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Trang 214 Bank<ng
Z 5 H
Q Consider banking products and services and different types of banks
Q Discuss the subprime crisis and microfinance
Lead-in
• Which of the following banking products or services do you find the
m ost useful or necessary?
a current account (BrE) or checking account
(AmE)
buying or sell.ng foreign currency for travelling (Bi E) or traveling (AmE)
a savings or deposit account (BrE) or time
or notice account (AmE)
a mortgage (a loan to buy property (BrE) or real estate (AmE))
cashpoints (BrE) or ATMs (Automated Teller
Machines, AmE)
an overdraft (the possibility to borrow money by spending more than you have in your bank account)
a chequebook (BrE) or checkbook (AmE)
a debit card internet banking (payments, transfers)
• What other banking services do businesses use?
Reading: Banks and financial institutions
In sert the nam es of the follow ing types of financial institutions in the s p a ce s in
the text.
commercial banks hedge funds investment banks Islamic banks
non-bank financial intermediaries private banks stockbrokers
called High Street banks in Britain) receive deposits
from, and make loans to, individuals and small
co m p an ie s.2 work
with big com panies, giving financial advice, raising
capital by issuing stocks or shares and bonds,
arranging mergers and takeover bids, and so on
They also generally offer stockbroking and portfolio
m anagement services to rich corporate and
individual clients Wealthy individuals can also use
3 - , which provide
them with banking and investm ent services, and
4 - , which are private investm ent funds for w ealthy investors (both individuals and institutions) that use a w ider variety
of (risky) investing strategies than traditional investm ent funds, in order to achieve higher returns.
In the USA, where many banks went bankrupt following the Wall Street Crash in 1929, a law
w as passed in 1934 (the Glass-Steagall Act) that
Trang 3separated commercial banks and investment
banks or stockbroking firms For the rest of the
20th century, there were regulations in the US,
Britain and Japan that prevented commercial
banks from doing investment banking business.
In other countries, including Germany and
Switzerland, large banks did all kinds of financial
business But starting in the 1980s, many rules
were ended by financial deregulation, and Glass-
Steagall was repealed in 1999 Large banks became
international conglom erates offering a complete
range of financial services that w ere previously
provided by b a n k s ,5
Vocabulary
1 Find the w ords or ex pressio n s in the text which mean the following:
1 money placed in a bank
2 a sum of money borrowed from a bank
3 the money invested in a business
4 certificates representing part-ownership of a company
5 certificates of debt issued by governments or companies to raise money
6 when one company combines with another one
7 when one company offers to buy or acqu.re another one
8 buying and selling stocks or shares for clients
9 all the investments owned by an individual or organization
10 the profits made on investments
11 unable to pay debts or continue to do business
12 the ending or relaxing of legal restrictions
13 a group of com panies, operating in different fields, which have joined together
14 the price paid for borrowing money, paid to the lenders
2 Match up the verb s in the left-hand box with the nouns in the right-hand box
to make common verb-n o u n com binations found in the text above.
and insurance com panies.
6 , in Islamic countries and major financial centres, offer interest-free banking They do not pay interest to depositors
or charge interest to borrowers, but invest in companies and share the profits (or losses) with their depositors.
Some car m anufacturers, food retailers and departm ent stores now offer products like personal loans credit cards and insurance Technically these are not banks b u t7 _
Trang 4Match up the w o rd s and definitions.
cancel a bad debt or a worthless asset from an account estim ates of people’s ability to fulfil their financial commitments failure to repay a loan
the money generated by an investm ent with property or another asset used as a guarantee of payment
• W ho do you think w as resp o n sible for the subprim e crisis? W hat did the
financial industry do w rong?
Listening 2: Microfinance U 5 I
• Do you know (and can you explain) w hat ‘m icrofinance’ is?
Anna-Kim Hyun-Seung from South Korea is a form er M BA student from the
Judge B u sin e ss School in Cam bridge w ho w orks in the not-for-profit sector
Listen to her talking about m icrofinance, and an sw e r the questions.
1 In m'crofinance, what replaces normal financial collateral?
2 What is the 'risk-management tool’ that Anna-Kim mentions?
3 Why is lending money to poor people not necessarily as risky as it sounds?
4 Why are conventional banks now developing microcredit products?
5 In which three continents are there successful microfinance schem es?
Discussion
• W hat do you think of this kind of banking initiative? W hat other initiatives like
this have you read about or heard of?
Anna-Kim Hyun-Seung
Role play: Microfinance
A m ajor bank has been rescu ed by the governm ent after losing billions of euros
on specu lative investm ents But it has lost a lot of custom ers and now has a very
bad reputation One of the directors thinks that the w ay the bank can regain
public trust and restore its reputation is to enter the m icrofinance m arket in
developing countries He/she calls a m eeting to explain the idea to colleagues
Your te a ch e r will give you a role to prepare Take part in the m eeting to decide
w hat to do.
Writing
Write m inutes of the m eeting explaining w hat decision w as taken, and why.
Trang 516 Bonds
O Consider the different types of bonds
Q Discuss mortgage-backed securities and bond funds
Lead-in
• What are the two main ways governm ents can raise
money?
• W hat are the two main ways established companies
can raise money?
• W hat are the advantages and d:sadvantages of bonds
for companies and investors?
Companies finance most of their activities by w ay
of internally generated cash flows If they need
to raise more money to expand their operations
they can either issue n ew shares - selling
them to their existing owners or on the stock
market (equity finance) - or borrow money (debt
finance), usually by issuing bonds Companies
generally use an Investment bank to issue their
bonds, and to find buyers, which are often
institutional investors like insurance companies,
mutual funds and pension funds.
Bondholders get back their original investment
(or 'principal') on a fixed maturity date, and
receive interest payments (the 'coupon') at regular
intervals (six-monthly or annually) until then.
Most bonds have fixed interest rates.
For investors, bonds are generally safer than
stocks or shares, because if an insolvent or
bankrupt company sells its assets, bondholders
are among the creditors w ho might get some
of their money back On the other hand, in the
medium or long term, shares generally pay a
higher return than bonds For companies, the
advantage of debt financing over equity financing
is that bond interest is tax deductible: companies
deduct their interest payments from their profits
before paying tax, w hile dividends paid to
shareholders come from already axed profits But debt increases a company's financial risk: bond interest has to be paid, even in a year without any profits to deduct it from, and the principal has to be repaid w h en the debt matures, whereas companies are not obliged to pay dividends or repay share capital.
