For what purposes does the bank require its own funds? Bank's own and borrowed funds

Banking resources are formed as a result of passive operations carried out by banks. Banking resources include own funds banks, borrowed and attracted funds.

The specificity of the bank’s activities is that its resources are overwhelmingly not formed at the expense of own funds, but at the expense of those attracted. Raised funds account for about 70 - 80% of all banking resources, the share of banks' own funds accounts for about 20 - 30%.

The ability of banks to raise funds is regulated by the Bank of Russia and depends on the size equity.

In the context of market transition, the problem of resource formation has become extremely relevant for banks.

Currently, the situation is characterized by the fact that banks, in conditions of independence and competition, devote a lot of effort and time to forming their own capital and attracting resources.

So, the resources of commercial banks represent the totality of their own and borrowed funds at their disposal and used to implement active operations.

Bank's own funds- these are various funds created by the bank to ensure its financial stability, commercial and economic activities, as well as the bank’s profit received based on the results of the current year and previous years.

The structure of the bank's own funds is heterogeneous in terms of qualitative composition and changes throughout the year depending on a number of factors and, in particular, on the quality of assets, the use of its own profits, and the bank's policy to ensure the sustainability of its capital base.

Own funds are the authorized capital and other funds of the bank created to ensure financial stability, commercial and economic activities, as well as profit received by the bank in the current year and in previous years.

Own funds include:

funds: statutory, reserve, special, economic incentives;

reserves for coverage credit risks and impairment valuable papers;

funds for industrial and social development;

current year profit and retained earnings from previous years.

The authorized capital is the guarantor of the bank's economic stability.

Own funds represent the wealth of shareholders in a commercial bank, i.e. net worth of the bank. Therefore, their movement is the subject of special report financial statements, compiled according to international rules. According to these rules, only four ways to change your own funds are allowed:

issue of new shares;

the result of the revaluation of fixed assets;

payment of dividends from the profits of the previous period;

net profit (loss) of the reporting year.

53. Passive operations of commercial banks of the Russian Federation

The bank's balance sheet liability consists of capital and current items. Capital liability items – share capital, reserve capital and retained earnings; current items - primarily bank deposits (contributions) and some others.

Passive operations are those through which banking resources are generated.

Banking resources are divided into own and attracted. Passive operations are of great importance, as a result of which the bank’s own capital is formed. The presence of this capital serves as the basis for attracting foreign funds. Sources of equity capital are: share capital (authorized capital), reserve capital (reserve and other funds formed from profits) and retained earnings.

Raised funds from commercial banks form the predominant part of banking resources and consist of deposits (deposits) and credits (loans) received by the bank. Accepting funds from depositors and other creditors is the main type of passive operations of banks.

The main source of funds raised are deposits, which make up a significant part of all liabilities of commercial banks. Deposits are divided into the following types: demand deposits, time deposits and savings deposits, and are the main source of banking resources.

Other sources of banking resources are funds that the bank attracts independently in order to ensure its liquidity. Increased demand for bank loans, increasing inflation rates, on the one hand, and the relatively slow growth of demand deposits, on the other, made it necessary for banks to attract additional sources. Among them are loans received from other banks; securities sold under repurchase agreements; loans on the Eurodollar market. They are called managed liabilities. These liabilities give banks the opportunity to make up for deposit losses and be prepared for unforeseen circumstances (for example, unexpected outflows of deposits, unexpected loan applications).

Commercial banks can obtain loans by purchasing reserve funds central banks. Such funds are deposit balances held in accounts at central reserve banks. As a result of an unexpected influx of deposits or a reduction in loans, commercial banks may create excess reserves that do not generate income, which they make available for a short time at the disposal of other banks. Reserve funds differ from other forms of bank credit in that they represent funds held in reserve bank accounts: drafts drawn on these accounts are paid immediately.

Obtaining a loan from the central reserve bank– a traditional passive operation of commercial banks associated with the provision of assistance to them by the central bank during a temporary lack of reserves (Denis Shevchuk).

