Capital adequacy of credit institutions. Bank equity. Accounting for own capital, formation of authorized capital, settlements with founders and shareholders on contributions to the authorized capital
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FederalagencyByeducation
GOUHPE"Siberianstatetechnologicaluniversity"
Faculty: Chemical-technological distance learning learning
Department:AccountingaccountingAndfinance
Discipline:"Moneycreditbanks"
ControlJobontopic:
OWNCAPITALJAR-GRADESUFFICIENCY
Completed:studentgroups0605s,
T.V.Semyonov
capital adequacy bank financial
Introduction
Conclusion
3. Practical part
Introduction
Due to the growing number of bankruptcies and delinquent loans, there has been increased attention to the adequacy of bank capital. Regulators are demanding a rise in bank capital to better protect depositors and ensure the viability of insurance funds. Bankers prefer lower capital requirements to boost profitability and asset growth. These conflicting goals give rise to a conflict between supervisory policy and bank performance. The Central Bank of the Russian Federation has sanctioned minimum capital requirements, which are restrictive for almost all banks.
Capital plays an important role in the banking risk/return dilemma. The increase in capital reduces risk by stabilizing income and its growth, 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 assessing the capital adequacy of a bank is especially relevant today, since in our country, on the one hand, an effective system of deposit insurance has not yet been created; on the other hand, an unstable economic situation, a sharp increase in competition in the banking sector, 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 failures and the loss of their funds by depositors. Therefore, for our country, the presence of own capital is the first condition for the reliability of the bank.
Accounting for equity capital is an important area in the accounting system. Here the main characteristics of the bank's own sources of financing are formed.
The bank needs to analyze its own capital, as this helps to identify its main components and determine the consequences of their changes for financial stability.
aim research This work is a detailed consideration of such a concept as a bank's own capital and an assessment of its sufficiency.
To achieve this goal, you need to do the following tasks:
Determine the functions of equity;
Identify the sources of its formation;
consider existing methods of capital assessment;
evaluate methods of managing equity;
identify quantitative characteristics of the assessment of own funds.
1. The role of equity capital in ensuring the financial stability of the bank
1.1 The concept and structure of the bank's own capital
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 from the results of current and past years.
The structure of the bank's own funds is heterogeneous in terms of quality and changes throughout the year depending on a number of factors, in particular, on the quality of assets, the use of own profits, and the bank's policy to ensure the stability of its capital base.
Main groups:
Authorized capital - creates the economic basis of existence and is a prerequisite for the formation of the bank as a legal entity. Its value is regulated by legislative acts of central banks;
Reserve capital - is created from net profit and is intended to absorb unforeseen losses in the bank's activities and ensure the stability of its functioning. This fund is created by all banks on a mandatory basis in accordance with the Federal Laws "On Joint Stock Companies" and "On Banks and Banking Activity". economic incentive funds - formed as a result of external economic factors, such as inflation, exchange rate differences;
A group of funds formed as a result of the distribution of net profit remaining at the disposal of the bank, and also reflects the process of using net profit for certain purposes;
The group of funds, united under the name "additional capital", consists of:
· funds received from the sale of shares to their first holders at a price higher than the nominal value - "share premium". These funds increase the initial capital of the bank and its stable part;
· increase in the value of property formed during the revaluation of fixed assets. The presence and size of this fund are a reflection of the level of inflation in the country and, therefore, do not serve as a qualitative characteristic of its activities;
the value of property received free of charge. The volume of this fund shows the source of growth of the bank's tangible assets.
The fourth group of funds is created to cover the risks of individual banking operations and thus ensure the stability of banks by absorbing losses at the expense of accumulated reserves. These include: reserves for possible losses on loans, securities and other assets of the bank.
Thus, under own capital the bank should be understood as specially created funds and reserves designed to ensure its economic stability, absorb possible losses and are in the use of the bank during the entire period of its operation.
1.2 Purposes and functions of banking capital
The first step in the analysis of any financial statements of banks is to determine what goals the bank pursues or should pursue. The activities of the bank should be aimed at achieving specific goals. An unbiased assessment of the performance of any bank should begin with determining whether it was able to achieve the goals that its managers and shareholders set for it.
Bank equity is a value determined by calculation. It includes those articles of own funds that, in economic sense, can perform the functions of the bank's capital. The main elements of own funds are included in the capital of the bank if they meet the following principles:
Stability;
Subordination, in relation to the rights of creditors;
No fixed income accruals.
The bank's equity performs the following functions:
1) Protective;
2) Operational;
3) Regulatory.
essence protective functions lies in the fact that the capital serves to protect the funds of depositors and creditors, since losses from credit, investment, foreign exchange operations of the bank, abuses, errors are written off at the expense of reserves that are part of the capital. Therefore, if a bank has sufficient reserve capital, it can be considered reliable and solvent for a long time even if losses occur in its core business. That is, the bank's capital plays the role of a kind of buffer that absorbs losses from the realization of various banking risks.
This function includes guaranteeing deposits, protecting the interests of depositors in the event of liquidation or bankruptcy of the bank, and also ensures the functioning of the bank in the event of losses from current activities, which are usually covered by current profits. The protective function of bank capital is the main one throughout the entire period of the bank's operation.
It should be noted that the protective function of equity capital changes under the influence of several factors:
The economic and financial situation of the country and the stability of the monetary sphere;
Development of deposit and loan insurance in the country;
Bank strategies and tactics.
Function ensure operational activities is important during the creation and at the initial stages of the functioning of the bank. During such periods, the bank's own capital finances the acquisition or lease of fixed assets, computer and office equipment, organizational measures to create security systems in the bank, the introduction of banking technologies and communication systems.
In the further activities of the bank, the function of ensuring operational activities becomes secondary, in contrast to enterprises in the sphere of material production, where it remains the main one throughout the entire period of activity.
Content governing functions capital lies in the fact that through fixing the value of equity or its individual components, supervisory authorities influence banking activities and limit the level of banking risks. Thus, to determine the mandatory economic standards for regulating the activities of banks established by the NBU, indicators of the bank's own capital are used in ten out of thirteen mandatory standards (except for liquidity standards). That is, the value of the bank's capital significantly affects the volume and direction of banking operations. The equity capital of a commercial bank can also be used to participate in the ownership of joint-stock and general enterprises.
Own capital is an important indicator that characterizes the capabilities and quality of banks. The capital adequacy ratio is one of the key indicators in assessing the financial position of a bank. The size of the bank's capital determines the possibility of the bank obtaining licenses that allow expanding the range of banking operations performed, opening branches in the country and abroad. The indicator of the amount of capital is used by supervisory authorities as a determining factor in assessing the activities of banks and their reliability. Mandatory economic standards governing the activities of banks tie the size of the bank's credit investments, its investments in securities and participation in other enterprises, the amount of funds raised by the bank in the market to the indicator of the bank's own funds.