If tax revenue is insufficient, governments also issue bonds to raise money, and these are considered to be a risk-free investment In the US there are Treasury notes (with a maturity of two
to ten years) and Treasury bonds (with a maturity
of ten to 30 years) w hile m Britain government bonds are known as gilt-edged stock or just gilts Bonds are saleable instruments that can be traded on the secondary bond market Banks and brokerage companies act as market makers, quoting bid and offer prices for bonds with a very small spread or difference b etw een them The price of bonds varies inversely w ith interest rates
If interest rates rise, so that n ew borrowers have
to pay a higher rate, existing bonds lose value If interest rates fall, existing bonds paying a higher interest rate than the market rate increase in value Consequently the yield of a bond - how much income it gives - depends on its purchase price as w ell as its coupon.
Trang 6Are the following statem ents true or false?
1 Companies regularly finance their activities by issuing bonds.
2 Bond-issuing com panies use investm ent banks to find investors.
3 Bonds are repaid at 100% when they mature, unless the borrower is insolvent.
4 Bondholders get their money back if a company goes bankrupt.
5 Bond coupons are generally lower than share dividends.
6 For profitable com panies, there are tax advantages to issuing stocks or shares rather than
bonds.
7 Governments system atically finance public spending by issuing bonds.
8 A bond paying 5% interest would lose in value if interest rates fell to 4%.
Vocabulary
1 Find w ords in the text that mean the following:
1 the money a com pany receives minus the money it spends during a certain period
2 part ownership of a company in the form of stocks or shares
3 funds operated by investm ent companies that invest people's money in var ous assets
4 funds that invest money that will be paid to people after they retire from work
5 the amount of capital making up a bond or other loan
6 the length of time for which a bond is issued (until it is repaid)
7 the amount of interest that a bond pays
8 unable to pay debts
9 people or institutions to whom money is owed
10 payments by companies to their shareholders
11 businesses that buy and sell securities
12 the price at which a buyer is prepared to buy a security at a particular time
13 the price at which a seller is prepared to sell a security at a particular time
14 the rate of income an investor receives from a security
2 Match up the verbs on the left with the nouns on the right to make common
verb-noun com binations found in the text Som e of the verb s and nouns are
used more than once.
Trang 717 Stocks and shares
Q Cons:dei the uses of stocks and shares and ways of talking about price changes
O Discuss different possible investments
Lead-in
• putting it under the mattress
• buying a lottery ticket
• taking it all to Las Vegas or Monte Carlo
• depositing it in a bank
• buying gold
• buying a painting (Matisse, Van Gogh, etc.)
investing in property or real estate buying bonds
• buying stocks or shares
• investing in a hedge fund
Trang 8Reading: Stocks and shares
Match up the half-sentences below, w hich make up a text about sto ck s and
shares.
1 Successful companies can issue stocks or shares
(certificates representing part ownership of the
company)
2 Offering these stocks for sale to financial institutions
and the general public changes the business
3 Selling stocks foi the first time is called an IPO or
in'tial public offering in the US
4 Companies use an investm ent bank to find buyers,
and to underwrite the stock issue,
5 Stocks and shares are also known as equity or
equities; the m ost common form
6 A fter shares have been issued they can be traded
on the secondary market at
7 Some stock exchanges have automatic
com puterized trading system s that match up
buyers and sellers; others have market makers
-8 Stock prices rise and fall depending on supply and
demand,
9 Consequently the nominal value of a share - the
price written on it - is rarely the same as its market
price
-10 Companies either distribute part of their profits to
shareholders as an annual dividend,
11 Stock markets are measured by stock indexes (or
indices),
12 A period during which most stocks (and the stock
index) are rising is called a bull market,
Discussion
1 Many economists argue that it is (theoretically) impossible to regularly outperform the
stock m arket, as all available information is already factored into a com pany’s share
price So analysing a com pany’s finances, or trying to discover or predict patterns in
price movements, is a waste of time What implications does this have for investors?
2 Imagine that you have just come from a secret meeting of a company's board of
directors, which has made a decision that you know will financially ruin some close
friends of yours unless they can sell some shares before the board's decision becomes
known You are having dinner at their home that same evening Should they expect you
to warn them7 Should you do so?
3 How can you make money from a falling stock market (when prices are going down)?
A and a flotation or an IPO in Britain.
B and one in which most of them fall in
value is a bear market.
C the stock exchange on which the
company is listed or quoted.
D from a private to a public company, and
is called going public.
E i.e how many sellers and buyers there
are.
F i.e to guarantee to buy the stocks if
there are not enough other buyers.
G is called common stock in the US, and
ordinary shares in Britain.
H or keep the profits in the company,
which also causes the value of the stocks to rise.
I the price it is currently being traded at
on the stock exchange.
J to raise capital to expand their
operations.
K traders in stocks who quote bid (buying)
and offer (selling) prices.
L which show changes in the average
prices of a selected group of important stocks.
Trang 9Vocabulary
Rather than en d le ssly repeating the w o rd s ‘ro se’ and ‘fell’, financial jo u rn alists
use a large num ber of verbs and p h rases to describ e the m ovem ents of secu rity
prices C lassify the following se n te n ce s, according to w h eth er you think the verb
Volkswagen shares rocketed after the 7
revelation that Porsche has upped its stake in
the com pany to 74%.
The Sensex index of the Bombay Stock 8
Exchange crashed on Monday on fears of a
Visa shot up yesterday on the NYSE on its
first trading day, rising as high as $69 a share 1 0 _
The Footsie revived a little in London in the
afternoon, gaining 30 points in late trading 11 _
After the strong gains of last week, Asian
shares slipped on fears of a looming
In Milan, the 5&P/MIB index plummeted, after
the unions called for a three-day general
strike next w eek.
Reading: Hedge funds
Hedge funds are private investm ent funds for w ealthy investors that trade
in se cu ritie s and derivatives, and try to get high returns w h e th e r m arkets
move up or dow n Read the follow ing extract from Geraint A n d e rso n ’s
book Cityboy, w hich explains one of the m ajor strategies of hedge funds,
and an sw e r the questions.
