Companies & Theirbanks: Relations Between Banks and Their Corporate Customers - Letter 1

COMPANIES & THEIRBANKS
The two proposed letters introduce you to business correspondence in English, an important element
of professional relations and not yet supplanted by email.
You will find that the tone used is always very courteous even if it can sometimes be firm. The level of
written language, whether in British or American English, is always very neat and respectful of usage.
After reading these letters carefully, the following exercises will help you understand the texts well
and allow you to improve your vocabulary.
Relations between banks and their corporate customers -Letter 1
Dear Mr Smith,
On the attached you will find the Bank’s proposed Schedule of Charges which will take effect as
from 1st of January 2006, and will be reviewed annually.
We very much regret that we are unable to continue offering ‘free banking’ to our customers.
This recent change of policy is due to increasing costs, and we feel that if we are to continue to
maintain the professional level of personal service that we have always provided to our
customers, we must now obtain a contribution to our expenses.
You will note that our charges are below the average levied by other UK banks, as we wish to
remain competitive in this market.
The charges will be debited to your account monthly in arrears.
The minimum balance requirement for those accounts which are interest bearing has been
reduced from USD 100,000.00 to USD 50,000.00 or currency equivalent. This reduction in the
minimum balance requirement will therefore compensate for some of the charges which will
have to be paid by yourselves.
Should you have any questions concerning the new charges, would you please call either myself
or my colleague, Robert Jones.
Yours sincerely,
Mary Biggs,
Account Manager.
Banking facilities - Letter2
Dear Sirs,
The Bank is pleased to offer your company banking facilities on the terms referred to below but
otherwise subject to normal banking terms and conditions.
Facilities: Withdrawals may be made under the following facilities provided that the total amount
of withdrawal at any time shall not exceed the overdraft limit of : £ 50,000
Availability: The bank may at any time discontinue all or any of the facilities and/or may demand
repayment of all sums owing. The facilities are due for review in twelve months’ time.
Interest rate: Interest on the overdraft facility is to be charged at 2.25% per annum over the
Bank’s Base Rate as published from time totime.
Fees: An arrangement fee of £150 will be payable.
Security: The repayment of all monies owed in respect of the facilities will be secured by
Business Premises, 59, Cornwall Road, Colchester.
All costs and expenses, as mentioned in the General Terms and Conditions attached to this letter,
shall be payable by thecompany.
To accept this offer, please sign and return the enclosed copy of this letter.
Yoursfaithfully,
Thomas Biggs,
Branch Manager.
Exercices: Comprehension questions
1- LETTER 1:
a) - How long will the new charges remain the same?

b) -Did the company have to pay charges before?
c) - Why has the bank changed their policy ?
d) - When will the company have to pay the charges ?
e) - From what account balance should the company be able to earn interest?
2- Find a word or phrase from letter 1 that has a similar meaning.
● Eachyear =
● Keep Something At The Same Level =
● Amount That Partly Meets Costs But Does Not Cover Them Completely =
● Having The Same Value =
3- Comprehension questions LETTER 2:
a)- How much can the company overdraw?

b)- How long are the terms of this letter valid?
c)- Has the bank the right to stop the overdraft facility before the end of this
period?
d)- By what can the overdraft facility be secured?
e)- Are there any charges to pay other than interest?
4- Vocabulary
Find a word or phrase from letter 2 that has a similar meaning.
● Go Above A Specified Maximum Level =

● By The Year =
● Fixed Amount That Has To Be Paid For A Service =
● Place Where A Company Carries Out Its Business Activities =
PROFIT AND LOSSACCOUNT
Read the financial data produced by British Airways and published on the Internet
forinvestors.
SUMMARY GROUP PROFIT AND LOSS ACCOUNT

Audited for the year to March 31, 1998
£ million 1998 199

7
Most of our revenue was earned from our main business, airline : 7,881 7,60
operations 8
Income from other activities earned: 761 7
5
1
This gave us total Group turnover of: 8,642 8,35
9
Our expenses comprised :
Pay and other employee costs: 2,211 2,24
8
Depreciation of fixed assets: 551 50
6
Selling costs: 1,217 1,18
7
Other operational costs: 4,159 3,872
In total, therefore, our overall Group operating costs were: 8,138 7,81
3
Deducting this from our Group turnover left a Group operating profit of: 504 54
6
Other income and charges amounted to: 80 25
6
The net profit on sale of fixed assets during the year was: 164 2
0
Net interest payable amounted to: (168) (182
)
This produced a Group profit after tax of: 580 64
0
Then we provided for tax totalling: (133) (90
)
This produced a Group profit after tax of: 447 55
0
Profit or loss from subsidiaries in which we have a minority interest: 13 3
This left a Group profit attributable to shareholders of: 460 55
3
From this we allowed for dividends representing a total of: (176) (154
)
Finally, this left a profit retained in the business of: 284 39
9
Earning per share