2. Assessment of the bank's own capital adequacy
2.1 The concept and necessity of assessing the adequacy of the bank's own capital
The problem of determining the capital adequacy of a bank has long been the subject of scientific research and disputes between banks and regulators. Banks prefer to get by with a minimum of capital in order to raise profitability and asset growth; bank controllers require more capital to reduce the risk of bankruptcy. At the same time, the opinion is expressed that bankruptcies are caused by bad management, that well-managed banks can exist even with low capital rates.
The term "capital adequacy" reflects the overall assessment of the bank's reliability, the degree of its exposure to risk. The interpretation of capital as a buffer on the path of incurring losses leads to an inverse relationship between the amount of capital and the bank's exposure to risk. This implies the basic principle of sufficiency: the amount of equity capital must correspond to the amount of assets, taking into account the degree of their risk. At the same time, commercial banks always take into account that excessive "capitalization" of the bank, the issuance of an excessive number of shares compared to the optimal need for own funds is also not good and negatively affects the results of the bank's activities. Mobilization of funds by issuing shares is an expensive and often undesirable method of financing for a bank compared to attracting third-party funds. Therefore, bank managers, on the one hand, and bank supervisors, on the other, seek to find the optimal ratio between the amount of capital and other parameters of a commercial bank.
Excessive "capitalization" of the bank, the issuance of an excessive number of shares compared to the optimal need for equity capital, is not a blessing. With an underestimated share of capital, a disproportionate liability of the bank to its depositors arises. The bank's liability is limited to its capital, and depositors and other creditors risk a much larger amount of funds entrusted to the bank. In addition, there are a number of factors that determine the requirements for increasing bank capital:
The market value of bank assets is more volatile than that of industrial enterprises. It depends on changes in interest rates, the financial situation of its borrowers, the situation on the stock and currency markets;
The Bank relies more on intermittent sources of short-term resources, many of which can be withdrawn on demand. Therefore, any event in political or economic life can provoke a massive outflow of bank resources.
Determining a sufficient amount of capital and maintaining it within the established limits is one of the main ways of managing capital, both on the part of the regulatory authorities and the bank itself. Therefore, a constant analysis of the structure and value of capital is an indispensable condition for modern bank management.
Analysis of own funds (capital) adequacy is carried out in order to identify the degree of stability of the capital base of the bank and the adequacy of capital to cover losses from the risks taken by banks.
It is known that the volume, composition, quality and nature of active operations affect the value of the bank's own capital adequacy. The orientation of the bank to predominantly carry out operations associated with high risk requires a relatively large amount of own funds and, conversely, the predominance of loans with minimal risk in the bank's loan portfolio allows for a relative decrease in equity. The amount of equity required by a bank also depends on the specifics of its clients. Thus, the predominance of large credit-intensive enterprises among the bank's clients requires a large amount of its own funds, with the same volume of active operations compared to a bank that focuses on serving a large number of small borrowers, since in the first case the bank will have high risks per borrower.
2.2 Capital adequacy ratios of the bank and regulatory requirements for its size
One of the most widely used metrics is attitude capital To sum deposits. This indicator was widely used in the USA by the Comptroller of the Currency Service at the beginning of the 20th century. It was established that the amount of deposits in the bank by 10% should be covered by capital. The bank is able to pay with its own funds a tenth of the deposits at the beginning of their mass outflow. This indicator is quite simple, and it is easy to compare banks on its basis, which keeps it popular with banking financial services to this day.
In the 40s, this indicator was replaced by another indicator - attitude capital To general assets. It was believed that it was the composition and quality of bank assets that were the main cause of bankruptcies; the expediency of the indicator followed from the reflection in the Western bank balance of losses in the form of a decrease in the total value of assets. This coefficient indicated what losses the bank could suffer without harming depositors, and was approximately 8%. The improvement of the indicator led to the introduction of a ratio calculated as the ratio of capital to risky assets, which offers an objective assessment of the size of the reduction in the volume of assets. This ratio determines the ratio of total capital to assets that contain the possibility of loss without attempting to determine losses from any risky asset or category of risky assets. Coefficients constructed on the basis of the excess value were also proposed. capital (total capital minus the cost of ordinary shares), since it primarily goes to cover losses, and other indicators.
The issue of methodology for assessing bank capital became the subject of discussion in international financial organizations (Bank for International Settlements) in the second half of the 80s. The goal was to develop common capital adequacy criteria acceptable to banks, regardless of their country of origin. In July 1988, under the auspices of the Basel Committee on Banking Regulation and Supervision, an Agreement was concluded on the international unification of capital calculation and capital standards, which introduced into practice standard sufficiency, commonly referred to as Cook's coefficient. The agreement entered into force in 1993 and is currently used as a benchmark by the central banks of many states. A feature of the standard is that it applies only to international banks, i.e. having branches, subsidiaries or joint banks abroad.
The Cook's ratio establishes the minimum ratio between a bank's capital and its balance sheet and off-balance sheet assets, weighted by risk in accordance with norms that may vary from country to country, but a certain logic must be followed. The ratio is set at 8% (the core or fixed capital must account for at least half of this 8%). Equity capital includes two elements: pivotal And additional capital. To assess their sufficiency, the weighting of assets and off-balance sheet liabilities (rather than using the total amount of the balance sheet) was chosen. This approach ensures that off-balance sheet activities are included and encourages investment in low-risk assets.
In essence, the Basel Accord standardized the assessment of credit and insurance risks. Interest rate risk and market risk were not manageable under this methodology until 1977.
In 1977, the Basel Committee developed recommendations for calculating the capital adequacy ratio, taking into account market risks.
To determine credit risk, all assets are weighted by a specified risk factor. The greatest difficulties are caused by the assessment of transactions taken into account off the balance sheet. This is due to their diversity in each country and sometimes insignificant volume. Each country has some freedom in interpreting the risks and applying the recommendations of the Basel Committee. However, these recommendations require the conversion of all off-balance sheet liabilities into equivalent credit risk using a specific conversion factor. The results of the venture are weighed, as in the case of balance sheet operations, this does not allow many banks to use the practice of taking risky assets off the balance sheet by introducing new financial instruments. Thus, a uniform assessment of the total risk for all assets of the bank is carried out.
The Basel system of valuation of capital has become widespread. Thus, within the EU, there is a single solvency ratio similar to the Cook's ratio and applicable to the entire system of credit institutions, and not just to large international banks.
In accordance with the Basel Accord, the bank's capital is divided into Tier 1 and Tier 2 capital.
Tier 1 (core) capital comprises ordinary shares, non-dividend retained earnings, perpetual preference shares, and non-controlling interest in consolidated subsidiaries less intangible (intangible) capital.
Banks are allowed to show on the balance sheet the intangible fixed capital that arises from the purchase of a bank or non-banking firm for cash. New international standards imply that when determining the minimum required amount of the bank's core capital, its intangible capital must be deducted from the total capital.
Tier 2 capital (additional) includes reserves for general losses on active operations, for covering losses on loans, cumulative, term preferred shares, subordinated debt.
