Foreign banks in the Russian financial market
Federal
State-Funded Educational Institution of Higher Education
“FINANCIAL
UNIVERSITY UNDER THE GOVERNMENT OF THE RUSSIAN FEDERATION”
(Financial
university)Financial Facultyfinance Department
Graduate
qualification thesisthe topic: «Foreign banks in the Russian financial
market»course: 080100 Economicsprofile: International finance
Prepared by IFF 4-2
studentM.V.:A.S., Associate professor
-
2015
Contents
Introduction
Chapter
1. The legal and economic framework for the activities of foreign commercial
banks in Russia
.1
The role and place of foreign commercial banks in the Russian banking system
.2
Legal regulation of the activities of foreign commercial banks
.3
Features of the Russian financial market
.4
The role and place of foreign banks in the credit and stock market 2.
Operation and methods to reduce the risks associated with the activities of
Raiffeisen in the financial market of the Russian Federation
.1
Position of Raiffeisen in the market of the Russian Federation
.2
Services of foreign banks in the financial market on the example of Raiffeisen
.3
Risks related to activity in financail marketof references
Introduction
bank financial market
With the development of market
relations and the financial market in the last 10-15 years, national economies
are becoming more open to foreign companies and, in particular, for a Foreign
banks are looking for new markets. Banks with foreign
capital operate in the non-domestic market for different purposes: the search
for new markets, hedging risks in their own market and to attract additional
capital. Expansion of activity leads to an increase of related risks, such as
liquidity and the possible increase in the outflow of funds. Therefore, the
degree of involvement of banks with foreign capital must be accompanied by the
development of legislation in this area ie the constant improvement of the
monitoring system, taking into account that the Russian specifics are not
always happen in practice.relative openness of the Russian banking market makes
it attractive for foreign capital investors, but this simplicity seems
misleading, as banks are forced to deal with increased risks.research is due to
the increased role of banks with foreign capital and their possible impact on
the Russian economy as a whole. As the Russian consumer often assumes that the
foreign bank is more reliable institution for investment funds, such a scenario
is quite acceptable.: to analyze the activities and services of foreign banks
and the consideration of approaches to managing the risks inherent to foreign
banks operating in the domestic market.order to achieve the objectives of the
study the following tasks:
) To analyze the theoretical approaches and the
classification of banks with foreign capital;
) To study the regulations governing the
activities of foreign commercial banks;
) To analyze the current activity of banks with
foreign capital, for example, "Raiffeisenbank";
) To allocate and characterize the current bank
services and their impact on the total loan portfolio of the bank;
) Describe the current practice of risk
management in a foreign bank.object of study: the activities of commercial
banks in the foreign domestic banking market.of research: the operation and
services of banks with foreign capital and management of the risks associated
with conducting business.theoretical basis for the study is the textbooks and
manuals on banking and banking operations of various Russian authors -
Ya.M.Mirkina, O.I.Lavrushina, S.L.Ermakova, A.M.Tavasieva, A.I.Balabanova,
E.F.Zhukova, L.P.Krolivetskoy, G.N.Beloglazovoy and many others.sources of
relevant statistics are open access materials on the Bank of Russia,
"Raiffeisenbank" Portal «banki.ru». Also, as the information base
used analytical data rating agency "Expert RA" and «Standard &
Poors».accordance with the objectives of the study the structure of the work
consists of two chapters. The first chapter analyzes carried out theoretical
approaches to the concept and classification of foreign banks; formulated the
concept of the bank with foreign capital, the conditions and reasons for
creating the financial structure in the domestic market; studied regulations
governing the implementation of the activities of banks with foreign capital; A
classification and characterization of the identities of the Russian banking
market.the second chapter done analysis of the structure and activities of
foreign commercial banks, revealed the basic services; shows the
characteristics of the risks faced by banks with foreign capital and
highlighted methods of dealing with them.
Chapter 1. The legal and economic framework for
the activities of foreign commercial banks in Russia
.1 The role and place of foreign commercial
banks in the Russian banking system
the mid-1980s, the level of participation of
foreign capital in the development of national banking systems were very
limited. Despite the partial decrease of the ban on the movement of capital and
an increase in foreign trade, many countries, both developing and
industrialized, have continued to follow to the already traditional principle
of protectionism.total number of restrictions on market access and national
treatment, used in world trade in financial services in the mid-1990s - before
the adoption of the agreements on the liberalization of financial services
under the General Agreement on Trade in Services (GATS), exceeded 11 thousand.
Of these, dominant part accounted for the banking services. Most countries
impose legal restrictions on the activities of foreign banks in the territory.,
the shift toward internationalization of financial intermediation affected
states with mature market economies. Then, for the next 15 years financial
markets in many developing countries and countries with economies in transition
began to open to external participants. In the first place, this phenomenon
manifested itself in the expansion of foreign banks, reflected in an increase
in their share of the assets and capital of national banking systems.
Especially pronounced this tendency was observed in the Eastern European
countries in transition to a market economy, and in Latin America. To a lesser
extent this process affected countries in Asia and Africa.many ways, the
process of trade liberalization and the provision of financial services on an
international scale were associated with the formation of a new global trade
and financial architecture. Regulatory agencies, opening access to foreign
capital in the national market of banking services, guided by several
considerations. Firstly, it was a desire to create favorable conditions for the
inflow of foreign investments. Secondly, a willing to make an increase in the
level of competition and encourage efficiency of doing business. Thirdly, the
entry of foreign banks means import of advanced technologies, which is followed
by a general institutional strengthening of the financial sector. Fourth,
foreign banks could be regarded as one of the channels of inflows to other
sectors, and their presence would be considered as one of the factors of
economic growth.of foreign banks, coming into a new market, deserves special
attention. The main essence for foreign banks to enter new markets is an
opportunity to profit from operations in the local market. Integration between
the economies of the countries of origin and the country - the object of
investment is another point, which affects investors’ decision. Finally, the
presence of foreign banks is largely dependent on the existing restrictions on
market entry and conduct of operations., the main reason for presence of
foreign banks in the world has become all the same opportunity to make a profit
in the new market. The strategy of foreign banks in this case focused on the
development prospects of the economy, GDP growth, inflation, capitalization of
local companies. In general, as the GDP growth rate becomes more attractive,
the greater will be the desire of foreign banks to exist in the local market.
An additional factor in this case is a competitive environment in the local
market. The interest of foreign banks will be higher than the less-developed
and effective local banking system.experience has shown that a foreign market
involves mainly large banks and this is due to several reasons. international
banks, holding significant market share in the country of origin, looks for an
opportunity for a risk diversification through the expansion of its activities
in different countries;companies are customers of large banks.
As a result, banks, wishing to offer
a wide range of services, forced to expand the scope of its activities and
provide services where their customers look for it;
Found a business in another country requires a
very substantial capital investment, especially if there is a high legislative
strap on market entry in this country, and "economies of scale" in
this case becomes essential;characteristic is that large banks yielding
portfolio management operations also involve increasing the number of points of
presence in foreign markets.of foreign banks, of course, is a serious risk to
local banks. Decline in yield on operations makes it difficult to increase
capital base for domestic banks, which in growing markets is rather weak. This
can have a destabilizing effect on certain national financial system.
Therefore, increasing the participation of foreign capital must be accompanied
by improvement of the system of prudential supervision, in order to prevent
rapid decline in the efficiency of the local institutions, which can not
compete with multinational banks. In addition, possibility to increase the
capital base and the impact on the profitability could be associated with an
additional risk factor that can have its impact on the quality of the loan
portfolio. This is due to the fact that the first-class domestic borrowers
willing to apply more to cheaper resources provided by foreign banks., upon the
occurrence of tough economic time, the presence of foreign banks may have a
stabilizing or destabilizing effect. On the one hand, foreign banks, relied
heavily on foreign resources, are more resistant to internal shocks. On the
other hand, in the case of a threat of banking crisis there may be an option
when investors consider foreign banks as a safe haven and begin a massive
withdrawal of funds from local banks, making the position of national
organizations even worse.for the impact of foreign banks on other sectors of
the economy, there can be mentioned largely positive moments. Firstly, economic
agents have access to a quality banking products. Secondly, increase in
competition in the financial services sector means greater choice for borrowers
and banks' customers, reducing the cost of cash management services. All this
should have a positive impact on corporate and economic growth.the last 10-15
years under the influence of liberalization of capital movements and the
globalization of financial markets, the situation has radically changed.
Nowadays, most of the countries don’t set any barriers for entering the
national system. However, the level of participation of credit institutions
with foreign participation vary significantly depending on the configuration of
the legislative, institutional and economic conditions in a given country. In
this sense, the experience of each country's procedures for the approval of
foreign banks and the degree of influence on the restructuring and
modernization of the system of financial intermediation can not be same.is no
exception. The feature of our country is that in the public mind was confirmed
false impression that the Russian authorities prevent the inflow of foreign
capital into the banking sector. In fact, the conditions and procedure for
access of non-residents in the domestic banking system in many respects softer
than in most other countries. In essence, Russia has acted and continues to act
moderately liberal approach to the registration and licensing of credit
institutions with foreign capital., there is only one unresolved fundamental
issue, which concerns the inability to open branches of foreign banks in the
Russian Federation, avoiding the creation of a subsidiary bank. The government
and the Central Bank of the Russian Federation based on the fact that at the
current stage of development of the banking sector establishment of branches of
foreign banks, by passing institution subsidiary bank, should be considered
premature. This concept comes through the idea
that same level of competition should be provided for all credit organizations
and to prevent the market of banking institutions with a negative business
reputation. In all other points of the conditions of
admission of non-residents in the Russian banking system fit into global
licensing practices of banking activities and do not cause significant
objections on the part of foreign investors.of October 1, 2009 on the territory
of the Russian Federation acted more than 150 credit institutions with
non-residents. In total in Russia at that date the number of credit
institutions has reached more than 1300. Thus, foreign capital is present in
the ownership structure of each tenth of the current bank. It is important to
note that the majority of banks with foreign capital have been recognized by
the Central Bank financially sustainable in the selection of banks in the
deposit insurance system and have a license to take deposits from individuals.institutions
with the participation of non-residents located in 30 regions of the Russian
Federation, including 85 credit institutions (or 64.9% of the total) are
located in Moscow.of banks with foreign participation are predominantly
associated with Moscow. There are registered approximately 85 credit
institutions, or 65% of the total. Concentration ratio of foreign capital also
demonstrates the imbalance in the distribution of investments in the authorized
capital of Moscow and other Russian regions. Thus, Moscow accounts for over 90%
of the total foreign participation in the authorized capital of banks.major
part of foreign investments in the Russian banking sector accounted for west
European countries - 96.6%. The leaders in the size of investments are Germany,
France, USA, Austria, the Netherlands and Turkey. The leading role of the
German capital in the Russian banking system (25% of all foreign investments)
reflects the status of Germany as a major economic partner of Russia.nature of
the involvement of foreign capital in the Russian banking sector is quite
diversified. First of all, the separation can be performed by size interests of
non-residents in the authorized capital of the Bank:40 credit institutions
authorized capital formed at the expense of non-residents by 100%.
