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Week March 17-21 TUES 8-10 RM30 / WED 10-12 RM 8 Seminar: Banking MK 14 + Listening

Week March 17-21 TUES 8-10 RM30 / WED 10-12 RM 8 Seminar: Banking MK 14 + Listening + RB pp.56-58 THUR 11-13 RM 10 Lecture: Central Banking text in RB p. 62 (HW pp. 62, 63) + listening MK + gapfillingtask RBp. 61. Types of bank. Commercial banks Investment banks

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Week March 17-21 TUES 8-10 RM30 / WED 10-12 RM 8 Seminar: Banking MK 14 + Listening

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  1. Week March 17-21 TUES 8-10 RM30 / WED 10-12 RM 8 Seminar: BankingMK 14 + Listening + RB pp.56-58 THUR 11-13 RM 10 Lecture: Central Banking text in RB p. 62 (HW pp. 62, 63) + listening MK + gapfillingtask RBp. 61

  2. Types of bank • Commercial banks • Investment banks • Universal banks • Supranational banks • EBRD • World Bank • IMF

  3. MK, p. 73: find the terms that are defined below • An account that pays interest, but usually cannot be used for paying cheques, and on which notice is often required to withdraw money. • A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. These cards charge interest. • An account that generally pays little or no interest, but allows the holder to withdraw his or her cash without any restrictions. • An electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services.

  4. MK, p. 73: terms defined KEY • SAVINGS or DEPOSIT ACCOUNT (BrE) or TIME or NOTICE ACCOUNT (AmE) • CREDIT CARD • CURRENT ACCOUNT ( BrE) or CHECKING ACCOUNT (AmE) • DEBIT CARD ______________________ chequevs. check chequebookvs. checkbook

  5. MK, p.73,4 Reading 1. COMMERCIAL BANKS 2. INVESTMENT BANKS 3. PRIVATE BANKS 4. HEDGE FUNDS 5. STOCKBROKERS 6. ISLAMIC BANKS 7. NON-BANK FINANCIAL INTERMEDIARIES

  6. The Glass-SteagallActFindanswers: • When was this law passed? • What did it do? • When was it repealed? • What was the result? • Explain ”financial deregulation”

  7. The Glass-Steagall Act • When was this law passed? - > in 1929 • What did it do? -> separated commercial banks from investment banks and stockbroking firms • When was it repealed? -> in 1999 • What was the result? -> intl. conglomerates = banking +stockbroking+insurance services • ”financial deregulation”: changes in laws that let financial institutions more freedom in how they compete

  8. MK 14 p. 74 Vocabulary 1. DEPOSIT 2. LOAN 3. CAPITAL 4. SHARES 5. BONDS 6. MERGER 7. TAKEOVER BID 8. STOCK BROKING 9. PORTFOLIO 10. RETURNS 11. BANKRUPT 12. REPEAL 13. CONGLOMERATE 14. INTEREST

  9. MK 14 p.74 match up CHARGE DO GIVE ISSUE MAKE OFFER PASS PAY PROVIDE RAISE RECEIVE SHARE

  10. MK 14 p.74 match up CHARGE interest, advice DO business GIVE advice ISSUE bonds, shares/stocks MAKE profits, laws OFFER advice, loans PASS laws PAY interest, PROVIDE services, capital RAISE capital RECEIVE deposits, SHARE profits/losses

  11. Servicesofferedby: RETAIL/COMMERCIAL BANKS or INVESTMENT/MERCHANT BANKS • Receive, hold deposits • Investment services for the wealthy • Raise funds/capital • Riskier investments, higher returns • Finance international trade • Make a loan • Banking that follows the principles of Sharia law • Offer financial advice • Arrange takeovers and mergers • Issue government bonds • Department stores offering personal loans, credit cards

  12. Servicesofferedby: RETAIL/COMMERCIAL BANKS INVESTMENT/MERCHANT B. Investment services for the wealthy Raise funds/capital Finance international trade Riskier investments, higher returns Arrange takeovers and mergers Stockbroking & portfolio management • Receive, hold deposits • Make a loan • Offer financial advice • Issue government bonds • Offer home loans • Arrange credit cards

  13. The bare essentials (RB, p. 56) Part I go bust = go bankrupt deposit ≠ loan borrow ≠ lend interest = price of loans or reward for deposit

  14. The bare essentials (RB, p. 56) Part I 1 bank account 2 cash 3 in 4 deposits 5 interest 6 loans 7 interest rates 8 depositors 9 shortages 10 borrow 11 central bank 12 goes bust/bankrupt

  15. The bare essentials (RB, p. 56) Part II debit(withdrawmoneyfrom) anaccount ≠ credit (depositmoneyinto) anaccount securities = stocks+ bonds... cartels ≠ regulators foreigncurrencies: £, €, ¥, $, kn... transactions: payment, debiting, crediting…

  16. The bare essentials (RB, p. 56) Part II 13 financial services 14 debit 15 credit 16 transaction 17 investments 18 foreign currency 19 securities 20 payments 21 payment system 22 cartels 23 regulators

  17. The bare essentials (RB, p. 56) • Why are banks useful? • How do banks make a profit? • How can you pay for goods? List different types of payment. • Explain: ”[Banks] deal in securities and derrivatives, and manage payments on behalf of their clients.” • Explain: ”Regulators ... their chief concern remains that banks are sound.”

