Vocabulary:

banking – the business of a bank or a banker

vault – a room with thick walls and a heavy door to protect it against fire and thieves, in which money, jewels, important papers, etc. are kept at a bank.

prominent – 1. sticking or stretching out beyond a surface; 2. noticeable, easily seen; 3. of great importance, fame, etc.

to disburse – fml. to pay out money, esp. from a sum saved or collected for purpose.

Exercise 1. Suggest the meaning of:

The ability to identify financial services, to meet the public demands, to provide large-scale services to..., to receive customers' deposits, in return for a service fee, cash transactions, safekeeping of valuables, to issue a receipt, to maintain a safe deposit service, duplicate keys, to undergo sweeping changes, particularly, it comes to the use of..., to specialize mainly in..., to offer regular life insurance policies and property-casualty policies, to market security brokerage services, current deposits, time deposits, to accept a deposit from a customer.

Exercise 2. What is the English for:

Предлагать широкий выбор финансовых услуг, продавать что-либо по какой-либо цене, предоставление широкого спектра банковских услуг крупным клиентам (юридическим лицам), предоставление банковских услуг отдельным вкладчикам (физическим лицам), предлагать процентные вклады, делать что-либо от имени кого-либо, проводить операцию, валютные операции, квалификация (опыт, умение), скреплять печатью (запечатывать), возвращать что-либо по предъявлении подписи клиента, в чрезвычайной ситуации, делать что-либо с разрешения клиента, подготовить декларацию о доходах, проверять кредитоспособность кого-либо, осуществлять операции по получению и выплате денежных средств для кого-либо, инвестировать временно свободные денежные средства в краткосрочные процентные ценные бумаги, предлагать брокерские услуги по реализации ценных бумаг, облигация, оказывать влияние на банковское дело, определять что-либо, называть что-либо

Exercise 3. Enrich your vocabulary and make up sentences with the following word combinations.

Bank – banking – to bank

to work at a mortgage clearance blood to break the

bank to bank banking banker’s

account book draft ~er card / order holiday note rate balance on/upon smb’s help ~roll ~rupt

Exercise 4. Act as an interpreter for parts A and B.

Part В 1. В недавнем прошлом круг банковских услуг, предлагаемых клиентам, существенно расширился. Но правомерно ли говорить о том, что такие услуги являются только сферой непосредственно банковской деятельности? 2. Но ведь все-таки основным поставщиком на рынке банковских услуг являются банки, не так ли? 3. Какие же новые виды услуг используют банки для привлечения крупных индивидуальных заемщиков и мелких вкладчиков? Ведь очень трудно одному банку учесть такие разные потребности.

Part A No, I am sorry. I disagree entirely. That's not right, I'm afraid. Yes, You are absolutely right. More than that... I'd like to underline the fact that … I feel I should point out to you that ... I'd like to make it clear that ...

Exercise 5. Read and translate the text «Bank Lending».

The money deposited in a bank doesn't lie idle. The bank lends it out at interest. Making loans is the principal economic function of banks. Banks fund consumption and investment spending of businesses, individuals and governments. Bank accommodation contributes to the economic health of its region because bank loans support the growth of new businesses and jobs within the bank's trade territory and promote its economic vitality. This makes a profit for the bank and provides some useful funds for personal borrowing and businesses that are in need of money. It is also a risky function because both external factors (economic conditions) and internal factors (management errors, illegal manipulation of loans) can result in substantial losses of the bank.

To minimize and control the risk and ensure prudent lending policy the bank regulates its lending functions working out its loan policy. Such a policy gives loan officers and the bank's management guidelines in making loan decisions and in shaping the bank's overall loan portfolio. The written loan policy includes statement of the types, maturities, size and quality of loans. It also lists guidelines for reviewing, evaluating and decision making on customer loan application. The written loan policy statement helps the bank to promote its profitability, control its risk exposure and satisfy regulatory requirements.

