Unit 6. Banks and Banking System

1. Remember the following terms:

- account

- clerk

- deposit account

- current account

- savings account

- joint stock

- profit

- shares

- shareholder

- Board of Directors

- interest

- loan

- to run the bank

2. Read and translate the text:

All commercial banks have a similar structure and mode of working. The owners are shareholders. They provide the necessary capital. They are all organized on the joint stock principle and are registered public company.

The Chairman and Board of Directors are elected by the ordinary shareholders at the Annual General Meeting and are responsible for the efficient management of the bank. The Board is concerned with the over-all policy of the bank and the major decisions, which put that policy into effect.

The Board will appoint a Managing Director who is directly responsible to them. They will also appoint the most senior executives who in turn appoint the rest of the clerical staff who will be responsible in different capacities for the day to day running of the bank.

The essence of a bank’s activities is the collection of deposits accounts through current accounts and deposit accounts and the use of these funds to provide loans or funds for investment. The pattern of investment, which a bank decides upon, is very important because, on the one hand, the bank must use the funds wisely to make a profit and, on the other, funds must be available for depositors to withdraw when they wish to do so.

At the end of each business year the Directors recommend and the Annual General Meeting decides how much of the profit should be distributed to the shareholders as dividend, and how much should retained in the business. In preparation to the Annual General Meeting, a bank publishes its Report and Account. These must be sent to every shareholder and are also available for anyone with an interest in the affair of the bank. From the published accounts shareholders can easily determine the total profits the bank has earned and how much is available for the distribution.

3. Answer the following questions:

1. Who owns the commercial banks?

2. How does a bank start?

3. Who chooses the Board?

4. What is the Board’s task?

5. Who hires the employees?

6. What are the bank’s main activities?

7. How are the profits distributed?

8. How are the shareholders kept informed?

4. Translate into Ukrainian:

Dividend, to invest, investment, similar structure, capital, director, the efficient management, activity, funds, to recommend, to raise capital, to become a public company, to put money into business, profits not paid out as dividends, to run a bank, to make a loan.

5. Translate into English:

1. Рада директорів вибирається власниками акцій.

2. Акціонери регулярно отримують дивіденди.

3. Планування банківських операцій дуже важливе.

4. Банк повинен використовувати фонди для отримання прибутків.

5. Акціонерам повідомляється про прибутки та їх розподіл.

6. Match the words with their definitions:

1) interest

2) mortgage

3) an overdrawn account

4) savings account

5) current account

6) disability allowance

7) child benefit

8) grant

9) transaction

10) withdraw

11) deposit

12) loan

13) cheque

14) credit

15) joint account

16) refund

a) a bank account with minus money in it;

b) money paid towards the cost of raising a family;

c) money given by the government for education, welfare etc.

d) an account that is used mainly for keeping money;

e) an amount paid for the use of money;

f) piece of business done; movements of money into/out of accounts;

g) a loan to purchase property;

h) money that is placed in a bank account by a customer;

i) money which is lent;

j) an account from which cheques are drawn on for day-to-day use;

k) take money from a bank account;

l) a depositor’s written demand to a bank to pay out money from his or her account;

m) a bank account that is used by two or more people;

n) a sum of money given back to you, especially because you are not satisfied with the goods or services you have paid for;

o) money paid to people with a handicap;

p) the privilege of using someone else’s money for period of time.

7. Read the following text:

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