companies specialise in life assurance, e.g. Scottish Widows. Others concentrate on general insurance, e.g. Norwich Union (which has a separate life assurance company). Yet other are composite insurers, providing both life and general cover from the same business.
There is also a very strong 'mutual' element in the industry, with the Firms being owned by their policy holders and not their shareholders. Scottish Widows is one of these, as is Standard Life, the largest of the mutuals. Norwich Union is, at present, a mutual but plans to become a pie in 1997 or 1998. Another mutual - Clerical. Medical and General - has been bought by the Halifax Building Society.
Pension funds
Pensions can be financed in two ways: unfunded or funded.
Unfunded pensions
Unfunded pensions are, in effect, 'pay as you go' schemes. Examples are the state retirement pension, financed by the National Insurance Contributions of today's workers, and pensions for civil servants, the police service and firefighters. The latter group of pensions is financed by taxation and borrowing. (Because they are not true funds, contributed by the pensioners during the period when they were working, and in which are held identifiable assets, we shall not consider them further.)
Funded pensions
Funded pensions come in three types:
Defined benefit schemes;
Defined contribution schemes; and
Hybrid schemes.
All have their own funds, with identifiable assets.
Defined benefit schemes
Defined benefit schemes are the standard schemes of this century. Contributions are made by employees and (usually) by their employees, who earn themselves a benefit (pension, of which part can be taken in a lump sum) of either 1/60 or 1/80 of their final salary (or the average of the last three years' salaries) for every year in which contributions are made. Thus, 40 years' service gives a pension of 2/3 or 1/2, of final salary if the benefit is 1/60 or 1/80 respectively. The assumptions are that employees stay in their jobs for a long time and that salary changes are upwards. However, it is now a fact that job changes are more frequent, so transfers have to be made between funds. Second, the 'upward salary' assumption makes it hard for older workers to move to part-time or less remunerative work with their employers as they approach retirement age.
A severe problem can arise with these schemes if there is a period of substantial inflation (as there was) because the earlier contributions are unable to finance the higher final salaries caused by the inflation. As a result, [he employers are required by the trustees of the schemes to make up the contributions and this can be a drain on their profits and cash flows. Moreover, if inflation then slows (as it did), the schemes may become 'over-funded' instead of 'underfunded', so that a 'pensions holiday' is declared. In some funds, the over-funding has allowed employees, as well as employers, to pay lower contribution rates. These 'defined benefit' schemes have been virtually universal in the largest companies and typically are run by trustees advised by merchant banks in their investment decisions. A more common term for them is 'final salary' pensions.
Defined contribution schemes
Defined contribution schemes are the opposite, in that the contribution percentages rarely change. They build up a fund which is used to buy an annuity when the employee retires. Their other name is a 'money purchase' scheme and. typically, they are provided by life assurance companies for smaller firms. Personal pensions are a type of 'money purchase' pension, as are AVCs taken out after 1988. Recently, some of the retail banks have instituted defined contribution schemes for their new employees; other employers may follow. There is less chance of a money purchase scheme becoming underfunded, because contributions rise in line with inflation, and benefits are not linked to inflation or salaries.
Hybrid schemes
Hybrid schemes, incorporating features of both the oilier schemes, have become fairly common in the USA, but were rare in the UK. However, in July 1996, Glaxo-Wellcome introduced the first combined final salary and money purchase scheme offered by a major company in the UK, following a merger of the two companies. Existing employees will have a choice between the two schemes, with an option to swap; new employees will have to join the money purchase scheme, although they can switch into the final salary scheme at the age of 40. The 'sponsors' of the schemes are a merchant bank for the defined benefits scheme and the Equitable Life Assurance Society for the de-lined contribution scheme.
Unit trusts
Unit trusts are long-term investment products sold by managers to investors, often with charges of up to 5% of the purchase price. Investors in unit trusts are usually private people but, from Tables 2.4 and 2.5, it is apparent that insurance companies had £29.9bn invested in unit trusts at the end of 1994. In many cases, these investments were in unit trusts which the companies managed. Managers of unit trusts are specialist companies, such as M & G or Save and Prosper, or banks and insurance companies: they play an active role in selling the units to investors, investing the proceeds and finding the cash to repay investors wishing to withdraw (sell their units back to the managers). In addition, there is always a second financial institution involved in a unit trust - acting as trustee and holding the investments (assets) on behalf of the unit-holders (as investors are called). The advantages of unit trusts are principally that risks arc pooled and that specialist managers should enhance investors' returns.
There are more than 1,400 unit trusts, with one manager sometimes running 10 or more unit trusts. In the USA, managers often permit 'switching' between unit trusts in the same group - known as a 'family of funds'. This term is little used in the UK, where a different practice has evolved - a ‘fund of funds', which is a unit trust which invests in a number of other unit trusts, often but not always from the same group. In December 1994, the assets of unit trusts totalled £87bn. but greater sales of units to investors, and rising prices for their investments had increased the value of assets to well over £120bn by April 1996.
Unit trusts are 'open ended' funds, i.e. if investors buy more units, then the managers issue more units and buy more assets: if investors sell back their units, the managers have to repay the sellers from their cash balances, cancel the units and, possibly, sell some of the long-term investments to top up the short-term assets.
Unit trust prices are published by the managers, who calculate them from the market values of the shares held by a trust divided by the number of units in existence. Hence, a fall (rise) in the price of a unit is due to a fall (rise) in the prices of the shares which the unit trust owns. At present, managers quote two prices - bid and offer - for their units, but it is planned to introduce single pricing soon.
The assets of unit trusts are shown below. Note that the short-term borrowings are shown separately, unlike the data for insurance companies and pension funds.