Cambridge University Press

978-0-521-54726-0 - English for the Financial Sector Teacher’s Book

Ian MacKenzie
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The organization of the

1 financial industry
To learn about: types of banks; the organization of the financial industry;
AIMS

key vocabulary of banking products and services

To learn how to: express permission, necessity and prohibition
To practise: asking and talking about terms and conditions of bank
accounts

BACKGROUND: THE FINANCIAL SECTOR This unit outlines the recent history of the financial
The financial sector (or the financial services industry) industry, and the way in which recent deregulation has
includes the following areas, most of which are covered led to formerly separate financial organizations –
in this book: commercial banks, investment banks, stockbroking
• commercial banks, which receive customers’ houses, insurance companies, etc. – combining to form
deposits and make loans large financial institutions.
• private banks, which manage the assets of
wealthy individuals Lead in
• investment banks, which advise and raise The lead-in for each unit provides discussion questions
money for companies, and sell and trade as a way into the unit. Anyone old enough to study
financial products finance is likely to have a bank account. If you don’t
• investment companies, which invest customers’ have any learners already working in financial
money in funds and other companies institutions, the discussion may be less varied.
• the money markets, in which financial However, learners could think about any changes they
institutions, companies and government bodies have noticed in recent years as bank customers.
can borrow and invest in the short-term (less
As with nearly all the exercises and activities in this
than one year)
course (except those for small groups), this activity
• the currency markets, in which individuals and
is probably best done in pairs, followed by a short
companies can buy and sell foreign currency
discussion, or question and answer session, with the
• the stock market, where the stocks and shares
whole class. (If you are teaching one-to-one, try to elicit
of public companies are traded
as much information as you can from your student.)
• the futures and derivatives markets, where
these financial instruments are traded
• the inter-bank clearing system, in which Vocabulary 1
financial institutions settle credits and debits As with many exercises in this book, learners can either
among themselves do this in pairs or complete it on their own and then
• insurance companies, which offer financial check their answers together when they’ve finished.
protection against risks such as accidents, fire, There is an answer key in the Student’s Book, but it
theft, loss, damage, etc. would be a good idea to ask the learners not to consult
• accounting and auditing companies, which it before you have elicited answers from the class.
examine companies’ financial records to make
sure they are accurate and in accordance with ANSWERS
the law 1 mortgage 5 capital
• regulatory authorities, which ensure that 2 deposit 6 bonds
financial institutions and markets comply with 3 pension 7 takeover
laws and regulations. 4 stocks, shares 8 merger

The organization of the financial industry Unit 1 11

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Cambridge University Press
978-0-521-54726-0 - English for the Financial Sector Teacher’s Book
Ian MacKenzie
Excerpt
More information

VOCABULARY NOTES short-term outlays and in some cases longer-

American English tends to use the word stock while term investment. Then we had another range
British English uses the word share, though British of institutions like insurance companies to
English uses stock in compounds such as stock market, provide life insurance or pensions, and we had
stock exchange, stockbroker, stock option, etc. (See investment banks – sometimes called merchant
Unit 15, Stocks and shares) banks. These weren’t retail banks; they didn’t
The most common use of stock in British English is to deal with individuals, they dealt with big
refer to the total amount of goods or the amount of a companies. They gave the companies financial
particular type of goods available for sale at a particular advice, maybe arranging mergers, or fighting off
time (inventory in American English). a takeover bid, and helped to raise capital, for
example by issuing shares or bonds.
Takeover is a noun; the verb is in two words (to) take
over (see Unit 17). NOTES
Shortly after this recording was made, Peter Sinclair left
Listening 1: The development of the the Centre for Central Banking Studies at the Bank of
financial industry England, and returned to Birmingham University where
he is Professor of Economics.
You will probably need to play this recording – and most
of the others in this course – twice. The learners can Further extracts from this interview are used in Units
read the questions, listen a first time, try to answer the 3, 13, 17 and 19.
questions, check their answers in pairs, and listen a
ANSWERS
second time to confirm their answers, before you elicit
1 Most financial institutions were national:
answers from the class. Depending on the level of the
‘So they were national banks belonging to that
learners, and the difficulty of the recording, playing the
country.’
recording a third time may also be necessary. Learners
2 Most financial institutions were specialized:
should be actively discouraged from reading the
‘The other key feature was that financial
tapescripts at the back of the Student’s Book before
institutions were specialized.’
listening, or while listening for the first time.
3
Here, and in other listening comprehension exercises
Retail banks making loans
based on authentic materials, quotes from the script
receiving deposits
have been included in order to help you explain / justify
the answers. Students should also be encouraged to Building arranging mortgages
give explanations for their answers. societies
Insurance providing pensions
1.1 TAPESCRIPT
companies offering life insurance
Peter Sinclair: Well, twenty-five years ago the
financial industry in most countries had two key Investment arranging mergers
characteristics. One was that pretty well all the banks giving financial advice to
banks and financial institutions in that country companies
were owned in that country, and there were issuing shares or bonds
few international links – in many cases none. arranging or fighting takeover
So they were national banks belonging to that bids
country. The other key feature was that financial
institutions were specialized, so in Britain we
had institutions that lent to people who wanted
to borrow to buy houses – that means arranging
mortgages – so we had specialized things called
building societies doing that. We had retail
banks where individuals and companies kept
bank deposits and which made loans to cover
12 Unit 1 The organization of the financial industry