The rise of hedge funds began in earnest around
2001 By then stock markets had been in decline
for around a year after the bursting of the tech
bubble With no end to the bear market in sight
investors wanted to make returns that were
not geared to the performance of the stock
market They wished to make an absolute return
even if stock markets fell They demanded
what Cityboys, in their never-ending m ission
to confuse the general public, like to call
k io iu u s in d u s i L u m x M iiA jia iis e m r o a w M i j r HOWMD M UttS
CflYBOY
BEER AND LOATHING
IN THE SQUARE MILE
Geraint Anderson
‘Aipha’ not ‘B eta’
Hence, hedge funds became increasingly popular since, unlike conventional ‘long- only’ funds, they can ‘short’ shares That is to say, they can sell shares they don’t own by borrowing them off a conventional fund so that when the share price falls they make a profit by buying them back at
Trang 1019 Accounting and financial statements
O Consider the different types of accounting and financial
statements
0 Discuss a company's financial results
Lead-in
■ What is accounting?
• What skills do you think accountants need?
■ Do you think you have these skiIIs? (What are yo ur assets
and liabilities?)
• If you have not yet chosen a career, could it be accountancy?
Vocabulary "Perhaps we could find a way to redefine 'profit'."
1 W hich basic accounting w ords are defined beiow ? © The New Yorker
1 all the money received from business activities during a given period
A assets B income C transactions
2 all the money that a business spends on goods or services during a given period
A debts B expenditure C liabilities
3 a financial operating plan showing expected income and expenditure
A account B budget C financial statem ent
4 anything owned by a business - cash, buildings, machines, equipment, etc.
5 all the money that a com pany will have to pay to someone else in the future,
including debts, taxes and interest payments
A debits B expenditure C liabilities
6 an entry in an account, recording a payment made
7 an entry in an account, recording a payment received
8 adjective describing something without a material existence, which you can't touch
A current B intangible C tangible
9 adjective describing a liability which has been incurred but not yet invoiced to the
company
A accrued B deferred C receivable
10 delayed or postponed until a later time
A deferred B payable C retained
2 How w ell do you know the different types of accounting and the different
b ranches of the accounting (or accountancy) profession? M atch the term s
with the definitions in the box below.
accounting auditing bookkeeping cost accounting
'creative accounting' managenal or management accounting tax accounting
1 calculating all the expenses involved in producing something, including materials,
labour, and all other expenses
Trang 112 calculating how much an individual or a company will have to pay to the local and
national governm ents (and trying to reduce this to a minimum)
3 inspecting and reporting on accounts and financial records
4 preparing financial statem ents showing income and expenditure, assets and
liabilities
5 providing information that will allow a business to make decisions, plan future
operations and develop business strategies
6 using all available accounting procedures and tricks to disguise the true financial
position of a company
7 writing down the details of transactions (debits and credits)
• W hich of th ese areas of accounting do you find the m ost interesting?
3 M atch up the nam es of the financial statem ents with the definitions below.
1 Balance sheet (or 2 Cash flow statem ent 3 Income statem ent (or
Statem ent of financial Statem ent of income, Profit
Profit and loss account)
A a statem ent giving details of money coming into and leaving the business, divided
into day-to-day operations, investing and financing
B a statem ent showing the difference between the revenues and expenses of a period
C a statem ent showing the value of a business's assets, its liabilities, and its cap.tal or
shareholders' equity (money the business has that belongs to its owners)
4 M ake comm on w ord com binations with the verbs and nouns below.
questions.
Reading 1: Google Inc Balance sheet
Look at the balance sh e e t opposite, and an sw er th ese
1 Which lines on the balance sheet do the definitions 4
below it refer to? (Two have been done as
examples.)
2 Which two figures have to be the same (to balance),
by definition7
3 How much money had the company already paid in
advance for goods and services, on the date of the
2008 balance sheet?
At the 2008 balance sheet date which is greater, the amount of capital the shareholders have paid into the com pany or the amount of profit that has not been spent?
5 At the 2008 balance sheet date, which total is
higher - the money Googie currently owes, or the money that it is owed?
Trang 12Cash & Equivalents 8,656 67 6,081.59
Short Term Investments 7,189.10 8,137.02
Total Receivables, Net 2,642.19 2,162.53
Prepaid Expenses 1,404.11 694.21
Other Current Assets, Total 286.11 213.79
Total Current Assets 20.178.18 17,289.14
Property/Plant/Equipment, Total - Gross 5,233.84 4,039.26
Goodwill, Net (10) 4,839.85 2,299.37
Intangibles, Net 996.69 446.60
Long Term Investments 85.16 1,059.69
Other Long Teim Assets Total 433 85 201.75
Total Assets 31,767.57 25,335.81
Accounts Payable 178.00 282.11
Accrued Expenses 1,824.46 1,575.42
Other Current Liabilities Total 299.63 178.07
Total Current Liabilities 2.302.09 2.035.60
Deferred Income Tax 12.51 0.00
Other Long Term Liabilities, Total 1,214.11 610.53
Total Liabilities 3.528.71 2,646.13
Common Stock, Total 0.31 0.31
Additional Paid-In Capital 14,450.34 13 241.22
Retained Earnings (8) 13,561.63 9,334.78
Other Equity, Total 226.58 113.37
Total Equity 28.238.86 22,689.68
Total Liabilities & Shareholders' Equity 31.767.57 25,335.81
1 all the money belonging to the company's owners
2 assets w hose value can only be turned into cash with difficulty (e.g reputation,
patents, trade marks, etc.)
3 capital that shareholders have contributed to the com pany above the nominal or
par value of the stock
4 expenses such as w ages, taxes and interest that have not yet been paid at the
date of the balance sheet
5 money owed by custom ers for goods or services purchased on credit
6 money owed to suppliers for purchases made on credit
7 money paid in advance for goods and services
8 profits that have not been distributed to snareholders
9 tangible assets such as offices, machines, etc.
