UNIT 14: BANKING

SECTION 1: READING
PRE-READING TASKS
Discussion – Pair work
1. Which of the following banking products or services do you find the most useful or necessary?

• Cashpoint (noun) /ˈkaʃpɔɪnt/ = another term for automated teller machine Máy rút tiền
• Overdraft (verb) /ˈəʊvədrɑːft/ = A deficit in a bank account caused by drawing more money than
the account holds= thấu chi

a current account (BrE) or checking account buying or selling foreign currency for travelling
(AmE) (BrE) or traveling (AmE)

a savings or deposit account (BrE) or time or a mortgage (a loan to buy property (BrE) or real
notice account (AmE) estate (AmE))

cashpoints (BrE) or ATMs (Automated Teller an overdraft (the possibility to borrow money by
Machines, AmE) spending more than you have in your bank
a chequebook (BrE) or checkbook (AmE) account)

a credit card investment advice

a debit card internet banking (payments, transfers)

a loan telephone banking (payments, transfers)

2. What other banking service do businesses use?

Vocabulary preparation
➢ Below are some basic banking terms. Match up the words in the box to the definitions.

loan bankrupt stocks or shares portfolio deposits

merger takeover bid stockbroking interest
conglomerate returns deregulation capital bonds

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 acquire another one
8. buying and selling stocks or shares for clients

CÙNG BELL QUA MÔN TIẾNG ANH 1

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 companies, operating in different fields, which have joined together
14. the price paid for borrowing money, paid to the lenders

WHILE-READING TASKS
READING 1: BANKS AND FINANCIAL INSTITUTIONS
VOCABULARY

▪ Intermediary (noun) /ˌɪntəˈmiːdɪəri/ = A person who acts as a link between people in order to try
and bring about an agreement Người trung gian
▪ porfolio management = the activity of managing a collection of shares and other investments that
are owned by a particular person or organization
▪ repeal /rɪˈpiːl/ a law= cause that law no longer to have any legal force.
▪ conglomerates /kənˈɡlɑm·ər·ət/ = a very large company consisting of several smaller companies or
divisions that supply varied products or services
▪ Islam /ˈɪz.lɑːm/ (n) = the Muslim religion, and the people and countries who believe in it
Islamic (adj)
▪ technically /ˈtek.nɪ.kəl.i/ = according to an exact understanding of rules, facts, etc…

➢ Insert the names of the following types of financial institutions in the spaces in the text.
commercial banks hedge funds investment banks Islamic banks
non-bank financial intermediaries private banks stockbrokers
Retail banks or (1) ………………………… (often called High Street banks in Britain) receive deposits from, and
make loans to, individuals and small companies. (2) ………………………… work with big companies, 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 porfolio management services to rich
corporate and individual clients. Wealthy individuals can also use (3) …………………………, which provide them
with banking and investment services, and (4) …………………………, which are private investment funds for
wealthy investors (both individuals and institutions) that use a wider variety of (risky) investing strategies
than traditional investment funds, in order to achieve higher returns.

CÙNG BELL QUA MÔN TIẾNG ANH 2

In the USA, where many banks went bankrupt following the Wall Street Crash in 1929, a law was passed in
1934 (the Glass-Steagall Act) that separated 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 conglomerates offering a complete range of financial services that were previously provided
by banks, (5) ………………………… and insurance companies.

(6) …………………………, in Islamic countries and major financial centers, 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 manufacturers, food retailers and department stores now offer products like personal loans,
credits cards and insurance. Technically these are not banks but (7) ………………………….

➢ Read the text again and make the best choice

1. The text is mainly about ………………….
a. the regulations of American banks
b. the functions of different banks
c. the enforcement of the Glass-Steagall Act
d. the removal of the Glass-Steagall Act
2. If you need credit like mortgage, loans to purchase a house, you should go to the …………..
a. retailer banks.
b. investment banks
c. private banks
d. conglomerates
3. If your business is looking to purchase a competitor, …………….. can advise your management team
on how much the company is worth and how to structure the deal in a way that’s favorable to the
buyer.
a. commercial banks
b. private banks
c. Investment banks
d. Islamic banks
4. As a high net worth individual, you need more personalized financial services and advice regarding
what may be the most appropriate investment options, you should consult some experts of the
……………
a. commercial banks
b. investment banks
c. retail banks
d. private banks
5. The Glasss-Steagall Act was no longer enforced in …………
a. 1929
b. 1934

CÙNG BELL QUA MÔN TIẾNG ANH 3

 c. 1980
d. 1999
6. In accordance with the Glass-Steagall Act, ………….
a. Large banks were allowed to supply varied financial products or services
b. Commercial banks were banned from offering investment banking services.
c. all the banking rules were removed
d. commercial banks and investment banks are integrated
7. International conglomerates came into being …..
a. when the Glass-Steagall Act was officially approved
b. before the Glass-Steagall Act was removed
c. after the Glass-Steagall Act was removed
d. while the Glass-Steagall Act was being enforced
8. If you put your money into an account of an Islamic bank, you may ………..
a. benefit from the bank’s investment
b. suffer from the possible losses
c. be paid low interest
d. both a and b
9. According to the text, customers can have ………………… from the retailers.
a. direct banking services
b. indirect banking services
c. interest free banking
d. a variety of financial services
10. “Technically” is closest in meaning to ………….
a. theoretically
b. technologically
c. skillfully
d. clearly

➢ Match up the verbs in box A with the nouns in box B to make common verb-noun combinations found
in the text above.
A.

charge – do – give – issue – make – offer – pass – pay – provide – raise – receive - share

B.