Contributions of non-residents to the authorized capital of banks in this group
make up 40.4 billion Rubles (nearly 1.5 billion. Dollars.). Or 87.6% of total
foreign investment. 9 credit institutions have a share of non-residents in the
authorized capital of more than 50% but less than 100%. In 13 banks foreign
participation varies from 20 to 50%. In 69 credit institutions share of
non-residents is negligible (less than 20% of the share capital)., 62 credit
institutions with non-resident participation in the authorized capital from 20
to 100% (or 47.3% of the total number of credit institutions with foreign
investment), in which non-residents can have a decisive or a noticeable impact
on the decision making process, we have 44, 5 billion. Rubles, or 10.6% of the
total authorized capital of the banking system and 96.5% of total foreign
investment in the authorized capital of Russian credit organizations.we compare
the current distribution of banks according to the size of their participation
in the capital of non-residents with existing after the financial crisis of
August 1998, we can see that the greatest changes affected the group of credit
institutions, in which the proportion of non-residents is 20 to 50% . Since
January 1999, the number of banks with foreign participation decreased by more
than 2 times. Against this background, the number of banks with 100%
contribution of non-residents in the managing capital from 18 to 40 (see. Fig.
3):the banks, under the effective control of non-residents (more than 50% of
the share capital), now account for over 90% of all foreign investment in the
banking sector. This includes subsidiaries of the 10 banks of the thirty
largest banks in the world in terms of assets, in particular the leaders of the
world banking business - Citicorp, Deutsche Bank, BNP Paribas, Societe
Generale.two opposite tendencies suggest that the Russian foreign founders try
not to involve local partners to create a subsidiary bank, but prefer to fully
control it.
1.2 Legal regulation of the
activities of foreign commercial banks
Regulation of relations in the banking sector,
due to the special significance for the country's economy, falls under the
jurisdiction of the Russian Federation Russian Federation. By law governing
relations in this sphere should be subject to special requirements:
• clarity
• balance
• enforceability
• strict legal compliance and enforcement
measures of legal responsibility in case of unattended, or abuse. Fundamental,
basic source of banking legislation is the Constitution of the Russian
Federation."g" Art. 71 of the Constitution of the Russian Federation
is directly related to the conduct of the Russian Federation to establish the
legal framework of the single market; financial, currency, credit, customs
regulation, money issue, the principles of pricing policy; federal economic
services, including federal banks. According p. 1, Art. 76 of the Constitution
of the Russian Federation on matters under the jurisdiction of the Russian
Federation federal constitutional laws and federal laws.accordance with Part.
1, Art. 8 of the Constitution of the Russian Federation in the Russian
Federation the integrity of economic space, free movement of goods, services
and financial resources, support for competition and freedom of economic
activity.norms derive their development, detailing the provisions of the
relevant federal laws. With regard to the banking law occupy the central place
of the Federal Law December 2, 1990 N 395-1 "On Banks and Banking
Activity" (hereinafter - the Law on Banks and Banking) and the Federal Law
of July 10, 2002 N 86-FZ "On the Central Bank of the Russian Federation
(Bank of Russia)."accordance with Art. 2 of the Law on Banks and Banking
elements of the Russian banking system are credit institutions, as well as
branches and representative offices of foreign banks. In the dictionary of the
Russian language, the term "system" is defined, in particular, as
"something whole, represents the unity of natural and are located in the
concatenation of parts." Given this interconnection underdevelopment of
its individual elements prevents the achievement of a harmonious state of the
whole system.you know, over the past years, Russian officials have made
repeated statements about the inadmissibility of the opening of branches of
foreign banks in Russia, which is confirmed by the practice of the Bank of
Russia., the legislation contains the necessary set of rules for the creation
and operation of branches of foreign banks in the Russian Federation.on the
content of art. 55 of the Civil Code of the Russian Federation (hereinafter -
the Civil Code), a branch of a foreign bank is a separate division of a foreign
credit institution located outside of its location and performing all its
functions, or part thereof, including the function of representation.this
definition it follows that the branch is not a legal entity and has no
independent standing in contrast to creating its foreign credit institution.
However, as a general rule branch of a foreign credit institution shall have a
wide range of powers to carry out banking operations and transactions within
the system of national banking legislation, where it is created.to Article 17
of the Federal Law "On Banks and Banking" from 2.12.1990 №395-1 (Ed.
Of 30.12.2008) for the state registration of credit organizations with foreign
investments and foreign bank branch and ability to receive a license to conduct
banking operations in addition to the documents referred to in Article 14 of
this Federal Law, additionally submit duly executed documents listed
below.entity is:
) a decision on his participation in the
creation of a credit institution in the territory of the Russian Federation or
to open a branch of the bank;
) a document confirming the registration of
legal persons and balance sheets for the three previous years, confirmed by the
auditor's report;
) the written consent of the supervisory
authority of the country of his whereabouts to participate in the creation of a
credit institution in the territory of the Russian Federation or to open a
branch of the bank in cases where such permission is required under the law of
the country of his residence.person is a first-class confirmation (according to
international practice) a foreign bank solvency of that person.14 of the
Federal Law "On Banks and Banking» 2.12.1990 №395-1 (Ed. Of 30.12.2008)
states that for the state registration of the credit institution and obtain a license
to conduct banking operations, the Bank of Russia in the established procedure,
the following Documents:with a written confirmation of a state registration of
a credit institution and a license to conduct banking operations; The statement
shall contain information about the address (location) of the permanent
executive body of the credit institution;
The memorandum of association
(original or notarized copy) if its signing by federal law;
the statute (original or notarized copy);plan,
approved by the meeting of the founders (participants) of the credit
organization, minutes of the meeting of the founders (participants), containing
a decision on approval of the charter of a credit institution, as well as
candidates for appointment to the post of the head of the credit organization
and the chief accountant of the credit organization. The procedure for
preparing a business plan of the credit institution and its evaluation criteria
established by normative acts of the Bank of Russia;confirming payment of state
duty for state registration of credit institutions and for the provision of a
license to conduct banking operations when creating a credit institution;of
documents on state registration of the founders - legal entities, the auditor's
report on the reliability of financial reporting and the tax authorities
confirm execution founders - legal entities liabilities to the federal budget,
budgets of subjects of the Russian Federation and local budgets for the last
three years;(according to the list established by regulations of the Bank of
Russia), confirming the sources of funds introduced by the founders - physical
persons in the authorized capital of the credit institution;of candidates for
the post of the head of the credit organization, chief accountant and deputy
chief accountant of the credit institution, as well as head and deputy head,
chief accountant and deputy chief accountant of the branch of a credit
institution. These profiles are filled with these candidates personally and
must contain the information specified in the regulatory acts of the Bank of
Russia, as well as information:presence of these persons higher legal or
economic education (with the submission of a copy of the diploma or an
equivalent document) and the experience of managing a department or other
division of the credit organization related to the implementation of banking
operations, at least one year, and in the absence of special education -
management experience so division of at least two years;presence (absence) of a
criminal record.view of the above in the case of a branch of a foreign credit
institution would have received the right to exercise on the territory of the
Russian Federation, some or all of the following banking operations and
transactions referred to in Art. 5 of the Law on Banks and Banking:
• Raising funds from individuals and legal
entities to deposits (demand deposits and time deposits) and placement of funds
on its own behalf and at his own expense;
• open and maintain bank accounts of individuals
and legal entities;
• settlements on behalf of individuals and legal
entities;
• collection of cash, bills, payment and
settlement documents and cash services to natural and legal persons;
• purchase and sale of foreign currency in cash
and cashless forms;
• attract deposits and placement of precious
metals;
• issuance of bank guarantees;
• make money transfers on behalf of individuals
without opening bank accounts (except for postal orders);
• issue of guarantees for third parties
providing the fulfillment of obligations in cash;
• acquisition of the right to claim from a third
party fulfillment of obligations in cash;
• trust funds and other property under contract
with individuals and legal entities;
• operations with precious metals and precious
stones in accordance with the legislation of the Russian Federation;
• lease of natural and legal persons of special
facilities or are they safe for storing documents and valuables;
• leasing operations;
• consulting and information services.the
implementation of some of these banking operations and transactions require
special licenses. In addition, attracting funds of individuals and legal
entities to deposits is possible only in case if the requirements stipulated by
the Federal Law of 23 December 2003 "On Insurance of Household Deposits in
Banks of the Russian Federation." These requirements include the presence
of a foreign credit institution license from the Bank of Russia and the
formulation of foreign credit institutions registered in the deposit insurance
system in accordance with Art. 28 of the Law on Deposit Insurance. addition to
the general requirements for the establishment of credit institutions in the
Law on Banks and Banking establishes additional regulatory requirements for the
establishment and operation of branches of foreign banks. Therefore, domestic
legal scholars rightly pointed out that state as a rule do not have the right
to refuse a foreign bank in the creation of the Russian branch, citing his
refusal as unreasonableness.
For example, the Bank of Russia
stopped issue of licenses to carry out banking transactions with foreign
investment banks, branches of foreign banks when the quota of foreign capital
in the banking system of the Russian Federation. Should be
mentioned that quota is calculated as the ratio of the total capital held by
non-residents in the authorized capital of credit institutions registered in
the Russian Federation. Consequently, one of the necessary conditions for the
establishment of quotas is the presence of branches of foreign banks. However,
the quota of foreign capital in the Russian banking system is not defined, and
is also a result of the Bank's Russia policy on an unofficial ban on the
establishment of branches of foreign banks in the Russian Federation.
Thus, the above statutory provisions do not
prescribe nor prohibit the creation of the territory of the Russian Federation,
branches of foreign banks. This leads to uncertainty in the legal regulation of
credit institutions, by virtue of which is one of the shortcomings of the
existing system of banking legislation.