10 the difference between the purchase price of acquired companies and their net
tangible assets
1 1 the total amount of money owed that the com pany will have to pay out
Trang 14CHAPTER 1: BANKING (UNIT 1 4 )
1 current account: tai khoan vang lai/ tai 33 institution (n): to chuc
khoan thanh toan 34 strategy (n): chien luoc
2 savings account: tai khoan tiet kiem 35 fund (n): quy
3 deposit account: tai khoan tien gui 36 returns (n): chi so sinh loi
4 to deposit: gui tien (vao tai khoan), dat coc 37 go burst: pha san = go bankrupt
5 depositor (n): nguai gui tien 38 insolvency (n)= su vo no
6 retail deposits (n): tien gui ca nhan 39 regulation (n): quy dinh
7 commercial bank: ngan hang thuang mai 40 financial deregulation (n): tu do hoa tai
8 hedge fund: quy dau tu mao hiem chinh
9 investment bank: ngan hang dau tu 41 conglomerate (n): tap doan
10 private bank: ngan hang tu nhan 42 interest (n): tien lai
11 non-bank financial intermediary: to chuc 43 interest rate (n): lai suat (%)
trung gian tai chinh phi ngan hang 44 certificate (n); giay chung nhan
12 retail bank: ngan hang ban le 45 represent (v): dai dien
13 central bank (n): ngan hang trung uang 46 subprime borrower (n): nguai vay duai
15 checkbook: so chi phieu 47 subprime mortgage (n): khoan vay cho
16 credit card: the tin dung nguai vay duai chuan
17 debit card: the ghi no 48 credit rating (n): xep hang tin dung
18 a loan: khoan vay ngan hang 49 corporate credit-rating agency: to chuc xep
19 foreign currency: (n) ngoai te hang tin dung doanh nghiep
20 mortgage (v, n): the chap, tai san the chap 50 risk (n): rui ro
21 asset (n): tai san 51 on default (n): vo no
22 overdraft (n): thau chi 52 securities (n): chung khoan
23 transfer (v, n): chuyen khoan 53 mortgage-backed securities: chung khoan
24 raise capital: huy dong von bao dam bang tai san the chap
25 to issue (v): phat hanh 54 collateral (n): tien ky quy
26 merger (n): vu sat nhap (cong ty) 55 debt (n): mon no
27 acquisition (n)=> to acquire: thau tom 56 mutual fund (n): quy tuang ho
28 takeover bid (n): thuang vu mua lai cong 58 securitization (n): chung khoan hoa
29 stockbroker (n): nguai moi giai 60 credit crisis (n): khung hoang tin dung
30 portfolio (n): danh muc dau tu 61 to write off: xoa bo tai khoan xau
31 corporate (n): doanh nghiep 62 part-ownership (n): nguai dong so huu
32 wealthy (adj): giau co
I M A T C H IN G
investment bank acquisition go burst corporate credit-rating agency
consumer lending collapse default high-risk
1 an activity when one company joins with another company to create a larger company
2 money which is lent to private individuals
3 an entity that advises companies on how they can grow by joining with, or buying other companies
Trang 154 an activity when one company buys another company or part of another company
5 another word for “go bankrupt”
6 private investment funds for wealthy investors that trade in securities and derivatives, and try to get high returns whether markets move up or down
7 fail to repay a loan
8 finance for a newly set-up company
9 when a company, organisation or system suddenly fails or becomes too weak to continue
10 the official bank o f a country
11 a company that calculates the risk of lending to or investing in a company or its financial products
12 an adjective to show a project that is likely to fail in the early stages, but could bring a highrate o f return in the later stages
bid subprime mortgage stockbroking deregulation
cash flow conglomerate retail deposits credit rating
1 a loan to buy a house which has been given to a borrower with a poor credit rating
2 the money that goes in and out o f the company, or the money generated by an investment
3 unable to pay debts or continue to do business
4 an estimation o f someone’s ability to fulfill their financial commitments
5 buying and selling stocks or shares for clients
6 a sum o f money borrowed from a bank
7 a group o f companies, operating in different fields, which have joined together
8 assets which are promised by a borrower to a lender if the borrower cannot repay a loan (alsoknown as security)
9 the price at which a buyer is prepared to buy a security at a particular time
10 cancel the bad debt or a worthless asset from an account
11 the money that savers put into banks
12 the ending or relaxing o f legal restrictions
II V O C A B U L A R Y
1 Money in notes and coins is c a lle d
2 The dollar, yuan and yen are a l l
3 Money borrowed from a bank is a
4 Money paid by the government or a company to a retired person is a
Trang 16A pension B refund C interest D insurance
5 The money needed to start a company is c a lle d
6 is a debt instrument or legal agreement to borrow money from a bank,especially to buy a house or other property
7 The borrowers who have low credit ratings or can default on a loan are called borrowers
8 If you have an , it means you have spent more money than you have in yourbank account
A overdraft B intermediary C company D debt
9 mean the certificates o f debt issued by governments or companies to raisemoney
A bonds B institution C ownership D collateral
1 0 refers to a calculation o f the ability o f a person, business, or government topay their debts
A pension fund B financial deregulation C takeover bid D credit ratingIII C L O Z E T E X T S
Text 1
Banks make their money on the difference between what they pay out in interest ondeposits and what they get in as interest from its loans Nowadays, many banks ( 1 ) _ theircustomers credit cards Any customer can ( 2 ) _ for a credit card If the bank thinks thecustomer is a good risk, it will issue him with a card and inform him o f his personal credit (3) _ For example, the bank might allow a customer a limit o f €250 per month This means thatevery month the customer can use his card to pay for €250 ( 4 ) _ o f goods and services or toborrow €250 in cash, travellers’ cheques or foreign currency It does not matter if the customer’s bank account is empty, when he spends or borrows the €250
At the end o f the month, the bank will send the customer a ( 5 ) _ If the customerclears his account every month, the facility will ( 6 ) _ him nothing He will have a m onth’scredit free However, if the customer fails to clear his account every month, he will be ( 7 ) _some interest per month on the outstanding ( 8 ) _ Therefore, this alternative form o f moneycan become very expensive
Trang 17Text 2
policies counter transactions for withdrawals carry
UBCS international is a leading international bank We (1) _ an excellent range ofproducts and services, including current accounts, savings accounts, mortgages, insurances, loans, foreign exchange services and investment advice We have 2000 employees in our head office in Frankfurt and 3,800 in our 320 branches in Europe, the Middle East and Asia We give our trainees experience in all our departments:
* Our cashiers serve the bank’s customers They help customers make deposits and(2) _ , check balances, answer questions and help customers (3) _ their everydaybanking needs
* At our foreign exchange (4) _ , the cashiers sell foreign currency to customers whowant to go abroad
* Our mortgage advisers arrange mortgages for customers who want to buy property.They set up insurance (5) _
* Our financial advisers give customers information about stocks and shares, bonds and other types o f investments
Customers can use the bank’s website to (6) _ out payments and othertransitions over the Internet This form o f banking can be done outside business hours and fromanywhere with Internet (7) _ Features o f Internet banking include payment of bills, fundtransfers, loan (8 ) _ , and viewing bank statements
Text 3
