Lyubimtseva_S_N__Koreneva_V_N_L_93_Kurs_angli
.PDFexport trades, which allowed the vendor and purchaser of traded goods to achieve liquidity; the role of the merchant was to put its name to or to "accept" a bill, which was then discounted in the market. The skill of the general merchant was to assess the credit of the purchaser whose bill it had accepted. Trade arid its finance continued to form the backbone of their business and the growing significance of their ability to provide credit transformed a number of general merchants into merchant banks, specializing in accepting bills. In doing so they assisted London to become the world's financial centre: the bill of exchange on a London accepting house, denominated in sterling, became a means of settlement in trade throughout the world.
Merchant banks maintained excellent connections with leading British companies and frequently joined their boards. As a result, from the 1950s a small number of merchant banks, in addition to their acceptance business, came to dominate the business of corporate issues in the form of offers for sale of formerly private companies to the public, rights issues of equities and debenture issues. In these issues merchant banks acted both as advisers and as primary underwriters in guaranteeing a sale price to the vendor. Merchant banks took full advantage of the development of the Eurocurrency markets in London in 1970s, and were amongst the most active syndicators of currency loans to the international banking community. Merchant banks have built up a substantial business as investment managers on behalf of UK institutions, such as pension funds, as well as overseas governments and major institutions worldwide. They played a leading role in developing the international investment management industry in London.
5. The consortium banks. A consortium bank is a bank owned by a group of other banks from a number of different countries, no one of which owns a majority share. Consortium banks were children of the Euromarket. Born in the 1970s they gave smaller banks a way into the Euromarket hand in hand with bigger bank partners. The advantage to the bigger banks lay in their easier access to the big domestic customers of the smaller banks.
Some consortium banks continue to thrive by staying at the forefront of new financial techniques, acting as a type of merchant bank, some other were gobbled up by one or other of their shareholders.
Words you may need:
universal bank универсальный банк
underwriting n андеррайтинг, гарантирование размещения (ценных бумаг) frown v не одобрять, относиться отрицательно
to draw a cheque on a bank выписать чек на банк savings bank сберегательный банк
distinction n различие
erode v размывать(ся), разрушать(ся)
fund management управление финансовыми средствами
London-based расположенный в Лондоне mercantile adj коммерческий, торговый
to remit money переводить деньги (по телеграфу) vendor n торговец, продавец
purchaser n покупатель backbone n хребет, основа
rights issues of equities выпуск новых акций, предлагаемых акционерам компаний
debenture n облигация (акционерной компании) consortium bank консорциальный банк majority share контрольный пакет акций
thrive v процветать
gobble v (зд.) поглощать (букв, пожирать)
Eх. 13. Read the dialogue, sum up its content and act it out:
Commercial Banks in Russia
Foreigner: As far as I know, Russia has a two-tier banking system.
Russian: Yes, our banking system consists of the Central Bank of Russia (CBR) and commercial banks, which is typical of many countries in the market economy.
F.: How do your commercial banks operate? Is the regulatory control strong enough?
R.: Banking in Russia is regulated by the Law on Banks and Banking in the Russian Federation. As to the CBR, it is constantly strengthening its regulatory and supervisory role. For instance, now banks can start operating only after they get registered and obtain a license from the CBR.
F.: Your banking legislation provides for the existence of banks and credit institutions. How do they differ? R.: Our credit institutions are only allowed to perform cash settlement operations, collect money and documents, buy and sell foreign currency.
F.: How are your banks run?
R.: It depends on the organizational and legal form of the bank. Banks with the authorized capital made up of contributions, have the status of limited liability societies. The founders' contributions may be in the form of money, property and other tangible assets. A joint-stock bank forms its authorized fund by issuing shares. The governing body in a bank is a meeting of the founders or shareholders. Between the meetings, this function is performed by the bank's council. They determine the bank's policy. Day-to-day management is carried out by the board, which is an executive body. The board is headed by the President. The board members determine the bank's structure and functions of its departments.
F.: In the West, bankers' services cover an enormous range of activities today. What about your banks? R.: In principle, we offer practically the same services. All operations can be divided into active and passive. Passive operations are bank's resources consisting of a bank's own and outside funds. I mean the authorized capital, the reserve and special funds as well as the retained profit.
F.: But the bulk of a bank's resources are formed by outside resources, in other words, loans obtained by the bank and deposits.
R.: You are right. Speaking about active operations, I'd like to stress that they are placement operations aimed to get a profit and guarantee a bank's liquidity. They are cash, credit and investment operations. F.: What operations prevail in the assets structure?
