The main activities of investment banks. Investment activities of commercial banks Directions of investment activities of the bank
Non-state private educational institution
Higher professional education
Southern Institute of Management
Department of "Finance and credit"
Coursework on the topic:
"Investment activity of banks"
Performed:
3rd year student
Groups 05-F1, Veretennikova E.A.
Scientific adviser:
e. n. head professor departments
"finance and credit", Petrova E.V.
Krasnodar 2008
Coursework contains str.58, tab.2, fig.2, bibl. nineteen.
Investment activity, capital, bank investments, securities, stock market, liquidity of investment assets, weak investment potential, capital flight, currency outflow, credit risk, monitoring, IPO (Initial Public Offering), competitive banks.
The course work used the methods of analysis and synthesis, the inductive method, the deductive method, etc.
Theoretically studied the principles of functioning of the investment activity of Russian banks. The organizational structure of the process, advantages and precautions are considered. Problems of investment activity of commercial banks and their causes. What will Russian banks face in the course of reforms taking place in investment activities. Also, reserves for improving the work of the banking system were identified, and a possible plan for its reform was given.
Introduction
2.1 Sources of bank investments
Conclusion
List of sources used
Introduction
Investment activity plays a significant role in the functioning and development of the economy. Changes in the quantitative ratios of investments have an impact on the volume of social production and employment, structural changes in the economy, development of industries and sectors of the economy.
The problem of investments in our country is so urgent that talk about them does not subside. This problem is relevant, first of all, because investments in Russia can make a huge fortune, but at the same time, the fear of losing the invested funds stops investors. The Russian market is one of the most attractive for investors, but it is also one of the most unpredictable, and investors are rushing from side to side, trying not to lose their piece of the Russian market and, at the same time, not to lose their money. At the same time, investors are guided primarily by the investment climate in Russia, which is determined by independent experts and serves to indicate the effectiveness of investments in a particular country.
Significant investment potential is concentrated in the institutions of the banking system, which, unlike many other intermediary institutions, have exceptional opportunities to use transaction funds and issue credits.
The banking system is an important source of meeting investment demand.
However, the state investment policy is now aimed precisely at providing investors with all the necessary conditions for working on the Russian market, and therefore in the future we can count on a change in the situation in the Russian economy for the better.
The course work is devoted to an important problem for a developing economy - the investment policy of a commercial bank. Today, banks are seen as potentially active and heavily resourced participants in investment activities.
The purpose of the work is to identify the conditions and prospects for the development of investment activities of commercial banks in the real sector of the Russian economy.
The information base of the course work was special and educational literature, regulations, statistical data of the State Statistics Committee and the Central Bank of Russia, Internet resources.
The object of research is the banking system of the Russian Federation.
The subject of the research is the investment activity of commercial banks.
The work has the following structure:
The introduction substantiates the relevance of the topic, defines the purpose and objectives of the work, the object and subject of research, its information base and structure.
The first theoretical chapter reveals the essence of the process and the purpose of the investment activity of commercial banks. The basic concepts and mechanisms of investment activity are considered.
The second chapter reveals the existing problems of the real sector of the country's economy. The investment activity of banks in the real sector of the economy is analyzed. In the third chapter, based on an analysis of the real sector of the economy, ways and means of improving the investment activities of commercial banks, as well as ways and conditions for the development of banking investments are proposed. In conclusion, the main ways and conditions for improving the investment activities of commercial banks are determined.
1. Theoretical foundations of the functioning of the investment activities of banks
1.1 Definitions and forms of investment activities of commercial banks
Usually, investments are understood as long-term investments of capital in any enterprise, business, project. In banking, this concept includes any long-term investment of bank funds. Investment activities, for example, in addition to investments in securities, often include lending to fixed assets of an enterprise, loans to small businesses, financing current, short-term needs of an enterprise.
However, the following definition should be considered more correct. Bank investments are long-term investments of bank resources in securities in order to obtain direct and indirect income. The bank receives direct income from investments in securities in the form of dividends, interest or resale profits. Indirect income is formed on the basis of expanding the influence of banks on customers through the ownership of a controlling stake in their securities. Bank investments include investments in stocks, bonds and other securities. Despite the fact that bank investments, according to the definition, should be long-term, all investment instruments are divided into:
money market instruments with a maturity of up to one year, which are characterized by low risk and high liquidity;
capital market instruments that mature after more than a year and generally have a higher yield.