Repurchase agreements emerged as new sources of resources for commercial banks. Such an agreement can be concluded between a bank and a firm (or government securities dealers). When a firm wants to invest a large amount of money for a very short period, it invests it in a repurchase agreement because it has great liquidity. The firm can return the funds the next day and earn interest on them that is only slightly lower than on certificates of deposit. These agreements have become an important channel for the placement of temporarily free funds.

Eurocurrency loans are a financial instrument for managing passive operations, arising on the basis of deposits denominated in foreign currency and kept in commercial banks of a given country. Eurocurrency banking business has acquired a global character. The leading euro currency in the structure international market loan capitals are Eurodollars. Commercial banks that hold such deposits use them for lending operations.

The own funds of a commercial bank include authorized capital, share premium, the amount of revaluation of fixed assets, funds created through deductions from profits, and retained earnings.
The authorized capital serves as the main security for the bank's obligations and is formed from ordinary and preferred shares; it can be replenished either by increasing the par value of shares (shares) or by additionally issuing them. The charter of a credit organization determines: the number, par value of shares acquired by shareholders (placed shares), and the rights granted by these shares; quantity, par value, categories (types) of shares that credit organisation has the right to place in addition to the placed shares, and the rights provided by these shares. If these provisions are not contained in the charter of a credit institution, it does not have the right to place additional shares.
Share premium can be received in two ways: firstly, as the difference between the par value of shares and the amount of contribution to the authorized capital in foreign currency, converted into rubles at the official exchange rate of the Central Bank Russian Federation on the date of payment; secondly, as the difference between the nominal and selling value of shares in rubles. The latter can be either the merit of the bank itself or the result of favorable market conditions. In some cases, share premium may be several times higher than the authorized capital of a credit institution (i.e. par value all shares sold);
The amount of revaluation of fixed assets, as a rule, does not depend on the activities of the credit institution and constitutes an insignificant part of the bank’s own funds. It is often unrealistic and is used to fictitiously increase capital, estimating the value of the revalued object much higher than the market value. Currently, an increase in the value of fixed assets as a result of revaluation can be included in its capital no more than once every three years: only if the book value of the revalued object is real and corresponds to it market value similar fixed asset item. However, recently it can be obtained as a result of a bonus issue. The bonus issue is due to the fact that revaluation reserves created to cover the difference between the market and book value of the bank's fixed assets can then be capitalized in the form of a free placement of shares between the bank's shareholders. Thus, new shares increase share capital, but do not disperse ownership or reduce the value of previously issued shares.
Funds created through deductions from profits include reserve, consumption, savings, etc. In particular, the reserve fund is formed through deductions from profits and serves to cover losses arising from the main activities of the bank. Its minimum value is determined to be at least 5% of the value authorized capital. Through deductions from profits, commercial banks can form consumption funds, accumulation funds, etc.
Retained earnings represent the portion of profits accumulated during its operation and withheld from distribution to shareholders. It includes “Funds and unused profits of previous years at the disposal of the credit institution” and “Profit for distribution (loss) for reporting period» minus expenses incurred after the end of the reporting year for the payment of dividends to shareholders, as well as profit remaining after making payments to the budget, contributions to reserve and other funds. The amount of retained earnings of the reporting year and the amount of funds created from profits must be confirmed by auditors.
Quality and structure own resources Banks largely depend on the ways (directions) of using the profits received by the bank. To ensure the stability of the bank in terms of its capital, it is important:
know in what proportions it is distributed among the bank’s funds;
determine what part of it is the current year’s profit and retained earnings from previous years;
monitor the movement of these indicators in their dynamics;
to study the influence on the formation of the bank’s own funds of the undistributed part of its profit.

Authorized capital

When registering any legal entity authorized capital is required. These are those funds and non-financial liabilities, the amount of which is specified in the constituent documents. They are needed to cover possible risks of creditors who will work with the newly created organization. The higher the amount, the more attractive the organization is to investors. We can say that this is the minimum balance on the balance sheet, which can cover the losses of creditors in the event of bankruptcy.