Banks make their money on the difference between what they pay out in interest ondeposits and what they get in as interest from its ( 1 ) _ For the majority o f homeowners, thepurchase o f their property is financed by a mortgage The bank or building society which lendsthe money to buy a property is called a mortgage (2) _ or mortgagee The person whoborrows money ( 3 ) _ the form o f a mortgage is called a mortgage borrower or mortgagor.There are several different types o f mortgages on the market Probably the most common is arepayment mortgage, in which the capital sum and the ( 4 ) _ are paid in installments over along period (for example, 25 years) An alternative is an interest-only mortgage, in which theinterest is paid, and the capital sum is ( 5 ) _ in another way, for example with an assurancepolicy This type o f mortgage is known (6) _ an endowment mortgage With an offsetmortgage, the mortgage borrower's current account is ( 7 ) _ with her/his mortgage Providedthe current account is usually in credit, this can (8) the interest repayments on the mortgage
Trang 18Text 4
Banks are places where people can keep their money M ost people use banks to savemoney in their savings accounts and to pay money from their checking accounts Today, when aperson earns money from their job, their paycheck is often electronically ( 1 ) _ into theirsavings account Then, he or she can pay their bills by writing checks from their checking accounts or pay online where their bills are electronically (2) _ to their bank accounts
Banks also give ( 3 ) _ to people Banks use the money that their customers deposit tolend to people to buy new houses, cars, or to start businesses The bank makes money fromlending by charging (4) _ In other words, people have to pay back more than theyborrowed This amount depends on how ( 5 ) _ the bank thinks the borrower is and how fastthe loan is paid back among other things
Banks (6) _ many different jobs, from trainee cashier right up to senior accountmanager or investment analyst Many jobs are in specialist areas such as IT or corporate bankingfor business customers Some banks have call centers where service advisers answer ( 7 ) _enquiries In the UK today, building societies, insurance companies and even supermarkets can offer the same services as banks There is a lot o f competition, so banks always need top-qualitystaff ( 8 ) _ good communication skills
IV R E A D IN G C O M R E H E N S IO N
Text 1
Banks are very important for the functioning o f the modern world Banks enable people
to save money, borrow money and to pay for things with ease and security Each country in the world has its own well-known banks that have branches in nearly every city so that they are convenient for people to use There are also some very big multinational banks that have branches in most countries in the world Each bank will also have a head office This is where all central tasks are performed that let the local branches function The people that work in the branches will be the bank manager and various tellers who work behind the bank counter and help the customers There will also likely be security guards to protect the money, workers and customers
M ost customers will just need to see the tellers when they go to the bank if they are paying money into their account However, they might need to see the bank manager if they want
to open an account, if they want to borrow money and get a loan, or if they have spent more money than there was in the account
Banks also offer their customers the more convenient methods o f using either a debit card
or credit card because they just need to carry a small plastic card to be able to pay for anything
Trang 19When paying with a plastic card, customers will need to either sign a receipt or enter a PIN number to confirm the purchase and that they are authorized to use the card.
1 According to the text, what could people do with the banking services?
2 W hat is the function o f the head office o f a bank?
3 W hat is the role of the bank teller?
4 W hat happens when a bank customer spends more money than they have in their account?
5 Why is a debit card or credit card convenient?
Text 2
Commercial or retail banks are businesses that trade in money They receive and hold deposits, pay money according to customers’ instructions, lend money, offer investment advice, exchange foreign currency and so on They make a profit from the difference (known as a margin) between the interest rates they pay to lenders or depositors and those they charge to borrowers Banks also create credit, because the money they lend is generally spent either on goods or services, or to settle debts and in this way transferred to another bank account - often
by way o f a bank transfer or a check- from where it can be lent to another borrower and so on When lending money, bankers have to find a balance between yield and risk and between liquidity and different maturities so that the banks could make a profit
Investment banks in Britain raise funds for industry on the various financial markets, finance international trade, issue and underwrite securities, deal with takeovers and mergers and issue government bonds They also generally offer stockbroking and portfolio management services to rich corporate and individual clients Investment banks in the USA are similar, but they can only offer advisory services and do not offer loans Investment banks make their profits from the fees and commissions they charge for their services
1 List 3 functions o f a commercial bank
2 How can the commercial banks make profits?
3 How can commercial banks create credit?
Trang 204 W hat should the bankers do when lending money to make sure that their banks could make a profit?
5 W hat are the differences between British and American investment banks?
Text 3
BA NK A CCO U N TSThere are different kinds o f bank accounts The most popular are the current and deposit accounts A current account pays no interest but it has other advantages Firstly, it enables people
to keep their money in a safe place Secondly, it allows them to withdraw it at any time Thirdly,
it provides them with a chequebook so that they do not have to carry a lot o f cash
To open a current account, it is necessary to see the branch manager He has to decide whether the applicant is likely to keep the account in credit A current account holder can only overdraw with the manager’s permission The manager will therefore want to meet the applicant
to get the necessary background information For example, he will want to know the applicant’s occupation and his place o f work He will also probably want a reference from his/her employer
If the manager is satisfied with the applicant after the interview, he will approve the application, arrange for the applicant to be given a chequebook and arrange for a monthly statement to be sent to him/her
A deposit account is another popular kind o f account It has advantages over a current account First o f all, it is easier to open than a current account There is no need to see the manager A customer only has to fill in a form and then deposit the minimum amount of money required by the bank The customer is then given a passbook which he must bring to the bank every time he wishes to withdraw or deposit money The passbook is the customer’s record of the account Secondly, a deposit account earns interest for the customer The bank invests the money that the customer pays in and, in return, the bank pays the customer interest
1 W hat is the disadvantage o f the current account?
2 W hat is the purpose o f the cheque book?
3 W hat is the role o f the branch manager?
4 Why does the branch manager want to meet the applicant if the customer wants to open a current account?
Trang 215 List 2 advantages o f the deposit account over the current account.