R.: Lending operations. Their share is the largest.
F.: Then the loan management departments must be most careful with applicants.
R.: They are. They study creditworthiness of applicants and their credit history most carefully before they give recommendations to lending operations departments.
F.: Banks sometimes follow a risky credit policy. Are your banks tempted by quick and easy profits? R.: They are. Moreover, sometimes they infringe normative documents of the Central Bank, particularly
about the capital and reserve requirements. Some banks also infringe rules for accounting and reporting and
requirements for reserves for possible losses.
F.: What is the position of the Central Bank in this critical situation?
R.: Banks are controlled regularly for capital adequacy, asset quality and liquidity, I mean cash and "near cash" investments.
F.: Refinancing is a tested technique to regulate bank's liquidity. Your Central Bank arranges refinancing, doesn't it?
R.: Yes, it does. Refinancing is done by granting lombard credits, through sale and repurchase agreements (REPOs), and by crediting correspondent accounts of banks acting as primary dealers in the GKO market. F.:I see that your financial sector is really developing at a great pace.
Words you may need:
credit institution кредитная организация
cash settlement operations расчетно-кассовые операции founder n учредитель
contribution n взнос
tangible assets материальные активы council n совет
active/passive operations активные/пассивные операции outside funds привлеченные средства
retained profit нераспределенная прибыль placement operations размещение средств
primary dealer первичный дилер, дилер по правительственным облигациями applicant n заявитель
creditworthiness n кредитоспособность
credit history «кредитная история», досье заемщика tempt v соблазнять
infringe v нарушать (правила, законы и т.п.)
Ex. 14. Give extensive answers to these discussion questions:
What is the nature of banking? How do banks earn their living?
What services do banks offer to individuals/corporations?
What kinds of banks exist? Describe their activities.
How can an individual get a bank loan?
What does the stability of a bank depend on?
What are the functions of central banks?
In what way do the discount houses earn money?
How is banking developing these days?
How do banks obtain funds?
Describe the banking system of Russia.
In order to get prepared for participation in the class discussion of the questions, write a short essay on:
a)Services provided by banks.
b)Your attitude to the bank's work (see the main dialogue).
c)Different kinds of accounts opened by banks.
d)History of banking and its present-day developments.
e)The influence of modern technology on banking.
Ex. 15. Prepare a short talk on the following:
a)Explain how banks earn profit, how they act as financial intermediaries, how they create new money.
b)Have you ever turned to a bank either as a depositor or a borrower? Have you ever done business with banks offering intermediation services?
c)Do you have a credit card or a debit card? What was the most recent purchase you made with your cards? Describe the sequence of connected events with the use of the cards.
d)If you have a bank account and heard that your bank was not honouring its obligations towards depositors, what would you do about your account?
Ex. 16. Scan several business newspapers and make conclusions about the attitude of businessmen to the presence of foreign banks in Russia.
READING PRACTICE
Ex. 17. Read the article below quickly to find out the functions the discount market performs. The Discount Market
The discount market is the fusion of the London markets for sterling money-market security and short-term sterling deposits in the operations of the discount houses.
For many years it was synonymous with the London money market but with the rise to prominence of the parallel markets it became known as the "traditional" money market in comparison especially with the interbank market in sterling funds. The discount market is a comparatively recent development in English monetary history. Its origins lie in the London bill market of the early 19th century.
Now this market in short-term financial instruments consists of ten big discount houses, who are members of the London Discount Market Association, and simple bill-brokers (discount houses) who do not have a large portfolio. Through this market the Bank of England fine-tunes the nation's money supply.
The participants in the market specialize in "bill-broking" form of banking, i.e. the provision of short-term money by way of discounting bills to borrowers. Some twenty years ago much of the discount market's business was in treasury bills. Now the market deals in a wider range of short-term assets, in particular, bank bills and certificates of deposit. Generally speaking, the discount market performs the same function for the banks as the banks themselves perform for their clients: it employs profitable funds which are temporarily unused by banks and other financial houses. It participates substantially in the financing of the short-term requirements of the government by buying Treasury Bills; it holds short-term government bonds and thereby carries some of the Government's unfunded debt; and it accepts and discounts bills of exchange, thereby financing short-term commercial operations and foreign trade.
Words you may need:
discount market учетный рынок
fusion n (зд.) слияние, объединение prominence n важность, значимость bill market рынок векселей
fine-tune v (букв.) «точно настраивать» (регулировать колебания рыночных тенденций) "bill broking" учет векселей
unfunded debt срочный долг, текущая задолженность
Ex. 18. Look through the text and name the facts which are new to you.