1.3 Features of the Russian financial market
any country, the financial market is a mechanism
for allocation and reallocation of capital (long-term returns) between lenders
and borrowers through intermediaries, including banks. The method by which it
is possible to influence the distribution and redistribution of capital between
the agents of the economy based on supply and demand, are financial
instruments. Thus, the financial instruments have a variety of market product
having a financial nature, that is, securities, bonds, foreign
currency.financial market is divided into the money market and the capital
market. The money market operations are carried out and to provide borrowing
available funds of enterprises and population in the short term. On the capital
market to borrow funds for long periods. Differences are determined purpose
borrowings. The money market serves the sphere of circulation, capital works on
it as a means of circulation and payment, which determines the types of
financial instruments on the market. Capital market serves the process of
expanded reproduction: the capital functions as a self-expanding value.process
of accumulation of money capital preceded by a stage of its production. When
money capital created and is still in production, it is a pure money-capital.
His transfer to other areas of the economy means the acceptance of the form of
loan capital. Loan market (as part of the capital market) is able to unite the
disparate petty cash, which in itself can not act as money-capital. Combining
them in large amounts allows the market to play a greater role in the process
of concentration and centralization of production and capital.role of the loan
market in the economy manifests itself in three main areas:
) before leaving the loan capital to the private
sector, government and the public, as well as foreign borrowers;
) accumulation of free cash capital and cash
savings of the population;
) the accumulation and concentration of
fictitious capital.the fictitious capital accumulation understood and
mobilization of money capital in a variety of securities (the second part of
the capital market), which is in contrast to the real capital (in the form of
money, equipment) is not a cost, but only the right to receive income.
Securities - this monetary documents proving ownership or loan document holder
in relation to the person that issued the document (the issuer) and speeding on
liability. Independent movement of fictitious capital in the market leads to a
sharp separation of the market value of securities on the balance sheet, which
further exacerbates the gap between the real material values and
their relative cost financed represented in securities., the national financial
market consists of three segments:
) Money market (traded cash and other short-term
means of payment - bills, checks and other.);
) capital market in the form of short-term and
long-term loans provided to borrowers by financial institutions;
) securities market, which is divided into an
OTC (primary) and exchange sector, as well as "street"
sector.financial market is an organized or informal system of trading in
financial instruments. In this market, the exchange of money, credit and
capital mobilization. The main role is played by financial institutions, direct
the flow of funds from the owners to the borrowers. The goods are the actual
money and securities. The financial market is thus intended to establish direct
contacts between buyers n sellers of financial resources.certain conditions,
and derivative financial instruments (DFI) are created by way of redistribution
of capital. Price is determined by the value of DFI of the underlying asset,
which can be viewed as a combination of property and cash belonging to the
enterprise, firm, company, which invested owners. Consequently, the DFI is the
subject of civil rights (Art. 128 of the Civil Code).the present stage of
development of market relations in the Russian financial market has the
following features:
• sharp differentiation degree of development of
the regions;
• restriction on the range of instruments used;
• privileged position of commercial banks in the
financial market as the main agents;
• lack of willingness on the economic potential
of commercial banks themselves to work in an active financial market;
• narrowness of the financial market due to its
two sectors - the market of foreign currency (US dollars) and equity securities
(state short-term and long-term liabilities).
• ability to independently control the size of
opened intraday currency positions, "on the basis of self-assessment of
the acceptable level of currency risk" (p. 15);
• the requirement in the case of exceeding the
limits ORP hold until the end of the trading day balancing transactions (p.
23);
• Compliance with the end of each trading day
requirements on the total value of all long (short) open foreign exchange
position (no more than 30% of the equity capital (p.10.1) and their values for
individual currencies, including the Russian rubles (less than 15% of equity
capital (Sec. 10.2).you violate the requirements of the Instruction number 41
the Bank of Russia has the right to apply to violators of the measures under
Art. 75 of the Federal Law "On the Central Bank of the Russian Federation
(Bank of Russia)."terms of the regulatory and supervisory authority that
oversees the activities of credit institutions, including responsible for their
currency risks, such an approach and the requirement to comply with AFP
objectively justified. However, these requirements are dealt with by credit
institutions, in particular the big banks, the burden is not conducive to their
monopoly approval to market and reliable delivery possible profits in times of
currency corridor makes it easy to predict in their favor difference between
the forward and spot rates apply to the Russian Foreign currencies, relatively
easy way to eliminate from the market smaller competitors. This pushes them to
search for detours. To a large extent their task is made easier by the fact
that in Russia there is no system of regulation, whether at the state or
self-regulatory levels, the creation and use of new financial instruments.at
your own risk or use already existing in the world of financial instruments,
including derivatives, not finding the definition and description of any law
(Civil Code), either in regulations or adapt them to the already established
practice in Russia and the existing national the legal system. As a result of
treatment with financial instruments mainly distorted their economic substance
and purpose. They are often used as tools bypass the requirements of
legislation and regulations.good example is the use of credit institutions
calculated forward to evade instructions №41. The nature and sequence of
operations carried out by the dealers with the calculated forwards on the
futures markets are as follows.concludes with sides a forward deal with a
settlement date T + n. Delivery of the underlying asset (mainly foreign
currency) is not provided, as side A made aware. On forwards parties
arbitrarily set the price of the underlying asset at the date of execution of
the conditional transaction T + n. In this case, the parties negotiated, but
not properly secured to concluding offset cash transactions in the spot market
on the date of execution of the conditional forward transaction T + n on the
current in the organized market the current price of the underlying asset. When
entering into a forward transaction the parties intend that the date of
execution of the conditional forward transaction calculation will be carried
out without actual delivery of basic contractual amounts, but only the
difference between the forward price and wholesale, while the latter may be a
deviation in the and in the opposite direction from the established parties
forward price; dealership ticket (offer), confirmation and, accordingly, the
agreement, this condition is fixed as follows: "INDEX TO BE NETTED AT
MICEX ON VALUE DATE".the conclusion of the settlement striker dealer makes
the operation in the transactions for the current trading day only puts his
signature on the basis of: Accounting carry out this operation on the balance
sheet, the estimated amount of the contract entered into forward calculation of
open foreign currency position (in accordance with Instruction №41 Bank
Russia). With an active presence in the market dealer and wish to conclude the
largest possible number of forwards calculated on the basis of which it is
possible, and this he expects to receive a significant profit, it inevitably
goes beyond the established AFP. Therefore, market participants found quite
original way out to bypass the requirements of the Instruction number 41:
• by mutual agreement with the dealer of a third
party is homogeneous forward transaction for the amount of the estimated
forward, while at the dealership ticket (offer) has repeatedly stated "not
real deal" 2;
• Dealer third party confirms (accepts) the
transaction, but it does not reflect in its registry and consequently in the
balance sheet;
• dealer based on their ticket and received from
a third party dealer confirm the deal makes the roster, puts his signature;
• in accordance with the completed and signed
them to the registry transaction is recognized in the balance sheet, which
leads to a strict "implementation" requirements of the Bank of Russia
regarding available to credit institutions AFP., we can conclude that the
Russian financial market and the existence of a settlement instruction
execution striker number 41 is supported by an operation called "false-wings",
the implementation of which, in turn, is possible only if there is collusion
between dealers.the date of execution of the conditional forward transaction T
+ n side of the clearing striker find out the situation with the price of the
underlying asset at the spot market to calculate the difference between the
forward and spot prices. The reality of the Russian financial market is that
the parties have the opportunity to abandon earlier agreement concerning the
conclusion of the transaction offset the spot in order to carry out a kind of
netting (which, as a rule, parties do not have a separate relevant
agreement).for settlement signed striker whose rights and interests are
infringed by the transaction, and which faces the need to fulfill its obligations
to counterparties to the full amount of the contract, refers to the court
(arbitration) for protection., considering the conclusion of the transaction in
accordance with applicable law, come to the conclusion that the transaction is
not subject to judicial protection, because it is a bet (at the moment in
Russia in any of the regulations there is no definition of
"bet").failure by the parties obligations under the forward
transactions and refusal to enter into spot transactions lead to the formation
of a critical mass of systemic risk and that he had repeatedly confirmed events
on the global and Russian financial markets, a crisis.is happening now in
Russia can be characterized as Beringz-case on a national scale. The current
financial market situation requires the permission of Russia. Steps towards
this have largely taken by the market participants, not the regulators, since
the issues raised mainly deal directly with the operational activities of
credit institutions.this regard, we can recommend to participants in financial
markets, including credit institutions, to take the following measures:
• establish personal (individual) limits on each
dealer;
• introduce more stringent control over the
activities of dealers in the financial markets (to delineate the scope of their
activities and the underlying assets or instruments);
• organize a system of follow-up with
appropriate cancer cords and terms of reconciliation;
• develop and establish internal mandatory
limits on counterparty for each type of transactions, including futures and
related cash transactions;
• establish an internal procedure for storing
control tapes to enter into transactions for dealers Reiter and recordings of
their conversations in the case of transactions over the phone;
• a more accurate work on the drafting of legal
documents, including agreements to conduct settlement forwards in which to give
them legal force in disputes in the courts fail to provide penalties for
violations of any of the parties to the earlier achieved agreement on the
second portion of the calculated forward;
• The internal instructions and documents to
apply concepts and terminology used in the Civil Code, in particular relating
to the conclusion of contracts (Ch. 28);
• adopt internal instructions on the documents
upon which to rosters, accounting for transactions in the balance sheet (form
number of signatures), and the corresponding workflow.assume that the situation
concerns exclusively the financial markets is their internal affair. Regulatory
bodies, including the Bank of Russia, also should not remain on the sidelines.
