Financial English 5 Hr_2012Slides

8/11/2019 Financial English 5 Hr_2012Slides

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Guy Thistlethwaite

12th June 2012


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Regulation and deregulation

The banking industry1 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7 repealed g people who place money in bank accounts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)


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Regulation and deregulation

The banking industry1 conglomerates c groups of companies that have joined together

2 depositors g people who place money in bank accounts

3 deregulated a abolished or ended rules and restrictions

4 fines b sums of money paid as penalties for breaking the law

5 prohibited f made it illegal to do something

6 regulation d control of something by rules or laws

7 repealed h cancelled or ended (a law)

8 underwriting e guaranteeing to buy a company's newly issued stocks if no one else does


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Put these sentences on a time-line

a) Major US banks were fined for giving bad adviceto investors

b) Commercial banks used their investors moneyto buy securities and many depositors lost money

c) Many banking regulations were ended and bigfinancial conglomerates were formed

d) New laws in the US and Britain separatedcommercial and investment banks


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Time-line

1900 2000


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Time-line

1900 2000

b

1920s

c

1980s-1990s

d

1930s

a

2002


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True or false?1. The Glass-Steagall Act was the result of the behaviour of investment

banks

2. The British and American Financial markets are now completely

unregulated3. 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 moreregulated, and then less regulated

5. Large American banks do no longer do the kind of things that led tothe separation of invesment and commercial banking in the 1930s


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AccountingA patient was at her doctor's office after undergoinga complete physical exam. The doctor said, "I havesome very grave news for you. You only have six

months to live."The patient asked, "Oh doctor, what should I do?"

The doctor replied, "Marry an accountant."

"Will that make me live longer?" asked the patient.

"No," said the doctor, "but it will SEEM longer."


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Accountingassets

cost accounting

income

tax accounting

financial accounting

expenditure

liabilitiesbookkeeping

management accounting

auditing


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Accounting1. assets

2. tax accounting

3. auditing

4. cost accounting

5. financial accounting

6. liabilities

7. bookkeeping8. Income

9. expenditure

10. management accounting


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Financial statements1 A charge for arranging a transaction [e.g. buying or selling securities]a commission b fee c tax

2 A charge for a service performed by a bank

a commission b fee c tax

3 Payments for an insurance policy

a commissions b premiums c tariffs

4 A reduction in the value of an asset, charged against profits

a amortization b loss c waste

5 Adjective meaning after all deductions have been made

a gross b net c zero


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Financial statements1 A charge for arranging a transaction [e.g. buying or selling securities]a commission b fee c tax

2 A charge for a service performed by a bank

a commission b fee c tax

3 Payments for an insurance policy

a commissions b premiums c tariffs

4 A reduction in the value of an asset, charged against profits

a amortization b loss c waste

5 Adjective meaning after all deductions have been made

a gross b net c zero


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Financial statements6 Adjective meaning for a whole group of companiesa consolidated b corporate c mutual

7 Adjective meaning one year or less in financial statements

a annual b long-term c short-term

8 Part-ownership [less than 50%) of other companies

a conglomeration b liabilities c minority interests

9 Things of value that cannot be physically touched, such as reputation (goodwill], brand names and

trademarks

a intangible assets b liabilities c tangible assets

10 The net worth of a company - the amount by which assets exceed liabilities

a dividends b profit c shareholders' equity


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Financial statements6 Adjective meaning for a whole group of companiesa consolidated b corporate c mutual

7 Adjective meaning one year or less in financial statements

a annual b long-term c short-term

8 Part-ownership [less than 50%) of other companies

a conglomeration b liabilities c minority interests

9 Things of value that cannot be physically touched, such as reputation (goodwill], brand names and

trademarks

a intangible assets b liabilities c tangible assets

10 The net worth of a company - the amount by which assets exceed liabilities

a dividends b profit c shareholders' equity


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(1)________________ income statement - IFRS

For the year ended 31st December 2005 (m) 2004 (m)

Continuing operations

Interest income 17232 13880

Interest expense -9,157 -7047

Net interest income 8075 6833

Fee and commission income 6430 5509

Fee and commission expense -725 -662

Net (2) ________________ and (3) ________________ income 5705 4847

Net trading income 2321 1487

Net investment income 858 1027

Principal transactions 3179 2514Net (4) ________________ from insurance contracts 872 1042