A crucial aspect of the development of a country's domestic banking system and financial markets is the payment system, which is used by enterprises and individuals to discharge obligations incurred in a market economy. Payment systems are the foundations on which a stable and efficient economy can be built. The principal objective of the payment system is to support the country's economy. Moreover, the payment system is one of the first places where financial stress will manifest itself, as firms in financial difficulty fail to meet their payment obligations.
The payment system is the apparatus through which obligations resulting from economic activity are discharged by transfers of monetary value. Obligations can be discharged through the payment system using cash or deposits held in banks. In the case of payments made using bank deposits, it is necessary to use some form of payment instrument, such as a paper or electronic credit or debit payment, to move funds. For a debit payment, such as a check, the receiver of money (the payee) initiates an instruction to the bank holding the deposit of the sender of money (the payer), ordering the paying bank to pay. This is done by presenting a check, which must be honoured by the payer, who is the customer of the paying bank, once the check is authenticated.
For a credit payment, such as a payment order, the party making the payment initiates an instruction to his bank to pay money to the intended receiver by initiating a payment order.
When using deposit money in banks to make payment, the process for discharging an obligation can be divided into two parts. The first part is clearing, the process by which payment information is conveyed between the payer and payee and between the banks holding the accounts of the two parties to the transactions. Once a payment is initiated, clearing should take place quickly and reliably in order to minimize financial risk as funds are being transferred. Commercial banks play an important role as intermediaries in the clearing process because they provide account services to the public.
The second part of the process for discharging an obligation using deposit money in banks is settlement, in which the actual transfer of monetary value associated with the payments is made. Banks play a role in settlement because it is through the accounts held on their books that the transfer of monetary value occurs. Commercial banks settle for the non-bank public and sometimes for other banks with which they have correspondent account relationships.
The central bank, where all commercial banks hold accounts, is often used by commercial banks as the settlement entity for interbank transfers.
Clearing and settling payments can be complex. Therefore, an efficient payment system requires a high degree of cooperation and coordination among banks, which usually occurs through a clearing house. A clearing house is a legal entity, owned and controlled jointly by its member banks. Its primary function is to coordinate the exchange and settlement of payments among its members.
The activities of the clearing house might be limited simply to coordinating the physical exchange of payments among banks, for example, by organizing efficient and speedy transportation of payment documents. Clearing houses may also provide processing services to their members, in which case they may operate fairly large data processing and data communications systems to process payment instructions. Payment systems face a number of risks, like liquidity risk, credit risk, cross-currency settlement risk and systemic risk.
Thus, confidence in a payment system is crucial in a market economy. In the long term each country is
likely to need a safe and efficient payments system for households; legislation governing payments; and a sound financial sector, including financially and operationally sound banks.
Words you may need:
crucial adj решающий, критический
to discharge obligations выполнять обязательства payee n получатель платежа
to initiate an instruction (зд.) дать указание payer n плательщик
to honour the check оплатить чек payment order платежное поручение convey v передавать
correspondent account корреспондентский счет systemic adj системный
Ex. 19. Read the article below carefully to find specific information about paper-based payment systems, electronic funds transfer systems, and recent tendencies in the development of payment systems. Paper-based systems are slow and costly to operate, involving physical movement of paper which must be sorted and cleared. They are prone to error, delays or disruptions because of returned cheques, missing documents or errors in data capture.
In recent years some countries have speeded up the documentation flows due to the rapid innovation of telecommunications and bank computer technology which has revolutionized payment systems. It is particularly true of debit or credit card-based transactions, in which bank customers may give instructions to effect funds transfers electronically through automated teller machines (ATMs), terminals or at retail outlets which operate electronic funds transfer at point of sale (EFTPOS). EFT systems have the advantage of speed, accuracy, convenience and greater efficiency relative to paper-based systems, but are much more costly to install and technologically complex to maintain.
Most developed countries now maintain a mixture of paper-based and EFT systems. Modern payment systems generally cover the following key components:
a.cheque clearing system;
b.automated clearing houses for bank EFT payments;
c.credit/debit card systems including ATMs and EFTPOS;
d.giro payment system;
e.interbank funds transfer system (such as Fedwire); and
f.securities market clearing/settlement system.
Modern banking technology enables payment systems to handle larger volumes of information faster, with greater accuracy, thus reducing the float and the time lag between a transaction and its settlement. As banking systems and financial markets become more inter-linked, payment systems have become increasingly interconnected through harmonized document and telecommunication standards. The greater the degree of harmonization of standards, the more efficient the information flows.