Text 4
BA N K IN G O N LIN EMore and more people are choosing to do their personal banking on-line But what can on-line banking offer that other types o f banking can’t?
Firstly, by banking on-line you are not limited to a bank’s opening hours You can check your bank account 24 hours a day, whenever it suits you Transferring money from a savings account to a current account, opening an account or seeing how much interest you have earned, will take you just a few seconds Compare that with the time you need to come to your local bank, queue up and carry out your transaction
On-line banking offers you numerous other services, from buying shares, to making deposits, to ordering chequebooks, to paying bills For many people a particularly useful feature
o f this kind o f banking is the fact that you have access to a large database, which contains details
o f all your accounts and the business you have done over the years
All you need is an Internet connection to download the financial data onto your computer You may not be able to pay cash online So, on-line banking does offer many benefits
At present, banks especially those engaged in foreign trade and foreign exchange transactions find it useful to become part o f the international electronic message switching network operated by “ SWIFT” The acronym stands for the Society for Worldwide Interbank Financial Telecommunications which provides the network that enables financial institutions to send and receive information about financial transactions in a secure, standardized and reliable environment
1 When can we check the account online?
2 How long does it take to check the interest you have earned in the banking online?
3 According to the reading text, what is the database?
4 W hat is the full name o f SWIFT?
5 W hat is the function of SWIFT?
Trang 22V E N G L IS H -V IE T N A M E S E T R A N S L A T IO N
1 When a company cannot pay its creditors, it is called “insolvency”
2 The company stopped trading, and its assets were sold to pay off its creditors
3 Retail banks receive deposits from, and make loans to, individuals and small companies
4 Commercial banks give financial advice, raise capital by issuing stocks or bonds, and arrange mergers and takeover
5 Commercial banks generally offer stockbroking and portfolio management services to corporate and rich clients
6 Hedge funds use a variety o f risky investing strategies in order to achieve high returns
7 There were regulations in the US, Britain and Japan that prevented commercial banks from doing investment businesses
8 Nowadays, large banks became international conglomerates offering a complete range of financial services
9 Islamic banks do not pay interest to depositors, but invest in companies and share the profits
or losses with their depositors (Islamic banks = ngan hang Hoi giao)
10 Some food retailers and department stores now offer products like personal loans, credit cards and insurance
Trang 2311 The subprime borrowers are those with poor credit ratings and a high risk o f default.
12 During the housing crisis, many banks in the USA went bankrupt, and others had to be rescued by governments
13 We think that that company looks particularly promising because it claims a very high internal rate o f return
14 Every company in a portfolio needs to give a potentially high return, because the winners will eventually have to cover the losers
15 The Central bank suffered from criticism for its failure to foresee the consequences o f the
US subprime mortgage lending crisis
VI S E N T E N C E C O M P L E T IO N
1 The banks can help us
2 In order to open an account in our bank, you need to
3 I decided to open my account in this bank because
4 All banking services nowadays
5 The services at this bank
6 I do not like that bank very much because
7 Because today is his first day as a banker,
8 Online banking is becoming popular because
Trang 249 If you want to open an account in our bank,
10 This bank refused to lend him the money because
11 Peter would like to borrow some money to buy a house,
12 Many banks try to attract more customers by
13 Many international banks in Vietnam
14 If you want to borrow money, you
15 Recently, many foreign investment banks have
16 The Central bank
Trang 25CHAPTER 2: BONDS (UNIT 1 6 )
1 bond (corporate bond/government bond) 21 returns (n): lai tuc
2 junk bonds (n): trai khoan bap benh, trai 22 to deduct => deductible: giam tru
phieu lai cao 23 dividend (n): co tuc
3 to finance = cap von 24 risk-free (adj): khong rui ro
4 generate (cash): tao ra tien mat 25 Treasury: kho bac
5 operation: tinh hinh hoat dong 26 gilt (n): trai phieu thuong dang
6 existing: (adj) hien hanh 27 to quote bid: dinh gia mua
7 equity finance: huy dong them von co 28 to offer price: ra gia ban
8 debt finance (n): huy dong von vay (bang 30 yield (n): loi nhuan
cach phat hanh trai phieu hay vay no) 31 kickstart: tao cu hich, kich thich
9 institutional investor: nha dau tu to chuc 32 to soar: tang vut, tang vot
10 mutual fund: quy tuang ho (duoc dieu 33 to plunge into: lao doc
hanh boi cong ty dau tu) 34 unveil (v): tiet lo
11 bondholder: nguoi mua trai phieu 35 to speculate => speculator (n): dau ca
12 principal: khoan vay goc 36 par value: gia danh nghia
13 fixed ^ variable: co dinh 37 benchmark (n); muc chuan
14 mature (adj) => maturity (n): het han 38 auction (n, v): dau gia
15 interval: ki thanh toan 39 measure (n): bien phap
16 coupon: trai tuc (lai trai phieu) 40 recession: suy thoai kinh te
17 to default on the loan: vo no 41 crisis: khung hoang
18 creditor: chu no 42 potential (adj): tiem nang
19 credit history (n): qua trinh vay muon 43 to be on offer: dang duoc chao ban
20 credit risk (n): rui ro tin dung
I M A T C H IN G
1 people or institutions to whom money is owed
2 a public sale at which things are sold to the people who offer to pay the highest
3 a standard used when comparing other things
4 part ownership o f a company in the form o f stocks or shares
5 the amount o f capital making up a bond or other loan
6 a company or bank that makes certain assets or securities such as bonds available for sale
7 the government department in charge o f the money that a government collects in taxes and from borrowing, and the money that it spends
8 the length o f time for which a bond is issued (until it is repaid)
Trang 269 the money a company receives minus the money it spends during a certain period:
10 the amount o f interest that a bond pays
11 the rate o f income an investor receives from a security
12 the reduction o f a country’s gross domestic product (GDP), usually for at least two quarters
of a year
13 an improvement or increase in prices
14 to revive or stimulate something
15 a type o f money that start-up entrepreneurs need by borrowing
16 the price at which a seller is prepared to sell a security at a particular time
17 to rise quickly
18 to invest money in ways that could produce a large profit but that also involve a lot o f risk:
19 a legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period o f years
20 to state a current market price o f a security
II V O C A B U L A R Y
1 When the bond i s , you can change it for money
2 Companies finance most o f their activities by way o f in tern ally cash flows
A imported B invetsed C created D generated
3 If a company needs to raise more money to their operations, they can eitherissue new shares or borrow money
4 The original investment that bondholders get is also called a s
5 Bondholders receive interest payments at re g u la r
A security B intervals C instruments D trades
6 When a limited company b e c o m e , it is likely to go into liquidation
A principal B insolvent C interval D coupon
7 The money a lender receives from a loan or an investment is expressed as i t s or yield
8 If your business fails, the bank will be the first in a long line o f to get their money back
A creditors B debtors C borrowers D lenders
9 C om panies their interest payments from their profits before paying tax
Trang 2710 If tax revenue is insufficient, governments also issue bonds to raise money, and these areconsidered to be a investment.