There are several categories of bank loans that meet different objectives. They are real estate loans, financial institutions loans, commercial and industrial loans, loans to individuals, miscellaneous loans, lease financial receivables. The largest volume are real estate loans. A bank grants loans to individuals and businesses to construct and purchase homes, office buildings, shops, industrial structures. They are subdivided into construction loans and long-term mortgage loans on property. They include credit to purchase inventories of goods and raw materials to cover operating expenses and to finance new equipment. Next in importance are loans to individuals and families for living cost, medical expenses, automobile purchase, home appliances, vacation, education and so on.

The rate of interest charged by the bank is a price of borrowing money. A bank makes a loan for a certain amount, over a certain period, at a certain rate of exchange, e.g. $2,000 borrowed towards the cost of a new car at 10% per annum. The bank may want its money (loan and interest) repaid by installements rather than all at once on the last day of the agreed period.

When a customer decides to request a loan an interview with a loan officer will follow. It gives the potential borrower the opportunity to explain his credit needs for one thing and offers a chance for the bank's loan officer to assess the customer's sincerity of purpose. The major question to deal with is whether or not the customer can service the loan — that is to pay out the credit when it is due. The interview is recorded as a strong factor weighing against or in favour of the approval of the loan request. Besides the customer must submit several crucial documents to fully evaluate the loan request.

The key factors in decision making and evaluating a loan application are capacity, character, capital, collateral, environment control. Conducting the interview the loan officer leans his decision on the above factors. Capacity proves the customer's proper authority from the company's board to request a loan and the legal standing to sign the loan agreement with the bank. Character concerns the customer's honesty that proves that the loan is for a good purpose and the customer's serious intention to repay. Collateral aspect of a loan deals with the assets and other valuables that the customer pledges behind the loan and against which the bank can make its claim in the event of loan default. Capital defines the borrower's ability to generate capital adequate and sufficient to repay the loan. The loan officer and credit analyst must be aware of the borrower's line of work and how changing economic conditions of the environment might affect the loan. Control factor is essential in assessing whether changes in regulation could adversely affect the borrower and whether the loan request meets the bank's standards for loan quality. A sound bank must exercise periodic reviews of its loans to maximize its chances to recover the funds.

Exercise 6. Suggest the meaning of:

To lie idle, fund consumption and investment spending of businesses, promote its economic vitality, illegal manipulation of loans, ensure prudent lending policy, to guideline in making loan decisions; statement of the types, maturities, size and quality of loans; to list guidelines for reviewing, evaluating and decision making on…, to promote profitability, control risk exposure and satisfy regulatory requirements, miscellaneous loans, to lease financial receivables, to purchase inventories of goods and raw materials to cover operating expenses and to finance new equipment, to charge а rate of interest, 10% per annum, to repay by installements, to request a loan, to weigh against or in favour of the approval of the loan request, to submit several crucial documents, to request a loan, the legal standing, to pledge behind the loan, to generate capital, to repay the loan, to affect the loan, to meet the bank's standards, to recover the funds.

Exercise 7. What is the English for:

Одалживать под проценты, банковские ссуды, способствовать чему-то, нуждаться в деньгах, внешние/внуренние факторы, привести к значительным убыткам, разработать кредитную политику, формировать кредитный портфель банка, заявление на получение ссуды, отвечать целям, предоставлять ссуды кому-то, ссуды под строительство, долгосрочные ипотечные кредиты, запасы товаров и сырья, покрывать операционные расходы, финансировать покупку нового оборудования, оценить добросовестность намерения клиента, выплачивать кредит в надлежащие сроки, оценить кредитоспособность, обеспечение кредита, провести интервью, полагаться в решении на…, подписать кредитный договор, выставлять требование, неспособность платить по кредиту, надежный банк

Exercise 8. Fill the gaps with the correct word.