The new international capital standards allow subordinated debt with an original average maturity of five years to be considered a source of required additional capital. However, no form of additional capital may exceed 50% of the capital stock. After 1992, allowable loan and rental loss allowances are also considered part of additional capital, provided they are general (not special) reserves and do not exceed 1.25% of banks' risk-weighted assets.
Tier 2 capital components are independently regulated by the Basel signatories, while Tier 2 capital cannot exceed 100% of Tier 1 capital.
Tier 2 capital loan default provisions are capped for the period from 1992 to 1.25% of risk-weighted assets, and the total amount of secondary debt and medium-term preferred shares that are subject to amortization at maturity cannot exceed 50% Tier 1 capital. Other components of Tier 2 capital have no restrictions, and all amounts that go beyond the established standards are allowed, but are not counted as capital.
The new agreed capital requirements, which were to come into effect by December 31, 1992, were as follows:
1) the ratio of Tier 1 capital to risk-weighted assets and off-balance sheet operations must be at least 4%;
2) the ratio of total capital (i.e. the sum of Tier 1 and Tier 2 capital) to total risk-weighted assets and off-balance sheet operations must be at least 8%.
The agreement also provided for a transitional period (1990-1992), during which these figures were to be 3.65% and 7.25%, respectively.
The approach proposed by the Basel Committee to determine capital adequacy had the following main advantages:
Characterized the "real" capital of the bank;
He contributed to the revision of the strategy of banks and the rejection of excessive growth of loans with a minimum capital, and preference was given not to the volume of the loan portfolio, but to its quality;
Contributed to an increase in the share of non-risk activities of the bank;
Encouraged the government to reduce the regulation of banking activities, as there are more elements of self-regulation in it;
Made it possible to take into account the risks of off-balance sheet liabilities;
Allowed to compare the banking systems of different countries.
At the same time, along with the advantages of the proposed method for calculating the capital adequacy of a bank, it had a number of significant drawbacks, in particular:
Lack of sufficient clarity in determining the elements of capital by levels, which made it possible to soften capital requirements on the part of individual banks;
Insufficiently detailed differentiation of assets according to the degree of risk;
Understatement of reserve requirements for certain types of operations;
Orientation to the assessment of capital adequacy only by credit risk;
The absence of dependence of the volume of capital on market and interest risks, which are very important in the bank's activities.
In order to calculate the bank's capital adequacy, taking into account interest rate and market risks, in July 1997 amendments to the Capital Requirements Agreement were adopted. In accordance with these amendments, within the time frame set by banking supervisors, banks were required to determine market risks and capital adequacy ratio, adjusting it for market risks in addition to credit risks. Market risk is the risk of losses on balance sheet and off-balance sheet positions caused by changes in the level of market prices.
This requirement extended the axis to the following types of risks:
Risks associated with interest rate-based debt instruments and equity instruments in the trading portfolio;
Currency and commodity risk (purchase and sale of precious metals) for all bank operations.
Thus, developed by 1988, a single agreement "on the capital standard, followed by an addition in 1997 (Basel 1), provided for the assessment of capital based on a comparison of the amount of capital and risk-weighted assets.
This agreement was aimed at strengthening the stability of national banking systems, creating common "rules of the game" for banks and influenced the activities of credit institutions:
Ensured the growth of the share of capital (by 1.2 times on average over eight years from 1988 to 1996);
The increase in capital was achieved by increasing it during periods of economic growth and reducing the value of risky assets (periods of recession);
The introduction of the capital standard did not encourage banks to make high-risk investments;
Banks began to use various types of capital arbitrage to avoid the restrictions imposed by the agreement.
Modern trends in banking regulation (increased flexibility, accuracy, deformalization of regulation) necessitated changes in capital assessment standards, which was done in 2000, when the Basel Committee approved a new sufficiency assessment system (Basel P). This system was developed in compliance with the new standards in the field of banking. It included various approaches to assessing capital (standardized, external, internal ratings - IRB) and focused the attention of regulators on the need to more fully and accurately take into account the level of risks of credit institutions.
The new assessment system (Basel II), taking into account the nature and quality of its development in methodological and supervisory terms, should become a guideline in reforming the current practice of assessing capital adequacy. This is because:
The increasing complexity and complexity of the banking business in modern conditions require the supervisory authorities to adjust the sufficiency assessment system in the direction of increasing its adaptability to the specific conditions of the functioning of a credit institution;
The main direction of movement in these conditions is to expand the number of models used to assess capital;
The introduction of new models depends on their theoretical and practical validity.
The Russian practice of the credit system is guided by international capital formation standards, but commercial banks are deprived of the right to choose a capital adequacy methodology. Instruction of the Central Bank No. 110-I “On Mandatory Ratios of Banks” dated January 16, 2004 (as amended on March 27, 2009) established the minimum amount and adequacy ratios for a bank's capital.
In accordance with Chapter 2 of this instruction, the bank's own funds (capital) adequacy ratio (H1) regulates (limits) the risk of bank insolvency and determines the requirements for the minimum amount of the bank's own funds (capital) required to cover credit and market risks. The bank's own funds (capital) adequacy ratio is defined as the ratio of the bank's own funds (capital) to the amount of its assets, weighted by risk level. The calculation of the bank's own funds (capital) adequacy ratio includes:
· the amount of credit risk on assets reflected in balance sheet accounts (assets net of created reserves for possible losses and reserves for possible losses on loans, loan and equivalent debt, weighted by risk level);
· the amount of credit risk on contingent liabilities of a credit nature;
· the amount of credit risk on futures transactions;
the amount of market risk.
A bank's own funds (capital) adequacy ratio (H1) is calculated using the following formula:
K - the bank's own funds (capital), determined in accordance with the Regulation of the Bank of Russia of February 10, 2003 N 215-P "On the methodology for determining the own funds (capital) of credit institutions", registered by the Ministry of Justice of the Russian Federation on March 17, 2003 N 4269;
Risk coefficient of the i-th asset;
I-th asset of the bank;
The value of the reserve for possible losses or the reserve for possible losses on loans, on loan and equivalent debt of the i-th asset;
KRV - the amount of credit risk on contingent liabilities of a credit nature;
KRS - the amount of credit risk on futures transactions;
РР - the amount of market risk, in accordance with the requirements of the Bank of Russia regulation on the procedure for calculating the amount of market risks by credit institutions;
Code 8957 - the amount of claims against persons related to the bank (minus the formed reserve for possible losses), weighted by the level of risk, multiplied by a factor of 1.3;
Code 8992 - reserve for futures transactions.
The value of the bank's own capital is calculated as the sum of the main and additional capital. Share capital is defined as the amount of authorized capital in the form of ordinary shares; non-cumulative preferred shares and preferred shares, the amount of dividends on which is not established by the charter of the bank (for joint-stock banks); the entire amount of the authorized capital (for banks established in the form of LLC), share premium; reserve fund, part of the accumulation fund and other funds created from the profits of previous years and the current year and confirmed by auditors. Funds that are a source of loans to bank employees, special-purpose funds and other funds, the use of which leads to a decrease in the bank's property directly or indirectly, are not included in the calculation of equity.