Banks that engage in foreign trade and foreign exchange transactions find it useful to become part of the international electronic message switching network operated by SWIFT (the Society for Worldwide Interbank Financial Telecommunications).
Since payment systems also develop hand in hand with the volume of market transactions, modern payment systems are increasingly integrated with financial market settlement systems, where market transactions are automatically matched with payment instructions and settled on time.
Words you may need:
paper-based system система, основанная на обработке документов в бумажном виде to be prone to error приводить к ошибкам, не исключать ошибок
delay n задержка
disruption n срыв, нарушение
data capture (зд.) считывание данных documentation flow документопоток
to effect funds transfer осуществлять перевод средств terminal терминал retail outlet торговая точка
electronic funds transfer at point of sale (EFTPOS) система электронных платежей в пункте продажи giro payment system система жироплатежей (почтовая)
Fedwire «Федуаер» – система электронной связи, принадлежащая Федеральной резервной системе США
float n срок между предъявлением чека в банк и его оплатой time lag временный лаг, отставание, запаздывание
SWIFT СВИФТ
UNIT 6. TAXATION
A. TEXT
WHAT ARE TAXES?
Taxes are a compulsory financial contribution by a person or body of persons towards the expenditure of a public authority. In modern economies taxes are the most important source of government revenues. Taxes on income (i.e. on wages, salaries, profits, dividends, rent and interest) and on capital are known as "direct" taxes. Taxes on commodities or services are known as "indirect" taxes.
Taxes are considered to have three functions:
(a)fiscal or budgetary, to cover government expenditure, to provide the public authorities with the revenue required for meeting the cost of defence, social services, interest payments on the national debt, municipal services, etc.;
(b)economic, to give effect to economic policy, to promote stable economic growth, to influence the rate of economic growth of the nation;
(c)social, to increase the economic welfare of the community, to lessen inequalities in the distribution of income and wealth.
Businesses and individuals are subject to many forms of taxes. The various forms of business organization are not taxed equally. The tax situation is simplest for proprietorships and most partnerships; corporations or companies are treated differently.
In the United States of America nearly all of the federal government's revenues come from taxes. By far the most important source of tax revenue is the personal income tax. Gross receipts from corporate income taxes yield a far smaller percentage of total federal receipts. Individual states levy their own taxes. As a result, for example, the profits of a corporation are liable to federal and sometimes state corporate income taxes. This
often imposes a double tax burden. When the after-tax income is paid out to stock-holders as dividends, it is then taxed again as personal income.
In the United Kingdom there is no single code of tax law, the body of tax legislation being increased by each year's Finance Act.1
The United Kingdom operates a "schedular" system,2 whereby taxable income from different sources is calculated and taxed under the rules of a particular "schedule".
Tax assessments are normally based on returns issued by the Board of Inland Revenue (referred to simply as "Inland Revenue") for completion by the, taxpayer. While companies may receive tax returns, they normally submit instead a copy of their annual accounts together with a computation of taxable profits.
The United Kingdom does not yet operate a system of self-assessment for tax on income and capital gains, but it is being introduced at the moment.
Under Russian law, all Russian legal entities, whether they have foreign investment or not, are subject to the profit tax law. Foreign entities that have a taxable permanent establishment in Russia are also taxed under this law.
Russian taxes provide revenue for three tiers of the budget: federal, regional and local. The major taxes paid to the budget are: Profit tax; Value-added tax (VAT); Securities tax; Withholding tax.
The Russian government tries to create a climate in which business can thrive, to keep the tax burden as low as possible. It also attempts to eliminate tax allowances, which deprive the budget of tax revenues, and to improve tax collection.
Tax returns for Russian legal entities are audited by the tax authorities at the time they are submitted. If the company or a person assessed believes the assessment is incorrect in any way, an appeal may be
lodged against it. The appropriate financial organ is required by law to reply to such an appeal within five days.
When a company resident in one country receives income or gains from a source in another, or when shareholders and company are domiciled in different countries it is possible that incomes arising will be taxable in each country, i.e. taxed twice. Many countries seek to mitigate the potentially harmful effects of double taxation by entering with other countries into double tax treaties, or arrangements preventing the same income being taxed twice.
A number of countries have problems because of significant taxpayer non-compliance.
Along with cases of illegal evasion of tax obligations there are entirely legal ways of avoidance by which a person may so arrange his affairs as to minimize, or even eliminate, tax liability on his property and income. B. DIALOGUE
TAXATION IN RUSSIA
Foreigner: I hear that many Russians complain that taxes are too high in Russia, personal income tax, for example.
Russian: I can't agree with you here. The existing 12% income tax on personal income under 20 thousand roubles a year is not too heavy.