Based on the logic of articles previously mentioned federal laws. The Bank of
Russia has no right to regulate and control over the activities of credit
institutions in the forward market. At the same time n. 7, Art. 5 of the
Federal Law "On the Central Bank of the Russian Federation (Bank of
Russia)" instructs the Bank of Russia to supervise.the supervision of
credit institutions in the art. 55 of this law is "constantly monitors the
compliance by credit institutions of banking legislation, regulations of the
Bank of Russia, in particular set of required reserves." In this same
article prohibits the Bank of Russia to intervene "in the operational
activities of credit institutions, except as provided by federal
law."should be noted that the Russian credit institutions transactions in
the futures market are carried out not only and not so much for its own
account. To a large extent they are acting in the market as brokers, that is
carrying out operations on behalf of, on behalf of and at the expense of
investors, creditors and depositors shifting arising from the futures market
risks in the past, not enough versed in the intricacies of it and pitfalls. At
the same time the Bank of Russia as a regulatory authority is obliged to the
banking system in accordance with Art. 55 of the Act to protect the interests
of depositors and creditors.laws and regulations are extremely limited
functions of the Bank of Russia in regulation, supervision and control over the
activities of the forward market, on the one hand, the regulated - by credit
institutions, on the other, - methods. In general, they are reduced to the
establishment of mandatory standards and reporting rules (both accounting and
statistical) for the banking system (Sec. 5, Art. 4 and Art. 56 of the Federal
Law "On the Central Bank of the Russian Federation (Bank of
Russia)"). The same article and n. 5, Art. 5 prescribe the Bank of Russia
"to establish rules to conduct banking operations, accounting and
reporting for the banking system."procedure to establish the Bank of
Russia accounting operations conducted by credit institutions in addition to
banking, the next. Bodies which federal laws entitled accounting regulation
within its jurisdiction, shall promulgate regulations, mandatory for all
organizations (legal entities) in the territory of the Russian Federation.
However, their regulations must not conflict with regulations and guidelines of
the Ministry of Finance. Only after that on the basis of acts adopted by the
Bank of Russia establishes accounting for credit institutions engaged in the
acts described in the business transaction.the absence of, firstly, the body
which has the competence to regulate the activities of all organizations in
Russia, conducting operations on the futures market, and secondly, a federal
law that creates such a body and to grant him the right to develop regulations
and rules applicable to the forward market and regulate accounting, in
accordance with the Federal Law "On Accounting", this function should
take the Government of the Russian Federation, provides overall methodological
guidance of accounting in the country, or to delegate this right to the
Ministry of Finance.
.4 The role and place of foreign
banks in the credit and stock market
At present, we can say that the role of foreign
investors to increase the capitalization of the Russian banking sector is
becoming more visible. In 2008, the growth rate of non-resident investment in
the authorized capital of operating credit institutions outpaced the growth
rate of the total registered share capital of credit institutions. As a result,
the share of non-residents in the aggregate authorized capital of credit
institutions found an upward trend., it can be stated that the actual extent of
the participation of foreign capital in the Russian banking system still remain
modest. In comparison with the countries of Central and Eastern Europe the
share of banking assets controlled by non-residents in Russia is much lower. As
of October 1, 2005, the Bank effectively controlled by non-residents (more than
50% of the share capital) disposed of only 8.5% of total banking assets. In
this case, attention is drawn to the fact that this share is in the last 5
years, a downward trend.in the share of non-residents in total assets was
largely due to exceptionally high growth of assets of Russian banks, which
quickly recovered after the 1998 crisis. In the period of 1999-2009 assets of
Russian banks increased by more than 7 times. It is quite clear that against
such unprecedented high growth scale business activity of banks with foreign
capital, despite an increase in absolute terms, had a downward trend in
relative terms.foreign banks, the current situation is largely a transition
when the strategy of doing business in Russia can undergo dramatic changes.
Statistical data fixes model of "cautious behavior" of foreign
capital in the Russian banking sector. Its main feature is an essential
imbalance between the potential competitive advantages of the subsidiaries of
foreign banks and the real scale of their activities in the Russian banking
market., in certain segments of the banking market, credit institutions with
predominant participation of foreign capital is already playing a significant
role. In particular, this applies to transactions in the interbank market. They
account for 22.6% of loans, deposits and other funds placed with banks. Foreign
banks are active in the market of corporate clients. They are concentrated in
their hands 11.2% of funds raised by the entire banking system of the country,
from companies and organizations. Despite the small share of citizens' deposits
in foreign liabilities of banks (3.3% of the total amount of household savings)
retail business already actively developing a number of banks controlled by
non-residents.and projections indicate that the extent of participation of
foreign capital in the Russian banking system, including through mergers and
acquisitions, in the near future has increased significantly.situation for many
Russian banks is further complicated by the fact that due to the widespread
practice of cross-border provision of financial services to the best borrowers
represented primarily export-oriented enterprises, go to foreign banks. Even
now, it is estimated that approximately 45% of loans granted to enterprises by
foreign banks. Due to the increase of the Russian sovereign debt rating to
investment grade by three international rating agencies, international banks
increased their lending activities of Russian enterprises. In 2009, domestic
borrowers were financed by more impressive amount compared to previous years.
According to Citigroup, the Russian IPO accounted for 10% of all European stock
issues. According to analysts, in the next three years, 200 Russian companies
will have enough money to organize IPO.the investment banking activities
understands investing in securities on its own behalf and on his own initiative
in order to obtain direct (dividends, interest, income from the sale) and
indirect (gain control of subsidiaries and affiliates, and others.) income. The
objects of investment banking can serve a variety of securities, both equity
(shares, bonds) and non-equity (certificates of deposit, bills of exchange).
The total quantity of securities owned commercial bank, called portfolio. The
securities portfolio of commercial bank has three interrelated functions:
increase in value, creating a liquidity reserve and participation in the
management of other companies.the fact that the formation of its own portfolio
of securities banks use the same tools and management techniques that other
investment companies, securities portfolio of commercial bank has the following
features.
. The securities portfolio of commercial bank is
closely related to the structure of assets and liabilities of the credit
institution, which must be balanced with each other in terms.
. The Bank has a certain degree of mobility for
the redistribution of its assets in securities and back (in other types of
property).
. The securities portfolio of commercial bank is
an essential tool for managing interest rate risk.
. The securities portfolio of a commercial bank,
as a rule, has a conservative character, manifested in the greatest relative
weight of government bonds in the total portfolio.portfolio of equity
securities, depending on the purpose of their acquisition are divided
into:portfolio;purchased in order to obtain investment income securities are
purchased based on their retention of more than 180 calendar daysportfolio;that
meet the following requirements:) marketable securities purchased for resale
within 180 calendar days inclusive) listed and unlisted securities purchased
under agreements providing for the possibility to sell them back within 180
calendar days inclusive) listed and unlisted securities purchased under loan
agreements (regardless of the length of the contract and the issuer)controlling
interest by the credit institution voting shares in an amount corresponding to
a significant impact criteria established by the Bank of Russia from 30.07.2002
N 191-P "On the consolidated financial statements"for classifying
securities to a specific portfolio of fixed Rules of accounting in credit
institutions located in the territory of the Russian Federation (Bank of Russia
from 05.12.2002 N 205-P) (in red. From 11.04.2005).part of the investment banks
conduct operations on purchase and sale of securities; attraction of loans
secured by purchase of securities; operations involving the sale of rights
certified by securities (receipt of interest and dividends, participation in
the management of joint stock companies and others.).banking business in Russia
has a short history. In fact, its origin can only speak from the late '90s,
when to activate the process of mergers and acquisitions in the economy,
passing on legal basis, and the company began to actively enter the stock
market in order to attract funding. On the formation of the capital market as
such in the country can only speak in general since the 2000s. The main driving
force of the market in terms of demand is the need for issuers in the relevant
innovation and investment products. In the changing situation on the financial
markets of the Russian banks have to expand the range of services to actively
expand cooperation with foreign financial institutions. Most popular in recent
years has become a "product" as the IPO. This is due to a number of
reasons, such as: the need for funding for the development of business owners
desire to withdraw from the capital of the company and a number of others.
Russian banks and financial companies, being interested in the client, actively
developed over the past years, these lines of business. At the same time, of
course, there are a number of fairly serious problems., the Russian financial
institutions are significantly inferior to foreign in its size, which affects
the investor base on the cost of services on the range of services within the
IPO., Russian companies themselves prefer to work with foreign financial
institutions. On the other hand, there is a certain economic environment,
rather than tell - "economic climate" that forms the preference of
issuers, the requirements for the selection of the host institution, and the
investment bank has been operating in a certain, fairly complex situation. in
the Russian scientific community concerning the issues of terminology and
concepts, and have not given a definitive interpretation differences between
the concepts "investment bank", "investment company" and
certainly not resulted in legislative reinforcement of these institutions. The
very concept of the investment bank has come to us from the US, where
historically since the Great Depression after the adoption of the Glass -
Steagall Act in 1933, was erected a stone wall between commercial and
investment banks. This model is a segmentation of the financial system is
completely opposite pattern prevailing in most European countries, dominated by
universal banks. However, it is necessary to mention that in the large European
countries such as France and the UK, in fact as to the middle of the 20th
century, ie, before the start of a wave of consolidation, mergers and
acquisitions in the sector, banking function and operation of the securities
market were in charge of different institutions.accordance with Russian law
and, in particular, the Federal Law of 22.04.1996 "On the Securities
Market" id determining the types of professional activities in the
securities market, and those activities dealt with by investment banks in the
classical sense, an investment company can be considered a professional
securities market participant, which has a license for conducting broker-dealer
activities and licenses to manage investment funds. Given the lack of
definition of an investment bank in the Russian legislation, many draw the line
between the investment bank and investment company in terms of service delivery
and asset size.rational approach, but in the future when considering the stated
theme will use these concepts as synonyms. It is necessary, however, to mention
that the term "investment company" (investment company), as the term
itself and investment bank, a transfer. Translation was not quite as successful
as its importance in the Russian language does not correspond to the authentic
meaning invested in it. In world, practice under the investment company means a
company whose activities are directly related to the management of securities:
primarily to investment companies there include mutual funds, unit trusts, that
is, in fact, collective institutions investment. Thus, we see that these are
two completely different things in the world. Since the 1990, all newly formed
investment banks began to call investment companies.
Chapter 2. Operation and methods to reduce the
risks associated with the activities of Raiffeisen in the financial market of
the Russian Federation
.1 Position of Raiffeisen in the market of the
Russian Federation
"Raiffeisenbank" part of an
international banking group and is a subsidiary bank of Raiffeisen CIS Region Holding
GmbH, which is owned by Raiffeisen Bank International AG - a leading universal
bank in the financial markets in Austria and Central and Eastern Europe. JSC
"Raiffeisen Bank" has been working in Russia since 1996 and offers a
full range of services to private and corporate clients, residents and
non-residents, in rubles and foreign currency.bank has 6 branches (2013: 6
branches) in the territory of the Russian Federation, as well as 205 separate
units (2013: 187 separate subdivisions).to the agency "Interfax -
CEA", the results of 12 months 2014 JSC "Raiffeisen Bank"
occupies the 13th place in terms of assets, 11th in terms of equity, the 4th
largest in terms of retained earnings, 9th place the volume of loans to
individuals, 6th place in terms of individuals' funds among Russian
banks."Raiffeisen Bank" is one of the most reliable banks in Russia
with one of the best songs of ratings from leading rating agencies: long-term
rating by S & P / Moody's / Fitch - BBB- / Ba1 / BBB (as of 31.12.2014).
