Important English Vocabulary from “The Economist”-(Day-30):
Dear Readers, to score good marks in English Section first and for most thing is you need to develop your reading skills, while reading a passage you need to highlight the tough words in it and you should know the correct meaning for those words. This will help you understand the passage clearly and also you can learn more new words, it means also you can develop your vocabulary. To help you in this part we have provided a passage along with meaning, synonyms and usages of hard words in the passage, make use of it. We also providing Important Vocabulary Quiz based on “THE ECONOMIST”.
Retail banks’ foreign ventures rarely pay off
A new study shows they do worse than the locals
NOT everybody—or every business—travels well. Retailers from Walmart to Tesco have faltered in forays into foreign lands. Banks, too, often fancy that success at home can be reproduced abroad. In meeting the needs of big companies, they are often right. Global corporations seem to want global banks. But in retail banking, serving households and small businesses, they are usually mistaken.
Or so concludes a report by Lorraine Quoirez and her colleagues at UBS, examining the performance of seven international banks (BBVA, Citigroup, HSBC, ING, Santander, Société Générale and Standard Chartered). For several measures, such as net interest margins and returns on equity, the Swiss bank’s analysts constructed benchmarks for each firm. The benchmarks are the averages for all banks in countries where the seven are active, weighted by the importance of each market in each bank’s loan book.
Most of the banks fall short on most measures. For example, UBS expects Standard Chartered’s return on tangible equity to be just 5.7% in 2018, 7.1 points below its benchmark. Société Générale’s projected net interest margin is 0.75 percentage points; par is 1.84.
Part of the explanation is that a global brand does not automatically confer pricing power. So international banks often sacrifice margin in the frequently vain pursuit of market share. HSBC’s Mexican bank, the country’s fifth-biggest by assets, made a net interest margin of 4.1 percentage points in 2016, a whole point below the local average. BBVA Bancomer, the Spanish lender’s local arm and the market leader, scooped 5.7 points.
Banks also tend to overestimate the ease of replicating cross-selling models that have worked at home. And national borders constrain economies of scale. Businesses stretching across several countries are simply harder to run. Legal and compliance expenses multiply. Bigger, more complex banks carry heavier regulatory burdens. At only two of the seven are projected ratios of costs to income below the benchmarks.
A possible benefit of heading abroad is that diversification reduces risk. Even this is not always borne out: four of the seven make provisions, as a proportion of loans, above their benchmarks. Between 2003 and 2017 at only two, HSBC and Santander, were earnings per share less volatile than in a comparable portfolio.
Globetrotting retail banks are not doomed to fail, especially if they can exploit new technology. ING, which the UBS team rates the best of the seven overall, has expanded as a digital bank outside its Dutch home. In Germany it boasts 8m customers. Although it has a thinner interest margin than the locals, its costs are far lower too, largely because it has no branches. Its return on equity beats those of German rivals by ten percentage points or more.
Perhaps wisely, since the financial crisis banks have retreated from foreign retail ventures, seeking to cut costs and bolster capital. UBS lists no fewer than 274 disposals of operations abroad since 2010. Last year mergers started to pick up. But the volume remains low and most deals have been domestic. Banks may be right to think twice before heading abroad again.
Source: “THE ECONOMIST”
1). Faltered (Verb) past tense: faltered; past participle: faltered
Definition: lose strength or momentum.
Synonyms: hesitate, delay, drag one’s feet, stall
Usage: When war seemed imminent the government faltered.
2). Forays (Noun)
Definition: a sudden attack or incursion into enemy territory, especially to obtain something; a raid.
Synonyms: raid, attack, assault, incursion
Usage: The garrison made a foray against Richard’s camp.
3). Tangible (Adj)
Definition: perceptible by touch.
Synonyms: touchable, palpable, tactile, material
Usage: The atmosphere of neglect and abandonment was almost tangible.
4). Confer (Verb)
Definition: grant (a title, degree, benefit, or right).
Synonyms: bestow on, present with/to, grant to, award to, decorate with
Usage: The Minister may have exceeded the powers conferred on him by Parliament.
5). Vain (Adj)
Definition: producing no result; useless.
Synonyms: futile, useless, pointless, worthless
Usage: A vain attempt to tidy up the room.
6). Pursuit (Noun)
Definition: the action of pursuing someone or something.
Synonyms: chasing, pursuing, stalking, tracking
Usage: The cat crouched in the grass in pursuit of a bird.
7). Compliance (Noun)
Definition: the action or fact of complying with a wish or command.
Usage: The action or fact of complying with a wish or command.
8). Constrain (Verb)
Definition: compel or force (someone) to follow a particular course of action.
Synonyms: compel, force, coerce, drive, impel
Usage: Children are constrained to work in the way the book dictates.
9). Borne (Adj)
Definition: carried or transported by the thing specified.
Usage: Waterborne bacteria.
10). Bolster (Verb)
Definition: support or strengthen.
Synonyms: strengthen, support, reinforce
Usage: The fall in interest rates is starting to bolster confidence.