Foreign banks in the Russian financial market

Legal regulation of the activities of foreign commercial banks. Features of the Russian financial market. The role and place of foreign banks in the credit and stock market. Services of foreign banks in the financial market on the example of Raiffeisen.

Рубрика Международные отношения и мировая экономика
Вид дипломная работа
Язык английский
Дата добавления 27.10.2015
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It 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.

Existing 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."

The 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.

In 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.

1.4 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.

Nevertheless, 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.

Decline 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.

For 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.

However, 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. Кроливецкой Л. П. Банковское дело. Под ред. В. И. Колесникова, М.: Финансы и статистика, 2008г.

Estimates 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.

The 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.

Under 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.

Despite 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.

1. 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.

2. The Bank has a certain degree of mobility for the redistribution of its assets in securities and back (in other types of property).

3. The securities portfolio of commercial bank is an essential tool for managing interest rate risk.

4. 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.

The portfolio of equity securities, depending on the purpose of their acquisition are divided into:

investment portfolio;

Securities purchased in order to obtain investment income securities are purchased based on their retention of more than 180 calendar days

trading portfolio;

Securities that meet the following requirements:

a) marketable securities purchased for resale within 180 calendar days inclusive

b) listed and unlisted securities purchased under agreements providing for the possibility to sell them back within 180 calendar days inclusive

c) listed and unlisted securities purchased under loan agreements (regardless of the length of the contract and the issuer)

portfolio controlling interest Миркин Я.М. Банковские операции: Учеб. пособие. Часть III. Инвестиционные операции банков. Эмиссионно-учредительская деятельность банков / Я.М. Миркин. - М.: ИНФРА-М, 1996. 44 с.

Acquired 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"

Procedure 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).

As 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.).

Investment 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.

Firstly, 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.

Secondly, 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.

Discussions 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.

In 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.

Sufficiently 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

2.1 Position of Raiffeisen in the market of the Russian Federation

JSC "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.

The bank has 6 branches (2013: 6 branches) in the territory of the Russian Federation, as well as 205 separate units (2013: 187 separate subdivisions).

According 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.

JSC "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.

In 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.

JSC "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.

More 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.

Strong 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.

In 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.


Total thousand. Rub.










154 506 091


185 376 922



30 870 831


Funds in other banks

9 787 579





5 607 132


Trading securities

20 363 257


9 639 559



-10 723 698


Net loans

432 208 116


574 089 442



141 881 326


Net investments in investment securities held to maturity






1 127


Net investments in securities available for sale

1 508 805





8 518


Derivatives and other financial assets








Total assets

711 372 141


893 279 765



214 851 863


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.

The 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.

For the analysis and evaluation of the bank's liabilities will use table 2.2


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.


Total, ths. Rub.


Funds of other banks

65 999 725


77 521 587



11 521 862


Term borrowings from parent capital

33 172 282


61 993 150



28 820 868


Term borrowings received from other financial institutions

6 266 921


9 821 410



3 554 489


Amounts due to customers (non-credit institutions)

452 472 765


531 900 500



79 427 735


Debt securities issued

10 354 558


22 228 342



11 873 784


Other commitments

6 245 010


7 675 796



1 430 786


Derivatives and other financial liabilities

6 529 237


64 221 611



57 692 374


Total liabilities

595 587 878


792 621 374



194 321 898


Table 2.2 - Analysis of liabilities

The 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.

It must be noted that the assets and liabilities of Raiffeisenbank in relation to derivative financial instruments increased by more than 80%.

Derivative 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.

Derivatives are conventionally divided into categories in accordance with the assets that underlie them.

1. Financial derivatives - contracts based on interest rates on short-term and long-term bonds of the United States, Britain and other countries.

2. Foreign exchange derivatives - contracts for the euro / dollar, dollar / yen and other world currencies.

3. 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.

4. Derivative securities into shares. On the MICEX, including futures traded on a number of Russian market leaders: "LUKOIL", "Rostelecom", etc.

5. 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.

Only 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.

Derivatives are used for two purposes.

Firstly, 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.

Second, 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. Лаврушина О. И.. Деньги, кредит, банки: Учебник. - М.: Финансы и статистика, 2009г., стр.68

Analysis of the structure and dynamics of income "Raiffeisenbank" hold using the table 2.3.