The main factors that affected in 2014 on the state of the banking industry, in
general, you can specify the deceleration of economic growth in Russia,
volatility in stock and currency markets, limited access to international
capital markets, rising interest rates. As a result, observed reduction in
profits in the banking system and the pressure on capital due to the
revaluation of foreign currency balances.the context of the difficult economic
situation in 2014 Raiffeisenbank demonstrated strong financial performance and
improve operational efficiency. By keeping a conservative approach to lending
and liquidity management in the period of economic growth, the Bank currently
has a substantial margin of liquidity and capital, high profitability and good
asset quality. These characteristics allow the Bank to adapt to changes in the
operating environment."Raiffeisen Bank" plans to continue to expand
its product range, improve service quality and to provide customers with all
the business segments of the high-quality services. The key objectives are to
improve the Bank quality of service, improved business processes, maintaining
long-term relationships with customers.than 56,000 employees service about 14.6
million customers in 2900 its offices. Raiffeisen Bank International is a fully
consolidated subsidiary of Raiffeisen Zentralbank Osterreich AG (RZB), which
owns about 60.7% of the common stock. The remaining shares are in free float on
the Vienna Stock Exchange.position of Raiffeisenbank in Russia is maintained by
well-designed and well-implemented business model that takes into account all
the features and trends of the Russian banking market and allows you to quickly
and timely respond to any fluctuations in the economy.this connection, it is
interesting dynamics of the financial condition of a commercial bank in a
crisis. We analyze the structure and dynamics of assets of JSC
"Raiffeisenbank" in order to determine changes in the directions of
the use of own and borrowed funds (Table 2.1).
Articles
asset balance
|
The
amount as of the date of the report
|
Change
in the period
|
|
Base
period 31.12.13
|
Current
period 31.12.14
|
The
growth rate,
|
Absolute
growth, ths. Rub.
|
Effect
on change in total assets
|
|
|
|
|
|
|
|
Total
thousand. Rub.
|
Share,%
|
Total
thousand. Rub.
|
Share,%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
154
506 091
|
21,72
|
185
376 922
|
20,75
|
16,65
|
30
870 831
|
3,46
|
Funds
in other banks
|
9
787 579
|
1,38
|
15394711
|
1,72
|
36,42
|
5
607 132
|
0,63
|
|
|
|
|
|
|
|
|
Trading
securities
|
20
363 257
|
2,86
|
9
639 559
|
1,08
|
-111,25
|
-10
723 698
|
-1,20
|
|
|
|
|
|
|
|
|
Net
loans
|
432
208 116
|
574
089 442
|
64,27
|
24,71
|
141
881 326
|
15,88
|
Net
investments in investment securities held to maturity
|
508655
|
0,07
|
509782
|
0,06
|
0,22
|
1
127
|
0,00013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investments in securities available for sale
|
1
508 805
|
0,21
|
1517323
|
0,17
|
0,56
|
8
518
|
0,001
|
|
|
|
|
|
|
|
|
Derivatives
and other financial assets
|
9570065
|
1,35
|
56776692
|
6,36
|
83,14
|
47206627
|
5,28
|
|
|
|
|
|
|
|
|
Total
assets
|
711
372 141
|
100
|
893
279 765
|
100
|
20,36
|
214
851 863
|
24,05
|
Table 2.1 Analysis of the structure
and dynamics of assets
A systematic approach to the selection of
customers and their lending, as well as well-established system of risk
management at the bank showed that, despite the difficulties of the crisis
moment, the majority of tasks was solved in a timely manner and with high
quality performance.impact of the global financial crisis and a sharp slowdown
in the economy could not but affect the results of the bank's activities. In
2011, there was a decline in the corporate loan portfolio. However, observed in
2012, the dynamics of change suggests progressive slowing decline in corporate
assets, starting from the second half of the year.the analysis and evaluation
of the bank's liabilities will use table 2.2
Liabilities
|
The
amount as of the date of the report
|
Change
in the period
|
|
Base
period 31.12.13
|
Current
period 31.12.14
|
Growth
rate,%
|
Absolute
growth, ths. Rub.
|
Effect
on change in total liabilities
|
|
|
|
|
|
|
|
Total,
ths. Rub.
|
Share,%
|
Total,
ths. Rub.
|
Share,%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds
of other banks
|
65
999 725
|
11,08
|
77
521 587
|
9,78
|
14,86
|
11
521 862
|
1,45
|
Term
borrowings from parent capital
|
33
172 282
|
5,57
|
61
993 150
|
7,82
|
46,49
|
28
820 868
|
3,64
|
|
|
|
|
|
|
|
|
Term
borrowings received from other financial institutions
|
6
266 921
|
1,05
|
1,24
|
36,19
|
3
554 489
|
0,45
|
|
|
|
|
|
|
|
|
Amounts
due to customers (non-credit institutions)
|
452
472 765
|
75,97
|
531
900 500
|
67,11
|
14,93
|
79
427 735
|
10,02
|
|
|
|
|
|
|
|
|
Debt
securities issued
|
10
354 558
|
1,74
|
22
228 342
|
2,80
|
53,42
|
11
873 784
|
1,50
|
|
|
|
|
|
|
|
|
Other
commitments
|
6
245 010
|
1,05
|
7
675 796
|
0,97
|
18,64
|
1
430 786
|
0,18
|
Derivatives
and other financial liabilities
|
6
529 237
|
1,10
|
64
221 611
|
8,10
|
89,83
|
57
692 374
|
7,28
|
|
|
|
|
|
|
|
|
Total
liabilities
|
595
587 878
|
100,00
|
792
621 374
|
100
|
24,86
|
194
321 898
|
24,52
|
Table 2.2 - Analysis of liabilities
bank's liabilities during the period
from 31.12.2013 on 31.12.2014 increased by 24.52%. The
main source of borrowed funds are bank clients' funds (67.11% of total
liabilities). Attracted funds from individuals for the year increased by
36.19%. Customers are offered a wide range of urgent and special deposits at
competitive rates. On the 14.86% increase in attracted bank loans, deposits and
other funds of the Central Bank of the Russian Federation. Increased debt and
also raised funds of credit institutions 36.19%. It is essential to the 89.83%
increase on derivatives and other financial liabilities.must be noted that the
assets and liabilities of Raiffeisenbank in relation to derivative financial
instruments increased by more than 80%.financial instrument (derivative) - a
financial instrument, based on the obligations laid down in respect of other
investment assets or commodities. In fact, a derivative - a security of a
security. There are several main types of derivatives: futures, forwards,
swaps, options, swaptions, contracts for difference.are conventionally divided
into categories in accordance with the assets that underlie them.
. Financial derivatives - contracts based on
interest rates on short-term and long-term bonds of the United States, Britain
and other countries.
. Foreign exchange derivatives - contracts for
the euro / dollar, dollar / yen and other world currencies.
. The index derivatives - contracts for stock
indices, such as the S & P 500, Nasdaq 100, FTSE 100, and in Russia and
futures on stock indexes MICEX and RTS.
. Derivative securities into shares. On the
MICEX, including futures traded on a number of Russian market leaders:
"LUKOIL", "Rostelecom", etc.
. Commodity derivatives - contracts for energy
resources, such as oil. In the precious metals - gold, platinum, palladium and
silver. In the non-ferrous metals - aluminum, nickel. In agricultural - wheat,
soy, meat, coffee, cocoa and even orange juice concentrate.in a small number of
transactions (3%), a real delivery of assets underlying derivative securities.
Mainly deal settled by mutual settlements in cash through the process of
clearing.are used for two purposes., for the insurance of financial risks
(hedging). For example, agricultural producers can protect themselves from
falling prices for its products in the future, he plans to harvest. Or
automobile concern that requires a known quantity for the production of
non-ferrous metal in the future can insure against his appreciation for a
certain period., the derivative securities - one of the most profitable
instruments for speculative trading. Indeed, for the purchase of a futures
contract is 100 thousand. Euro against the US dollar for delivery in three
months required to pledge only about 2 thousand. Dollars. Thus, we can get for
free so-called shoulder on a very large sum. Unfortunately, while speculative
transactions with derivative securities - the most risky compared to other
securities.of the structure and dynamics of income "Raiffeisenbank"
hold using the table 2.3. main source of income of the bank continue to be
interest income (51.51%). However, despite the reduction in their share
relative to other sources of income, their share in the total income of the bank
has remained at 3.05%. This is due to the absolute and relative decline in
non-interest income. Fee and commission income of the bank increased by
2,228,951 thousand. Rub. and amounted to 17,075,699 thousand. rub., their share
in total revenues of 3.2%. Overall, total income of the bank rose by 22.74%.
Items
of income
|
Base
period 31.12.13
|
Current
period 31.12.14
|
Change
in the period
|
|
|
|
Absolute
growth, ths. Rub.
|
Growth
rate,%
|
Effect
on change in total liabilities
|
|
Total,
ths. Rub.
|
Share,%
|
Total,
ths. Rub.
|
Share,%
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income after provision for loan impairment
|
33
706 894
|
62,72
|
35
829 431
|
51,51
|
2
122 537
|
5,92
|
Fee
and commission income
|
14
846 748
|
27,63
|
17
075 699
|
24,55
|
2
228 951
|
13,05
|
3,20
|
Gains
less losses from dealing in foreign currencies
|
3
189 091
|
5,93
|
6
358 959
|
9,14
|
3
169 868
|
49,85
|
4,56
|
Net
gains / (losses net of gains) from foreign currency revaluation
|
967
503
|
1,80
|
9
057 334
|
13,02
|
8
089 831
|
89,32
|
11,63
|
Recovery
of provision for credit related commitments
|
231
271
|
0,43
|
312
921
|
0,45
|
81
650
|
26,09
|
0,12
|
Reversal
of provision for impairment of investment securities held to maturity
|
14
250
|
0,03
|
974
|
0,0014
|
-13
276
|
-1363,04
|
-0,02
|
Gain
on sale of loans
|
32
499
|
0,06
|
158
734
|
0,23
|
126
235
|
79,53
|
0,18
|
Other
operating income
|
336
526
|
0,63
|
303
168
|
0,44
|
-33
358
|
-11,00
|
-0,05
|
Share
of results of associates
|
418
355
|
0,78
|
463
756
|
0,67
|
45
401
|
9,79
|
0,07
|
Total
income
|
53
743 137
|
100
|
69
560 976
|
100
|
15
817 839
|
22,74
|
Table 2.3 Analysis of the structure and dynamics
of income "Raiffeisenbank"
we could see that most share of
income belongs to Net interest income after provision for loan impairment there
could be mentioned few words about this article.
