EXERCISES. І. Discuss the types of banks described in the text and their functions

І. Discuss the types of banks described in the text and their functions.

II. Personal Banking. Match up these terms and definitions.

1. cash card	a) doing banking transactions by telephone or from one's personal computer; linked to the bank via a network.
2. cash dispenser	b) a loan; usually to buy property; which serves as a security for the loan.
3. credit card	c) one that generally pays little or no interest; but allows the holder to withdraw his or her cash without any restrictions.
4. home banking	d) an arrangement by which a customer can withdraw more from a bank account than has been deposited in it; up to an agreed limit; interest on the debt is calculated daily.
5. loan	e) a plastic card issued to bank customers for use in cash dispensers.
6. mortgage	f) an instruction to a bank to pay fixed sums of money to certain people or organizations at stated times.
7. overdraft	g) a computerized machine that allows bank customers to withdraw money; check their balance etc.
8. standing order	h) one that pays interest; but usually cannot be used for paying cheques; and on which notice is often required to withdraw money.
9. current (UK)or checking (US) account	i) a card which guarantees payment for goods and services purchased by the cardholder; who pays back the bank or finance company at a later date.
10. deposit (GB) or time/notice (US) account	j) a fixed sum of money on which interest is paid; lent for a fixed period; and usually for a specific purpose.

III. Tricky Situations. The expressions below are all used to describe unusual or difficult conditions in banking. Match the words with the correct definitions.

1. bear squeeze	a) A policy barrier between the trust department and the rest of the bank to prevent inside information from being released to other departments.
2. dirty-float	b) Money which is moved out of a country in the case of a political or economic crisis.
3. problem bank	c) A warning that something may not be right when reviewing a credit application.
4. belly up	d) A corporation or lender which is unable to pay its obligations or creditors.
5. red flag	e) A series of sudden cash withdrawals caused by lack of confidence or fear that a bank may be in trouble.
6. bank run	f) The official intervention by central banks in the FX markets to force currency speculators who are short-selling a currency to cover their position.
7. Chinese wall	g) A bank with a high ratio of non-performing loans to its total capital.
8. rubber cheque	h) A cheque which is drawn on an account with insufficient funds to cover it.
9. flight capital	i) A foreign exchange rate which is influenced by market intervention by the country of issue's monetary body.
10. watch list	j) A list of banks which are in danger of bankruptcy or suspected of having financial troubles.

PART III. BANKING

IV Choose the word which best completes each sentence.

1. Building____ lend money to people who want to buy houses, taking a mortgage of the

property deeds until the loan is repaid.

a) companies b) associations c) societies

2. A bank will sometimes give you a loan if someone is prepared to stand as your
guarantor, agreeing to____ the loan if you fail to do so.

a) repay b) refinance c) recollect

3. Persons are described as____ when they cannot meet their liabilities.

a) dishonest b) disreputable c) bankrupt

4. Before you___ a cheque for more than you have on your account you must apply for

an overdraft.

a) withdraw b) draw c) sign

5. You will be deemed negligent if you do not_____ the bank when you have lost your

cheque-book.

a) instruct b) inform c) indemnify

6. The Bank of England is a____ bank and acts as a banker to the government and other

banks.

a) central b) overseas c) clearing

7. When the payee signs on the back of a cheque it is described as an______.

a) signature b) endorsement c) guarantee

8. If you wish to___ a large sum from your bank the branch manager may require

authorization from his Head Office.

a) borrow b) obtain c) receive

9. The banker is expected to treat any information he has in regard to his customer's
__ affairs as confidential.

a) domestic b) private c) financial

10. A customer who____ his overdraft limit will have to pay additional bank charges as

well as interest on the excess.

a) exceeds b) overlaps c) uses

V Inter-bank business. What qualities are important when banks have correspondent relations with banks abroad? Replace the words in italic in the passage with the words in the box.

reputation	solvent	track record	reciprocity
dependable	terms	trained	cost-effective
tariffs	trustworthy	counterparty	credit-rating agency

When selecting a correspondent bank, it is essential to choose one with a good (1) name and (2) background. It is also important that the bank has (3) skilled staff; can provide (4) similar services with (5) reasonable (6) conditions and (7) charges. If you require credit lines to be opened overseas, you should choose a (8) trading partner which is {9) financially sounds well as (10) honest and (11) reliable. The financial position of the bank can be established by taking up references or approaching a (12) body which provides an analysis of banks' financial performance.

VI. Irrevocable Letter of Credit. An irrevocable letter of credit cannot be cancelled or annulled unless all parties agree.

Rearrange the letters in the box to reveal words related to the issue of a documentary credit: Example: merts = terms

UNIT 3. TYPES OF BANKS 177

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