Lending, profit, safekeeping, reserves, transactions, profitability, safety, to remain, ensure, to back up, loans

The simultaneous pursuit of ... and safekeeping is achieved through fractional-reserve banking. Reserves are customers’ deposits that are not used for ... and kept available to process day-to-day ..., that is ... deposits. Banks keep a fraction of deposits in ..., but only a fraction, hence the term fractional-reserve banking.

While reserves are essential to ... the safety of deposits, they do not generate profit. The key is to keep enough reserves to back up deposits, but not so many that lending is not profitable. Keeping more reserves means more safety, but less profit. Focusing too much on the ... of reserves is likely to prevent the profit needed for a bank ... in business. Keeping fewer reserves means more ..., but less safety. Focusing too little on the profitability of making loans is likely to prevent sufficient reserves to ensure the safety of deposits.

So banking is the business of keeping enough reserves to ensure deposit ..., but not too many to limit profitable .... Most banks perform this task admirably. But some stumble along the way, often edging too far in the direction of profit and failing to ensure the safety of deposits.

Exercise 9. Match the equivalents.

1. to sit on deposit in the bank 2. a deposit account 3. to place money on deposit 4. bank deposit 5. to put some money into a company 6. an investment in 7. to talk smb into investing $250,000 in the company 8. to go about (an investment) 9. average credit balance 10. a current account

1. уговорить кого-то вложить компанию 2. срочный вклад 3. быть на срочном вкладе, в банке 4. инвестирование, помещение капитала в... 5. вкладывать деньги в компанию 6. средний кредитный баланс 7. срочный вклад; депозитный счет 8. текущий счет 9. вносить деньги в депозит 10. приступать к (инвестированию)

Exercise 10. Do it in English making use of the active.

Функционирование экономики современного общества невозможно без четко отлаженной системы мобилизации денежных доходов и сбережений и превращение их в капитал. Главным звеном такой системы являются банки. В современных государствах рыночной экономики банки представляют собой особый вид предприятия, занимающегося предпринимательской деятельностью в специфической сфере ссудного капитала, осуществляя его мобилизацию, движение и распределение.

Существует несколько видов банков: эмиссионные (issuing bank), осуществляющие эмиссию банкнот и контроль за функционированием всей банковской системы страны и являющиеся ее центрами; коммерческие, представляющие предпринимателям кредиты в области промышленности и торговли за счет мобилизованных в виде вкладов средств; инвестиционные (investment bank), занимающиеся долгосрочным кредитованием целых отраслей экономики государства; специализированные (specialized bank), осуществляющие кредитование предпринимателей в отдельных сферах деятельности.

Коммерческие банки являются основным звеном кредитной системы государства. Поскольку их деятельность в огромной степени зависит от общественного доверия и оказывает значительное влияние на экономическую жизнь страны, их организационная структура и управление ими должны быть на самом высоком уровне.

Держатели акций банка избирают совет директоров, которые облечены большой властью для выполнения своих обязанностей. От них ожидается принятие таких стратегических решений и такое качество управления деятельностью банка, которые обеспечат безопасность фондов и прибыльность операций. Совет директоров, однако, не осуществляет непосредственного руководства повседневными операциями банка. Директора избирают председателя совета директоров (председателя правления), который постоянно информирует совет директоров о положении банка и о практической реализации принятой им политики.

Exercise 11. Read and translate the text «Financial statements in banks. Regulation in banking»

Banks necessarily use sophisticated accounting systems to record as clearly as possible what the financial situation of the bank is. Most counting information is designed to be useful in making economic decisions. Accountants use their experience to aid the management to select the best plan of action for the business. Managers and other bank specialists will need some accounting knowledge in order that they may understand what the accountant is telling them.

As economic decisions are made by persons both within and outside the bank accounting information may be generated for internal and external users. Managerial accounting is concerned largely with providing information for internal use by the management and focuses more upon planning which includes financing, resource allocation and marketing decisions. Financial accounting is concerned largely with reporting upon the financial position of a firm and upon its profitability to outsiders. Thus this type of information deals with the firm's financial condition (or position), and the results of operations (profitability). Many companies and banks publish these statements in an annual report. The report contains auditor's opinion as to the fairness of the financial statement, as well as other information about company's activities, products or types of services, profits by major divisions and plans.