  18. RB p. 57 II 1 take deposit 2 pay interest 3 manage loans 4 charge interest 5 manage depositors’ mny 6 make losses 7 borrow money 8 go bust (bankrupt) 9 make payments 10 make financial services 11 give financial advice 12 exchange foreign currency 13 deal in securities/derivatives 14 manage investments

  19. RB p. 57 III FIND WORDS 1 a plasticcardwhich is usedinsteadofmoney to pay for goodsandserviceswhosecost is takendirectlyfromtheusersbankaccount. –> ______________ 2 a computerizedmachinethatallowsbankcustomers to withdrawmoney, checktheirbalanceandso on -> _____ 3 anaccountwhich is debiedtoomuchis -> ________ • a cardwhichguaranteespayment for goodsandservicespurchasedbythecarholder, whopaysbackthebank or financecompany at a later date -> __________ • the amount of money in a financial repository, such as a checking account, at any given moment-> _________ 6 aninstruction to a bank to payfixedsumsofmoneytocertainpeople or organizations at statedtimes -> _______ _________

  20. RB p. 57 III FIND WORDS 1 a plasticcardwhich is usedinsteadofmoney to pay for goodsandserviceswhosecost is takendirectlyfromtheusersbankaccount. –> debitcard 2 a computerizedmachinethatallowsbankcustomers to withdrawmoney, checktheirbalanceandso on -> ATM 3 anaccountwhich is debiedtoomuchis -> inthe red • a cardwhichguaranteespayment for goodsandservicespurchasedbythecarholder, whopaysbackthebank or financecompany at a later date -> creditcard • the amount of money in a financial repository, such as a checking account, at any given moment-> balance 6 aninstruction to a bank to payfixedsumsofmoneytocertainpeople or organizations at statedtimes -> standingorder

  21. More banking vocabulary: guess VERB + account o_ _ n an account o_ _ _ d _ _ _ an account c_ _ s _ an account c_ _ _ g _ sth. to an account w_ _ _ d _ _ _ money from an account d _ p _ _ _ t money in an account d _ _ _ t money from an account (take money from) c _ _ d _ t money to an account (add money to) a current account p_ y _ a small interest s _ tt _ _ an account h _ _ d an account (with ZABA)

  22. Verb + account = open an account overdraw (..) account close an account charge sth. to an account withdraw money from an account deposit money in an account /dı ’pozıt/ debit money from (...) account (take money from) credit money to an account (add money to) a current account pays a small interest settle an account hold an account (with ZABA) READER P 27, task III

  23. MK14, p. 75 Listening 1 How does Tony Ramos describe commercial banking? -> a kind of _____ _____ _______ 2 What was Tony Ramos’s job before he moved into recruitment? 4 What does he say students wrongly think it consists of ?

  24. MK14, p. 75 Listening 1 -> a kindofbestkeptsecret 2 -> commercialmanager 3 1workingin a localmarketplace, 2localentrepreneurs , 3going to seepeople, 4helping start up, 5businessesgrow 4 -> sittinginfrontofcomputerandlooking at spreadsheets

  25. RB p. 58 Bank statements • What are bank statements for? • How often are they sent to bank account holders? • What kind of information do they contain? • Tasks: • RB, p. 58 / I • RB, p. 58 / II

  26. RB p. 58 Bank statements -KEY • MONTHLY MAINTENANCE FEE • ACCOUNT NUMBER • ACCOUNT SUMMARY • DETAILED CHECK LIST • DEPOSITS AND OTHER CREDITS • STATEMENT PERIOD • WITHDRAWAL LIST • ATM LOCATIONS USED • CHECKS AND OTHER DEBITS

  27. Microfinancing quiz 1. What is microfinancing? • Giving loans to poor people • Financing microtechnology. 2. Microfinancing is risky. • Yes • No

  28. 3. Decide which statement is true: • In microfinancing the loans are very small so defaults are rare. • In microfinancing a large number of people are given small loans and so the risk is diversified. 4. What kind of collateral do banks use when giving microloans? • Social • Financial

  29. 5. What motivates micro-borrowers to repay their loans? • The bank can take away their property. • Their lending group will put peer pressure on them to make them pay.

  30. MK p.76 Microfinance: Listening Listen for termsdefinedbelow: Assetspromisedby a borrower to a lenderiftheborrowercannotrepaytheloan. Themanagingofinvestmentsinwaysthatproduce as much profit as possiblewhilelimitingthedangeroflosses. Reducingriskbyinvestingin a varietyofassets / lendingmoney to largenumberofpeople.

  31. MK p.76 Microfinance: Listening KEY Listen for termsdefinedbelow: Assetspromisedby a borrower to a lenderiftheborrowercannotrepaytheloan - collateral Themanagingofinvestmentsinwaysthatproduce as much profit as possiblewhilelimitingthedangeroflosses – riskmanagement (tool) Reducingriskbyinvestingin a varietyofassets / lendingmoney to a largenumberofpeople – riskdiversification

  32. Microfinancing: Listening • Listen and compare your answers: 1 In microfinance, what replaces normal financial collateral? 2 What is the ’risk management tool’ 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 schemes ?

  33. Microfinancing: Listening Listen and compare your answers: 1 In microfinance, what replaces normal financial collateral? SOCIAL COLLATERAL 2 What is the ’risk management tool’ Anna-Kim mentions? VERY SMALL LOANS 3 Why is lending money to poor people not necessarily as risky as it sounds? PORTFOLIO OF DIVERSIFIED RISK 4 Why are conventional banks now developing microcredit products? GOOD FOR BUSINESS 5 In which three continents are there successful microfinance schemes ? ASIA, LATIN AMERICA, AFRICA

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