The profit of the current year, in part, confirmed by the conclusion of the audit organization based on the results of the quarter, is also included in the calculation of fixed capital. The capital stock is reduced by:
Intangible assets at residual value (minus accrued depreciation) and investments in the creation (manufacturing) and acquisition of intangible assets;
Own shares acquired (repurchased) from shareholders;
Shares of bank participants transferred to the credit organization;
Uncovered losses of previous years and losses of the current year;
Investments of a credit institution in shares (stakes) of participation of subsidiaries and dependent legal entities acquired for investment, if the block of shares exceeds 20% of the authorized capital of the issuing organization;
Investments in the authorized capital of resident credit institutions;
The book value of shares alienated with the simultaneous assumption of obligations for their repurchase;
The balance sheet value of shares (participation interests) alienated with the simultaneous provision to the counterparty of the right to defer payment, reduced by the received payment amount;
Authorized capital and other sources of equity, for the formation of which improper assets were used. At the same time, improper assets are understood as monetary funds or other property, the owner of which, directly or indirectly (through third parties), was a credit institution, or property provided by other persons, if the credit institution directly or indirectly assumed the danger (risk) of incurring losses, arising in connection with the provision of said property.
The amount received after adjustments will be the main capital or Tier I capital.
Additional capital (Tier II capital) includes the following main elements:
Increase in the value of property due to revaluation;
Part of the funds formed in the current year and not confirmed by auditors;
Profit of the current year, not confirmed by auditors;
Subordinated loan (deposit) at residual value. At the same time, its value, taken into account in the calculation of additional capital, should not exceed 50% of the fixed capital.
The residual value of a subordinated loan is calculated using the following formula:
O \u003d C: 20 x D,
where O is the residual value of the subordinated loan;
C - the number of full quarters remaining until the repayment of the subordinated loan (C< 20);
D - the initial amount of the subordinated loan;
Part of the authorized capital formed by capitalization of the increase in the value of property during revaluation;
Part of preferred (including cumulative) shares;
Profit of previous years, not confirmed by auditors.
The amount of Tier II capital is reduced by sources of additional capital, for the formation of which improper assets were used.
The sums of the basic and additional capital calculated in this way are summed up. In this case, the absolute value of the additional capital is taken into account in the amount not exceeding the fixed capital. If the value of the fixed capital is zero or negative, then the sources of additional capital are not included in the calculation of capital.
The total amount of equity in order to calculate the adequacy ratio is adjusted for a number of indicators:
Under-created reserve for possible losses on loans and other assets;
Under-created reserve for operations with residents of offshore zones;
Overdue accounts receivable with a duration of more than 30 days;
Subordinated loans granted to resident credit institutions;
Excess of the amount of investments in the construction, creation and acquisition of fixed assets, the cost of fixed assets and inventories over the sources of fixed and additional capital;
Exceeding the total amount of loans, bank guarantees and guarantees provided to its participants (shareholders) and insiders over its maximum amount established by the relevant federal laws and regulations of the Bank of Russia;
The excess of the actual value due to withdrawn bank participants in the form of a limited liability company over the value at which the share was sold to another participant in the company, if the share was transferred to the bank and then acquired by one of the bank participants or third parties.
When calculating the amount of risk-weighted assets, they are divided into five groups according to the degree of risk of investments and the possible loss of part of the value. Assets are weighed by multiplying the balances on the respective balance sheet account(s) or their part, reduced by the amount of the created reserve for this type of asset, by the risk ratio divided by 100%. Assets for which market risk is calculated are not weighted by the risk factor.
The resulting sum of risk-weighted assets. increases by the amount of credit risk on contingent liabilities of a credit nature, the amount of credit risk on futures transactions and the amount of market risk.
To calculate the amount of credit risk on contingent liabilities of a credit nature, the nominal amount of liabilities for each financial instrument is converted to a credit equivalent by multiplying by the appropriate coefficients. At the same time, financial instruments are grouped according to the degree of risk: with high risk - 1; medium risk - 0.5; low risk - 0.2; without risk - O. Risky assets increase by the amount received.
To calculate the credit risk for futures transactions (except for transactions concluded on the trading floors of countries included in the group of developed countries for which credit risk is not calculated), the current credit and potential risks are determined.
Current credit risk represents the sum of the replacement cost for transactions included in bilateral offset agreements (netting and similar agreements) and the replacement cost for transactions not included in offset agreements.
Potential credit risk is defined as the sum of risk on transactions with legally formalized bilateral offset agreements and on transactions not included in such agreements.
The total amount of risk on futures transactions (CRS) is determined as the difference between the amount of current and potential risk and the amount of collateral received by the bank from the counterparty. The value found is multiplied by the risk factor depending on the counterparty and amounts to the amount of credit risk on futures transactions taken into account when calculating capital adequacy.
The amount of market risk is calculated in accordance with Bank of Russia Regulation No. 89-P dated September 24, 1999, as amended on April 18, 2002, “On the Procedure for Calculating Market Risk by Credit Institutions”:
PP \u003d 12.5 x (PR + FR + VR),
where RR - market risk;
PR - interest rate risk;
FR - stock risk;
VR - currency risk.
The minimum allowable numerical value of the norm H 1 is set depending on the amount of equity capital:
For banks with an equity capital of at least the amount equivalent to 5 million euros - 10%;
For banks with equity capital less than the equivalent of 5 million euros - 11%;
For banks issuing mortgage bonds -14%.
The methodology for calculating the capital adequacy of a bank developed by the Bank of Russia is as close as possible to the recommendations of the Basel Committee on the Supervision of Commercial Banks. At the same time, the Basel Committee in 2000 proposed new approaches to the problem of assessing the adequacy of capital and improving control over banks' compliance with prudential norms.
Three reasons should be mentioned that to the greatest extent led to changes in the capital calculation methodology:
1) on the basis of the current approach, it was impossible to accurately determine the real quality of assets and the magnitude of risks, since the risk ratios used in practice gave only an approximate assessment of them;
2) the possibility of manipulating assets and changing the structure of the portfolio made it possible to influence the value of the capital adequacy ratio, which led to a discrepancy between the real value of risks taken by banks and the estimated estimate based on the Basel methodology;
3) the existing Agreement did not stimulate the use by banks of protective technologies that reduce risk.
When calculating capital ratios, the positive role of collateral and guarantees for credit operations was poorly taken into account.
In revising the principles of the Agreement, the interests of large banking capital also played a certain role. Large international banks sought to draw a hard line between the banks of the most prosperous countries and the banks of other countries.
An important point of the new scheme for monitoring compliance with the principles of the Agreement is that it is based on a broader basis - on three parallel pillars, or operational components:
1) minimum standards of own capital;
2) intensive control of supervisory authorities over the implementation of these standards;
3) observance of market discipline.
The main changes incorporated in the new scheme are related to:
1) with a change in the risk coefficients for the bank's assets;
2) with the expansion of the range of risks taken into account. There are three categories of risks: credit loans, market and operational risk.