The law establishes that in order to register a bank, the authorized capital must be at least 180 million rubles. To obtain a general license from the Central Bank, this amount will need to be increased to 900 million rubles. If a non-bank credit organization is registered, then 90 million rubles is enough. The bank's authorized capital is initially formed from contributions from the founders and the property that they transfer into the ownership of the organization. At the same time, intangible assets and credit funds cannot be entered there.

Reserve Fund

The second part of the bank's own funds is the reserve fund. Its presence is also mandatory, and its size cannot be less than 15% of the authorized capital. The formation of the reserve fund is carried out from the profit received during the year in the amounts approved for general meeting shareholders. The purpose of this money is to cover possible losses in the event of a decrease in profits and other unforeseen circumstances. In addition, they can be spent on increasing the authorized capital. At the same time, at least 15% of the total amount must remain in the reserve fund. new amount this capital.

Other banking funds

The existence of other funds in the bank is not necessary, but is desirable for successful and safe operations. For example, an economic incentive fund allows you not to reduce profits during negative market conditions. There are funds designed to smooth out inflation and exchange rate differences currency pairs. These include funds for the revaluation of both fixed and currency funds. Their volume is constantly changing and can reach large sizes if necessary. The increase is especially important during the period economic crises to mitigate their negative consequences.

retained earnings

In progress commercial activities part of the bank's profit is paid in the form of dividends to shareholders, salaries to employees, and is spent on paying mandatory payments and taxes. The other part remains on the balance sheet for reinvestment in its activities and business development. So it is retained earnings, which also relates to the bank’s own funds. Its size is determined by the meeting of shareholders.

Although the bank's borrowed funds are the basis of the organization's profit, equity capital guarantees stable operations, and its size is the most important criterion reliability of the credit institution.

The own funds of a commercial bank include: the authorized capital, the reserve fund, funds formed from the bank’s profits (special funds, economic incentive funds), insurance reserves, depreciation of fixed assets, revaluation of foreign currency, as well as profits not distributed during the year. A commercial bank's own funds can be represented in schematic form (see Fig. 3.1).

The structure of the bank's own funds is heterogeneous in terms of qualitative composition and changes throughout the year depending on a number of factors, the main ones being the volume and direction of use of the profit received by the bank. Constant growth in the amount of equity capital, as the main part of permanent capital, is a necessary condition expanding the scope of the bank’s activities and increasing the volume of its active operations.

In accordance with the recommendations developed by the Basel Committee of the Bank for International Settlements (Switzerland), the concepts of “basic capital” (tier 1 capital) and “additional capital” (tier 2 capital) are introduced to analyze the bank’s capital structure. The following are proposed as the main indicators characterizing the level of capital adequacy of a bank:

1) Cook's ratio (the ratio of basic capital to risk-weighted assets);
2) the ratio of total capital (basic and additional) to assets, weighted taking into account the degree of risk.

In this case, the capital of the 1st and 2nd levels should be in a ratio of one to one. Bank capital includes the following elements (see Fig. 3.2).

Rice. 3.1. Structure of the bank's own funds

1. Basic capital, including:

authorized capital;

reserve fund;

exchange rate differences on own foreign currency funds.

2. Additional capital, including:

special funds;

economic stimulus funds;

funds aimed at industrial and social development;

current year retained earnings.

The sum of basic and additional capital constitutes total capital.

Authorized fund commercial bank is formed only from deposits of participants - legal and individuals and serves as security for their obligations. For example, the authorized capital of Russian banks is formed from contributions Money, material and Not tangible assets, as well as securities of third parties.

Formation of the authorized capital at the expense of bank loans not allowed. Funds raised by the bank cannot be used for contributions to the authorized capital either. When creating a commercial bank, its authorized capital can only be formed from cash, ruble, currency and tangible assets. The use of other assets is possible only with a subsequent increase in the authorized capital.

In commercial banks created with the participation of foreign capital, the authorized capital may be partially formed in foreign currency.

