Banking system and its development in the period of transition to the market

1. Work on overdue payments carried out mainly by the following methods:

- The adoption of the redemption of securities, liquid at the federal and local level (VEB bonds, KO, government securities)

- Contracts of assignment of claims

- Contracts with banks borrowing on assignment of debt borrowers

- Conclusion of agreements on compensation for tangible assets, including bank customers from borrowing and their subsequent implementation or statement on the bank's balance sheet.

2. In parallel with the work on collecting arrears legal service carried out all the necessary formalities for the production of notary inscriptions refer cases to arbitration courts, seizure of property and other assets of borrowers, blocking correspondent and current accounts. This provides the necessary impact on the borrower in order to induce him to fulfill all the necessary measures to return the loans.

In addition, materials for a variety of borrowers in 1999 were referred to law enforcement authorities for criminal cases.

3. If all the above measures failed to repay the loan due to lack of funds or assets of the borrower, the legal service on the basis of a forensic artist refer the matter to Court for an act of uncollectible and written off against the allowance account.

So, in 1999, offices and OPERA Samara Bank SB RF AK was written off against the allowance for possible loan losses loans totaling 34,109 thousand rubles, including:

- Corporate loans .............................. 17 641 thousand rubles

- Loans to the population .................................... 183 000 rubles.

Information Department of the Office of the bank lending Samara AK SB RF data based on monthly statistical reporting form number 18 and database departments and OPERA placement credit - ARM "loans "analyzes the issuance and repayment of loans, and if necessary, the employees of Lending field visits to verify performance and help employees credit services departments.

With offices in Samara 12.09.1995 AK Bank SB RF operated ARM "loans" which allows accompany each loan from the date of issue until its maturity, including the maintenance of the account of the borrower. Information on all loans granted, which has offices in the communication lines for each state change the account and the credit agreement is transmitted to the control of bank lending and thus provides a database on corporate loans. In the future, the lending bank service task is to go to the daily updating of the database on corporate loans and population. Based on a database ARM "loans" organized analytical work on the loan portfolio of the bank of Samara. All this increases the efficiency of work of Samara bank.

Major impediments in 1999. more efficient use of credit resources and increase the risk of credit, we can assume the following:

- Due to the presence of high levels of arrears (especially in the third quarter of 1999) Samara AK Bank SB RF to reduce the risk of loan default is preferably carried out loans proven highly reliable clientele under lower interest rates to ensure minimal risk of non-repayment of credits.

Consider the statistical data on the size of loans provided for 199 9 (Table number 4).

Table number 4

Size of loans in 1999.

As seen from the table, most of the borrowers received loans that do not exceed the sum of 1,000 rubles, 56%.

By the size of loans arranged in the following sequence:

1) 1000 to 56%

2) 1000 - 5000 26%

3) 5 000-10 000 8%

4) 10 000 - 50 000 6%

5) 50 000 - 100 000 3%

6) 100 000 - 500 000 1%

All of this suggests that there has been some improvement in the economic climate, reduced riskiness of lending to certain industries, companies solvency slightly, but increased. Therefore, entities can afford to request a larger amount of loan, and the bank can afford to its issuance (in more cases).

We now consider the terms of lending. Not always the period for which the client requests a credit equal to the period for which the loan issue this borrower. (As a rule, the term can only be reduced). This is done to reduce the risk of losses. The vast majority of loans issued entities for the year 1999, 92.56% are short-term. And this is justified, because such issuance least risky loans.

However, during this period in 2000 the share of long-term loans increased slightly (from 5.44% to 8%, ie 1.5 times) by reducing the short-term. This is again due to some stabilization of the economy.

Security has become a smaller lending banks, the share of 01.01.2000 amounts to 1.7%. Of enterprises accounted for the majority of loans associations and joint stock companies.

Highly desirable (in terms of reducing the likelihood of incurring losses for a large sum) to diversify its loan portfolio by industries. Here's how it makes Samara AK Bank SB RF (see table number 5).

Table number 5

The structure of credit investments by industries in 1999

Immediately becomes clear that most of bank capital injections made in the industry. Next, in descending order of densities (in 1999) are: trade, construction, and other industries, agriculture and transport.