The 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.


Total, ths. Rub.


Net interest income after provision for

loan impairment

33 706 894


35 829 431


2 122 537



Fee and commission income

14 846 748


17 075 699


2 228 951



Gains less losses from dealing in foreign currencies

3 189 091


6 358 959


3 169 868



Net gains / (losses net of gains) from foreign currency revaluation

967 503


9 057 334


8 089 831



Recovery of provision for credit related commitments

231 271


312 921


81 650



Reversal of provision for impairment of investment securities held to maturity

14 250




-13 276



Gain on sale of loans

32 499


158 734


126 235



Other operating income

336 526


303 168


-33 358



Share of results of associates

418 355


463 756


45 401



Total income

53 743 137


69 560 976


15 817 839



Table 2.3 Analysis of the structure and dynamics of income "Raiffeisenbank"

As 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.

The 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. "

In 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.).

Last 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.

In 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.

Much 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.

Remote 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.

Number 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.

Idea of development of activities will be continued in the next point of this work.

Analysis of the structure and dynamics of costs "Raiffeisenbank" hold using the table 2.4.

A 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.


Total, ths. Rub.


Commission expenses

4 263 403


5 722 664


1 459 261



Net losses from trading securities

166 656


1 381 610


1 214 954



Losses net of gains arising from other securities at fair value and changes therein are recognized in profit or loss

19 396


2 246 954


2 227 558



Unrealized losses net of gains on derivative financial instruments

728 083


11 500 591


10 772 508



Realized (losses) / gains less losses from transactions with derivative financial instruments

-235 441


343 743


579 184



The ineffectiveness of hedge accounting

282 620


246 817


-35 803



Total expenditures

5 224 717


21 442 379


16 217 662



Table 2.4 Analysis of the structure and dynamics of costs "Raiffeisenbank"

2.2 Services of foreign banks in the financial market on the example of Raiffeisen

Deposits and current accounts

In 2013, 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.

Working with premium customers (Premium Banking and Premium Direct)

In 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 and

It is 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.

For 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.

Working with small companies and micro businesses

During the 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).

Corporate and investment banking

In the 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.

The priority of maintaining stability and profitability over volume growth

Lending was, in our opinion, the only true, objective and responsible approach to business development with customers and partners in terms of increased risks.

With 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%.

To 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.

In 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%.

The 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.

Project financing

The portfolio 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%.

Transactions 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.

To 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.

Customer service medium-sized businesses

In 2013, 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 Banking

In 2013 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:

safety equipment;

preparation of a stable profitability;

providing liquidity and diversification;

information transparency; (Table 2.10)

Table 2.10 Investing available funds

the funds in the accounts of credit institutions: 0.4%

cash in bank deposits: 50.3%

State securities of the Russian Federation: 0.0%

State securities of the Russian Federation: 5.3%

bonds of Russian issuers: 27.9%

shares of Russian companies: 0.1%

mortgage-backed securities: 14.8%

securities of international financial institutions: 0.6%

Other assets: 0.7%

payables: -0.1%

Corporate bonds

In 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.

Among 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 Release

provided the use of Russian issuers (SPV) for the purpose of maximizing investor demand.

Raiffeisenbank 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.

2.3 Risks related to activity in financail market

In terms on the financial market, Raiffeisen Bank faces the following risks: market, currency, credit and liquidity risk.

Market 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.

Risk management tools Joetta Colquitt, Credit Risk Management: How to Avoid Lending Disasters and Maximize Earnings, 2007, p. 134

The Bank 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".

Cost of risk (VaR)

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.

Despite 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:

the 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;

use 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;

the 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.  Philippe Jorion, Value at Risk: The New Benchmark for Managing Financial Risk, 3rd Edition, 2010, p. 18

To 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.

For quotes share is calculated daily yield from the formula:

Where: D - day yield;

Ri- current share price;

Pi-1 - yesterday's earnings per share.

The 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)

Table 2.11 1-day VaR count

Stress Testing

The main 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.

Stress 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.  Myrvin H. Ellestad, Stress Testing: Principles and Practice, 2013, p. 22 


The effectiveness 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.

If 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.

The 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.

Currency 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).

As 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.

Unit 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.  Alfred Kenyon, Currency Risk Management, 2011, p. 30

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