At the end of 2014, Raiffeisenbank has
demonstrated significant growth in all areas of retail banking. Profit before
tax of the retail business in 2014 increased by 17.6% compared to the same
period in 2013 and amounted to 10 947.3 million rubles.volume of retail loan
portfolio increased by 15.6% to 210 110 100 000 rubles. compared to 2013 year
(before provisions for impairment). The mortgage portfolio grew by 24.9% or 10
329 600 000 rubles. to 51 846.1 million rubles. The portfolio of credit cards
and overdrafts rose by 43.6% to 17 266.8 million rubles. And the consumer loan
portfolio increased by 11.2% or 10 013 900 000 rubles. compared with 2013 and
totaled 99 812 700 000 rubles. Auto loan portfolio increased by 7.4% or 2 833
900 000 rubles. to 41 184.4 million rubles.
"Similar to the results we have achieved
both by expanding the branch network - in 2014, it opened 32 points of sale in
Moscow and by the launch of products and customers sought to improve the
quality of service", - said Andrey Stepanenko, the deputy chairman of JSC
"Raiffeisenbank" , Head of retail banking and small business. -
"In 2015, we will continue to develop new technological channels of
communication with customers to develop innovative services. But the main thing
in our work will remain high standards of service quality. "2014 the
volume of individuals' funds placed in Raiffeisenbank increased by 19% due to
growth in current accounts (up 28.1% to 137 328 700 000 rub.) And deposits (+
12.7% to 173 657.1 mln.).year, Raiffeisenbank has offered its customers a
number of new products: started issuing Visa debit cards with contactless
technology purchases Visa payWave, has launched a new online service
'Accumulate with us! ", Which helps to accumulate the required amount for
the implementation of a particular purpose. In addition, customers are now on
the same day the bank for 15 minutes can apply for instant card issuance.
Premium customers a new program became available Easy Europe, which includes
not only banking services but also services aimed at simplifying the
formalities for travel to Europe.2014, Raiffeisen Bank and MDM Bank united ATM
network. Thus, taking into account the previously signed similar partnerships
with UniCredit Bank, the bank "Uralsib" Tatfondbank and Rosbank, the
number of devices in which Raiffeisenbank clients can withdraw cash without
commission and check the account balance has exceeded 11 thousand.attention is
traditionally paid Raiffeisenbank remote banking services. In 2014, the greatly
expanded functionality for online banking R-Connect - now to the standard
options, such as access to information on accounts and making payments, add new
features - the opening of accounts in rubles and foreign currency, money
transfer from card to card Raiffeisenbank other Russian banks, savings account
to control and special bonuses when a predetermined amount, complete work with
templates, as well as the service account for personal expenses. The list of
payees, whose services can be paid through R-Connect without commission added
more than 100 companies, including suppliers of utility services, mobile
operators and Internet service providers.control of finances has also become
easier with the new version of the mobile application R-Mobile. By the usual
functions to add a translation on the cards of other banks within the same
payment system, budgetary payments (taxes, penalties), search partner ATMs on
the map, and more.of users of the system R-Connect has grown by 46% over the
previous year, while the number of advanced remote transfers and payments
increased by 67% compared with 2013 year.of development of activities will be
continued in the next point of this work.of the structure and dynamics of costs
"Raiffeisenbank" hold using the table 2.4.large proportion of the
costs of the bank owned by unrealized losses net of gains on derivative
financial instruments (56.63%). The second highest value is commission
expenses, their share was 26.69%. Overall, total expenses increased by 75.63%.
Items
of income
|
Base
period 31.12.13
|
Current
period 31.12.14
|
Change
the period
|
|
|
|
Absolute
growth, ths. Rub.
|
Growth
rate,%
|
Effect
on change in total liabilities
|
|
Total,
ths. Rub.
|
Share,%
|
Total,
ths. Rub.
|
Share,%
|
|
|
|
|
|
|
|
|
|
|
|
Commission
expenses
|
4
263 403
|
81,60
|
5
722 664
|
26,69
|
1
459 261
|
25,50
|
6,81
|
Net
losses from trading securities
|
166
656
|
3,19
|
1
381 610
|
6,44
|
1
214 954
|
87,94
|
5,67
|
Losses
net of gains arising from other securities at fair value and changes therein
are recognized in profit or loss
|
19
396
|
0,37
|
2
246 954
|
10,48
|
2
227 558
|
99,14
|
10,39
|
Unrealized
losses net of gains on derivative financial instruments
|
728
083
|
13,94
|
11
500 591
|
53,63
|
10
772 508
|
93,67
|
50,24
|
Realized
(losses) / gains less losses from transactions with derivative financial
instruments
|
-235
441
|
-4,51
|
343
743
|
1,60
|
579
184
|
168,49
|
2,70
|
The
ineffectiveness of hedge accounting
|
282
620
|
5,41
|
246
817
|
1,15
|
-35
803
|
-14,51
|
-0,17
|
Total
expenditures
|
5
224 717
|
100
|
21
442 379
|
100
|
16
217 662
|
75,63
|
2.4 Analysis of the
structure and dynamics of costs "Raiffeisenbank"
.2 Services of foreign banks in the financial
market on the example of Raiffeisen
and current accounts2013, deposits were launched
with monthly capitalization, which improved product offering. Through monthly
interest capitalization customers get more income, which increases the
attractiveness of our deposits and allows to attract new customers. In addition,
the product line has been optimized by pooling deposits "Refillable"
and "rentier". Customers made it easier to navigate among the
contributions. The changes were made and the deposit "P-Connect. Money in
growth! ". It was complemented by the options to replenish and monthly
capitalization, resulting in increased number of customers who open a deposit
through the Internet bank. This will eventually reduce the cost of the Bank, as
the cost of opening a deposit through the R-Connect is much lower than the opening
of the deposit through a branch. In June 2013 launched a new product
"Savings Account", which allows you to place the funds at any time.
This account is the ruble, and the main difference from other accounts - it can
not bind to the card. Moreover, the daily calculation of interest on the
remainder.with premium customers (Premium Banking and Premium Direct)2013, both
segments, "Premium" and "Premium Direct", performed well
results both in attracting new customers and in sales of investment products.
At the end of the year the number of customers segment "Premium"
amounted to more than 27 thousand. Man. Unique to the premium segment of the
market with a focus on service over the phone - "Direct Premium" -
made a sharp jump, which allowed for the year to increase the number of clients
with 1 thou. To 11.5 thous. People. By year end, personal managers
"Premium Direct" attracted 573 million rubles in mutual funds and
insurance products issued IC "Raiffeisen Life" at 59 million rubles.
One of the focuses of 2013 was to improve the quality of customer service.
Implemented a monitoring system in regular contact management with clients,
developed a process of active dating new customers with all the services of the
Bank in the first six months of service. Also in 2013, financial planning for
clients segment "Premium" strengthened risk-profiling. Defining the
customer profile before proposing investment products it corresponds to
European trends andis a competitive advantage of premium services in JSC
"Raiffeisenbank". The range of investment products offered to clients
extended with new strategies of trust management of Open Company "UK"
Raiffeisen Capital "- a strategy with partial capital protection, designed
for customers with a more risky investment portfolios. The previously launched
the strategy of trust management with full capital protection in 2013 was
raised to 1.1 billion. Rubles.the segment "Premium Direct" 2013 was a
year of formation: the staff management increased by 4 times, improved training
programs, the control system through the team leaders, is being successfully
implemented sales experience of investment and insurance products remotely over
the phone. Also it conducted constant monitoring of customer satisfaction and
implemented tools to increase their loyalty. The priority of
"Premium" and "Premium Direct" is the provision of high
quality services and offer new and interesting products for the customer, which
ultimately provides stability to attract new customers and minimize the outflow
of existing ones.with small companies and micro businessesthe year, the Bank
has consistently improved its product line for this segment: developed
profitable and simple packages of cash and settlement services, introduced the
product "Mobile acquiring", simplifying the process of opening a bank
account and to sign the agreement acquiring launched a specialized call center,
optimized credit products and processes. Also introduced was the model of a
single front office for businesses and individuals, bringing clients segment
"Small and micro" may apply to the 127 offices of the Bank. As a
result, in 2013, it was achieved impressive results involved more than 13,000
new customers, and the customer base exceeded 35,000 companies. Increasing the
number of customers and increased use of settlement services has led to the
growth of the Bank's liabilities segment "Small and micro" 28.8% to
16.85 billion rubles (according to IFRS) on 31.12.2013. In the area of lending
to clients of this segment grew by 43%, while higher growth rates were
unsecured microcredit, where the credit portfolio for the year almost doubled.