The minimum authorized capital of a commercial bank according to the law is 25 million Euros. From compliance minimum size authorized capital depends on receipt banking license, currency license, the opportunity to become a dealer in the GKO market.

Rice. 3.2. Bank capital structure

As the analysis shows, in a number of banks the share of tangible and intangible assets, respectively, accounts for up to 65% and 15% of the amount of the authorized capital, which allows us to conclude that its structure is irrational. As a consequence, these types of assets cannot be used as a lending resource and, moreover, reduce the solvency and liquidity of the bank. That's probably why central bank Russia is taking certain steps to regulate the process of forming the authorized capital of banks. Thus, the share of tangible and intangible assets should not exceed 20% at the time of bank registration. In the future, the share of tangible assets should be no more than 10% (in this case, the cost of buildings is not taken into account), intangible assets should not be higher than 1%.

Reserve funds, created by commercial banks are intended to compensate for possible losses from active operations. They also serve as a source of interest payments on bonds issued by the bank and dividends on preferred shares in case of lack of profit.

The reserve fund is formed through periodic deductions from profits. Its size is determined in the bank’s charter and ranges from 25 to 100% of the authorized capital. As soon as the reserve fund is fully formed, it is capitalized, that is, sent to the authorized capital. Then the accrual of the reserve fund begins again.

Bank reserves include:

a reserve fund created in the amount of at least 10% of the authorized capital. It is intended to cover losses, pay wages if the bank does not have enough funds for this purpose, etc.;

reserve fund for depreciation of securities (50%), intended to cover losses arising from a fall in the price of securities;

reserve for loan losses, used to pay off possible loan losses and charged to bank expenses;

fund economic development, formed in the amount established at the meeting of shareholders. It is intended for the development of the bank (purchase of real estate for the bank, equipment, employee incentives).

The bank's reserves include the so-called insurance reserves. These include: reserve for possible losses for loans, reserve for impairment of investments in securities. They are formed by the bank upon the occurrence of certain circumstances. For example, if the borrower does not repay the debt. The purpose of insurance reserves is to reduce the amount of possible losses in case of non-repayment of loans provided or to mitigate the negative consequences due to a decrease in the market value of securities on the bank’s balance sheet. The creation of these reserves is provided for by law and relevant instructions central bank.

Along with reserve funds, commercial banks create special funds, usually used for production and social development. The formation of these funds is carried out through deductions from profits. The procedure for creation, the amount of deductions, the purpose and direction of spending the funds of the mentioned funds are determined by the internal provisions on commercial settlement.

The third source of the bank's own funds is profit undistributed during the year. It is usually either capitalized or participates in the creation of funds and reserves of the bank in the coming year.

Retained earnings are the accumulated amount of profit that remains at the disposal of the bank. At the end of the period (quarter, year), the sum of all the bank's productive accounts is credited to the profit and loss account. Part of these funds is used to pay dividends, taxes, and form reserve funds. The remaining retained earnings is a fund of funds managed by the bank's management and the meeting of shareholders.

Own funds allow commercial bank ensure its obligations to depositors and other clients. The size of the bank's own funds determines the scale of the bank's activities and is one of the criteria for its solvency and reliability. Their growth makes it possible to expand monetary operations, the production and material base of the bank.

Sources for increasing own funds can be: retained earnings from previous years, including bank reserves; placing additional issues of securities or attracting new shareholders. Many banks practice capitalization of dividends as one of the ways to increase their own funds. In foreign practice, issuing bonds is widely used to increase equity capital. Bonds are essentially a means of raising additional capital in the form of debt. Meanwhile, a growing bank, needing long-term capital to finance its growth, may choose to have debt in its capital structure. This strategy is completely justified, however, in the CIS countries this practice has not yet found widespread use. At the same time, it should be noted that an increase in the share of bond and other loans reduces the bank’s profitability, since these funds cost the bank more than ordinary short-term resources. However, the most common and in effective ways increasing the amount of equity capital are: accumulation of profits and expansion of the issue of own shares.