A risk-free B kickstart C coupon D default
11 In Britain, government bonds are also known a s
12 In the UK, Treasury bonds have a o f ten to 30 years
13 Bonds are saleable instruments that can b e on the secondary bond market
14 Banks and brokerage companies bid and offer prices for bonds with a very smalldifference between them
15 T h e of a bond refers to how much income it gives
III G R A M M A R
1 High-yield b o n d s to grow in popularity since the world plunged into recession last year
A started B have started C were starting D start
2 Bonds are saleable instruments t h a t on the secondary bond market
A can trade B can trading C can be traded D are trading
3 The bank i s a minimum rate of 8 per cent for the loan
4 Since he defaulted on his mortgage payments, the b a n k possession on his house
5 Business con d itio n s that much in the next financial year
A inprove B have improved C don’t improve D w on’t improve
6 Shares generally a higher return than bonds
7 the long term, this situation will make the economy speed downward
8 If a bankrupt company sells its assets, bondholders are the creditors who might getsome o f their money back
9 Dividends p a id shareholders come from already-taxed profits
10 Customers can buy these b o n d s the stock exchange market
Trang 28IV C L O Z E T E X T S
Text 1
I ’d like to discuss about three basic investment ( 1 ) First, you can buy shares Youthen become a shareholder, that is part ( 2 ) _ of a company When the company makes aprofit, the shareholders get a share o f that profit This payment is called a ( 3 ) _ The price ofshares can go up or down, so there is no guarantee you can make a profit when you sell yourshares However, share prices can ( 4 ) _ a lot, so you can make a lot of money Bonds areanother type o f investment When you buy a bond, you are lending your money to a company, or sometimes to a government In return, they agree to pay you a fixed rate o f interest on yourmoney In addition, you get your ( 5 ) _ back on a certain date in the future This is called thedate when the bond ( 6 ) _ There is little risk here, but the returns are quite low Finally, youcan invest in a mutual fund This is a ( 7 ) _ o f shares and bonds You put your moneytogether with money from other investors You pay a financial professional, a fund manager, to handle your investment The fund manager decides what shares and bonds to buy and sell There isn’t a predictable rate o f ( 8 ) _ Your earnings change from day to day
Text 2
Investment means using money to buy something (an asset) with the aim o f making a (1) _ by selling that asset at a higher price sometime in the future There are many differenttypes o f investments Some people put their money in art, stamps, or coins Other people invest( 2 ) _ shares and become part owners o f a company N ot only can they make a profit byselling those shares at a higher price than they paid for them, but they can receive a ( 3 ) _ - ashare o f the profits which the company gives to its ( 4 ) _ every year People often ask aboutthe difference between savings and investments Sometimes the two terms appearinterchangeable, but there is a big difference Quite simply, investment ( 5 ) _ some kinds ofcapital risk There is no guarantee that you will make a profit In fact, the price o f your assetsmay fall and you may not even get back your ( 6 ) _ , the money you put in Some banks calltheir savings accounts 'investment accounts', but this is wrong The only risk o f savings accounts
is that inflation will ( 7 ) _ the value o f the money you put in them There is no ( 8 ) oflosing your capital
Text 3
Trang 29down earnings investment capital rate in
There are three basic (1) options First, you can buy shares You then become ashareholder, a part owner of a company When the company makes a profit, the shareholders get
a (2) _ of that profit This payment is called a dividend The price o f shares can go up or (3) _ , so there is no guarantee that you can make a profit when you sell your shares However,share prices can rise a lot, so you can make a lot o f money Bonds are another type ofinvestment W hen you buy a bond, you are ( 4 ) _ your money to a company, or sometimes to
a government In return, they agree to pay you a fixed ( 5 ) _ o f interest on your money Inaddition, you get your capital back on a certain date in the future This is called the date when thebond ( 6 ) _ There is little risk here, but the returns are quite low Finally, you can invest in amutual fund This is a collection o f shares and bonds You put your money together with money from other investors It is sometimes called an ‘open- end fund’ because new investors can jointhe ( 7 ) _ at any time You pay a financial professional or a fund manager to handle yourinvestment The fund manager decides what shares and bonds to buy and sell There isn’t a predictable rate o f return Your ( 8 ) change from day to day
Text 4
A financial institution, such as a ( 1 ) _ , buys a loan from a (2) _ who has alreadylent an amount o f money to a (3) _ (another person or institution) This means that thefinancial institution now has the right to collect the (4) _ on the original borrower’s loan Itthen uses the expectation o f receiving these as security for a (5) _ , which it issues to anindividual or corporate (6) _ , in return for a specific amount o f money, which the financialinstitution promises to repay the investor at a later date The financial institution also uses the(7) _ borrower’s repayments to make payments to the bond holder until the date when thebond is repaid Both the financial institution who bought the loan and (8) _ it in the form o f abond, and the bank who originally sold the loan to the financial institution, use the capital they have received from their sales to improve their financial situation or increase their activities They lend that money to more borrowers, and sell on these loans to other institutions, who then securitize them And so it goes on
Trang 30V R E A D IN G C O M P R E H E N S IO N
Text 1
BA N K IN G O N LIN EMore and more people are choosing to do their personal banking on-line But what can on-line banking offer that other types o f banking can’t?