Advice – bonds – business – capital – deposits –

laws – loans – profits – interest – services – stock or shares

➢ What other verb-noun combinations can you make with these words?
…………………………………………………………………………………………………………………………………………………………………………………………
………………………………

READING 2: THE SUBPRIME CRISIS AND THE CREDIT CRUNCH

Vocabulary Preparation

CÙNG BELL QUA MÔN TIẾNG ANH 4

 ▪ Subprime (adjective) /ˈsʌbprʌɪm/ → used to describe the practice of lending money, especially to
buy a house, to people who may not be able to pay it back: Nợ dưới chuẩn
A subprime borrower is a person considered to have relatively high credit risk for a lender.
▪ Default (noun) /dɪˈfɔːlt/ = Failure to fulfil an obligation, especially to repay a loan or appear in a law
court. Sự vỡ nợ
▪ Mortgage (noun) /ˈmɔːɡɪdʒ/ = A legal agreement by which a bank, building society, etc. lends
money at interest in exchange for taking title of the debtor's property, with the condition that the
conveyance of title becomes void upon the payment of the debt. Tiền thế chấp
▪ Collateralize (verb) /kɒˈlat(ə)r(ə)lʌɪz/ = Provide something as collateral for (a loan) Thế chấp
▪ Bankrupt (adjective) /ˈbaŋkrʌpt/ = of a person or organization) declared in law as unable to pay
their debts. vỡ nợ, phá sản
▪ Write-off (noun) /ˈrʌɪtɒf/ = A cancellation from an account of a bad debt or worthless asset.
to write off (v) = to officially say that a debt no longer has to be paid, or officially accept that you
cannot get back money you have spent or lost
Read the following text and do as directed
Deregulation in the 1980s was one of the factors that led to the subprime crisis.
When American house prices began to fall in 2007, many ‘subprime’ borrowers, defined as those with poor
credit ratings and consequently a high risk of default, stopped paying their mortgages, as their debt was
greater than the value of their house. Unfortunately, the institutions which had issued the mortgages had
created financial products called mortgage-backed securities (MBS) and collateralized debt obligations
(CDO), which had been bought by many financial institutions including investment banks, hedge funds,
insurance companies, pension funds, mutual funds, and so on. This process is called securitization:
financial assets like mortgages which produce a cash flow are pooled (grouped together) and converted
into securities that are then sold to investors.

MBSs and CDOs give their buyers the right to receive the payments on the underlying mortgages, and
banks bought them because they believe that house prices would continue to rise, and households would
continue to make their mortgage payments. But when many subprime borrowers stopped paying, the
value of subprime related securities fell dramatically. Many banks in the USA, Britain and elsewhere lost
billions of dollars on their MBSs; some went bankrupt, and others had to be rescued by governments. It is
estimated that banks around the world will eventually have to write off $1.5 trillion of worthless subprime
MBSs (now often referred to as ‘toxic debt’). These losses destroyed much of the capital of the world
banking system, leading to a credit crisis or a ‘credit crunch’: a massive reduction in the amount of credit
available for banks to lend to other banks, businesses and households.

CÙNG BELL QUA MÔN TIẾNG ANH 5

➢ Read about the crisis mentioned in the text and put these sentences below in the right order.
…… American house prices fell and many borrowers stopped repaying.
…… Lenders granted mortgages to ‘subprime’ borrowers.
…… Some went bankrupt, and others had to be rescued by governments.
…… The value of MBSs fell to almost zero and many banks lost billions of dollars.
…… There was a credit crisis as there was little capital left for lending and borrowing.
…… The mortgage lenders sold mortgage-backed securities to financial institutions.
➢ Match up the words and definition

1. credit rating A. cancel a bad debt or a worthless asset from an account

2. default B. estimates of people’s ability to fulfil their financial commitments

