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|
|Размер файла||2,5 M|
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The table below summarizes the foreign currency risk of the Group as at 31 December 2014 as follows (Table 2.12) :
Tavle 2.12 Calculation of gross risk
The 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.
The 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):
Table 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.
The Bank sets the following limits restricting credit risks:
limits on the amount of assets subject to credit risk;
limits on short-term interbank transactions in the context of counterparty banks;
Limits on investments in debt securities of issuers in the context;
Limits on investments in a group of related counterparties;
The 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.
Interest 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.
The 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.
Department 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
Group'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.
The 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):
Table 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.
The 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):
Table 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. http://www.bis.org/publ/bcbs144.pdf 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.
The 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.
The 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.
The Group calculates liquidity ratios on a daily basis in accordance with the requirements of the CBR. These standards include:
Quick 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%).
Current 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%).
Long-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%). http://www.raiffeisen.ru/about/press/releases/?id28=32460
As 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.
An 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.
Effective 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.
For 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".
Vertical 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.
Identifying 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.
Although 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.
Among 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.
List of references
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