The calculation of the capital adequacy ratio includes the following parameters:
6% 1.6% 0.4% (estimate)
Thus, when assessing capital adequacy, the principle of calculating the ratio of capital to a certain measure of risk and the approach to calculating the capital itself are preserved.
At the same time, great importance is attached to strengthening the role of supervisory authorities and the disciplinary influence of the market mechanism on the process of forming the capital base of banks.
Thus, the new approach to assessing the capital adequacy of a bank, by complicating the calculation of the standard, is designed to ensure a more thorough identification of financial risks and their management. At the same time, the center of gravity shifts to the internal control systems of the bank, which should lead to a weakening of the dependence of the most advanced banks on the scale of standard ratings, which cannot reflect the full variety of practical situations in the activities of banks.
Conclusion
In my control work, I considered the question of what role equity plays in ensuring the financial stability of the bank, the need to assess the adequacy of the bank's own capital, and its indicators.
The equity capital of a commercial bank is the basis of its activities and is an important source of financial resources. It is designed to maintain customer confidence in the bank and convince creditors of its financial stability. The capital must be large enough to ensure the confidence of borrowers that the bank is able to meet their needs for loans even under unfavorable conditions for the economic development of the national economy. In turn, the confidence of depositors and creditors in banks strengthens the stability and reliability of the entire banking system of the country. These reasons led to increased attention of state and international bodies to the size and structure of the bank's own capital, and the bank's capital adequacy ratio was considered one of the most important in assessing the bank's reliability.
The bank's own funds should be understood as various funds created to ensure its financial stability, and the profit received from the results of previous years.
Bank's own capital - specially created funds and reserves intended to cover losses and used by the bank during the entire period of its operation.
The larger the bank's capital, the more assets may be unpaid before the bank becomes insolvent and the less the bank's risk.
The capital adequacy ratio is one of the key indicators in assessing the financial position of a bank. The size of the bank's capital determines the possibility of the bank obtaining licenses that allow expanding the range of banking operations performed, opening branches in the country and abroad. The indicator of the amount of capital is used by supervisory authorities as a determining factor in assessing the activities of banks and their reliability. Mandatory economic standards governing the activities of banks tie the size of the bank's credit investments, its investments in securities and participation in other enterprises, the amount of funds raised by the bank in the market to the indicator of the bank's own funds.
The problem of bank capital adequacy is ambiguous. Despite the objective trends in the world economy, the size of a bank is not a sufficient criterion for its effectiveness. A bank's large capital does not necessarily give it an advantage. To increase bank capital, it is necessary to raise funds or concentrate, centralize bank capital, and unite small banks into large ones.
Thus, we can conclude that equity capital is the basis of the bank's commercial activities. It ensures its independence and guarantees its financial stability, being a source of smoothing the negative consequences of various risks that the bank bears.
A large equity capital ensures a stable reputation of the bank, the confidence of depositors in it.
Bibliography
1. Federal Law of December 2, 1990 No. 395-1 (as amended on June 3, 2009) “On banks and banking activities”.
2. Instruction of the Central Bank No. 110-I "On the mandatory ratios of banks" dated 16.10. 2004 (as amended on March 27, 2009).
3. Banking: Textbook / Ed. G.N. Beloglazova, L.P. Krolivetskaya. 5th ed., revised. and additional M.: Finance and statistics, 2003. 592 p.
4. Banking: Textbook / I.O. Lavrushin, I.D. Momonova, N.I. Valentsev. 3rd ed., revised. and additional M.: KNORUS, 2005.768 p.
5. Banking: Textbook for students of universities teaching in the specialty (080105) "Finance and Credit" / A.M. Tavasieva, V.A. Moskvin, N.D. Eriashvili. 2nd ed., revised. and additional M.: UNITI-DANA, 2007. 287 p.
6. Beloglazova G.N., Krolivetskaya L.P. Banking. Organization of a commercial bank: Textbook. M.: Higher education, 2009. 422 p.
7. Banking: Textbook / Ed. Dr. Econ. Sciences prof. G.G. Korobova. M.: Economist, 2006.766 p.
8. Tavasiev A.M. Banking: management of a credit institution: Textbook / A.M. Tavasiev. 2nd ed., revised. and additional Moscow: Dashkov i K, 2009. 640 p.
3. Practical part
Table 1
Accounting balance f.1 of AVANTA LLC as of 01.01.2008, thousand rubles
|
Codelines |
OnStartreportingof the year |
Onendreportingperiod |
||
|
NON-CURRENTASSETS |
||||
|
Intangible assets |
||||
|
fixed assets |
||||
|
Construction in progress |
||||
|
Profitable investments in material values |
||||
|
Long-term financial investments |
||||
|
Deferred tax assets |
||||
|
Other noncurrent assets |
||||
|
TOTALBysectionI |
||||
II. CURRENT ASSETS |
||||
|
including: |
||||
|
raw materials, materials and other similar values |
||||
|
animals for growing and fattening |
||||
|
work in progress costs |
||||
|
finished goods and goods for resale |
||||
|
goods shipped |
||||
|
Future expenses |
||||
|
other inventories and expenses |
||||
|
Value added tax on acquired valuables |
||||
|
Accounts receivable (for which payments are expected more than 12 months after the reporting date) |
||||
|
Accounts receivable (payments for which are expected within 12 months after the reporting date) |
||||
|
including buyers and customers |
||||
|
Short-term financial investments |
||||
|
Cash |
||||
|
Other current assets |
||||
|
TOTAL for section II |
||||
|
LIABILITY |
||||
III. CAPITAL AND RESERVESAuthorized capital |
||||
|
Own shares repurchased from shareholders |
||||
|
Extra capital |
||||
|
Reserve capital |
||||
|
including: |
||||
|
reserves formed in accordance with the law |
||||
|
reserves formed in accordance with constituent documents |
||||
|
Retained earnings (uncovered loss) |
||||
|
TOTAL for Section III |
||||
IV. LONG-TERM LIABILITIESLoans and credits |
||||
|
Deferred tax liabilities |
||||
|
Other long-term liabilities |
||||
|
TOTAL for Section IV |
||||
|
V. SHORT-TERM LIABILITIES |
||||
|
Loans, credits |
||||
|
Accounts payable |
||||
|
including: |
||||
|
suppliers and contractors |
||||
|
debt to the staff of the organization |
||||
|
debt to state off-budget funds |
||||
|
debt on taxes and fees |
||||
|
other creditors |
||||
|
Debt to the participants (founders) for the payment of income |
||||
|
revenue of the future periods |
||||
|
Reserves for future expenses |
||||
|
Other current liabilities |
||||
|
TOTAL for section V |
||||
REFERENCE on the presence of valuables recorded on off-balance accountsLeased fixed assets |
||||
|
including leasing |
||||
|
Inventory assets accepted for safekeeping |
||||
|
Goods accepted for commission |
||||
|
Written-off debt of insolvent debtors |
||||
|
Securing obligations and payments received |
||||
|
Securing obligations and payments issued |
||||
|
Depreciation of the housing stock |
||||
|
Depreciation of objects of external improvement and other similar objects |
||||
|
Intangible assets received in favor. |
table 2
Profit and loss statement (form 2) of Sibkar LLC as of 01.01.2004, thousand rubles
|
Name indicator |
Code lines |
During the reporting period |
For the same period of the previous year |
|
IncomeAndexpensesByordinarytypesactivitiesRevenue (net) from the sale of goods, products, works, services (net of VAT) |
||||
|
Cost of sold goods, products, works, services |
||||
|
Gross profit |
||||
|
Selling expenses |
||||
|
Management expenses |
||||
|
Profit (loss) from sales |
||||
|
II . Other income And expenses |
||||
|
Interest receivable |
||||
|
Percentage to be paid |
|
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The term "capital adequacy" defines the reliability of the bank. Because of the protection that equity offers against emergency spending, maintaining it at a sufficient level is often the main way to ensure public confidence in commercial banks and convince creditors of its financial stability. It is no coincidence that the issue of capital adequacy is one of the most pressing issues in banking practice and is one of the most urgent for commercial banks and for the Bank of Russia.
