Banks and business

Banks are different in different countries. Let's speak about the banks in the United Slates of America. There, commercial banks are classified into two main groups. First, there are national banks. They are charted and supervised by the Federal Government. Secondly, there arc slate banks. They arc charted and supervised by the state in which they are operated. All commercial banks can make loans to borrowers.
Major commercial banks in such cities as Tokyo, Pans, Rio cooperate with each other. In this way they finance imports and exports between countries.
An importer buys merchandise from another country using the currency of that country. For that purpose he buys this currency from the foreign exchange department of his bank. And in the same way if an exporter receives foreign money from sales to other countries, he sells this currency to his bank. By this method the currency of any country can usually be exchanged.
Active Vocabulary
commercial bank комерційний банк
national bank національний банк
to charter започатковувати, створювати
to supervise завідувати, контролювати
state bank державний банк
merchandise товар
currency валюта, гроші
foreign exchange department відділ обміну валют
to exchange currency обмінювати валюту
Comprehension Questions
1. What do all commercial banks do?
2. What kinds of commercial banks in the USA do you know? What are they called?
3. Who supervises the operations of national bank?
4. What kind of currency does an importer generally use when he buys goods from
another country?
5. What do you know about the "international exchange"?
6. What is the currency of this country called?
What is the exchange rate between your currency and the currency of the USA and
Germany? How can you find it out if you don't know it?
Vocabulary Practice
Exercise 1. Choose the necessary word and put it in the sentence.
1. Federal government..... and ..... all national banks. 1 merchandise
2. International cooperation between banks makes it possible 2 currency
..... imports and exports. 3 commercial
3. It is possible to convert American dollars to Swiss francs 4 foreign exchange
in ..... department.
4. The..... of Germany is the mark. 5 to finance
5. All..... banks make loans to borrowers. 6 to supervise
6. If the importer buys ..... from another country he will
pay for it in the currency of this country. 7 to charter
Dialogue
( A banker's office in New York City. Mr. Smith, a Vice President, is speaking to Bill Wilson).
Smith O.K. Bill. As a secretary you ought to know certain things about banking.
Bill That's what I want. I hope to make my career in banking.
Smith And what bank services are you familiar with?
Bill Oh, let me see. I am familiar with checking and savings accounts, safety deposit
boxes, insurance and things like that.
Smith It is something.
Bill But I don't have a clear idea of the services which banks offer to business.
Smith O.K. Let's discuss it then. In fact it is more directly concerned with what passes
over my desk.
Bill I think businesses come to the banks for loans.
Smith You are right. Banks make loans to corporations, to organizations, individuals and
to small companies. For this service, we always charge interest.
Bill But how can a bank decide whether a business should receive a loan.
Smith First of all we request a financial statement. It shows what the company has in
inventory, accounts receivable and other assets and liabilities. Profit and loss
statement shows the company's income and expenses.
Bill In other words you look over the financial situation of a business.
Smith Exactly. If the company is eligible for a loan, it may choose a long-term loan or
a short-term loan.
Bill I see. And how much interest does the bank charge on these loans?
Smith It can be different. We have so-called prime-rate, that is the lowest interest rate
available at the particular time. Only preferred customers can have it.
Bill Who decides on prime-rate then?
Smith Major lending banks do.
Bill Oh, I must know that. And very often I hear the term "a line of credit". I have a
vague idea what it is.
Smith A line of credit is the maximum amount of money that a company can borrow
from a bank. This top amount of customer's credit is based on the profits and
earnings of a business.
Bill Well. Then it is very important to have a good line of credit, isn't it?
Smith Sure. A bank also issues letters of credit. Such letter says that its holder can
borrow up a certain sum of money. Or a bank can also issue a letter of credit for a
person who goes to the other country where another bank is involved. Then there
is the credit reference letter which recommends a company to its suppliers, and
well - I could go on all morning.
Bill Thank you. It's very useful information.
Smith O.K. We can pass on to a more complicated subject. That is tax service.
