1. BANKING
UNIT 14

2. MONEY POEMS AND SONGS Complete the MONEY POEM with the missing verbs.
Listen to the song MONEY, MONEY, MONEY by ABBA and fill in the missing words.

3. MONEY PROVERBS AND SAYINGS – MATCHING
without which you cannot make a complete use of the other five.
…in someone’s pocket.
…grow on trees.
…easy go.
…the root of all evil.
...than a man who devotes all of the waking day to the making of money for money’s sake.
...you don’t have a billion dollars.
...money.
…are soon parted.
...and that’s poverty.
Easy come,...
A fool and his money…
Money burns a hole…
The love of money is…
There’s one thing money can’t buy you,...
Money doesn’t…
Money is like a sixth sense...
If you can count your money,...
Remember that time is...
I know of nothing more despicable and pathetic...

4. FOOD FOR THOUGHT...
“Neither a borrower, nor a lender be.” (from Hamlet, Shakespeare) “If you owe your bank a hundred pounds, you have a problem. If you owe it a million pounds, it has a problem.” (J .M. Keynes) Why do people borrow money from a bank? How does living on credit affect people’s lives? Read the passage and discuss. Debt is quickly becoming the curse of modern living. Not only is life becoming expensive in the western world, the pressures of fashion and status require many of us to spend money on things that we feel we should have, rather than things that we actually need. Upgrading the car, building an extension, the right school for the children, the flash holiday, all concepts alien to the "make do and mend" philosophy of our grandparents generation but all facts of life today. And as debts spiral upwards the fallout can be - strained relationships, stress, illness and even suicide, such is the trap that we all too easily build for ourselves.

5. PERSONAL BANKING
*CASH CARD *GIRO ACCOUNT *CREDIT CARD *DEBIT CARD
*CASHPOINT (GB) OR ATM (AUTOMATIC/ED TELLER MACHINE (US)
*MOBILE BANKING *INTERNET BANKING *TELEPHONE BANKING
*STANDING ORDER OR DIRECT DEBIT *INVESTMENT ADVICE
*CURRENT ACCOUNT (GB) OR CHECKING ACCOUNT (US) *LOAN
*SAVINGS OR DEPOSIT ACCOUNT (GB) OR TIME OR NOTICE
ACCOUNT (US) *FOREIGN CURRENCY ACCOUNT *DEPOSIT *WITHDRAW *CREDIT *OVERDRAFT *DEBIT *BALANCE
*BANK STATEMENT *IN THE RED *IN THE BLACK
*MORTGAGE *CHEQUEBOOK (GB) OR CHECKBOOK (US)
DISCUSSION
1 Which of the banking products or services listed in above do you use?
2 Which of them do you find the most useful or necessary?
3 What changes have there been in personal banking recently?
4 What other changes do you foresee in the future?

6. PERSONAL BANKING – BANK STATEMENTS – RB, p. 57 & 58
Complete the PERSONAL BANKING handout.
Do the Task III in RB, p. 57.
Then, study the BANK STATEMENT in RB, p. 58 and match the definitions to the corresponding headings.

7. PERSONAL BANKING – TRANSLATION
Customers will be charged for paying regular bills by trajnim nalogom.
Using telebanking you can transfer cash to your tekući račun.
If you put your money in a depozitni račun, the bank will pay kamate on it.
The bank has extended my authorised prekoračenje računa.
He recently paid off his hipoteku na kuću because he fears that interest rates will rise.
I left my karticu in the bankomatu.
How will I ever otplatiti the debt?
I need to dignuti 100 kn from my account.
I need to check the stanje računa.

8. Describe this graph by filling in the blanks:
RECEIVE
DEPOSITS
GRANT
LOANS
EXPAND
BUSINESS
CREATE
WEALTH
BANKS
This is how banks help to create prosperity. Banks ___________
from savers and ___________ to those customers who have
enough assets to guarantee repayment.The customers in turn pay
interest. In that way companies are able to ___________ their
___________. The expansion helps to ___________ more
___________ in the country and banks can continue with their
activities.

9. BANKING – THE BARE ESSENTIALS – RB, p. 56
Read the article in RB, p. 56, fill in the missing words and find out how the banking industry functions.
Then, complete the word partnerships in Task II, p. 57.

10. READING – BANKS AND FINANCIAL INSTITUTIONS – MK, pp. 73 & 74
Read the text about different types of banks and financial institutions in MK, pp. 73 & 74 and insert the missing words.
Find out about the types of banks and financial institutions, their functions, clients and the types of services they provide.
Which paragraph talks about the history of the banking industry? How did it affect the banking industry today?
Do the vocabulary tasks on p.74.