Any commercial bank that focuses on a certain range of customers and the volume of services provided to them must have equity capital of such a size as to be able to satisfy all the justified needs of its customers for borrowed funds and timely fulfill all the obligations assumed without violating the established regulations and without exposing yourself to increased risk.
The method of calculating the bank capital adequacy ratio, adopted in Russian banking practice to control the maintenance of commercial banks' own capital sufficient to compensate for losses in critical situations, largely complies with international standards. In accordance with Instruction No. 110-I of the Bank of Russia “On Mandatory Ratios of Banks”, the methodology for determining the sufficient amount of a bank's equity capital is based on the principle of risk-weighting assets. This means that when calculating the capital adequacy ratio of a bank, its assets are grouped depending on the degree of investment risk and the possible loss of part of their value. Assets are weighted by risk by multiplying the balance of funds on the corresponding balance sheet account or their part by the risk factor.
The assets of Russian banks are divided into five groups with weighting coefficients of 0-2, 10, 20, 50 and 100%. Zero risk is assigned to funds on correspondent and deposit accounts with the Bank of Russia, required reserves transferred to the Bank of Russia, funds of banks deposited for settlements by checks, funds on savings accounts when issuing shares, investments in bonds of the Bank of Russia that are not burdened with obligations, and other means. On the contrary, the Bank of Russia has set the highest degree of risk (50-100%) for funds on accounts in banks - residents of the Russian Federation and in banks - non-residents of countries that are not included in the group of developed countries, for securities for resale and other assets.
The capital adequacy ratio of a commercial bank is defined as the ratio of the bank's own capital to the total volume of risk-weighted assets, and its minimum acceptable value is set depending on the size of the bank's own capital. The minimum allowable value of the bank's own funds (capital) adequacy ratio, as well as the minimum amount of capital of a bank being created, changed with changes in the operating conditions of banks. So, until 1996, the ratio was 4%, then it was raised to 5% and then, increasing annually, reached 8% by February 1999. From January 1, 2000, the value of this ratio was established for banks with a capital equivalent to 5 million euros and above, in the amount of 10%, and with a capital of less than 5 million euros - 11%.
One of the estimated indicators of the bank's activity is the capital adequacy, which is calculated in the form of various coefficients. The value of this indicator lies in the fact that the role of equity in banking is quite specific and this is manifested through the implementation of certain functions, which were noted above. The economic meaning of equity capital adequacy ratios lies in the fact that its absolute value does not sufficiently reflect the true position of the bank in terms of compliance with the acceptable degree of risk in attracting funds from creditors and depositors. This means that banks prefer to attract free resources of customers, while investing a minimum of their own funds. With certain negative phenomena associated with a violation of the return of placed funds, the bank may suffer large losses, which, if there is a lack of equity capital, may cause the bank to go bankrupt.
Thus, the absolute value of equity capital does not characterize the degree of reliability of the bank, since it does not reflect the full picture of acceptable banking risk for creditors and bank depositors. In this case, it is necessary to take into account how equity capital corresponds to the value of bank assets. On the other hand, the amount of equity capital cannot increase indefinitely, there are so-called optimality sizes. The optimality of the bank's own capital is associated with a real need, which allows it to perform the functions of protection against the increased risks of banking activities. Replenishment of equity capital by issuing additional shares is a rather expensive way of financing compared to attracting free funds from third-party organizations and the public. The optimal ratio of the bank's own capital compared to assets and borrowed funds should be adequate to the degree of risk experienced by the bank and its customers.
It is impossible to give an unambiguous answer to the question of what the bank's equity capital should be, since each bank takes on a certain degree of risk that it is capable of. However, only the desire of the bank is not enough when deciding on the amount of equity capital. The bank must replenish its own capital with the growth of assets and, accordingly, the risk of banking operations to raise funds. In fact, his actions to replenish his own capital can be postponed until better times and, as a result, lead to financial difficulties and even bankruptcy. It is clear that the difficulties of one bank cannot but affect the system as a whole, therefore, concern for maintaining the adequacy of the bank's own capital is not a matter of one bank, but of the entire banking system as a whole. The requirement to maintain capital adequacy is one of the rules for regulating the activities of banks by the state.
The current state of equity capital of banks in Kazakhstan is characterized by a variety of volumes, which can be seen from the data posted by the FMSA. This data illustrates the wide variation in equity values and confirms that absolute figures do not allow one to evaluate and compare different banks. Therefore, to assess the adequacy of own capital, standards in the form of relative indicators - various coefficients - were initially used.
In the world practice of evaluating the activities of commercial banks, as a rule, indicators are used that characterize the ratio of equity capital to deposits or bank assets. According to these calculated indicators, it is possible to compare the sufficiency of a bank's own bank with the optimal coefficient, which is established by the authorized body.
Generally recognized in world practice is the equity capital adequacy ratio, calculated in relation to the bank's assets, and to that part of them that is subject to a certain degree of risk. The methodology for calculating the bank's own capital adequacy ratios has been worked out for several decades, and as a result, at the international level in July 1988, under the auspices of the Basel Committee on Banking Regulation and Supervision, the "Agreement on the International Unification of Capital Calculation and Capital Standards" was concluded, according to which capital adequacy ratio, called "Cook's ratio". This agreement has been in force since 1993. The central banks of various states, including Kazakhstan, currently use this indicator as a base for second-tier banks. Let us further consider the methodology for assessing equity capital adequacy used in Kazakhstan in more detail.
The “Instructions on normative values and methodology for calculating prudential ratios for second-tier banks”, approved by the Resolution of the Board of the Agency of the Republic of Kazakhstan for Regulation and Supervision of the Financial Market and Financial Organizations (hereinafter - the FMSA) dated September 30, 2005 No. 358, established that as prudential standards governing the amount of the bank's own capital, the minimum amount of the bank's authorized capital is used, as well as the equity capital adequacy ratio.
The minimum amount of the bank's authorized capital, as noted earlier, is established by the Resolution of the Board of the National Bank of the Republic of Kazakhstan dated June 2, 2001 N 190, subsequently supplemented by the relevant regulatory acts of the FMSA.