Active Vocabulary
banking - банківська справа
to make a career in smth. - робити у чомусь кар’єру
bank services - банківські послуги
checking account - чековий рахунок
savings account - ощадний рахунок із встановленим процентом
safety deposit box - сейф для депозитів, який надається приватним
особам у банку
insurance - страхування
to make a loan to smb. - давати кому-небудь позику
to be eligible for a loan - придатний для надання позики (тобто той, що
визнається платеспроможним)
long-term loan - довгострокова позика
short-term loan - короткотермінова позика
prime-rate - найменший процент з позики, який
встановлений в певний час і в певному місці
preferred customer - привілейований клієнт
to be available - наявний, той, що є в розпорядженні
line of credit - кредитний ліміт
to borrow - позичати
letter of credit - кредитний лист, акредитив
credit reference letter - рекомендований кредитний лист
Vocabulary Exercises
Exercise 1. Change the sentences according to the model.
Model: We use the safety deposit boxes (sometimes).
We sometimes use the safety deposit boxes.
1. All the banks provide credit services (usually).
2. Banks give investment advice (sometimes).
3. Banks charge interest (always).
4. You can borrow money quickly (rarely).
5. Businesses want to borrow money (frequently).
6. The amount of interest depends on the prime-rate (generally).
7. Companies need a line of credit (seldom).
8. A line of credit is available (occasionally).
Exercise 2. Change the sentences from active into passive according to the model.
Model: They use the safety deposit boxes very often.
Safety deposit boxes are used very often by them.
1. Federal government supervises and charters national banks.
2. This bank is asking ten percent interest.
3. The bank requests a financial statement of the company.
4. Their company takes a long-term loan from the Federal Bank.
5. The executive shows the company's expenses.
6. The manager is instructing the secretary.
Exercise 3. Answer the questions.
1. Is there a difference between banking systems in Ukraine and western countries? What is the difference?
2. What bank services are you familiar with?
3. Do the banks in this country have safety deposit boxes?
4. Whom do the banks make loans to in this country?
5. What kind of loan would you prefer, long-term loan or short-term loan?
6. What prime-rates are available in this country?
7. What does the line of credit of the enterprise depend on?
8. What is a credit letter written for?
9. What can one do with credit reference letter?
Exercise 4.
1. Speak about banking system in Ukraine.
2. Make up a dialogue between a bankman and a customer, who wants to take a long-term (short-term) loan.
Exercise 5. Translate into English.
1. Держава засновує комерційні банки.
2. Якщо ти хочеш купити товари за кордоном, ти повинен поміняти гроші у відділі обміну валют.
3. Я б хотів зробити кар’єру в банківській справі.
4. Всі банки встановлюють проценти на позику.
5. Наш банк має намір надати короткострокову позику цьому підприємству.
6. найменший процент з позики надається привілейованим клієнтам.
7. Банки можуть випускати акредитиви та рекомендовані кредитні листи.
8. Я маю намір позичити велику суму грошей.
9. Банк вважає, що це підприємство платеспроможне і йому можна надати позику.
Grammar Exercises
Exercise 1. Make the sentences negative.
Model: This commercial bank had already stopped to exist when the war started.
This commercial bank hadn't stopped to exist yet when the war started.
1. He had already changed currency when I rang him up yesterday.
2. They had already chartered the commercial bank when I organized my private cafe.
3. He had looked over the financial statement by five o'clock yesterday.
4. My brother had made a career in banking when he was 26.
5. He had put all his money on his savings account before the money reform was introduced.
Exercise 2. Put up four questions of different types (general, special, disjunctive, alternative) to each sentence.
Model: They had written a credit reference letter before he left abroad.
1. Had they written a credit reference letter before he left abroad?
2. What had they written before he left abroad?
3. They had written a credit reference letter before he left abroad, hadn't they?
4. Had they written a credit reference letter or a credit letter before he left abroad?
1 He had been a preferred customer for this bank till his business was successful.
2. My parents have settled everything connected with insurance before they retired on pension.
3. He had borrowed the money before I managed to find him.
4. The lawyer had given me investment advice before I asked him about it.
5. He had arrived to the conclusion to take a long-term loan when I met him yesterday.

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