3. collateralized C. failure to repay a loan

4. cash flow D. the money generated by an investment

5. write off E. with property or another asset used as a guarantee of payment

➢ Read the text again and answer these questions

1. What caused the financial crisis in the US in 2007?
……………………………………………………………………………………………….
2. How could people with high credit risk buy houses then?
……………………………………………………………………………………………….
3. Why did many borrowers stop repaying?
……………………………………………………………………………………………………
4. Who created MBS and CDO?
………………………………………………………………………………………………………..
5. Who bought MBSs and CDOs?
……………………………………………………………………………………………………
6. What does the underlined part refer to?
“MBSs and CDOs give their buyers the right to receive the payments on the underlying mortgages”
……………………………………………………………………………………………
7. Who does “their buyers” refer to?
“MBSs and CDOs give their buyers the right to receive the payments on the underlying mortgages”
………………………………………………………………………………………………….
8. Why did they buy MBSs and CDOs?
………………………………………………………………………………………………….
9. What could the buyers of MBSs and CDOs benefit?
CÙNG BELL QUA MÔN TIẾNG ANH 6
 ………………………………………………………………………………………………
10. What was the effect of the subprime borrowers’ default on the banks around the world ?
…………………………………………………………………………………………………..
POST-READING TASKS
➢ Vocabulary review: Fill in each gap with one suitable word from the box

deposit – overdraft – intermediaries - subprime – bankrupt –

write off – collateralized – deregulated – default – mortgage (v) –

1. The ______________ crisis demonstrated that the framework for the operation of credit rating agencies
needs to be significantly reinforced.
2. His father went __________ and the family had to sell their home.
3. These loans are ________________ by property.
4. I’d like to make a _____________ into my savings account.
5. The company will have to restructure its debts to avoid ___________ .
6. He had to __________ his parents’ house in order to start a business.
7. The United States agreed to ____________ debts worth billions of dollars.
8. I have a(n) ___________ facility of £200 on my bank account. It means I can go £200 into the red.
9. Financial institutions act as ________________ between lenders and borrowers.
10. After internal US flights were ______________ in 1978, the industry quickly became more competitive.
Discussion – Pair work
Who do you think was responsible for the subprime crisis? What did the financial industry do wrong?
SECTION 2: LISTENING
Listening 1: Commercial banking. Listen to Tony Ramos, a recruitment manager at HSBC in London,
talking about investment and commercial banking, and answer the questions.
1. How does Tony Ramos describe commercial banking? A kind of a ……………….. ……………….. ………………..
2. What was Tony Ramos’s job before he moved into recruitment? ………………..
3. What does he say commercial banking actually consists of? Fill in the gaps.

‘… you’re kind of working in a (1) ……………….. ……………….. , you’re working, you know, with, like, (2) ……………….
………………..., kind of what the day-to-day job consists of, actually (3) ……………….. ……………….. ……………….. people
with their businesses, (4) ……………….. ……………….. ……………….. those businesses, seeing those (5) ………………..
……………….. and the kind of excitement and the job satisfaction that provides to you …’

4. What does he say students wrongly think it consists of?

Sitting ………………..………………..……………….. and doing ………………..………………..…

CÙNG BELL QUA MÔN TIẾNG ANH 7

 Listening 2: Microfinance. Anna-Kim Hyun-Seung from South Korea is a former MBA student from the
Judge Business School in Cambridge who works in the not-for-profit sector. Listen to her talking about
microfinance, and answer the questions.
1. In microfinance, 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 schemes?
………………………………………………………………………………………………………
………………………………………………………………………………………………………

CÙNG BELL QUA MÔN TIẾNG ANH 8

Listen to the recordings again and check your answers.
➢ Listening 1

I think there is a real kind of perception around kind of the world of investment banking and kind of what it offers. I think also as
well I think commercial banking, and I guess I would say this as a previous commercial manager, I think is a kind of a best kept
secret. I think if you actually and when you do talk to students, when I talk to students and I talk them to about what the
commercial banking role is and I talk to them about the fact that you’re kind of working in a local marketplace, you’re working you
know with, like, local entrepreneurs, kind of what the day-to-day job consists of, actually going to see people with their businesses,
helping start up those businesses, seeing those businesses grow and the kind of excitement and the job satisfaction that
provides to you, you actually do see their eyes kind of light up and open up, because they kind of think, oh, I actually I didn’t think
it was about that, I actually thought it was kind of sitting in front of a computer looking at spreadsheets, I think it was doing a lot
of analysis, it seemed quite dull and stuffy to me ...

➢ Listening 2

Microfinance schemes started with several NGOs and social enterprises, for example Grameen Bank in Bangladesh. They
distribute very small loans to poor people, often without financial collateral. But they use some kind of different collateral,
sometimes it can be social collateral, so they create a group of people and within the group people help each other to repay the
loan, but it’s usually a very small amount of money, and from the bank’s point of view it actually provides a unique risk-
management tool. Of course, distributing loans to poor people sounds very risky, but because we are talking about a large number
of people, with a very small amount of money, it actually creates a very nice portfolio in which the risk can be diversified.
NGOs and social enterprises proved that these kinds of schemes can be scalable, and the poor people are actually repaying the
loans, so now the conventional banks like Citibank and Barclays are taking part in these schemes, not for the purpose of doing
good only, they are actually doing it as part of their business. They are developing their microfinancing and microcredit products
in developing countries. It seems that microfinance is doing really well particularly in Bangladesh and part of India, and there are
some positive cases in Latin America and Africa too.

CÙNG BELL QUA MÔN TIẾNG ANH 9