U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

UNIT 14: BANKING (HANDOUT)

AIMS
- Consider banking products and services and different types of banks.
- Discuss the subprime crisis and microfinance
Subprime /ˌsʌbˈpraɪm/ (adj): used to describe the practice of lending money, especially to buy a
house, to people who may not be able to pay it back.(chỉ 1 hành động cho mượn tiền mua nhà mà
người đó không có khả năng trả / vay nợ dưới chuẩn)
Crisis /ˈkraɪsɪs/ (n): a situation that is extremely difficult or dangerous, when there are many
problems.
Microfinance /ˈmaɪkrəʊˌfaɪnæns/ (n): the activity or business of providing financial services,
such as small loans, to poor people or new businesses that cannot use traditional banking
services, usually in developing countries.
Checking account: tài khoản vãng lai
Saving account: tk tiet kiem
Atms: may rut tien
Chequebook. checkbook: tấm séc ghi tiền để chi trả
Credit card: thẻ tín dụng
Debit card: thẻ ghi nợ
A loan: 1 cái khoản vay (đối với ngân hàng)/ debt: nợ s.o
Buying or selling foreign currency for travelling: mua bán ngoại tệ
A mortgage: sự đồng ý cho mượn tiền để mua nhà thế chấp cho ngân hang
Overdraft: số tiền mà ngân hàng cho phép mượn vượt qua số tiền mình đang có/ vay thấu chi
Investment advice: lời khuyên đầu tư
Internet baking
Telephone baking

Retail bank: ngân hàng thương mại – nhận tiền gửi và cho vay quy mô cá nhân và công ty nhỏ

Investment bank: lấy tiền làm việc với công ty lớn, đầu tư kêu gọi góp vốn. phát hành cổ phiếu,
… tư vấn tài chính. Môi giới chứng khoán và quản lý danh mục đầu tư

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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

Private bank: dành cho cá nhân giàu, cung cấp dịch vụ đầu tư và quỹ phòng hộ. đầu tư rủi ro
nhằm đạt lợi nhuận cao hơn quỹ đầu tư truyền thống
Stockbroker: môi giới cổ phiếu
Islamic bank: ngân hàng hồi giáo – cung cấp dịch vụ không lãi xuất
Non- bank financial intermediaries: trung gian tài chính phi ngân hàng
Hedge fund: quỹ phòng hộ

LEAD-IN
Which of the following banking products or services do you find the most useful or
necessary? (textbook/p. 73)
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READING: BANKS AND FINANCIAL INSTITUTIONS

deposit Khoản tiền gửi vào 1 một tài khoản ở ngân hàng
 depositor
bond Trái phiếu

takeover bid Tiếp nhận giá thầu

stockbrokking Môi giới chứng khoán

portfolio Danh mục vốn đầu tư

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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

repeal Sự bãi bỏ

conglomerate Kết nối

LISTENING 1: COMMERCIAL BANKING

Listen to Tony Ramos talking about investment and commercial banking and answer the
questions.
1. How does Tony Ramos describe commercial banking?

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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

‘A kind of ....best kept secret.................... ...................... ......................

2. What was Tony Ramos’s job before he moved into recruitment?
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3. What does he say commercial banking actually consists of? Fill in the gaps.

TAPESCRIPT (Track 30)

I think there is a real kind of (1) perception around kind of the world of (2) investment banking
and kind of what it (3) offers. I think also as well I think (4) commercial banking and I guess I
would say this as a previous (5) commercial manager, I think if you actually and when you do
talk to students and I talk to them about what the commercial banking role is and I talk to them
about the fact that “... you’re kind of working in a (6) local marketplace, you’re working you
know with, like, (7) local entrepreneurs kind of what the day-to-day job consists of, actually (8)
going to people with their businesses, (9) helping start up those businesses, seeing those (10)
businesses grow and the kind of (11) excitement and the (12) job satisfaction that provides to
you, you actually do see their eyes kind of light up and open up, because they kind of think, oh, I
actually I didn’t think it was about that, I actually thought it was kind of sitting in front of a
computer looking at (13) spreadsheets I think it was doing a lot of (14) analys is it seemed
quite (15) dull and stuffy to me ...
4. What does he say students wrongly think it consists of?
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New vocabulary
Perception a belief or opinion, often held by many people and based on how things
seem.
entrepreneur someone who starts their own business, especially when this involves
seeing a new opportunity.
Job satisfaction the feeling of pleasure and achievement that you experience in your job
when you know that your work is worth doing, or the degree to which
your work gives you this feeling.

