Finance English practice: Unit 20 — Commercial and Retail Banking

Biz English

Apr 14, 2016

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Complete the sentences below. Use the key words if necessary.
- Commercial and retail banks
  
  key words
  save      ○      deposit      ○      bank account      ○      commercial      ○      retail      ○      interest      ○      grant loans      ○      borrowers      ○      transfer
  
  When people have more money than they need to spend, they may choose to it. They it in a , at a or bank, and the bank generally pays to the depositors. The bank then uses the money that has been deposited to — lend money to who heed more money than they have available. Banks make a profit by charging a higher rate of interest to borrowers than they pay to depositors.
  
  Commercial banks can also move or money from one customer’s bank account to another one, at the same or another bank, when the customer asks them to.
  
  Credit
  
  key words
  create credit      ○      assets      ○      deposits      ○      liabilities      ○      reserve      ○      requirement
  
  Banks also — make money available for someone to borrow — because the money they lend, from their deposits, is usually spent and so transferred to another bank account.
  
  The capital a bank has the loans it has made are its . The customers’ are because the money is owed to someone else. Banks have to keep a certain percentage of their assets as reserves for borrowers who want to withdraw their money. This is known as the . For example, if the reserve requirement is 10%, a bank that receives a €100 deposit can lend €90 of it. If the borrower spends the money and writes a cheque to someone who deposits the €90, the bank receiving that deposit can lend €81. As the process continues, the banking system can expand the first deposit of €100 into nearly €1,000. In this way, it creates credit of almost €900.
  
  Loans and risks
  
  key words
  assess      ○      standardized      ○      personal loans      ○      terms and conditions      ○      risk      ○      assessment      ○      corporate customers      ○      liquidity      ○      maturities      ○      yield
  
  Before lending money, a bank has to or calculate the risk involved. Generally, the greater the risk for the bank of not being repaid, the higher the interest rate they charge. Most retail banks have products for personal customers, such as . This means that all customers who have been granted a loan have the same — they gave the same rules for paying back the money.
  
  Banks have more complicated methods for — business clients — but large companies these days prefer to raise their own finance rather than borrow from bank.
  
  Banks have to find a balance between — having cash available when depositors want it — and different — dates when loans will be repaid. They also have to balance — how much money a loan pays — and risk.
Complete the sentences.
- If you need instant access to all your money, this is the . . .
  bank account
  for you.
  - personal customers
  - grant loans
  - corporate customers
  - bank account
- Our products for . . .
  corporate customers
  include business overdrafts, loan repayments that reflect your cash flow, and commercial mortgages.
  - personal customers
  - bank account
  - grant loans
  - corporate customers
- Our local branch managers are encouraged to help local businesses and are authorized to . . .
  grant loans
  and overdrafts.
  - grant loans
  - corporate customers
  - personal customers
  - bank account
- We offer standardized loans: you can be sure you won’t get less favourable terms and conditions than our other . . .
  personal customers
  .
  - grant loans
  - corporate customers
  - personal customers
  - bank account
Match the two parts of the sentences.
- Banks lend savers’ deposits . . .
  to people who need to borrow money.
  - depends on the reserve requirements.
  - to people who need to borrow money.
  - lending the same original deposit several times.
- They also create credit by . . .
  lending the same original deposit several times.
  - depends on how risky it is for the bank to lend the money.
  - depends on the reserve requirements.
  - lending the same original deposit several times.
- How much credit banks can create . . .
  depends on the reserve requirements.
  - lending the same original deposit several times.
  - depends on how risky it is for the bank to lend the money.
  - depends on the reserve requirements.
- Before lending money, . . .
  banks have to assess the risk involved.
  - banks have to assess the risk involved.
  - to people who need to borrow money.
  - so they can’t lend all their money in loans with long maturities.
- The interest rate on a loan . . .
  depends on how risky it is for the bank to lend the money.
  - depends on the reserve requirements.
  - to people who need to borrow money.
  - depends on how risky it is for the bank to lend the money.
- Banks always need liquidity . . .
  so they can’t lend all their money in loans with long maturities.
  - so they can’t lend all their money in loans with long maturities.
  - lending the same original deposit several times.
  - to people who need to borrow money.
Make the word combinations with the nouns ‘interest’, ‘money’, ‘risks’. Use words from the box.
- box
  charge pay transfer withdraw assess calculate
  
  interest
- interest
- risks
- risks
- money
- money
Complete the sentences with verbs below.
- With standardized products, all customers are . . .
  charged
  the same interest rate.
  - asses
  - withdraw
  - charged
- Banks generally know from experience how much cash to keep in their reserves for customers who want to . . .
  withdraw
  it.
  - charged
  - asses
  - withdraw
- Banks carefully study the financial situation of a company to . . .
  assess
  the risk involved in lending it money.
  - withdraw
  - asses
  - charged

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