The total amount of loans granted customer segment in 2013 amounted to more
than 6 000 units, and the loan portfolio at the end of the year reached 17.8
billion. rubles (according to IFRS).and investment bankingthe difficult market
conditions in demand for credit, reducing the profitability of both active and
passive operations and increase the credit risks of borrowers, the main
priorities of the work of the corporate management of the Bank are:
Improving the quality of services and technology
opportunities for their use, expanding the product range of Credit tools,
non-credit products;
An increase in productivity and operational
efficiency;
Preservation and improvement of the quality of
the loan portfolio and credit risk management;
Ensuring a high rate of return on
capital.priority of maintaining stability and profitability over volume
growthwas, in our opinion, the only true, objective and responsible approach to
business development with customers and partners in terms of increased
risks.virtually stable volume of total corporate loan portfolio for the year to
December 2012, we were actively increasing the volume of lending in the segment
of medium-sized businesses, where a relatively high rate of return with an
acceptable level of risk. The increase in the volume of loans in the segment of
medium-sized businesses made up more than 53.3%.increase the amount of
financing of our clients, we are actively used documentary instruments with low
risk weight - bank guarantees and letters of credit - which demand from both
large and medium-sized businesses grew steadily throughout the year. The effect
on the quality parameters of the loan portfolio remained minimal.general, the
amount of commitments for the year increased by 22.5 billion rubles (+ 12.2% to
the results went the year). In the mid-market, this figure exceeded
56.1%.structure of the loan portfolio by industry did not change significantly,
indicating that the continuity and stability of our approach to risk assessment
and the development prospects of the most significant in terms of business
sectors.financingportfolio of project finance transactions of the Bank in 2013
remained at about the level of the previous year, and amounted on December 31,
2013 more than 60 billion. Rubles. Most of the portfolio - long-term financing
transactions of commercial real estate. Compared with last year its volume in
the overall portfolio of projects decreased slightly from 92% to 84%.Financing
commercial real estate is distributed over the following main business
segments: offices - 27%, retail properties - 43%, warehouse real estate - 21%
of hotel - 7%, residential real estate - 2%. Most of the transactions in the
segment of project financing has been associated with the refinancing of
completed properties.sign transactions in 2013 include the following:
• Financing the construction of five-star luxury
hotel - Grand Hotel Europe, located in the heart of St. Petersburg, in the amount
of 50 mln. US dollars for a period of 5 years.
• Provide group company Raven Russia Limited
loan of 33 mln. US dollars for a period of 10 years for the completion of the
third phase (47 thousand sq. M) logistics park in Klimovsk. The total area of the
logistics park at the end of the third construction phase of the project will
amount to 156 thousand square meters.
• The signing of a long-term loan agreement in
the amount of 45.6 million. The euro on finance the construction of commercial
and service center of Porsche in Moscow, which should become a flagship sales
and service of cars Porsche.service medium-sized businesses2013, the Bank
continued to actively develop lending to midsize companies. The loan portfolio
of JSC "Raiffeisenbank" in this business segment increased by 53.3%
and exceeded 16.5 billion rubles. The volume of business on documentary
instruments increased to 4 billion. Rub. (+ 65.4% from the previous year). Such
impressive growth figures were the result of active work on expanding its
customer base in the regions where the bank, as well as the supply of credit
products, including documentary, and services in the field of optimization of
settlements with counterparties and liquidity management. Reducing the time to
work with the company's application, as a result of improvements in internal
procedures and mechanisms of interaction of divisions in the process of review
and approval of loan applications has also made a significant contribution to
the acceleration of growth in the loan portfolio. Medium business segment of
the Bank is mainly represented by companies from developing sectors such as
trade, the production of consumer goods, services, including media, information
technology and telecommunications, where there is significant growth potential,
including through mergers and acquisitions. Therefore, the bank is actively
expanding its interaction with the medium-sized businesses in the field of
investment banking. Many years of practical experience in transactions
conducted by the bank's specialists, allows us to offer structure and any
decision on a merger, consolidation of the asset repurchase of minority
interest, using the bank's own resources as soon as possible and with the
highest quality performance work. Along with the significant growth of the loan
portfolio and number of clients, one of the most significant results of the
team of the Office of Customer medium-sized businesses in 2013 can be regarded
as an increase in the share of revenues of the business segment in total revenues
of Corporate Business Bank, both in the regional centers, as and in general
management.(Figure 2.9)
Figure 2.9. The structure of the loan portfolio
by lending to medium-sized businesses
Investment Banking2013 NPF
"Raiffeisenbank" continued successful work in the field corporate
finance and investment banking operations. NPF "Raiffeisen" carries
out investment of pension reserves and pension savings in order to ensure
optimal investment in accordance with the legislative requirements and the
investment philosophy of the "Raiffeisen", provide:equipment;of a
stable profitability;liquidity and diversification;transparency; (Table 2.10)
2.10 Investing
available fundsfunds in the accounts of credit institutions: 0.4%in bank
deposits: 50.3%securities of the Russian Federation: 0.0%securities of the
Russian Federation: 5.3%of Russian issuers: 27.9%of Russian companies:
0.1%backed securities: 14.8%of international financial institutions:
0.6%assets: 0.7%: -0.1%bonds
the market of ruble bonds of
"Raiffeisen Bank" has strengthened its leading position was the
organizer of 30 transactions with a total nominal value of over 250 billion
rubles. According
to news agency Cbonds, on the results of 2013 the Bank has traditionally
entered the top five in the ranking of the organizers of the ruble bonds.the
landmark transactions this year include:
• two bond issues of JSC "Oil Company"
Rosneft "totaling 70 billion rubles for the period of 5 years;
• two bond issues totaling VEB 35 billion rubles
for a period of 2 and 5 years. Documentation issues included a number of
innovations, and was as close to international standards Eurobond market;
• the issue of bonds of OJSC "MegaFon"
of 20 billion rubles for a period of 5 years;
• debut issue of bonds of "HC Finance"
provided by a pool of consumer loans (5 billion rubles) for a period of 3
years. Structure Releasethe use of Russian issuers (SPV) for the purpose of
maximizing investor demand.has also successfully made the agent for the
restructuring of the bond issue of JSC "TGC-2". 2013 also was a
breakthrough for the Raiffeisen Group in the Eurobond market in Russia, where
the Bank acted as lead arranger and bookrunner 11 placements totaling more than
US $ 4 billion.
.3 Risks related to activity in financail market
terms on the financial market, Raiffeisen Bank
faces the following risks: market, currency, credit and liquidity risk.risk.
Market risk - is the risk of incurring losses as a result of the negative
impact of changes in interest rates, exchange rates, prices of securities and
commodities and credit spreads, which may affect the capital gains of the Group
or the market value of its assets and liabilities. Market risk is determined on
the basis of balance sheet and off-balance sheet positions in treasury,
investment, banking and lending operations of the Bank.management toolsBank
manages market risk by monitoring market risk limits for all trading portfolios
(domestic and foreign securities with fixed income, foreign exchange and equity
positions), using a variety of risk management tools such as position limits,
the cost of risk, stress testing, back testing, analysis inconsistency level of
interest rates on assets and liabilities, sensitivity analysis, and limits
"stop loss".of risk (VaR)is a statistical estimate of the potential
losses on current trading portfolio of the Bank, including positions in fixed
income, equity and currency positions, as well as a decrease in the economic
value of the banking book as a result of adverse changes in market parameters.
By the standards of the Parent Bank and the Group Vag is estimated at 99%
confidence interval, and it is specified statistical probability (1%) that
actual losses will exceed the value of VaR.the fact that VaR is a valuable tool
for determining market risk, you must also take into account the shortcomings
of this method, especially for less liquid markets, such as:use of historical
data as a basis for determining future events may not take into account all
possible scenarios, particularly those that have an extraordinary nature;the
level of the confidence interval equal to 99%, does not allow to estimate the
amount of losses expected with a probability of less than 1%. The amount of VaR
is associated with empirical uncertainty. There is a 1% probability that losses
could exceed VaR;value of VaR is calculated only at the end of the day, and do
not necessarily reflect the risks that may arise on positions during the
trading day.calculate the parameters of risk Value at Risk using a delta normal
method, it is necessary to form a sample of a risk factor, it is necessary that
the number of sample values were greater than 250 (recommendation Bank of
International Settlements), to ensure representativeness.quotes share is
calculated daily yield from the formula:
: D - day yield;current share price;-
yesterday's earnings per share.value of VaR depends on the Bank's position and
the volatility of market prices. VaR for unchanged position reduces if market
volatility declines and vice versa.(Table 2.11)
2.11 1-day VaR
count
Stress Testingmain advantage of the risk
assessment using VaR - reliance on empirical data - is at the same time it is a
major drawback. Extreme changes in the market, which can cause significant
deterioration of the Bank should be evaluated based on the number of standard
deviations of market returns. The figures are approximate indication of the
magnitude of possible losses from the relevant scenario. The Bank uses stress
tests to model the financial impact of a variety of exceptional market
scenarios on individual trading portfolios and the overall position of the
Bank. Stress tests are an indicator of the size of potential losses that could
arise in extreme circumstances.testing helps to assess the risk of the Bank
resulting from extreme market movements and can detect signs of potential
losses that may result from such changes. Stress testing is used to make sure
that was studied by a large range of scenarios in order to understand the
vulnerability of the Bank, and that the management and control system is a
comprehensive, transparent, and has a quick response to changing market
conditions and events occurring as a in the world, and in the Russian
economy.testingeffectiveness of the VaR model is verified by a back-testing.
During back-testing to identify cases of loss greater than the amount of VaR,
and the frequency of violations compared with VaR limits set by the confidence
interval.back-testing the Bank compares the one-day VaR, calculated on the
positions at the end of each working day, the actual income for the same positions
on the next business day. In this income ("income when back testing")
are not included non-trading components such as commissions, but including
revenues from intraday operations (so-called "dirty backtesting"). If
the result is negative and exceeds the one-day VaR, it is considered that there
was a "deviation back-testing." When Var is estimated at 99%
confidence interval, is expected deviation backtesting, on average, once every
hundred days, ie about three times a year.Bank uses interest rate sensitivity
analysis to assess the interest rate risk in the banking portfolio, including
loans, deposits, interbank operations on the money market, securities,
fixed-income securities held to maturity, and derivative instruments whose
underlying assets are interest rates and the trade portfolio includes trading
securities with fixed income and derivative instruments whose underlying assets
are interest rates, which hedges the risk on trading securities with fixed
income. The Group calculates the sensitivity of the interest rate (the value of
a basis point) for each portfolio by calculating the change of the current
market value of all future cash flows at the interest rate shift by 1 basis
point, calculated on the basis of current market interest rates, the Bank uses
internal pricing, relative cost All future cash flows in the current state of
the market, increased by one basis point.risk. Currency risks associated with
the effects of fluctuations in exchange rates. The Group is exposed to foreign
exchange risk on open positions (currency fluctuations, primarily the US dollar
against the Russian ruble and the euro to the Russian ruble).part of the
currency risk management The Bank sets limits on the level of exposure by
currency and in total as at the end of each day, and within one day, which is
monitored on a daily basis. The control system also includes Value at Risk (see
details. Value Description Value at Risk) limits and "stop - loss",
each of which is monitored on a daily basis.operations in the capital markets
of the Bank daily calculates the total foreign currency position of the Bank
and takes measures to maintain the foreign currency position at the minimum
level. The Bank uses spot transactions, forwards and futures contracts in US
dollars traded on the Moscow Interbank Currency Exchange (MICEX), the Russian
Trading System ("RTS") and on the OTC market as the main instruments
to hedge risks.