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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

Spreadsheet an electronic document in which information is arranged in rows and

columns and can be used to do financial calculations and plans.
dull not interesting or exciting in any way.

stuffy old-fashioned, formal, and boring.

READING: THE SUBPRIME CRISIS AND THE CREDIT CRUNCH

New vocabulary and phrases
credit rating Tỉ lệ tín dụng

default Mặc định

mortgage Thế chấp

collateral Tài sản thế chấp

pool Bể vốn chung

investment fund Khoản đầu tư

hedge fund Quỹ phòng hộ

pension fund Quỹ hưu trí

mutual fund Quỹ tương hỗ

underlying Cơ bản

write off something Viết ra 1 cái gì đó

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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

massive To lớn

Comprehension
1. Who are “subprime” borrowers?
2. What were two financial products that the institutions had issued the mortgage?
3. What is MBS?
4. What is CDO?
5. Who bought MBSs and CDO?
6. The process “financial institutions bought MBs and CDO” is called .................?
7. What is securitization?
8. What is a credit crisis or credit crunch?
Your answer:
1. The “subprime” borrowers are defined as those with poor credit ratings and consequently
a high risk of default.
2. MBS and CDO
3. Mortgage – backed securities (MBS)
4. Collateralized debt obligations (CDO)
5. Financial institution had bought including investment bank, hedge funds, insurance
companies, pension funds, mutual funds and so on.
6. Securitization
7. Produce cash flow are pooled and converted into securities that are then sold to investors
8. a massive reduction in the amount of credit available for banks to lend other banks,
business and households.

Key takeaways
Mortgage-backed securities (MBS):
o Mortgage-backed securities (MBS) turn a bank into an intermediary between the
homebuyer and the investment industry.

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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

o The bank handles the loans and then sells them at a discount to be packaged as MBSs to
investors as a type of collateralized bond.
o For the investor, an MBS is as safe as the mortgage loans that back it up.
Collateralized debt obligations (CDO)
o A collateralized debt obligation is a complex structured finance product that is backed by
a pool of loans and other assets.
o These underlying assets serve as collateral if the loan goes into default.
o Though risky and not for all investors, CDOs are a viable tool for shifting risk and
freeing up capital.

DISCUSSION
Who do you think was responsible for the subprime crisis? What did the financial industry
do wrong?
Further reading: Who was to blame for the subprime crisis?
https://www.investopedia.com/articles/07/subprime-blame.asp
Suggestion: central banks (for lowering their interest rate)
Lenders (for giving low-income groups the possibility to own their houses)
Homebuyers (for taking risks by buying houses they could not afford)
Your answer:
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LISTENING 2: MICROFINANCE
Listen to Anna-Kim Huyn-Seung talking about microfinance and answer the questions.
1. In microfinance, what replaces normal financial collateral?
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2. What is the ‘risk-management tool’ that Anna-Kim mentioned?
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U14 HANDOUT E4BS Lecturer: Nguyen Thao Trang

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3. Why is lending money to poor people not necessarily as risky as it sounds?
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4. Why are conventional banks now developing microcredit products?
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5. In which three continents are there successful microfinance schemes?
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TAPESCRIPT (Track 1.31)
Microfinance schemes started with several (1) .................... and social (2) ...................., for
example, Grameen Bank in Bangladesh. They (3) .................... very small loans to poor people,
often without (4) .................... .................... But they use some kind of different collateral,
sometimes it can be (5) .................... ...................., so they create a group of people and within a
group of people help each other to (6) .................... the loan, but it’s usually a very small amount
of money, and from the bank’s point of view it actually provides a (7) .................... risk-
management tool. Of course, distributing loans to poor people sounds very (8) ...................., but
because we are talking about a large number of people, with a very small amount of money, it
actually creates a very nice (9) .................... in which the risk can be (10) ....................
NGOs and social enterprises proved that these kinds of schemes can be (11) ...................., and
the poor people are actually repaying the loans, so now the (12) .................... .................... like
Citibank and Barclays are taking part in these schemes, not for the purpose of
(13) .................... ............... only, they are actually doing it as part of their business. They are
developing their (14) ................................. and .................... products in (15) ....................
countries. It seems that microfinance is doing really well particularly in Bangladesh and part of
India, and there are some positive cases in Latin America and Africa too.

New vocabulary
scheme an officially organized plan or system.
non-governmental an organization that tries to achieve social or political aims but is not

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organization controlled by a government

Company an organization, a company, or a business.
Portfolio a collection of different investments that are owned by a particular person
or organization.
scalability used to describe a business or system that is able to grow or to be made
larger.
Micro credit a very small amount of money lent to a person or group, especially in
order to make it possible for people in poor countries to start businesses.