Cambridge University Press

978-0-521-54725-3 - English for the Financial Sector Student’s Book

Ian MacKenzie
Excerpt
More information

The organization of the

1 financial industry
To learn about: futures,
the organization
options and
of the
swaps,
financial
key industry;
vocabulary
keyforvocabulary
derivatives
AIMS
AIMS

To learn
of banking
how to:
products
clarify, and
summarize
servicesand paraphrase
To learn
practise:
howtalking
to: express
aboutpermission,
the advantages
necessity
and disadvantages
and prohibitionof
Toderivatives,
practise: asking
clarifying
and talking
and summarising
about termskey
and
points
conditions
from aof
talk
bank
accounts

Lead in
• What services does your bank offer? Which of them do you use?
• If you are still studying, what area of finance do you want to work in, and why?
• If you are already working, what area of finance do you work in, and why? Would you like
to change your field of activity in the future, and why?
• Has the institution or company you work for changed significantly in recent years? In
what ways?

Vocabulary 1
You are going to listen to Peter Sinclair, the former director of the Centre for Central Banking
Studies at the Bank of England, talking about the financial industry. Before you listen, check
your understanding of banking vocabulary by completing each sentence with a word from the
box.

bonds deposit mortgage shares takeover

capital merger pension stocks
1 A is a loan to buy property.
2 Money you put in the bank is called a .
3 Money paid to a retired person is called a .
4 Securities representing part-ownership of a company are called or
.
5 The money invested in a business is its .
6 are interest-paying securities issued by companies that need to borrow
money.
7 A is when a company gains control of another one by buying its stocks.
8 A is when two formerly separate companies join together.

Listening 1: The development of the financial industry

Listen to Peter Sinclair talking about the organization of the financial
industry 25 years ago, and answer the questions below. 1.1
1 Were most financial institutions national, or international?
2 Were most financial institutions specialized, or did they offer lots of
services?

The organization of the financial industry Unit 1 9

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Cambridge University Press
978-0-521-54725-3 - English for the Financial Sector Student’s Book
Ian MacKenzie
Excerpt
More information

3 What kinds of financial institutions traditionally did the following types of business?
Complete the table.
making loans issuing shares or bonds
arranging mergers arranging mortgages
providing pensions arranging or fighting takeover bids
giving financial advice to companies offering life insurance
receiving deposits

Retail banks

Building societies

Insurance companies

Investment banks

Listening 2: Going international

Listen to Peter Sinclair talking about recent changes in the financial industry, and answer the
questions below. 1.2

1 What has recently happened to banks in Britain and many other countries?
2 In what way does Peter Sinclair compare the City of London to the Wimbledon tennis
tournament?
3 Which two words does Peter Sinclair use to summarize the two big recent trends in
banking?
Peter Sinclair
makes a
comparison
between the City
of London and the
Wimbledon tennis
tournament.

Discussion
Has your bank changed in any of the ways described by Peter Sinclair?
10 Unit 1 The organization of the financial industry

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Cambridge University Press
978-0-521-54725-3 - English for the Financial Sector Student’s Book
Ian MacKenzie
Excerpt
More information

Vocabulary 2
1 You are going to read about changes in the banking industry. Before you read, check your
understanding of the words (1–8) below by matching them with their definitions (a–h).
1 conglomerates a abolished or ended rules and restrictions
2 depositors b sums of money paid as penalties for breaking the law
3 deregulated c groups of companies that have joined together
4 fines d control of something by rules or laws
5 prohibited e guaranteeing to buy a company’s newly issued stocks if no one else does
6 regulation f made it illegal to do something
7 repealed g people who place money in bank accounts
8 underwriting h cancelled or ended (a law)
2 Now look again at the words above and put a stress mark in front of the stressed syllable
in each word.
Example: con 'glomerates

Reading: Regulation and deregulation

1 Read the article, and complete it using the words (1–8) from the Vocabulary exercise above.

Regulation and deregulation

In the late 1920s, several American commercial (6) . A lot of commercial banks
banks that were (1) security merged with or acquired investment banks and
issues for companies weren’t able to sell the insurance companies, which created large financial
stocks to the public, because there wasn’t enough (7) . The larger American and
demand. So they used money belonging to their British banks now offer customers a complete
(2) to buy these securities. If range of financial services, as the universal banks
the stock price later fell, their customers lost a lot of in Germany and Switzerland have done for a long
money. time. The law forbidding US commercial banks from
operating in more than one state was also abolished.
This led the government to step up the
In Britain, many building societies, which specialized
(3) of banks, to protect
in mortgages, started to offer the same services as
depositors’ funds, and to maintain investors’
commercial banks.
confidence in the banking system. In 1933 the
Glass–Steagall Act was passed, which Yet in all countries, financial institutions are still
(4) American commercial banks quite strictly controlled, either by the central bank
from underwriting securities. Only investment banks or another financial authority. In 2002, ten of Wall
could issue stocks for corporations. In Britain too, Street’s biggest banks paid (8)
retail or commercial banks remained separate from of $1.4 billion for having advised investors, in the
investment or merchant banks. A similar law was 1990s, to buy stocks in companies that they knew
passed in Japan after World War II. had financial difficulties. They had done this in order
to get investment banking business from these
Half a century later, in the 1980s and 90s, many
companies – exactly the kind of practice that led
banks were looking for new markets and higher
the US government to separate commercial and
profits in a period of increasing globalization. So most
investment banking in the 1930s.
industrialized countries (5)
their financial systems. The Glass–Steagall Act was