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978-0-521-54726-0 - English for the Financial Sector Teacher’s Book
Ian MacKenzie
Excerpt
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VOCABULARY NOTES owned by foreigners, by German companies, or

With more advanced learners, you could point out (or French companies or Austrian companies –
let them identify) key, a synonym for ‘very important’ whatever it might be – and the huge
that Sinclair uses twice, and pretty well, a phrase international financial institutions are typically,
meaning ‘nearly (all)’ or ‘almost (all)’. He also uses the though not all of them, American; and you can
noun outlay, meaning amounts of money spent for now think of the City of London, the world’s
particular purposes. leading centre for foreign exchange dealings and
a great deal of finance, as rather like Wimbledon.
In other words it’s a great big international
Listening 2: Going international stage, happens to be in London, but most of the
As with other listening exercises in this book, you can players are foreign; they are nearly all foreign
ask learners to predict answers before listening. They companies that do, for example, the investment
can discuss their predictions in pairs then listen a first banking and so many other things.
time to see if their predictions were correct, compare
So internationalization and, if you like,
their answers in pairs, and listen again to confirm the
homogenization of these hitherto specialized
correct answers. If learners feel they have the answers
financial institutions. Those are the two big
at this stage you can elicit them from the class. If
recent trends.
a third listening is requested by the learners, try to
ensure that they have a slightly different task, e.g. ANSWERS
elicit the answers they are happy with first, so they just 1 Many banks have become international, by
focus on the problem question(s) for the third listening. buying banks in other countries or through
1.2 TAPESCRIPT being taken over.
Peter Sinclair: In the old days in Britain, the merchant 2 The City of London is a major financial centre,
or investment banks were pretty well all British but most of the banks operating there are
and there were big boundaries between building not British, just as Wimbledon is a big
societies and insurance companies and all international tennis tournament that takes place
these other types of companies. Well, now if you in London, although very few of the players are
look at the picture, many banks have become British.
universal banks; perhaps ‘banks’ is the wrong 3 Internationalization and homogenization
word. Lots of institutions do all the things that (making all the banks become the same, or
I have just described – insurance, mortgages, very similar).
advice, raising capital for companies, and retail VOCABULARY NOTES
banking besides, and the other great change is Sinclair again uses pretty well, as well as a synonym,
that so many of the financial institutions – and pretty much. He also uses the phrase if you look at
it is not just true of Britain, true of pretty much the picture meaning ‘look at the current situation’.
everywhere else – are now international. So, He describes the major participants or companies in
for example in Britain, two of the big four retail the finance industry as players, which is a common
banks have changed ownership: one was taken idiom, and uses hitherto, a fairly formal alternative to
over by Hong Kong and Shanghai Bank, that ‘previously’.
was the Midland Bank previously, and it’s now
changed its name to Hong Kong and Shanghai
Bank and it really isn’t a British bank any more; Discussion
and another, National Westminster, was taken This is a good opportunity to relate what Sinclair
over by the Royal Bank of Scotland. But if you says to students’ personal experience. There may be
look at, say, countries like the Czech Republic examples of recent mergers or takeovers of banks in
or Hungary or Poland or New Zealand too, and their countries.
plenty of other small countries around the world,
all their financial institutions pretty well are now

The organization of the financial industry Unit 1 13

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978-0-521-54726-0 - English for the Financial Sector Teacher’s Book
Ian MacKenzie
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Vocabulary 2 NOTES
Word stress is important for comprehension (at least
It is always worth drawing learners’ attention to
by native speakers); learners should be encouraged
common verb–noun word combinations (also known
to systematically mark the stressed syllable of new
as word partnerships, or collocations), as nouns are
words they write down.
generally used with an accompanying verb, and many
nouns used in finance are only used with a limited and The rules (or at least regularities) of word stress are
predictable range of verbs. Learners should think about given in a number of books, including in the ‘Language
how they write down and store new vocabulary and be reference’ section of Professional …nglish in Use
encouraged to record them in a collocation, a phrase or Finance (Cambridge University Press, 2006). Most of
a sentence. the words in this exercise are stressed on the second
syllable, as the first syllable is a prefix. The exceptions
ANSWERS are regulation, because the beginning of the suffix
1 1c 2g 3a 4b 5f 6d 7h 8e -ation is regularly stressed, and underwriting, which is
2 1 con'glomerates 5 regu'lation better analysed as a compound noun than as a word
2 de'positors 6 re'pealed with a prefix.
3 de'regulated 7 'underwriting
4 pro'hibited

Reading: Regulation and deregulation Discussion

Students can read the text individually first, thinking If the learners do not know the answers to these questions,
about their answers. Then they can check their they could be invited to find out before the next lesson.
answers in pairs. Finally, you can elicit answers from Regulatory agencies tend to have large and informative
the whole group. websites, and lists of banks are also quite easy to find on the
Here, and throughout the course, encourage learners internet. The third question is more abstract, but learners
to give the reasons for their true and false answers by working in banking may have something to say. Essentially,
referring to the text, or by paraphrasing it in their own regulation protects the customer, but tends to limit financial
words. institutions’ room to manoeuvre. The subject of regulation
reappears towards the end of the course, in Unit 23.