A very important point in a security issued by Credit loan. In the case of non-repayment of principal and interest on the bank can make a claim to the guarantor (surety) may implement the mortgaged property (on consignment basis), etc. As a result, overdue loan interest m can be covered completely or partially. Thus, security is one of the most powerful operating leverage, avoiding large irrecoverable losses of bank resources. It can help you reduce the risk to zero. Analyze the forms of collateral loans to legal entities on the basis of number of tables 6.

Table number 6

Information on the forms of securing loans to legal entities in 1999

According to the instructions of the Central Bank loan in arrears on principal or%% over 180 days, it is considered unsecured.

In MBC of software here often practiced against securities SB (as third-party securities issuers are not used in the design of collateral). This deposit is the most liquid. In second place, the security of property.

For legal entities in 1998 and 1999. mainly used pledge of property (40.5% from 82.7% and 49.73% from 97.53%, respectively). Next in order of specific weights are: guarantees, other types of collateral on securities, loans without collateral (in 1999 there were more). On individuals most software provided guarantees (warranties).

Each extension of the credit agreement increases the risk of non-repayment of the loan (short-term loans converted into longer-term), because in most cases it is caused by the insolvency of the client (less desire to extend the deal because of its profitability). Consequently, the greater prolongations, the more risky loan portfolio becomes.

Analyze information table number 7.

Table number 7

Information on the extension of credit agreements with the entities in 1999

So, in 1999, 2.26% of all contracts were prolonged. In the total amount of credit agreements proportion of renewals decreased to 5.1%. This indicates an increase in the loan portfolio quality.

Now we can consider the dynamics of the specific weights of loans and arrears categories of borrowers.

For the 1998-1999 period. share of overdue debt population increased steadily and reached 8% (applies to the present). A similar pattern is observed in the MBC until March 1998 (an increase from 14% to 60%), followed by a smooth decrease (from 60% to 42%). For legal entities after the recession set stably low levels (1-2%).

The diagram (Fig. 4 number) shows the proportion of average trend of arrears in loan debt.

It becomes apparent that the percentage in question at the moment is reduced. This result is due to a large proportion of corporate lending. Interesting is that Samara AK SB Bank of the Russian Federation took into account the trend that we saw in the previous diagram, and began to increase lending to legal entities, while reducing the inter-bank lending. True, the granting of loans to the population and has not changed. This is illustrated in the diagram in figure number 5.

Issuing loans Samara AK Bank SB RF creates them provision for possible losses (which we have already mentioned in this paper). Thereby Sat like "insure" themselves.

On exactly how much he expects at this, we can see from the table below and graphic explanations to her. To do this, consider a table number 7 and Fig. Number 6. Part of the loans was overdue. If we assume that they become overdue (it's the worst case), then throughout the 1998 reserve to cover them would not be enough. Part of the losses would cover "live" resources. And to divert resources, which previously counted Sat-very risky. This, apparently, was taken into account, and in 1999 the allowance for possible loan losses are almost always covered in arrears. The risk of this kind has been significantly reduced.

Table number 7

Dynamics of provisions for possible loan losses

Assessing the dynamics of provision for possible loan losses, we note that the initial sharp rise was due to lack of accrual of this provision, then the arrears covered to create a reserve, we can conclude that the quality of the loan portfolio has improved (he became less risky). However, at the end of the first quarter of an increase in reserve. This was caused by the increase of the loan portfolio.

In 1996, employees of the credit, legal services, and security measures have been taken to reduce the arrears due to its maturity by:

- Adoption of the redemption of securities, liquid at the federal and local level (bills Samara Oblast Administration and the city of Samara, the Ministry of Finance Bills, Bills of Sberbank of Russia, government securities, bonds and other EBV-party issuers of securities with permission Rossberbanka)

- Conclusion of contracts of assignment of claims

- Transfer of the debt to creditworthy borrowers,

- Conclusion of agreements on compensation for tangible assets and their subsequent implementation or statement on the bank's balance sheet.

In the case of uncollectible arrears legal service carried out all the necessary formalities for the transfer of cases to arbitration courts, seizure of property and other assets of borrowers, which contributed to the execution of the necessary measures to return the loans.