11. BANKING SERVICES – Complete the collocations with the missing verbs and decide whether COMMERCIAL or INVESTMENT BANKS provide these services.
l________
b_______ p_______
t_______ in
MONEY
r______
h______ t_______
DEPOSITS
p_______
c_______
INTEREST
i_______
SHARES
GOVERNMENT
BONDS
CREDIT CARDS
CHEQUES
o_______
c_______
DIFFERENT
TYPES OF
ACCOUNTS
e_______
FOREIGN
CURRENCIES

12. BANKING SERVICES – Complete the collocations with the missing verbs and decide whether COMMERCIAL or INVESTMENT BANKS provide these services.
lend
borrow
pay
trade in
MONEY
receive
hold
take
DEPOSITS
charge
INTEREST
issue
SHARES
GOVERNMENT
BONDS
CREDIT CARDS
CHEQUES
open
close
DIFFERENT
TYPES OF
ACCOUNTS
exchange
FOREIGN
CURRENCIES

13. BANKING SERVICES – Complete the collocations with the missing verbs and decide whether COMMERCIAL or INVESTMENT BANKS provide these services.
r_______
CAPITAL
FUNDS
u_______
SECURITIES
h_______
TRANSACTIONS
a_______
d_______
with
MERGERS AND
TAKEOVERS
c_______
FEES
COMMISSIONS
m_______
g_______
a_______
LOANS
INVESTMENT ADVICE
o_______
p_______
STOCKBROKING
AND PORTFOLIO MANAGEMENT SERVICES

14. BANKING SERVICES – Complete the collocations with the missing verbs and decide whether COMMERCIAL or INVESTMENT BANKS provide these services.
raise
CAPITAL
FUNDS
underwrite
SECURITIES
handle
TRANSACTIONS
arrange
deal with
MERGERS AND
TAKEOVERS
charge
FEES
COMMISSIONS
make
grant
approve
give
LOANS
INVESTMENT ADVICE
offer
provide
STOCKBROKING
AND PORTFOLIO MANAGEMENT SERVICES

15. HOW DO BANKS MAKE PROFITS?
COMMERCIAL OR
RETAIL BANKS
Spread or margin –
the difference between the interest they pay to clients for their deposits and the interest they charge for loans.
INVESTMENT OR
MERCHANT BANKS
Fees and commissions they charge for their services.

16. READING – BANKING CRISIS – How do banks go bankrupt? – MK, p. 75
I PRE-READING STATEMENTS – CALL MY BLUFF!
DEREGULATION refers to ending or relaxing of legal restrictions in the banking sector.
‘SUBPRIME’ BORROWERS are the ones who get the loans from banks first.
SOLVENCY is the same as liquidity.
COLLATERAL refers to property which acts as a security or guarantee for a loan.
CREDIT RATING or CREDITWORTHINESS is a lender’s estimation of a company’s or individual’s present and future solvency.
Mortgage backed securities (MBS) are financial products.
BLUE CHIP borrowers are the highest risk borrowers.

17. READING – BANKING CRISIS – How do banks go bankrupt? – MK, p. 75
SECURITIZATION is a process in which securities are pooled (grouped together) and converted into financial assets like mortgages which produce a cash flow, which are then sold to investors.
‘CREDIT CRUNCH’ is a credit crisis which stems from a massive increase in the amount of credit available for banks to lend to other banks, businesses or households.
II READING – Read the text about the credit crisis in MK, p.75
and put the summary sentences below the text in the right
order. Then explain how banks go bankrupt.

18. HOW DOES THE BIG SHORT TRAILER REFER TO THE FINANCIAL CRISIS?
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19. READING – NORTHERN ROCK BANKING CRISIS – RB, pp. 59 & 60
I PRE-READING TASKS I ‘BANK’ OR ‘BANKING’ COLLOCATIONS. II Can you guess what a ‘BANK RUN’ means? III Before reading about the first run on a British bank for generations match up the words and definitions in RB, p. 59, Task I.

20. READING – NORTHERN ROCK BANKING CRISIS – RB, pp. 59 & 60
II READING TASKS
Read the introductory paragraph and find out what happened and how it happened. Can you predict what came next?
Scan the rest of the text and match the questions to the corresponding paragraphs.
1 Who is to blame for the Northern Rock crisis?
2 Why did the Bank of England not act earlier?
3 Why did the Treasury get involved?
4 Are critics convinced by the Bank's response?
5 What does the Chancellor's guarantee for Northern Rock cover?
6 What about investors who lent money to Northern Rock?
7 How much is the guarantee worth and how long will it last?
PARA _____

21. HOW DO THESE CARTOONS COMMENT ON NORTHERN ROCK BANKING CRISIS?

22. WHO CAN HELP BANKS WHEN THEY GO BUST?

23. LISTENING – CENTRAL BANKING – RB, p. 61
CENTRAL BANKS ARE RESPONSIBLE FOR:
implementing monetary ______________
supervising exchange _______________
supervising commercial ______________
acting as a lender of last _____________
controlling _______________
issuing _______________

24. LISTENING – CENTRAL BANKING – RB, p. 61
CENTRAL BANKS ARE RESPONSIBLE FOR:
implementing monetary policy
supervising exchange rates
supervising commercial banks
acting as a lender of last resort
controlling the money supply
issuing banknotes and coins