Firstly, by banking on-line you are not limited to a bank’s opening hours You can check your bank account 24 hours a day, whenever it suits you Transferring money from a savings account to a current account, opening an account or seeing how much interest you have earned, will take you just a few seconds Compare that with the time you need to come to your local bank, queue up and carry out your transaction
On-line banking offers you numerous other services, from buying shares, to making deposits, to ordering cheque books, to paying bills For many people a particularly useful feature
o f this kind o f banking is the fact that you have access to a large database, which contains details
o f all your accounts and the business you have done over the years
All you need is an Internet connection to download the financial data onto your computer You may not be able to pay cash online So, on-line banking does offer many benefits
At present banks especially those engaged in foreign trade and foreign exchange transactions find it useful to become part o f the international electronic message switching network operated by “ SWIFT” The acronym stands for the Society for Worldwide Interbank Financial Telecommunications which provides the network that enables financial institutions to send and receive information about financial transactions in a secure, standardized and reliable environment
1 When can we check the account online?
2 How long does it take to check the interest you have earned in the banking online?
3 According to the reading text, what is the database?
4 W hat is the full name o f SWIFT?
5 W hat is the function o f SWIFT?
Trang 31Text 2
BANK LOANSRecently banks have started to offer many new facilities to their customers There are new types of accounts, cheque cards, cash cards, credit cards, insurance cover, investment services However, one o f the most important services banks offer is that they lend money to their customers The methods available for a customer to borrow and the rate o f interest vary from country to country and bank to bank
One way o f borrowing is to overdraw on your account This is useful if you only wish to borrow a small amount for a short time The interest rate on overdrafts depends upon the bank rate In the U K at the moment it is 12 % over base rate You can only have an overdraft with your manager’s permission
Another way is to arrange a ’personal loan’ A personal loan is for a fixed period o f time usually 3-5years Many people take out a personal loan, for example, to buy a car Each month the customer makes a payment on the loan to the bank The main advantage of a personal loan is that the interest rate is fixed In the U K at the moment it is 19 % O f course, for both a personalloan and a long-term loan the bank requires some kind o f security e.g., shares
1 W hat facilities have banks started to offer their customers?
2 When is it useful to overdraw on the account?
3 According to the text, what is the requirement to have an overdraft?
4 What does the customer have to do every month when he takes out a personal loan?
5 According to the text, what is the requirement to take out a personal loan?
Text 3
Banks are financial institutions that accept deposits from citizens and pay interest in return However, banks are not all service institutions, most banks operate in order to make a profit Even if they are a non-profit organization, they have to make money in their operation in order to pay expenses Banks do this in a variety o f ways
First, they charge interest on loans from their depositors and from the government They pay interest to depositors but charge a higher rate on money they lend out For example, a bank may pay 3% on a savings account but charge 9.5% in interest on a loan In the case o f money borrowed from the government, banks pay a percentage rate on money they borrow, which is
Trang 32called the discount rate Banks then lend that money and charge a higher rate on the loan than the rate that they pay It’s called using other people’s money!
Second, banks use depositors’ money to make money They do this by giving loans and earning interest These loans are usually real estate loans, sometimes they are car loans, student loans, etc Some banks make commercial real estate loans, others do not Recently, there have been the mergers between banks and investment institutions They do this so that they could step into rather dangerous business areas o f investing and being connected to the stock market
Third, banks charge fees Today banks have fees for minimum deposit, per check fees and ATM fees W hen ATMs were first introduced, they were supposed to replace bank branches, save banks operating expense and that savings would be passed on to consumers However, this has not happened Instead, ATMs have become a revenue source for banks as they charge up to
$1.50 per transaction If you use the ATM o f a bank other than your own both your bank as well
as the ATM's bank may charge you a fee
1 Why do banks have to make money?
2 How do banks make money by charging on loans from their depositors?
3 How do banks make a profit from depositors’ money?
4 Why do some banks merge with investment institutions?
5 W hat were the original purposes o f ATMs?
Text 4
The BBC says that HSBC, the world's second largest bank, helped rich people to hide money so they would not have to pay tax A BBC documentary programme got access to the details o f thousands of private bank accounts, worth $128 billion, from an HSBC bank in Switzerland The information was leaked by a whistleblower in 2007 The whistleblower was a computer expert working for HSBC in Geneva He stole the details o f more than 100,000 clients worldwide A French banking team looked at the stolen data in 2013 It concluded that 99.8% of French citizens on the list were probably evading tax
HSBC said the bank has changed a lot since 2007 It said: "HSBC has developed numerous methods to prevent its banking services being used to evade taxes." HSBC told its reporters that the bank understood that it failed to follow the law properly However, one woman lost her job when she complained that the bank did not make these changes Sue Shelley was responsible for
Trang 33making sure HSBC followed the law The BBC said that when she complained that the bank was not keeping its promise to change, the bank fired her Panorama said HSBC is now facing criminal investigations in the USA, France, Belgium and Argentina.
1 Why did HSBC help rich people to hide their money?
2 W hat did the whistleblower do?
3 W hat did the French banking team conclude in 2013?
4 W hat happened with the woman who said the HSBC did not keep the promise to change?
5 W hat was the duty o f Sue Shelley?
3 Bonds are saleable instruments that can be traded on the secondary bond market
4 Bondholders get back their principal on a fixed maturity date, and receive coupon at regular intervals
5 If a bondholder wants to sell his bonds before maturity, the bonds are sold on the secondary market
6 When buying or selling a bond through a brokerage firm, an individual investor will be charged a commission
Trang 347 Corporate credit-rating agencies assess the creditworthiness o f bonds and bond issuers.
8 Investors use the information o f corporate credit-rating agencies to assess the potential return
11 In case o f insolvency, the interests o f the company’s creditors must become a priority
12 As soon as their business becomes insolvent, the directors need to act quickly to seek the protection with the insolvency procedure
13 He must show at all times that he is acting in the best interests o f all o f the company’s existing creditors
14 They need to take independent professional advice from a specialist or licensed insolvency practitioner
V II S E N T E N C E C O M P L E T IO N
1 If you want to work as a broker, you should ,
2 As a bank teller, you sh o u ld