Specific gravity The cost of own resources in the capital structure of domestic banks ranges on average from 8 to 15%, while at enterprises, for example, this parameter is in the range of 40 - 60%. Despite its small share, the bank's own capital performs a number of important functions.

Function for protecting financial interests. Due to the fact that a significant part of the bank’s assets, on average 40-50%, is financed by depositors, this means that the bank is obliged to protect their financial interests. The function of protecting financial interests means the possibility of paying compensation to depositors in the event of bank liquidation. Own capital makes it possible to maintain the bank's solvency by creating reserves that allow it to function and fulfill its obligations, even in the event of losses.

Unlike other types of business entities, a bank can cover losses both from capital and from current assets. Commercial Bank is considered solvent as long as its share capital remains unaffected, i.e. if the value of the assets is equal to the sum of the liabilities minus the unsecured liabilities, plus its share capital.

The problem of protecting the interests of depositors is always relevant, since there is no absolutely effective deposit insurance system, and the activities of banks are carried out in conditions of all kinds of risks: intense competition, an unstable economic situation in the country, aggressive policies pursued by some banks, etc. Other than that equal conditions the presence of solid equity capital is the primary condition for the bank's reliability.

Operational function. Start-up capital necessary for the bank to begin successful work. It is used to purchase buildings, equipment, and create financial reserves in case of unexpected losses. That is, equity capital is directed to solving, first of all, operational tasks related to the creation financial basis for banking operations.

Regulatory function. This function is associated with the need to regulate and control the implementation of banking operations by government agencies and above all National Bank, since society is interested in the successful functioning of banks and their compliance with laws and regulations.

Thus, the amount of own funds depends on financial stability credit institution, its rating, the volume of attracted deposits and other parameters of the bank.

Content.

Introduction 3

Chapter 1. Determination of the bank’s own funds (capital) 4

1.1 Concept, structure and functions of the bank’s equity capital 4

1.2 Sources of bank equity capital 5

1.3 Methods for assessing equity 7

Chapter 2. Managing your own funds 9

2.1. Internal sources of equity capital growth 9

2.2. External sources of capital gains 10

Chapter 3. Assessing the quality of management of the bank’s own funds 12

3.1.Regulatory requirements for the amount of own funds 12

3.2. Assessing the quality of equity management 18

Conclusion 26

References 27

Introduction.

With the growing number of bankruptcies and non-performing loans, there has been increased attention to the adequacy of bank capital. Regulators are requiring more bank capital to better protect depositors and ensure the viability of insurance funds. Bankers prefer lower capital ratios to boost profitability and asset growth. These conflicting goals create conflict between supervisory policies and bank performance. The Central Bank of the Russian Federation has sanctioned minimum capital standards, which are limiters for almost all banks.

Capital plays an important role in the banking risk/return dilemma. Increasing capital reduces risk by stabilizing income and increasing it, insuring against bankruptcy. But it also reduces expected returns because equity is more expensive than debt. The main issues of asset and liability management, therefore, come down to determining the optimal amount of capital.

The topic of rational management of a bank’s own capital is especially relevant today, since in our country, on the one hand, an effective deposit insurance system has not yet been created; on the other hand, an unstable economic situation, a sharp increase in competition in the banking sector, the implementation of an aggressive banking policy in the absence of an adequate information base, often a lack of professional knowledge among some bankers and other negative factors lead to bank bankruptcies and the loss of depositors’ funds. Therefore, for our country, the presence of equity capital is the first condition for the reliability of a bank.

The purpose of the course work is a detailed examination of such a concept as a bank’s equity capital and its management.

To achieve this goal course work The following tasks must be completed:

Determine the functions of equity capital;

Identify the sources of its formation;

review existing methods for assessing capital;

evaluate methods of managing equity capital;

identify quantitative characteristics of the assessment of own funds.

Chapter 1. Determination of the bank's own funds

1.1 Concept, structure and functions of own funds

The bank's own funds should be understood as various funds created by the bank to ensure its financial stability, commercial and economic activities, as well as the profit received based on the results of the current and previous years.

The data presented (Table 1) show that the bank’s own funds consist of various funds that have their own purpose and various sources of formation.