25. LISTENING – CENTRAL BANKING – RB, p. 61
CENTRAL BANKS CAN BE:
independent from the government (the government is unable to instigate expansionary policies)
controlled by the government
COMPLETE THE FOLLOWING ANSWERS:
1 . What is monetary policy?
controlling the m__________ s__________ (and consequently inflation) and i__________ r___________
2. How is monetary policy implemented?
central bank s__________ interest rate ceilings and floors (l__________ the fluctuations of the interest rate)
central bank p__________ money or d__________ it
central bank b__________ and s___________ government bonds to and from commercial banks

26. LISTENING – CENTRAL BANKING – RB, p. 61
CENTRAL BANKS CAN BE:
independent from the government (the government is unable to instigate expansionary policies)
controlled by the government
COMPLETING THE FOLLOWING ANSWERS:
1 . What is monetary policy?
controlling the money supply (and consequently inflation) and interest rates
2. How is monetary policy implemented?
central bank set interest rate ceilings and floors (limit
the fluctuations of the interest rate)
central bank prints money or destroys it
central bank buys and sells government bonds to and from commercial banks

27. CENTRAL BANKING MAKE SENTENCES USING THE FOLLOWING PROMPTS:
The Bank of England
The Federal Reserve Bank (USA)
The Bundesbank (Germany)
banks for the government and for other banks
monetary policy
the money supply
the minimum interest rate
lender of last resort to commercial banks
coins and bank notes
exchange rates
the banking system

28. FOOD FOR THOUGHT... DISCUSSION
Does (would) the government in your country exploit the ‘political business cycle’ by increasing the money supply or government spending, or lowering taxes, in order to increase economic activity in the months before an election, despite the long-term inflationary consequences?
2) Do you agree that central banks should be controlled by
(unelected) bankers rather than by elected governments – which
will often do everything possible to get re-elected?
3) Do you agree that price stability (i.e. keeping inflation low) is
more important than other economic aims, such as attempting
to reduce unemployment?

29. READING – CENTRAL BANKING: HOW CAN MONETARY POLICY HELP THE ECONOMY
READING – CENTRAL BANKING: HOW CAN MONETARY POLICY HELP THE ECONOMY? – RB, p. 62
PRE-READING VOCABULARY - Do you understand the words
below? Which of them did you mention in your economics
classes? Are they related to MONETARY POLICY issues?
full employment money supply output bonds
aggregate demand reserve requirement discount rate
loan availability loan approval borrow
lending capacity market participants scarce goods
inflation income redistribution investment
consumption open market

30. READING – CENTRAL BANKING: HOW CAN MONETARY POLICY HELP THE ECONOMY
READING – CENTRAL BANKING: HOW CAN MONETARY POLICY HELP THE ECONOMY? – RB, p. 62
Read the extract from Schiller, B.R. (1996). Essentials of Economics. McGraw-Hill and explain how monetary policy can help the economy.
Then, read the text again and fill in the table about EXPANSIONARY and RESTRICTIVE MONETARY POLICY in RB,
p. 63, TASK II.
Finally, compare MONETARY and FISCAL POLICY, by completing the paragraphs with the missing words in TASK IV.

31. THE BANKING INDUSTRY – VOCABULARY REVISION
MORTGAGE
PRIME RATE
STOCKBROKING
COLLATERAL
DEREGULATION
MARGIN
UNDERWRITE
DISCOUNT RATE
LIQUIDITY/
SOLVENCY
CREDIT RATING
BLUE CHIP
MATURITY
PORTFOLIO MANAGEMENT
YIELD
MERGER

32. BANKING - REVISON
___________ banks hold customers' deposits and make loans.
___________ banks raise funds for industry.
Merchant banks in GB __________ and __________ securities.
___________ in Britain and the US has led to the creation of financial conglomerates offering a wide range of financial services that were previously provided by banks, stockbroking and insurance companies.
A country’s minimum __________ rate is fixed by the ___________ bank.
___________ borrowers are very safe large companies that receive loans at the base rate.
Banks ___________ progressively higher rates to less secure borrowers.

33. BANKING - REVISON
That bank _________________ a wide range of ________________.
Could you ________________ me some ________________?
That’s a very expensive overdraft. The bank _______________
a very high ________________ rate.
When you start working you’ll have to ________________
a ________________ to get your salary.
Investment banks make their profits from the _______________ and ________________ they ________________ for their services.
Credit ________________ is the lender’s estimation of borrowers’ present and future solvency.

34. REVISION – TYPES OF BANK – SERVICES
PAIR WORK – HANDOUT – Copy the right verbs or nouns and complete the missing parts of collocations.
Then use the collocations to complete the table in the slide that follows.

35. REVISION – TYPES OF BANK – SERVICES – HANDOUT
COMMERCIAL,
RETAIL OR CLEARING BANKS
INVESTMENT OR MERCHANT BANKS
ISLAMIC BANKS
CENTRAL BANKS