To calculate the equity capital adequacy ratio, the methodology recommended by the 1988 Basel Accord is used.
The bank's own capital adequacy is characterized by two coefficients – k1 and k2.
The size of the SCB is required to calculate the coefficient k2, to calculate k1, Tier 1 capital (KII) is used. Before showing the formula for calculating the coefficients k1 and k2, it is necessary to clarify the composition of the value of assets, with which the value of SBC and KI are correlated.
To calculate k1, the sum of the bank's assets (AB) is taken into account, and to calculate k2, the sum of assets, contingent and possible liabilities, weighted by the degree of credit risk (ADB).
The calculation of assets, contingent and possible liabilities, weighted by the degree of credit risk, is carried out in accordance with Applications 1 And 2 to the "Instruction on normative values and methods for calculating prudential ratios for second-tier banks".
The value of the bank's own capital adequacy ratio k2 must be at least 0.12.
For a bank whose member is a bank holding, the value of the bank's own capital adequacy ratio k2 must be at least 0.10.
The economic meaning of the equity capital adequacy ratio, namely k2, is that the amount of equity capital must be maintained in such a size that its value is at least 12% in relation to risky assets.
In addition to the adequacy ratios established in the form of prudential standards, the authorized bodies may apply additional indicators characterizing the adequacy of banks' own capital. Thus, in Kazakhstan, the Agency for Regulation and Supervision of the Financial Market and Financial Organizations calculates and publishes, in addition to k1 and k2, indicators characterizing the ratio of equity to:
loan portfolio;
Formed provisions;
Doubtful loans;
Bad loans.
3.4 Funds raised from a commercial bank
In the total amount of banking resources, attracted resources occupy a predominant place - up to 90%, as noted above. The attracted resources of a commercial bank include funds deposited with the bank by customers in the form of deposits, as well as received by the bank in the form of loans or by selling its own debt obligations in the money market. In world practice, all banking resources are usually divided into deposits and non-deposit attracted (borrowed) funds - all together this constitutes the total liabilities of the bank.
The predominance of deposits in the total volume of attracted resources is a characteristic phenomenon for the banking system of developed countries. In modern banking practice, a wide variety of deposits, deposits and deposit accounts is used. The process of constant expansion of the types of deposits is the result of the activities of banks in the face of fierce competition and the desire of banks to create the most profitable and attractive conditions for customers.
Deposits are classified according to various criteria. By subjects, they are divided into deposits of legal entities and individuals. According to their economic content, they can be divided into the following groups:
Demand deposits;
Term and savings deposits;
Conditional deposits.
In addition, you can divide all deposits by terms, type of currency, conditions for depositing, replenishing and withdrawing funds, the size and type of interest rate and other conditions.
Demand deposits are funds on various accounts from which owners can receive funds on demand by issuing monetary and settlement documents. This type includes current accounts, as well as card accounts of customers. The mode of operation of these accounts allows you to freely credit and receive funds, thus ensuring high liquidity of these funds for their owners. In this case, as a rule, the bank does not charge any interest on the balance of these accounts. At the same time, the bank does not charge an additional fee for maintaining demand accounts, limiting itself only to a commission for opening an account.
Current accounts include a current account - a single account opened for highly reliable clients to record all transactions. In addition, demand deposits usually include funds on correspondent accounts of other banks.
Demand deposits are the cheapest and most accessible type of resources, at the same time, their balance is very mobile and can change at any time. The instability of demand account balances does not allow counting on their 100% use as credit resources. At the same time, some part, being more or less constant, can be taken into account as sources of credit resources.
The peculiarity of term and savings deposits is characterized by the fact that they are a more stable and stable part of the attracted resources, since they are usually deposited for a fixed period or with an additional condition for withdrawal. The economic meaning of these deposits is to mobilize free funds of various economic entities for their further placement by banks in order to obtain bank profits. For the depositor, the economic meaning of the deposit is related to the goal he pursues. For some depositors, a deposit is necessary for temporary storage of funds, for others - for the accumulation of a certain amount, for others - to receive additional income, etc.
The longer the term of the deposit, the more opportunities for terms of bank lending. Therefore, banks are interested in longer-term deposit agreements. At the same time, banks offer various conditions and terms of bank deposits. Thus, in world and domestic practice, the storage periods range from 30 days to several years. Depending on the storage period, banks set different interest rates. Interest rates are usually fixed for the entire term of the deposit. The exception is cases of early termination of the deposit agreement, when banks provide for a reduction in interest depending on the actual period of storage of funds.
In world practice, savings deposits are allocated, which occupy an intermediate position between fixed-term and demand deposits. For them, the interest rate is somewhat lower than for urgent ones, since the storage period is not fixed, or only the withdrawal period is limited. At the same time, it is allowed to freely replenish and partially withdraw funds. One of the conditions for savings deposits is the issuance of a savings book to the depositor.
Varieties of savings deposits are deposits with additional contributions, winning, targeted, etc., as well as nau-accounts used in foreign banks, accounts with automatic clearing of funds and money market money accounts (MSAR). The general conditions of these deposits are the absence of a fixed period of storage, the accrual of interest on the balance, the ability to carry out settlement transactions in favor of third parties.
In domestic practice, bank deposits are mainly classified as time deposits, which include similar savings deposits in terms of storage and withdrawal. In addition, so-called conditional deposits are allocated, for which special conditions for payment are established. Their share, as can be seen from the data in the table above, accounts for a small proportion.
The deposit policy of commercial banks is discussed in the relevant sections of this textbook, so we do not dwell on the rules and conditions of deposits, we only note that all deposits are formalized by an appropriate agreement between the bank and the depositor in writing. This agreement stipulates all the conditions for storage, replenishment, partial withdrawal, accrual of remuneration, withdrawal and payment of the deposit.
In world practice, there is a variety of deposits drawn up in the form of securities - deposit and savings certificates, bank bills. In economic sense, they are similar to fixed-term and savings deposits.
Deposit and savings certificates are a written certificate of the issuing bank on the acceptance of funds, certifying the right of the depositor or his successor to receive funds after a certain period of time with payment of the established interest rate. Essentially, certificates are registered securities that can be transferred and donated to third parties. Deposit certificates are issued in large amounts and are intended for legal entities, savings certificates - for individuals. Terms of circulation of certificates can be from several days to several years. Each issue of certificates is accompanied by the establishment of specific conditions for applying and paying income.
Bank bills are issued to attract borrowed resources. Their peculiarity is that they can be used to pay for goods and services.
Deposits in the form of securities have not yet been developed in domestic banking practice.
In the practice of Kazakh banks, non-deposit attracted resources are actively developing, attracted mainly as credit resources in the form of interbank deposits, as well as loans received from other banks and organizations engaged in certain banking operations. These funds are essentially term loans. In addition, Kazakhstani banks attract such funds as:
Loans received from the Government of the Republic of Kazakhstan;
Loans received from international financial organizations;
REPO operations with securities;
subordinated debts;
Issued securities.