The standard measure of a company’s profitability is calculated by dividing profit
attributable to shareholders by the average number of shares.
On this basis, our earnings persharewere: 44.7p 55.7p
Exercices :
Understanding the main points: True or false?
1. The total Group turnover increased slightly on the previousyear.
2. Salaries paid to employees are part of the operatingcosts.
3. Interest payable on loans is deducted from the profit aftertax.
4. British airways sold off some of its assets in1998.
5. All the profit is distributed toshareholders.
6. Earnings pershare were lower than in the previousyear.

COMPANY BALANCESHEET
SUMMARY GROUP BALANCESHEET
SUMMARY GROUP BALANCE SHEET

£ million 1998 1997

The group’s fixed assets comprised:
Ourfleet: 7,227 6,33
7
Property: 1,181 988
Computers, ground andotherequipment: 259 263
Investments inotherbusinesses: 388 684
Added together these represented total fixedassetsof: 9,055 8,27
2
Our current assets, mainly money we are owed, our ‘cash in hand’ andstock,
represented: 2,16
4
2,245
Most passengers book and pay for tickets in advance. This money, and
amounts owing to creditors that are payable within one year,totalled: (2,881) (3,160
)
Deducting this gave us net current liabilities of: (576) (996
)
Adding this to the total fixed assets left us with total assets less current
liabilities of: 8,479 7,276
In addition, we owed to creditors amounts due after more than a year including:
Long-term borrowings of: (4,978) (4,034
)
We have also made provision for other liabilities and charges: (180 (284
) )
We also had contributions from a minority shareholder in one of our
subsidiaries of: - 26
Thus our assets less liabilities represented: 3,321 2,984
The money invested in the British jAirways Group comprised:

Our share capital, some 1,038.9 million 25p shares: 260 251
Our reserves: 3,061 2,733
3,32 2,984
1
Exercices:
Understanding the main points : True or false?
1. The airline’s fixed assets includeaircraft.
2. The company had acquired new aircraft since the previousyear.
3. The amount of current assets was greater than the amount of currentliabilities.
4. Net current liabilities are calculated by deducting current liabilities from total
assets.
5. British Airways had issued more than a billion shares at the time of publishing
theseaccounts.
6. British Airways had increased its reserves since the previousyear.

Companies & Theirbanks: Relations Between Banks and Their Corporate Customers - Letter 1

Uploaded by

Copyright:

Available Formats

Companies & Theirbanks: Relations Between Banks and Their Corporate Customers - Letter 1

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Companies & Theirbanks: Relations Between Banks and Their Corporate Customers - Letter 1

Uploaded by

Copyright:

Available Formats

COMPANIES & THEIRBANKS

Relations between banks and their corporate customers -Letter 1

Fees: An arrangement fee of £150 will be payable.

a) - How long will the new charges remain the same?

2- Find a word or phrase from letter 1 that has a similar meaning.

3- Comprehension questions LETTER 2:

a)- How much can the company overdraw?

Find a word or phrase from letter 2 that has a similar meaning.

● Go Above A Specified Maximum Level =

SUMMARY GROUP PROFIT AND LOSS ACCOUNT

£ million 1998 199

Earning per share

Understanding the main points: True or false?

1. The total Group turnover increased slightly on the previousyear.

2. Salaries paid to employees are part of the operatingcosts.

3. Interest payable on loans is deducted from the profit aftertax.

4. British airways sold off some of its assets in1998.

5. All the profit is distributed toshareholders.

6. Earnings pershare were lower than in the previousyear.

SUMMARY GROUP BALANCESHEET

Audited for the year to March 31, 1998

SUMMARY GROUP BALANCE SHEET

£ million 1998 1997

The money invested in the British jAirways Group comprised:

Understanding the main points : True or false?

1. The airline’s fixed assets includeaircraft.

2. The company had acquired new aircraft since the previousyear.

6. British Airways had increased its reserves since the previousyear.

You might also like