The organization of the financial industry Unit 1 11

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Cambridge University Press
978-0-521-54725-3 - English for the Financial Sector Student’s Book
Ian MacKenzie
Excerpt
More information

2 Put the sentences (a–d) below in the right order on the timeline, and write the time period
that each sentence refers to. The first one has been done as an example.
a Major US banks were fined for giving bad advice to investors.
b Commercial banks used their investors’ money to buy securities and many depositors
lost money.
c Many banking regulations were ended and big financial conglomerates were formed.
d New laws in the US and Britain separated commercial and investment banks.

1900 b – 1920s 2000

3 Look at the following statements. Are they true or false, according to the article?
1 The Glass–Steagall Act was the result of the behaviour of investment banks.
2 The British and American financial markets are now completely unregulated.
3 German and Swiss banks did all types of banking business at a time when American and
British ones were not allowed to.
4 During the 20th century, many financial markets first became more regulated, and then
less regulated.
5 Large American banks no longer do the kind of things that led to the separation of
investment and commercial banking in the 1930s.

Discussion
• Which are the largest banks (or financial conglomerates) in your country?
• To what extent is banking regulated in your country? What are the advantages and
disadvantages of this?
FOCUS
LANGUAGE

Permission, necessity and prohibition

1 The Reading article gives information about banking regulations – how banking is
controlled by rules. Look at the following sentences and underline the words that are
used to describe things that are permitted, necessary, not necessary, or prohibited
(forbidden).
1 Although banks are allowed to open on Saturdays, most of them don’t.
2 Banks aren’t allowed to charge less than the minimum interest rate.
3 Commercial banks have to deposit part of their reserves at the central bank.
4 If you have a credit card, you don’t need to pay cash.
5 If you keep at least $1,000 in the bank, you don’t have to pay charges.
6 Today, retail banks need to react to competition from building societies.
7 Our policy states that we can’t lend you more than one month’s salary.
8 You can pay me back at the end of the month.
9 You must keep at least $1,000 in the account if you want free banking.
10 You mustn’t use this loan for any other purpose.
11 You needn’t go to the bank – you can do it on the internet.

12 Unit 1 The organization of the financial industry

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Cambridge University Press
978-0-521-54725-3 - English for the Financial Sector Student’s Book
Ian MacKenzie
Excerpt
More information

2 Put the sentences into the correct columns, according to their meaning. The first one has been done as an
example.
Meaning Permission Necessity or No necessity or no Prohibition
obligation obligation
Sentence number 1
Verbs used be allowed to

These verbs change if we talk about the past:

Present Past
can / can’t was / were (not) able to OR could / couldn’t
must had to
mustn’t was / were not allowed to OR couldn’t
is / are (not) allowed to was / were (not) allowed to OR could / couldn’t
has / have to had to
doesn’t / don’t have to didn’t have to
need to needed to
needn’t / don’t need to didn’t need to
Examples: I had a credit card, so I didn’t need to pay cash.
I had to keep $1,000 in the account.
3 Complete each sentence using a verb. Look back at the Reading and Listening exercises to find the
information you need.
1In the 1970s, US commercial banks do business in more than one state.
2Today, US banks operate in several states.
3Today, American banks be specialized any more.
4For most of the 20th century, commercial banks issue shares.
5Banks sell stocks to their own customers if it is not in the customers’ interest.
6Today, building societies restrict their activity to mortgages.
7German banks were always do business with both large companies and small
individual customers.
8 Before deregulation, foreign banks operate in many countries.
9 Even after deregulation, banks still obey a lot of laws.
10 Twenty-five years ago, most banks worry about foreign competition.

Practice
A customer calls a bank to ask about the terms and conditions of a bank account. Your
teacher will give you a role to prepare. Use the phrases for permission, necessity and
prohibition from the Language focus above.
Work in pairs. Student A should look at page 115, and Student B at page 123.

Discussion
How do the bank accounts in the Practice compare with your own? Talk about the rules for
your account using the language from the Language focus above.
The organization of the financial industry Unit 1 13

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