In addition to the above, commercial banks can additionally use such methods of attracting resources as accounting for bills of exchange and obtaining loans from the central bank, as well as loans in the Eurodollar and Eurobond markets.
Thus, the main source of financing for the active operations of a commercial bank is attracted resources, which requires a commercial bank to constantly direct its efforts towards achieving an effective deposit policy and expanding deposit operations, observing the rules for regulating balance liquidity and ensuring a guarantee of return and safety of customer funds.
One of the key parameters for assessing the stability of banks is the capital adequacy ratio (N1).
Bank's own funds (capital) adequacy ratio (H1) regulates (limits) the risk of bank insolvency and determines the requirements for the minimum amount of own funds (capital) of the bank required to cover credit, operational and market risks. The H1 ratio is defined as the ratio of the bank's own funds (capital) and the amount of its assets, weighted by the level of risk.
K - equity capital of the bank;
K Pi is the risk factor of the i-th asset;
A i is the i-th asset of the bank;
P Ki is the value of the reserve for possible losses on loans of the i-th asset;
KRV - the amount of credit risk on contingent liabilities;
KRS - the amount of credit risk on term liabilities;
РР is the value of market risk.
The numerical value of the bank's capital adequacy ratio:
For banks with equity capital of at least 5 million euros - at least 10%.
For banks with an equity capital of less than 5 million euros - at least 11%.
The revocation of a banking license threatens the bank if the norm N 1 has decreased to 2%.
Despite an insignificant share in the resources of a commercial bank, its own capital performs a number of vital functions:
Protective: Due to its permanent nature, equity capital acts as the "primary defense" of the interests of depositors and creditors, which fund a significant proportion of the bank's assets. Those. SC - the value within which the bank
Operational: Throughout the entire period of the bank's operation, its own capital is the main source of formation and development of the bank's material base, providing conditions for its organizational growth
Regulatory: IC is designed to protect a commercial bank from financial instability and excessive risks
12. Foreign analogues of bank capital adequacy assessment.
To register a bank, it is necessary to ensure the minimum required amount of the authorized capital and maintain the established capital adequacy ratios throughout the entire period of activity. In banking practice, there are different methods for determining capital adequacy.
Leverage method (lever) consists in establishing the ratio of the bank's own and borrowed funds. For example, if the ratio is set to 5%, then this means that the bank's attracted funds cannot exceed the capital by more than 20 times. Until 1998, the NBU used this method to calculate the bank's estimated capital adequacy ratio. In the United States in 1983, the ratio of equity to borrowed funds was 3%. The leverage method has the following disadvantages:
There is no differentiation between different types of capital;
The level of riskiness of active operations is not taken into account;
Off-balance sheet liabilities and the risk associated with them are not taken into account.
In modern banking practice, this method of determining capital adequacy can be used as an auxiliary in parallel with other methods.
Method of comparative analysis of indicators. Following this method, the following indicators are used to assess capital adequacy:
the ratio of capital to total assets of the bank;
The ratio of capital to total deposit liabilities;
The ratio of capital to risky assets, calculated as the sum of all assets except cash and government securities.
The value of the indicators is constantly monitored and analyzed by the regulatory authorities, but no standards or limits are set. In the process of supervision, methods of structural, comparative and dynamic analysis are used. The indicators of a particular bank are compared with similar values of other banks or with industry averages. Dynamic analysis is designed to identify trends in the size of the capital of the same bank over a certain period of time.
The disadvantages of the method of comparative analysis of capital adequacy indicators are the subjective nature of assessments and conclusions, the lack of generally accepted capital adequacy standards, and significant labor intensity.
Method of expert assessments. Expert assessments of capital adequacy are based on the use of expert conclusions about the quality of bank management, the level of profitability and liquidity, the dynamics of the deposit base, the structure of the balance sheet, the riskiness of active operations, and the regional characteristics of the market in which the bank operates. The method involves studying the activities of each bank in the context of specific market conditions and taking into account the relationship between external and internal factors. If the market conditions are characterized by increased riskiness or revealed weakness of internal structures, then the bank may be required to increase capital above the minimum level.
The method of expert assessments can be successfully used to assess the adequacy of the capital of individual banks, but given the significant size of the country's banking system and the variety of markets, its application becomes problematic.
Capital adequacy ratio ( Cook's coefficient) 1988:
OK(MC, Undistributed profit, Open reserves) ≥ Additional(Revalued reserves, Provisions for credit risks, Subordinated instruments)
The main capital must be at least 50% of the additional capital
Calculation of capital adequacy ratio
Alternative approaches to calculating the minimum level of capital, in relation to credit risk:
A). Standard approach based on the methodology of the 1988 Basel Capital Accord. B). Approach based on internal ratings, according to which the amount of capital. calculated by banks based on their own assessments.
Capital adequacy is an indicator reflecting the stability of a financial institution and the ability to fully function, taking into account possible risks.
With a lack of capital, the bank is extremely sensitive to macroeconomic changes. Even with a slight deterioration in the financial situation, the risk of bankruptcy increases. In the opposite situation, when there is an excess of capital, the organization often turns out to be uncompetitive in the credit market.
For several decades, attempts have been made to create a unified system for assessing capital adequacy. Due to disagreements in the legislation of the countries, it was not possible to come to common indicators and criteria for a long time. Only by joint efforts was it possible to develop a universal method of calculation. The Basel Committee on Banking Supervision played a significant role in its creation.
Capital adequacy ratios are divided into two main groups:
- the ratio of capital funds to the amount of deposits;
- capital versus assets.
There are two types of capital adequacy:
- regulatory capital adequacy;
- capital adequacy.
Sufficiency calculation
The indicator is calculated using the formula:DK = NA / Risks = NA / SUM A x KWhere:
DC - capital adequacy
NA - net assets, A - asset
K is the risk factor.
If the final result is low, then you need to reduce the level of risks with the help of competent asset management, or increase the capital of the enterprise using additional investments from the owners of the organization.
When calculating regulatory capital adequacy, the following formula is applied:
DNA = NK / (KP + 10 x (OP + PP)) x 100%where: DNA is the final result to be determined,
NK - a digital indicator of the amount of capital, K
P is the risk on loans,
RR - risk by operations,
RR - market risk.
The Central Bank of Russia determines the sufficiency standard for this indicator in the amount of 10%.
If we are talking about a similar characteristic in relation to fixed capital, then the formula looks a little different:
DOK = OK / (KP + 20 x (OP + PP)) x 100%Where:
DOK - capital adequacy,
OK - the total indicator of fixed capital
CR - credit risk RR - market risk
OR - operational risk.
The Central Bank of the Russian Federation has set the norm for this parameter at the level of 5%.
Asset classification
The tangible assets of the institution are divided into 7 groups according to the degree of credit risk. In this case, the international rating of the counterparty is taken into account. Also taken into account: the sources and reliability of collateral, the level of debt servicing and other characteristics.Degrees of credit risk:
- Zero indicator;
- 20% risk;
- 100%;
- 150%.