The actual record-making phase of accounting is usually called bookkeeping. Large organizations employ many bookkeepers who use electronic and mechanical equipment. They record all the transactions of a firm in a chronological order in journals showing the names of accounts that are to be debited or credited. Each item on the balance sheet and income statement has a separate account in the company's ledger to where all the transactions are transferred or posted at regular intervals. Though each organization has its own bookeeping requirements, all accounting systems operate on the same basic principles the most widespread of which being the use of the double-entry method. This means that each transaction is entered twice (has a twofold effect), to show a value received and a value yielded or parted with. Thus the same transaction is entered as a credit (CR) in the account and as a debit (DR) in another account. The sum of $5,000 deposited with a bank will be entered as a debit for the receiver and as a credit for the giver.

The resources at a bank's disposal are known as assets, whereas the indebtedness for these resources if they are provided by someone else other than the owner are known as liabilities. The total amount supplied by the owner is known as equity capital. The whole of financial accounting is based on the accounting equation: Assets = Liabilities + Equity Capital

Because banks are simply business firms selling a particular kind of product, they are no exclusion and the same formula is expressed in their balance sheets.

The particular services each bank chooses to offer and the overall size of a banking organization will be reflected in its financial statements, the two most important of them being the balance sheet and the income statement (the profit and loss account).

A balance sheet is described as a photograph of a company's business at a moment in time, usually 31 December of a particular year. It shows the amount and composition of funds sources the bank has drawn upon to finance its lending and investing activities and how much has been allocated to loans and other funds used at any given time.

For people such as bank managers, accountants and investors who look at a lot of different balance sheets it is easier to keep to a set pattern of items so as to enable comparison. The assets are usually shown under two headings Fixed Assets (those of long life, such as buildings, machinery, vehicles, fixtures and fittings) and Current Assets (short-lived, such as cash or convertible into cash). There is a choice of two methods of listing the assets under their respective headings. The first, being used by companies, is that the assets are listed starting with the least liquid and in this case fixed assets will be followed by current assets. In the other method, used mainly by banks, it is the most liquid asset that appears first. Under the liabilities the order will be starting with capital to meet the claims against the respective assets, thus progressing from long-term liabilities. The method used in banks is the complete opposite.

In banking the assets on the balance sheet include four major items: cash in hand and due from banks (money in vaults, balances with other banks, cheques in process of collection), investments (bonds, shares and interest-bearing securities purchased on the open market), loans, fixed assets. Items listed in as liabilities are: deposits and non-deposit borrowings of funds in the money and capital markets, taxes payable, dividends payable. The largest asset of a bank is normally its total portfolio of loans. Deposits usually constitute the largest liability.

In contrast the income statement, or the profit and loss account, indicates how much it has cost the bank to acquire its deposits and other resources and to generate revenues from the uses of these funds. These costs include interest paid to depositors and other creditors of a bank, the expense of hiring management and staff, overhead costs in acquiring and using office facilities and taxes paid for government services. The income statement also shows the revenue (cash flow) generated by selling bank services to the public, including making loans and leases and servicing customers' deposits. Finally the income statement shows the bank's net earnings after all the costs (including taxes) are deducted from the sum of all revenues.

Figures published in financial statements provide essential data on the efficiency, liquidity, safety and solvency of a bank. In today's highly competitive financial markets, the financial statements of banks are being scrutinized by investors, competing financial institutions, and by the general public. The fight for loan and deposit customers has increased dramatically. All this poses new challenges and demands for the effectiveness of a bank's performance. The most important performance dimensions for any bank are profitability and exposure to risk. The objective of maximum profitability with a level of risk acceptable to the bank's shareholders is not easy to achieve.