If all the above measures do not lead to repay the loan due to lack of funds or assets of the borrower, the bad loans on the basis of a forensic artist and the act of the court recognized the impossibility of collecting funds hopeless to recover. Resolution of the Board of Samara AK Bank SB RF such loans are written off against the allowance for possible loan losses.

In order to prevent the growth of arrears in Samara bank AK SB RF and reduce the risk of loan default is preferably carried out loans proven highly reliable clientele, located on the cash service at lower interest rates to ensure minimal risk of non-disbursed funds.

1999 was without any drops and eventually marked a slight decline in this indicator.

Can not ignore the distribution of loans by risk groups. Let us consider the dynamics of the past two years. It is displayed in the following table and chart her table number 8.

Table number 8

Dynamics of specific weights of risk groups in the total amount of loans

It is obvious that the majority of borrowers belonged and belongs to the first group of risk. Here, the peak occurred in the proportion of 01.01.98 (89.2%). He is the inflection point (growth was reversed). Densities of other groups are small. Thus, according to the second risk indicator varies in the range from 1.0% to 2.2%. The third group is the oscillation from 1.2 to 2.0. Fourth-risk group according to specific gravity is in second place, the highest rate falls on 01.01.1999 and was 9%.

Table number 9 is a consequence of the table discussed above. We are talking about the dynamics of the specific weights of allowance for risk groups in the total allowance for loan losses.

Highest weight in the reserve has fourth risk group, for loans related to it, are the most risky. However, this figure is reduced. At the same time it increases the risk of the first group, which takes on the proportion in the second reserve.

Noticeably reduced figure for the fourth and risk increases with the third.

Table number 9

Dynamics of specific weights reserve risk groups in the total reserve

The second group the proportion increased over the past six months and retains its value. Album trend is positive.

You now have the correlation and regression analysis.

Most successfully and accurately it can be done in relation to indicators such as the proportion of at-risk groups in the total amount of loans, the share reserve in arrears, and the share of overdue loans in loan debt.

For this are taken for each indicator values ??on different dates from tables № № 7,8. Analysis is a necessary condition for uniformity time interval. Among all values set of indicators will be drawn up common table observations. On its basis, using complex mathematical processing can derive the equations of trends.

Table number 10

Table equations trends

Thus, we have obtained the equations trends. Now, substituting the values ??of the time interval t, we can make a prediction for each indicator. Even if we apply these equations to the known series speakers, we see almost complete agreement between the forecast and the fact. The error in this case is only 0-5% (this is a very small value for the analysis of this kind).

Looking at the trends resulting equations, we can make the following predictions:

- The proportion of arrears in loan debt in the near future will be reduced, but not significantly. Variation in will be small;

- The reserve will cover the arrears in full;

- Changes within the risk groups will continue to improve the quality of the loan portfolio. Riskiness of the latter will continue to decline. However, the pace of this decline will be wearing damped.

Knowing the average level of loans to be written off because of non-payment, we have the opportunity to make another prediction (relatively accurate and not so complex) - a grouping of the loan portfolio on risk classes for 2000. The forecast will be made on the basis of foreign currency loans granted by the bank Samara for the first three months of 2000.

With the introduction of the new chart of accounts in Samara bank AK Security Code establishes new rates allowance for possible loan losses by risk groups: Group 1-1% 2-group 20%, Group 3 50% 4 100% group.

Conclusion: the diversion of bank resources in reserve for possible loan losses will be less elastic with respect to the degree of riskiness of the loan portfolio. Thus, contributions to this reserve will be more constant value. Range of variation of the last decrease.

Conclusion.

So, summing up on the work done, we can say the following:

Any entity (whether natural or legal person) in current market conditions its own rules (within the law). Purpose of its activities (in the end) is profit. However, at every step you have to risk. Generally, the greater the risk, the more likely to make a profit.

Range of banking services is currently very high, so the range of banking risks arising every day expands. On the main factors of banking risks are divided into economic and political. The most difficult for the bank is to anticipate political risks as predict the political situation is difficult, especially in our country.

Economic risks are mainly associated with the policy of the bank and anticipate this risk group is entirely dependent on the competence of the staff of a bank.

