Text 3. Applications for Loans

1. currently available	имеющийся в распоряжении, наличный
2. borrower	Заемщик
3. current account	текущий счёт
4. overdraw	Превышать кредитный лимит
5. overdraft	превышение кредита
6. credit	кредит, правая сторона счёта
7. overdraft facilities	предоставление овердрафта (превышение кредита)
8. grant	Дозволять, допускать
9. principal	номинал векселя, капитал; основной должник
10. repay	Возвращать, возмещать
11. installment	взнос в счёт уплаты
12. repayment	возмещение, возврат (денег), погашение (долга)
13. security	защита, охрана; залог; поручитель; ценные бумаги (pl)
14. profit and loss accounts	счёт прибылей и убытков
15. balance sheet	балансовый отчёт
16. asset	Имущество, средства, капитал; активы, фонды
17. life insurance policy	полис страхования жизни
18. deed	юридический документ, скрепленный подписью и печатью
19. title to property	право на собственность
20. expected return	средний ожидаемый доход по всем инвестициям

Banks make their profits by lending the money which customers deposit with them to others who need it for personal or business reasons. Most people need more money than they have currently available at some time in their lives.

To be a borrower you must be a customer of the bank because the money will be lent to you through a bank account. There are two ways in which you may borrow. The first, and easy, is to spend more money than you have in your current account – to overdraw. The second, and the normal way of borrowing larger amounts or for a long period of time is the loan.

If a manager permits an overdraft on current account he is likely to set a limit to the size of the overdraft and may stipulate a date by which the account is back in credit. Businesses whose payments and receipts are often irregular will frequently need to use overdraft facilities and they are often granted to private customers when the manager knows that regular payments are made directly into the account.

If a loan is granted it will be a fixed sum immediately available for a fixed period of time. The principal and the interest on it may all become due for payment at the end of that period but for personal loans it is common to arrange that the loan and interest are repaid in equal regular installments over the period of the loan. A separate account is opened to record the repayments as they are made.

When you are seeking money for business or personal reasons there are a number of things that the manager will want to know before he is prepared to grant your request. The obvious facts will be the amount that you seek and the arrangements for repayment that you are able to suggest. You need to tell him something about the purpose of the loan, a business loan is likely to help you make profits out of which the loan can be repaid with interest and he will wish to judge for himself whether or not he is likely. Personal loans usually have to be repaid out of an income which will not get any bigger and the manager will be particularly anxious to ensure that you are not being too optimistic. In deciding this he will be considerably assisted by his knowledge of you and his estimate of your character.

Sometimes people do not ask for enough money because they are anxious about the burden of the repayments. The manager will be wise enough to try and ensure that you will leave sufficient amount of money to do what you want to do. Finally he will consider whether or not you really will be able to repay and what kind of security you can offer against the possibility that you not repay, in the case of a business the manager may want to see well prepared, relevant documents such as profit and loss accounts and balance sheets for the most recent years. He would also ask about the expected return from the use of the money and want to see some figures upon which you have based your calculations. For a business good security might be one or more of the assets of the business whilst personal loans are often secured by such things as life insurance policies on which the bank is making regular payment for you or the deeds of your house.

Questions on the text

1. What two kinds of borrowings are possible?
2. In what circumstances an overdraft on current account is permissible?
3. How are personal loans usually repaid?
4. Will you pay back more than you borrowed? What will the difference be?
5. What information will the manager require for a personal loan?
6. What information will he require for a business loan?
7. What other things will he take into account?
8. What will he need from you to make the loan safer for him?
9. What does a businessman mean by his expected rate of return?
10. Why might this be important to the bank manager?
11. What kind of things might you offer as collateral for a personal loan?

 

Text 4. Bank Investments

1. funds	фонды, денежные средства; запас, резерв
1. make withdrawals	снимать со счёта
2. asset	активы, средства; капитал; имущество, собственность
3. meet demands	удовлетворять требования
4. cushion	деньги, отложенные на черный день (на случай сложного финансового положения)
5. unexpected demands	неожиданные нужды, требования
6. rate of return	норма прибыли; коэффициент окупаемости капиталовложений
7. highly liquid lending	легко ликвидные (реализуемые) кредиты, ссуды
8. money market	денежный рынок, рынок краткосрочного ссудного капитала
9. capital market	рынок долгосрочного ссудного капитала
10. yielding	доход по ценным бумагам, доход в виде процентов на вложенный капитал; приносить доход
11. government bonds	облигация, закладная, долговое обязательство
12. readily	легко (без труда)
13. saleable	пользующийся спросом; реализуемый, продаваемый
14. occasion demand	когда потребуется по какой-то причине
15. short notice	сокращенный срок уплаты
16. banks investment portfolio	портфель ценных бумаг
17. working capital	оборотный капитал
18. fixed capital	основной капитал; активы длительного пользования
19. AA rating	Первоклассный
20. blue chip	первоклассная ценная бумага

The investment policy of a bank is based upon the reconciliation of two conflicting aims. On the one hand the bank wants to make as much profit as it can and for this reason it must take the risks of lending money. On the other hand its funds belong to its depositors and must be available whenever they wish to make withdrawals.

There are two things that the bank must therefore do. First it must keep a proportion of its assets in the form of cash to meet demands. The amount that this needs to be varies very little from one bank to another or from one day to another and experience suggests that it is about six percent. As a cushion against unexpected demands a further proportion of funds is invested at low rates of return in highly liquid lending mostly to firms in the money and capital markets.

The second thing that the bank must do is to ensure that the investments it chooses are safe. This also means that they are relatively low yielding since high yields are associated with risk and with lending for long periods of time. Much of a bank’s investment is in short and medium term government and local government bonds. They yield certain incomes and are readily saleable should the occasion demand.

Advances by a bank to its customers are the least liquid of their assets since there are few borrowers who could repay a loan at very short notice. However, they are also the most profitable of them yielding the highest rates of return. Advances to customers are likely to account for more than two thirds of the banks investment portfolio although this will vary on a day to day basis since overdrafts are the most common form of advance and are not immediately controllable by the bank.

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