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Text b Globalization in the Banking Industry

In modern time there has been huge reductions to the barriers of global competition in the banking industry. Increases in telecommunications and other financial technologies, such as Bloomberg, have allowed banks to extend their reach all over the world, since they no longer have to be near customers to manage both their finances and their risk. The growth in cross-border activities has also increased the demand for banks that can provide various services across borders to different nationalities. However, despite these reductions in barriers and growth in cross-border activities, the banking industry is nowhere as globalized as some other industries. In the USA, for instance, very few banks even worry about the Riegle-Neal Act, which promotes more efficient interstate banking.

In the vast majority of nations around globe the market share for foreign owned banks is currently less than a tenth of all market shares for banks in a particular nation. One reason the banking industry has not been fully globalized is that it is more convenient to have local banks provide loans to small business and individuals. On the other hand for large corporations, it is not as important in what nation the bank is in, since the corporation's financial information is available around the globe.

Notes: reach- розмах, досяжність Bloomberg - а major global provider of 24-hour financial news and information including real-time and historic price data, financials data, trading news and analyst coverage, as well as general news and sports.

cross-border activities - транскордонна діяльність

Riegle-Neal Act - Law permitting interstate banking in the U.S

1. Insert the correct prepositions.

with to about by into of(x2) for(x2)

Bank Error Makes Customers Millionaires

New Zealand police are hunting (1)…a couple who received nearly US$ 8 million (2)…mistake from their bank. The couple applied (3)…Westpac Bank for a NZ$10,000 overdraft. The Bank employees made a huge mistake. They deposited NZ$10 million (4)…their customers’ bank account instead (5)…giving them the loan facility. The couple probably thanked their lucky stars. They took the money and ran. The pair, an Asian man and his New Zealand girlfriend, left the country immediately. However, they did not take all (6)…the money (7)…them. New Zealand police have told Interpol (8)…the couple leaving the country, so there is now an international manhunt (9)…them. Westpac officials are keeping how much the couple took a secret.

Speaking

  • What would you do if you found yourself in the similar situation?

  1. Match the terms with to their definitions.

Banks face a number of risks in order to conduct their business. Some of the main risks faced by banks include:

  1. credit risk

  1. liquidity risk

  1. operational risk

  1. reputational risk

  1. market risk

  1. risk that a given security or asset cannot be traded quickly enough in the market to prevent losses

  2. risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors

  3. risk of loss arising from a borrower who does not make payments as promised

  4. risk arising from execution of a company's business functions

  5. a type of risk related to the trustworthiness of business

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