All of the above applies to commercial banks as a whole, and to Samara bank AK SB Russia in particular. For the latter, the risk is the cost of the threat of losing some of their resources, revenue or work extra costs as a result of certain financial transactions. Anticipation of such risks is an important moment in the bank. There is a constant need to analyze the probability of losses. Here there are both conventional methodology and methodology developed by the financial-credit institution.

An important part of developing the strategy is the development of measures to prevent and reduce the identified risk.

It is in the development of the main approaches to risk assessment, determining the allowable level and its development of a strategy and is the main task of risk management.

Currently developed and became widespread measures aimed at reducing certain types of banking risks, such as currency risk, foreign risk, market risk, interest rate risk, credit risk. Just one way of banking risk management is insurance. But this method in domestic practice has not received wide acceptance.

The main type of bank risk is credit risk. It occurs when lending bank of its customers. In this situation, certain methods are used to reduce the risk. In Samara bank AK SB RF, as in many others, the following measures to reduce this risk: a provision for possible loan losses; deversifitsiruyutsya loans, the borrower is required to obtain the loan and its intended use. Lending principles must be observed in any case.

From the approach to each specific loan issued will depend on the level of riskiness of the loan portfolio. So, in Samara bank AK SB RF (based on work done) the level of riskiness of loans issued in the aggregate for the past two years, has repeatedly changed. The latest trend is to reduce the probability of loss. According to a regression analysis, it will continue on and on. Number of renewals reduced. This indicates an increase in the loan portfolio quality of true decisions on issuing loans. This is indicated by the following figures: 01.01.1999 year the amount of the loan portfolio amounted to 800,000 thousand rubles, and on 01.05.2000, 1.03 million rubles.

Increases the size of loans granted. Win MBC decreased, and the lending industry, construction, agriculture has increased considerably. Obviously, the economy revived, and by increasing investment attractiveness of certain branches of the bank AK Samara Russian Security Council has been actively involved in its lending. Courts for the most part still are issued for a short period, but the proportion of long-term loans is slowly starting to grow.

In prospect AK SB Russia will pay more attention to konsortsionalnomu lending, population, factoring, bank guarantee, overdraft loans. Planned to improve regulations on lending and reporting structure.

It is important not to take risks, so you do not "shaken" and undermine the confidence of its customers. After all, some of them may refuse service in the bank, and then lose the last opportunity to receive part of their income. Nice to know that Samara bank always adheres to the principle: "reliability - first".

REFERENCES

1. CBR Instruction number 1 of 30.04.1991 "On the order of regulation of commercial banks"

2. Application number 6 Guidelines for assessing the credit risk of the loan portfolio perensmotra "a temporary instruction CBR number 17 dated 24.08.1993 for developing an overall financial statements koimmercheskimi banks

3. Letter CBR number 130a of 20.12.1994 on the formation and use of the reserve for possible loan losses arising from commercial banks

4. Regulation 89-P dated 24.06.1999 "On calculation of credit institutions Market Risk"

5. Regulations in the creation and use of RF SB and its affiliates reserve for possible loan losses 445-r dated 30yu10.1998

6. Regulation № 285-r dated 08.12.1997 "Providing loans to legal entities of the Russian Federation Security Council and its branches"

7. Bakanov MI Analysis of the commercial risk (Accounting uchei 1996 number 10)

8. Efimova O. Banking risks and their control and prevention (Business and banks 1995 number 52)

9. Lakshina OA Risks in export credit banks (banking 1995 number 1)

10. Sevruk VT Analysis of the level of country risk (Accounting 1995 number 7)

11. Sokolinskaya NA Credit risks and loan portfolio of commercial bankm) business and banks 1997 number 2)

12. Chorin A. Is it profitable to insure bank loans (Business and banks 1999 number 16)

13. Zhukov EF "Banks and banking", Moscow, 1997

14. OI lavrushin "Banking", Moscow, 1999

15. OI lavrushin "Money. Credit. Banks ", Moscow, 1999

16. OI lavrushin Livshits I. "The banking system of Russia", Moscow, 1998

17. "Results of ARCO 9 meksyatsev 1999", "Money and Credit" № 1 / Year 2000

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