Banks and business
Banks are different in different countries. Let's speak about the banks in the United Slates of America. There, commercial banks are classified into two main groups. First, there are national banks. They are charted and supervised by the Federal Government. Secondly, there arc slate banks. They arc charted and supervised by the state in which they are operated. All commercial banks can make loans to borrowers.
Major commercial banks in such cities as Tokyo, Pans, Rio cooperate with each other. In this way they finance imports and exports between countries.
An importer buys merchandise from another country using the currency of that country. For that purpose he buys this currency from the foreign exchange department of his bank. And in the same way if an exporter receives foreign money from sales to other countries, he sells this currency to his bank. By this method the currency of any country can usually be exchanged.
commercial bank комерційний банк
national bank національний банк
to charter започатковувати, створювати
to supervise завідувати, контролювати
state bank державний банк
currency валюта, гроші
foreign exchange department відділ обміну валют
to exchange currency обмінювати валюту
1. What do all commercial banks do?
2. What kinds of commercial banks in the USA do you know? What are they called?
3. Who supervises the operations of national bank?
4. What kind of currency does an importer generally use when he buys goods from
5. What do you know about the "international exchange"?
6. What is the currency of this country called?
What is the exchange rate between your currency and the currency of the USA and
Germany? How can you find it out if you don't know it?
Exercise 1. Choose the necessary word and put it in the sentence.
1. Federal government..... and ..... all national banks. 1 merchandise
2. International cooperation between banks makes it possible 2 currency
..... imports and exports. 3 commercial
3. It is possible to convert American dollars to Swiss francs 4 foreign exchange
in ..... department.
4. The..... of Germany is the mark. 5 to finance
5. All..... banks make loans to borrowers. 6 to supervise
6. If the importer buys ..... from another country he will
pay for it in the currency of this country. 7 to charter
( A banker's office in New York City. Mr. Smith, a Vice President, is speaking to Bill Wilson).
Smith O.K. Bill. As a secretary you ought to know certain things about banking.
Bill That's what I want. I hope to make my career in banking.
Smith And what bank services are you familiar with?
Bill Oh, let me see. I am familiar with checking and savings accounts, safety deposit
boxes, insurance and things like that.
Smith It is something.
Bill But I don't have a clear idea of the services which banks offer to business.
Smith O.K. Let's discuss it then. In fact it is more directly concerned with what passes
over my desk.
Bill I think businesses come to the banks for loans.
Smith You are right. Banks make loans to corporations, to organizations, individuals and
to small companies. For this service, we always charge interest.
Bill But how can a bank decide whether a business should receive a loan.
Smith First of all we request a financial statement. It shows what the company has in
inventory, accounts receivable and other assets and liabilities. Profit and loss
statement shows the company's income and expenses.
Bill In other words you look over the financial situation of a business.
Smith Exactly. If the company is eligible for a loan, it may choose a long-term loan or
a short-term loan.
Bill I see. And how much interest does the bank charge on these loans?
Smith It can be different. We have so-called prime-rate, that is the lowest interest rate
available at the particular time. Only preferred customers can have it.
Bill Who decides on prime-rate then?
Smith Major lending banks do.
Bill Oh, I must know that. And very often I hear the term "a line of credit". I have a
vague idea what it is.
Smith A line of credit is the maximum amount of money that a company can borrow
from a bank. This top amount of customer's credit is based on the profits and
earnings of a business.
Bill Well. Then it is very important to have a good line of credit, isn't it?
Smith Sure. A bank also issues letters of credit. Such letter says that its holder can
borrow up a certain sum of money. Or a bank can also issue a letter of credit for a
person who goes to the other country where another bank is involved. Then there
is the credit reference letter which recommends a company to its suppliers, and
well - I could go on all morning.
Bill Thank you. It's very useful information.
Smith O.K. We can pass on to a more complicated subject. That is tax service.
banking - банківська справа
to make a career in smth. - робити