F.: There are many rich people in Russia now. How are higher incomes taxed?
R.: Progressive income tax is applicable in such cases. The larger the income, the bigger proportion of it is paid as tax.3 The upper limit of the tax rate is 35% at the moment.
F.: Oh, I must say that in many countries personal income taxes are also rather high. Can the same be said
about taxes levied on businesses?
R.: The tax rate depends, first of all, on the form of business, on what each particular business is involved in. Juridical persons involved in entrepreneurial activities pay 13% to the federal budget and up to 25% to the regional budget.
F.: Do businesses involved in intermediary activities, including stock exchange activities, banking and insurance pay similar taxes?
R.: No, such businesses pay taxes on profit at a rate of 43%.
F.: Well, your profit tax is also comparable to other countries' taxes, isn't it?
R.: Yes, but the tax burden on businesses is too high, because along with the profit tax, enterprises pay VAT, excise tax, property tax and other local taxes. They also pay charges to the Pension Fund, Employment Fund, and Social Insurance and Medical Insurance Funds.
F.: VAT and excise are indirect taxes which are levied on transactions and are included into the selling price. They are paid by consumers and not by producers.
R.: Yes, you are absolutely right, but higher prices often cause sales problems.
F.: As to the VAT, do you use a flat rate for all goods?
R.: No, a reduced rate of 10% is applicable to foodstuffs and goods for children.
F.: In this connection, are there many tax allowances in Russia now?
R.: Quite a lot, but in the situation of growing tax evasion the government plans to do away with many tax breaks.
F.: Besides, as far as I know, there is a good deal of anxiety because the existing privileges for small businesses are under a big question mark.4
R.: Right. The majority of tax allowances have already been eliminated. Now small businesses have two alternatives. They either pay an imputed tax on income or pay taxes in the established order under which they have some tax deferments.
F.: These privileges deprive the state budget of some amount of revenue, don't they?
R.: Yes, but they are insignificant compared with the enormous sums that the industrial giants owe in taxes. F.: The government must provide a clear-cut and stable legislative base for small businesses, I think.
R.: Not only for small businesses. All people suffer from hasty, ill-considered decisions which adversely affect millions of people.
F.: Is there any discrimination against foreign companies in Russia?
R.: No, Russian business legislation provides that a company should pay tax at the same rate whether it is foreign or Russian.
F.: And what about foreign companies that earn income from renting equipment or making loans to Russian companies?
R.: Lower rates are applicable in such cases. Taxes are a powerful instrument. They must be used to support not to stifle business.
F.: Foreign experience can be of help here.
R.: No doubt. The Taxation Ministry of Russia is cooperating closely with its Western counterparts to borrow Western experience.
Notes
1 the body of tax legislation being increased by each year's Finance Act – причем налоговое
законодательство расширяется за счет новых налогов, вводимых ежегодно при принятии финансового акта (самостоятельный причастный оборот – см. Note 3 в Unit 1)
2 The United Kingdom operates a "scheduler" system ... – В Великобритании существует система
«шедул» ... (т.е. частей, на которые поделены доходы в зависимости от их источника)
3 The larger the income, the bigger proportion of it is paid as tax. – Чем выше доход, тем большая доля его выплачивается в качестве налога.
Конструкция со сравнительной степенью прилагательных используется для того, чтобы сравнить действия, происходящие одновременно.
4 are under a big question mark – находятся под большим вопросом
VOCABULARY LIST
A. taxation n налогообложение, взимание налогов compulsory adj обязательный, принудительный tax on income подоходный налог
tax on wages налог на заработную плату tax on salary налог на жалование служащих tax on profits налог на прибыль
tax on dividends налог на дивиденды tax on rent налог на рентные платежи
tax on interest налог на процентный доход tax on capital налог на капитал
direct taxes прямые налоги indirect taxes косвенные налоги
interest payments процентные платежи municipal services муниципальные услуги
to give effect (to) осуществлять, приводить в исполнение, проводить в жизнь welfare of the community благосостояние общества
inequality of incomes неравенство доходов forms of taxes виды налогов
treat v обращаться, обходиться levy v облагать налогом
corporate income tax налог на корпоративный доход impose v облагать (пошлиной, налогами ), налагать double tax burden бремя двойного налогообложения after-tax income доход после удержания (за вычетом) налога stock-holder n акционер, держатель акций
personal income личный доход code n кодекс
tax law налоговое законодательство
body of tax legislation содержание налогового законодательства
Finance Act финансовый акт
operate v (зд.) использовать, пользоваться