Other income 147 131

Total income 17978 15367

Net claims and benefits paid on insurance contracts -645 -1259

Total income (5) ________________ of insurance claims 17333 14108

Impairment charge and other credit provisions -1571 -1093

Net income 15762 13015

Operating expenses excluding amortisation of (6)

________________ (7) ________________ 10448 8514

Amortisation of (8) ________________ (9) ________________ -79 -22

Operating expenses 10527 8536

Share of post-tax results of associates and joint ventures 45 56

Profit on disposal of associates and joint ventures 0 -45

Profit before tax 5280 4580

(10) ________________ -1439 -1279

Net profit for the year 3841 3301


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Consolidated income statement - IFRS

For the year ended 31st December 2005 (m) 2004 (m)

Continuing operations

Interest income 17232 13880

Interest expense -9,157 -7047

Net interest income 8075 6833

Fee and commission income 6430 5509

Fee and commission expense -725 -662

Net feeand commission income 5705 4847

Net trading income 2321 1487

Net investment income 858 1027

Principal transactions 3179 2514Net premiums from insurance contracts 872 1042

Other income 147 131

Total income 17978 15367

Net claims and benefits paid on insurance contracts -645 -1259

Total income netof insurance claims 17333 14108

Impairment charge and other credit provisions -1571 -1093

Net income 15762 13015

Operating expenses excluding amortisation of intangible assetts 10448 8514

Amortisation of intangible assets -79 -22

Operating expenses 10527 8536

Share of post-tax results of associates and joint ventures 45 56

Profit on disposal of associates and joint ventures 0 -45

Profit before tax 5280 4580

Tax -1439 -1279

Net profit for the year 3841 3301


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Numbers


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Financing International TradeDiscuss the following in small groups:

What are your country's main exports?

What are your country's main imports? Which countries or regions are your country's major

trading partners?

What are the most common ways for importers to pay

exporters for goods?


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Espaa! Spain major imports are machinery and equipment,

fuels, chemicals, semi-finished goods, foodstuffs andconsumer goods. Its principal import partners areEuropean Union countries (Germany, France, Italy,UK, Netherlands) and China

Spain major exports are: machinery, motor vehicles,fuels, chemicals, and semi-finished goods andfoodstuffs. Spain is also the third largest wine exporterin the world. The EU accounts for 70 percent of Spain'sexports, the most important trading partners beingFrance and Germany.


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How a letter of credit worksThe advising bank authenticates the letter of credit and sends the beneficiary (the

seller) the details. The seller examines the details of the letter of credit to make sure

that he or she can meet all the conditions. If necessary, he or she contacts the buyer

and asks for amendments to be made.

The applicant (the buyer) completes a contract with the seller.

The issuing bank (the buyer's bank) approves the application and sends the letter of

credit details to the seller's bank (the advising bank].

The buyer fills in a letter of credit application form and sends it to his or her bank forapproval.


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How a letter of credit works1. The applicant (the buyer) completes a contract with the seller.

2. The buyer fills in a letter of credit application form and sends it to his or her bank

for approval.

3. The issuing bank (the buyer's bank) approves the application and sends the letter of

credit details to the seller's bank (the advising bank).

4. The advising bank authenticates the letter of credit and sends the beneficiary (the

seller) the details. The seller examines the details of the letter of credit to make sure

that he or she can meet all the conditions. If necessary, he or she contacts the buyerand asks for amendments to be made.


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How a letter of credit works5. When the seller [beneficiary] is satisfied with the conditions of the letter of credit, he or she ships thegoods.

6. The seller presents the documents to his or her bankers [the advising bank]. The advising bank examines

these documents against the details on the letter of credit and the International Chamber of Commerce

rules.

7. If the documents are in order, the advising bank sends them to the issuing bank for payment or

acceptance. If the details are not correct, the advising bank tells the seller and waits for corrected documents

or further instructions.

8. The issuing bank [the buyer's bank] examines the documents from the advising bank.

If they are in order, the bank releases the documents to the buyer, pays the money promised or agrees to pay

it in the future, and advises the buyer about the payment. [If the details are not correct, the issuing bankcontacts the buyer for authorization to pay or accept the documents.] The buyer collects the goods.

9. The issuing bank advises the advising [or confirming] bank that the payment has been made.

10. The advising/confirming bank pays the seller and notifies him or her that the payment has been made.

Documents

Financial English 5 Hr_2012Slides