The table below summarizes the
foreign currency risk of the Group as at 31 December 2014 as follows (Table
2.12) :
2.12 Calculation of
gross risk
above derivative financial
instruments are monetary financial assets or monetary financial liabilities,
but are presented separately in order to present the overall risk of the Group.
The position of the Group's derivative
instruments presented in each column reflects the fair value at the end of the
period of the relevant currency in respect of which agreed to buy (positive
amount) or sell (negative amount) before netting of positions and payments with
the counterparty.Bank calculates VaR in euro for the report to the parent bank
for local currency Bank performs impact analysis. The table below shows the
change in the financial result and equity due to possible changes in exchange
rates applied at the balance sheet date, despite the fact that all other
variables remain constant (Table 2.13):
2.13 Impact on
profit changes in exchange rates
Credit limits. The Group monitors the direct
credit risk of financial institutions, government agencies and local
administrations and regional governments through a system of limits, designed
the parent bank. These limits include the financial credit risk limits (credit,
letters of credit and guarantees, contingent liabilities, financial
underwriting, credit risk insurance, overdraft accounts for Loro and a positive
balance on nostro accounts), credit risk limits on securities (investment /
trading / underwriting issuer , trading of the issuer of equity instruments settled
transactions in securities, options / futures on securities) and limits the
credit risk of treasury operations (calculations of treasury operations,
operations in the money and foreign exchange markets operations in the markets
of derivative securities transactions repo). The limit can be used counterparty
if it is assigned an internal rating, which determines the amount of the limit
provided by this counterparty. Limits and ratings are reviewed at least once a
year. Monitoring the financial position of financial institutions, state and
sub-state contractors on a regular basis in accordance with the requirements of
the Parent Bank and the Central Bank of Russia. Monitoring compliance with the
established limits on financial institutions, state and sub-state
counterparties on a daily basis.Bank sets the following limits restricting
credit risks:on the amount of assets subject to credit risk;on short-term
interbank transactions in the context of counterparty banks;on investments in
debt securities of issuers in the context;on investments in a group of related
counterparties;Bank controls credit risk by setting limits per borrower or
group of related borrowers, and setting limits for geographical and industry
segments. Limits on credit risk by product and industry sector are approved
regularly by the Credit Committee. Such risks are monitored on a regular basis,
and the limits are reviewed at least once a year.rate risk. The Group takes on
exposure to effects of fluctuations in market interest rates on its consolidated
financial position and cash flows. These fluctuations can increase the interest
margin, however, in case of unexpected changes in interest rates the interest
margin may reduce or create losses.Group is exposed to interest rate risk
primarily as a result of maturities of assets and liabilities / reprising of
assets and liabilities in different currencies.for market risk management sets
limits on the level of sensitivity of interest rates and monitors compliance
with these limits on a daily basis. Committee on market risk the Parent Bank
sets limits on the sensitivity of interest rates for currency's position in
rubles, US dollars, euros and other currencies and for the overall risk
exposure of the Group. In addition, the Group uses interest rate and cross
currency interest rate swaps to hedge interest rate risk. However, hedge
accounting is not applied due to the fact that the test for the efficiency
shown negative results.table below shows the sensitivity of the fair value of
derivatives portfolios of the Bank to possible changes in the interest rates
used at December 31, 2014, despite the fact that all other variables remain
constant (Table 2.14):
2.14 The impact on
the profit from the change in fair value
If on December 31, 2014 interest rates in rubles
were 600 basis points (bp) below, and the rate in dollars and euros were 1
basis point lower (bp) 1 despite the fact that all other variables held
unchanged, the economic value of the Bank's balance sheet would have been
7,061,564 thousand higher, mainly as a result of lower interest expense on
short-term liabilities and liabilities with a variable interest rate. If on
December 31, 2014 interest rates in rubles were 600 basis points (bps) above,
and the rates of the dollar and the euro had been 200 basis points higher (bps)
despite the fact that all other variables held unchanged, the economic value of
the Bank's balance sheet would have been 4,473,373 thousand lower, mainly as a
result of higher interest expense on short-term liabilities and liabilities
with a variable interest rate.Group monitors interest rates on financial
instruments. The table below summarizes the effective interest rates for major
debt instruments of major currencies. The analysis is based on the effective
interest rates at the end of the period used for amortization of the respective
assets / liabilities. The following table provides information as at December
31, 2014 (Table 2.15):
2.15 Interest rate
for major debt instruments
Liquidity risk. Liquidity risk - this is the
current and prospective risk of affecting profits or equity, arising from the
bank's inability to meet its financial obligations as they fall due settlement
without incurring unacceptable losses (extremely high financing costs). This
risk arises from the fact that the bank may not be able to ensure the
effectiveness of the expected and unexpected cash flow and collateral
requirements. The Group is exposed to daily calls on its available cash
resources from overnight deposits, current accounts, maturing or early
withdrawal of deposits, loan draw downs, guarantees and derivative financial
instruments that are settled in cash. The Group does not maintain cash
resources in case you need a one-time meet all of these as the basis of
accumulated experience, we can with a sufficient degree of accuracy to predict
the level of funds needed to fulfill these commitments. Liquidity risk is
managed by the assets and liabilities of the Group.Group seeks to maintain a
stable funding base primarily consisting of deposits of legal entities /
deposits of individuals, due to other banks, as well as invest in diversified
portfolios of liquid assets, in order to be able to quickly and smoothly to
unforeseen liquidity requirements.liquidity management of the Group requires
considering the level of liquid assets necessary to settle obligations as they
fall due; providing access to various sources of funding; contingency plans in
case of problems with financing and exercising control over compliance of the
balance sheet liquidity ratios against regulatory requirements. The Group
calculates liquidity ratios on a daily basis in accordance with the
requirements of the CBR.Group calculates liquidity ratios on a daily basis in
accordance with the requirements of the CBR. These standards include:ratio (H2
must be at least 15% in accordance with the requirements of the Central Bank of
the Russian Federation), which is calculated as the ratio of liquid assets to
demand liabilities. As of December 31, 2014 the value of this standard was
48.54% (on December 31, 2013 H2 Bank amounted to 42.46%).liquidity ratio (N3
should be at least 50% in accordance with the requirements of the Central Bank
of the Russian Federation), which is calculated as the ratio of liquid assets
to liabilities maturing within 30 calendar days. As of December 31, 2014 the
value of this standard was 58.72% (on December 31, 2013 H3 Bank was
77.18%).term liquidity ratio (N4 must be no more than 120% in accordance with
the requirements of the Central Bank of the Russian Federation), which is
calculated as the ratio of assets maturing after one year to capital and
liabilities maturing in over one year. As of December 31, 2014 the value of
this norm was 112.99% (on 31 December 2013 the Bank was 90.87 H4%).
Conclusion
part of the analysis carried out and
the scope of activities of foreign commercial banks in the domestic banking
market and considered approach to the management of risks associated with the
activities of banks. The first examined the theoretical
foundations of the phenomenon under study: to analyze different approaches to
the definition of the bank with foreign capital participation by Russian
authors reviewed the classification and legislation, as well as restrictions
imposed by the regulator to reduce the risks associated with increasing
competition between Russian and foreign banks. For the purposes of the work to
the emergence of foreign banks in the domestic market of foreign investments
allocated to commercial banks in subsidiaries with a view to profit, asset
diversification and the maintenance of liquidity. The method to create a bank
with foreign capital corresponds to the data contained in the Federal Law N
86-FZ, designed for foreign credit institutions, and solves the problem of the
emergence of banks with a dubious reputation. Analysis of legal acts regulating
the activities of foreign commercial banks revealed that at present the risks
associated with the activities of the latter are limited mainly by the
mandatory standards set by the CBR. This fact demonstrates the need for an
effective control system for monitoring the state of the domestic banking
system and continuous improvement approaches to risk assessment and management
within the country.analysis of current data on the nature and extent of
involvement of foreign capital in the Russian banking sector for 2009-2010.
revealed several trends: 1) a steady increase in the volume of investments of
commercial banks in the Russian banking sector; 2) the concentration of foreign
investment; 3) the desire of foreign investors to fully control the controlled
bank. These trends show an increase in complication and risks inherent in the
activity of banks with foreign capital - of all types of market risk, credit
risk, liquidity risk and operational risk.risk management operations of a
foreign bank is impossible without the existence of a bank independent and
reliable overall risk management system. A study of the current practice of
risk management has been found that with certain assumptions we can speak of a
direct relationship between the size and quality of the bank's risk management
system. Major foreign banks seek to continuously improve the applied methods
and approaches, and closer to international best practice. In smaller banks
still face the problem of an independent selection of the structural unit of
risk management and giving him authority to make decisions and restrict the
activities of the business units that generate risk.a detailed study of
approaches to risk assessment and management was held vertical analysis, the
role of each of the main services and the risks associated with the activities
of the bank on the example of "Raiffeisenbank".analysis allows, on
the basis of the financial statements, consider the assets, liabilities, income
and expenses of the selected bank and see how each separate article affects the
overall composition, and what percentage of this article. It was also compared
with the previous year to determine the rate of development of the bank as a
whole and for each individual item.possible risks and ways to reduce them to an
acceptable level to evaluate the impact of each factor on the bank's
activities. At the same time suggests possible ways to overcome these risks and
reduce their exposure to an acceptable level.the proposed measures to mitigate
the impact of risks on a bank with foreign capital, the market is still
observed crises of various sizes that can be avoided due to the size and
experience of the selected bank. However, serious omissions inherent not only
to foreign banks, but the whole Russian banking system - reliance on standard
methods of risk reduction, the use of methods to reduce the risks in the image
of the risk models used in the framework of another, foreign economy and
"hope" on the rationality of the Russian consumer - have become
justification for the search for new solutions to reduce risk.the foreign banks
present in the domestic market, one of the most successful in the matter of
forecasting and risk reduction is "Raiffeisenbank". The basis of
minimizing risks, as well as to reduce the possible negative impact of an
organization - the issuer is carried out a number of actions: the organization
of risk management is carried out on three levels, consistent with the parent
company, taking into account Russian specifics; the introduction of new, more
stringent requirements of the Basle committee the; the use of different
methodologies to assess risk, such as Value-at-Risk, stress testing, sensitivity
analysis tools / portfolios of the Bank to risk, scenario analysis.
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Appendix