ANSWERS
1 1 underwriting 5 deregulated
2 depositors 6 repealed
3 regulation 7 conglomerates
4 prohibited 8 fines

1900 2000
b – 1920s d – 1930s c – 1980s–1990s a – 2002
3 1 False: it was the result of the behaviour of commercial banks.
2 False: ‘Yet in all countries, financial institutions are still quite strictly controlled’.
3 True
4 True
5 False: the last paragraph gives an example of an illegal practice in the 1990s.

14 Unit 1 The organization of the financial industry

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Cambridge University Press
978-0-521-54726-0 - English for the Financial Sector Teacher’s Book
Ian MacKenzie
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Language focus: Possibility, necessity and prohibition

This section looks at ways of expressing possibility, possible / necessary to ... whereas native speakers
necessity and prohibition. Before looking at the usually use the modal equivalent.
exercise, ask learners to think about regulations in Ask learners to read the sentences and make sure the
their place of work or study and to give an example of first task is clear. The second task asks learners to
things which are possible, necessary or prohibited. classify the sentences according to their meaning. Work
For example, It is forbidden to smoke. You could then through the example to ensure learners understand
ask them if they can think of another way of saying what to do. They should then think about their answers
this. Learners with a Latin-based first language (such individually before checking them in pairs.
as Spanish, French or Italian) often tend to use It is

ANSWERS
1 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.

2 Meaning Permission Necessity or No necessity or no Prohibition

obligation obligation
Sentence number 1, 8 3, 6, 9 4, 5, 11 2, 7, 10
Verbs used be allowed to have to don’t need to not be allowed to
can need to don’t have to can’t
must needn’t mustn’t

3 1 were not allowed to / couldn’t 7 allowed to / able to

2 can / are allowed to 8 were not allowed to / couldn’t
3 don’t have to, don’t need to / needn’t 9 have to, need to / must (must would probably
4 were not allowed to / couldn’t come before still)
5 mustn’t / aren’t allowed to / can’t 10 didn’t have to / didn’t need to
6 needn’t, don’t need to / don’t have to

NOTE
Need is both a regular verb and a modal verb, but the have to. (German speakers in particular often find this
modal usage (e.g. Need banks compete with building difficult, as the German müssen nicht means ‘don’t
societies?) is rare. The regular verb is followed by an have to’.)
infinitive with to (the to is underlined in the answers Could and was / were able to are both used to talk about
above). a past possibility. The difference is that was able to
The most difficult aspects are probably the past forms describes one specific action, whereas could describes
of the modal verbs (or lack of them), and the use of a general past ability, e.g. I could speak German quite
the verbs expressing lack of obligation or necessity, well so I was able to get the job.
especially the difference between mustn’t and don’t

The organization of the financial industry Unit 1 15

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Cambridge University Press
978-0-521-54726-0 - English for the Financial Sector Teacher’s Book
Ian MacKenzie
Excerpt
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Practice
See pages 115 and 123 of the Student’s Book for the
file cards.
This role play, to be done in pairs, gives learners the
chance to use the verbs from the Language focus to
talk about the terms and conditions for different kinds
of bank accounts. You could ask learners what kind of
bank account they have and if they have more than
one. You could ask them what the regulations or terms
and conditions are for each (e.g. Do you have to keep
a minimum balance in the account to avoid charges?)
Each role has two parts, a call centre employee
(explaining terms and conditions) and a customer
(asking for information about a bank account).
Assign each learner a role (A or B) and ask them to
read it through and make sure they understand
the vocabulary. You may need to explain the terms
overdraft, balance, statement, transaction and ATM. Ask
the learners to prepare their questions and answers
and encourage them to use the language from the
Language focus.
When the learners are ready, Role A, Call 1 (the call
centre employee) could begin by saying Can I help you?
When they have completed the first call, they should
move on to the second, with Role B, Call 2 starting the
conversation.
Try to listen to as many of these conversations as you
can, making a note of both good use of language and
that which needs to be corrected, so that you can give
feedback at the end of the activity. You might want to
pick out two or three pairs of students to perform their
dialogues in front of the rest of the class.
ADDITIONAL SPEAKING ACTIVITY
This could involve the learners asking questions about
each other’s job contracts – things they can do, can’t
do, don’t have to do and mustn’t do in their job (or,
if they are studying, at their school or university).
Examples might include working hours (Can they
work evenings and weekends?), whether they have
to attend training courses, whether there is a dress
code specifying what they can and can’t wear at work,
whether they are allowed to choose when they take
their holiday, etc.

16 Unit 1 The organization of the financial industry

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