The given structure of a commercial bank's own funds shows that the main share of the bank's capital consists of: authorized capital, additional capital and bank funds - 75.9% as of January 1, 1998 and 94.9% as of July 1, 1998. At the same time, the funds formed from net profit banks, constitute respectively 51.0 and 70.0% of the total amount of funds created by banks, and in their composition the largest share is occupied by special purpose and accumulation funds - 45.3 and 59.6%. The funds from the last two funds are used by commercial banks primarily to satisfy the material and social needs of their employees, to provide charitable assistance and to the bank’s industrial development. Thus, the expenditure of part of these funds serves the current needs of the bank. Significantly less profit was allocated to increase the reserve fund, as evidenced by the rate of change in individual funds. In Table 3.1 Structure of the bank's own funds (%) in the conditions of increasing crisis phenomena in the economy and deteriorating solvency of clients, such distribution of profits did not contribute to increasing the bank's own funds and ensuring its stability. An important element of the structure of the bank's own funds are reserves for possible losses on loans and for depreciation of securities and other assets of the bank. The share of these reserves for the analyzed bank ranges from 5.9% as of January 1, 1998 to 9.4% as of July 1, 1998, reaching its highest value on April 1, 1998 - 18.3%. Such a sharp increase in the amount of reserves to cover operational risks was caused by a change in the order and expansion of assets for which the creation of reserves is required, which, on the one hand, led to an increase in the absolute value of equity, and on the other, to a qualitative change in their structure, this can be noted as a positive phenomenon, since a qualitative change in the structure of equity capital is one of the main factors in the growth or decline of the bank’s equity capital.

Table 1 Bank's own funds

1.2 Sources of bank equity capital

Authorized capital. It consists of the amount of participants’ deposits and determines the minimum amount of property and the interests of the bank’s creditors. The minimum authorized capital is 5,000,000 euros.

The authorized capital is intended to secure the obligations of the bank and among its sources the following can be distinguished:

Share contributions of the founders of a commercial bank

The initial cost of fixed assets contributed as material assets into the authorized capital (their share is regulated and should not exceed 20% of the authorized capital)

Funds from profits.

Increase in the nominal value of shares in the authorized capital.

The following funds cannot be used to form the authorized capital:

Cash and other objects of their own political, public, religious and other public associations and organizations in the charter of which

Funds raised

Funds from the federal budget and state extra-budgetary funds

Bank reserve capital. The bank's reserve capital is formed from the bank's net profit. There are two options for its formation

According to established standards, by decision of the general meeting of shareholders

After approval of the annual report, a part of the profit is allocated to the reserve capital in the amount provided for by the charter of the commercial bank.

Reserve capital funds serve the following purposes:

Covering possible losses and expenses not included in the bank's plans

To pay interest on bank bonds or dividends on preferred shares if there is insufficient bank profit for these purposes.

The amount of reserve capital is regulated by the central bank and should not exceed 25% of the bank’s authorized capital.

Extra capital.
Additional capital is formed from the following sources:

The amount of share premium received, the difference between the market value and the issue price

Property revaluation amount

The cost of gratuitously received property of a commercial bank.

Special bank funds.

Sources:

Cost of sale of disposed commercial property

Depreciation deductions

Part of net profit that is used

Banking Development Fund

Material Incentive Fund

Bank profit (bank retained profit is calculated as the difference between book profit, taxes, dividends and expenses)

Mandatory reserves for active operations formed by the bank: they are formed through the inclusion of funds for their formation in the expenses of a commercial bank.

The bank's own capital must perform the following functions:

Protective function (main). Acts as a guarantee to depositors in the event of bank liquidation.

Operational function. Consists of allocating funds from created funds for the purchase of buildings, property, transport, equipment, etc.

Regulatory function. Associated with the interest of society in the stable functioning of the banking system.

Methods for analyzing the equity capital of a commercial bank:

Determining the amount of equity capital:

Determination of gross capital

Gross capital is equal to: bank funds (including reserve operations) plus book profit