Investment activity - investment, or investment, and a set of practical actions for the implementation of investments. The subjects of investment activity are investors, both individuals and legal entities, including banks, and the objects of investment activity are newly created and modernized fixed and working capital, securities, targeted cash deposits, scientific and technical products, and other property objects.
The investment activity of commercial banks is carried out at the expense of: own resources, borrowed and borrowed funds.
The main areas of participation of banks in the investment process in the most general form are as follows:
mobilization by banks of funds for investment purposes;
provision of investment loans;
investing in securities, shares, equity participations (both at the expense of the bank and on behalf of the client).
These areas are closely related to each other. By mobilizing capital, savings of the population, other free funds, banks form their resources for the purpose of their profitable use. The volume and structure of operations for the accumulation of funds are the main factors influencing the state of the credit and investment portfolios of banks, the possibility of their investment activities.
The investment activity of banks is seen as a business of providing two types of services: increasing cash by issuing or placing securities on their primary market; connecting buyers and sellers of existing securities in the secondary market while acting as brokers and / or dealers.
With the transition to a market economy and the formation of the stock market, the interpretation of bank investments as long-term investments in securities is also reflected in domestic economic literature. It is noted that it is customary to include securities with a maturity of more than one year as bank investments.
Investments are understood both as all directions of placement of resources of a commercial bank, and as an operation for the placement of funds for a period of time in order to generate income. In the first case, investments include the entire range of active operations of a commercial bank, in the second, its term component.
Bank investments have their own economic content. The investment activity of banks in the microeconomic aspect - from the point of view of the bank as an economic entity - can be viewed as an activity in which the bank acts as an investor, investing its resources for a period of time in the creation or acquisition of real assets and the purchase of financial assets in order to extract direct and indirect income.
At the same time, the investment activity of banks has another aspect related to the implementation of their macroeconomic role as financial intermediaries. In this capacity, banks contribute to the implementation of the investment demand of business entities, acting in a market economy in the form of monetary and credit, the transformation of savings and savings into investments.
At the same time, in the real conditions of the Russian economy, where the securities market is characterized by the dominance of speculative investments, instability and does not play any significant role in solving the problems of investing in the economy, the priority importance of credit forms of meeting investment demand will remain for a sufficiently long period. Therefore, when studying the participation of banks in the investment process, one should take into account the dual nature of the investment activities of banks. The following indicators can be used as indicators of the investment activity of banks:
the volume of investment resources of commercial banks;
index of real value of investment resources;
volume of bank investments;
the share of investment investments in the total assets of banks;
structural indicators of banking investments by objects of their application;
indicators of the effectiveness of the investment activities of banks, in particular, the increase in assets based on the volume of investments, the increase in profits based on the volume of investments;
indicators of alternative profitability of investing in the manufacturing sector compared to investing in profitable financial assets;
The classification of the forms of investment activity of commercial banks in the economic literature and banking practice is carried out on the basis of general criteria for systematizing the forms and types of investments.
In accordance with the object of investment, investments in real economic assets (real investments) and investments in financial assets (financial investments) can be distinguished. Banking investments can also be differentiated by more specific investment objects: investments in investment loans, term deposits, shares and equity participations, in securities, real estate, precious metals and stones, collectibles, property and intellectual rights, etc.
Depending on the purpose of the investment, bank investments can be direct, aimed at ensuring the direct management of the investment object, and portfolio, aimed at direct management of the object, and carried out with the expectation of receiving income in the form of a flow of interest and dividends or due to an increase in the market value of assets.
According to the purpose of investments, it is possible to single out investments in the creation and development of an enterprise and organization and investments that are not related to the participation of the bank in economic activities.
According to the sources of funds for investment, there are own and bank investments made at its own expense, and client investments made by the bank at the expense and on behalf of its customers.
According to the terms of investments, investments can be short-term (up to one year), medium-term (up to three years) and long-term (over three years). Investments of commercial banks are also classified by types of risks, regions, industries and other characteristics.
In addition to lending to investment projects in the sphere of production, real investments of banks can be made in the form of investments in real estate, precious metals and stones, collectibles, property and intellectual rights that are in market circulation, as well as the creation and development of their own material and technical base.
Banks' financial investments include investments in securities, term deposits with other banks, investment loans, shares and shares. As the stock market develops, investments in securities are becoming increasingly important: debt obligations (bills, certificates of deposit, state and municipal securities, other types of obligations issued by legal entities), equity securities (shares). Investments in securities can be made at the expense of the bank's funds (own investment transactions), as well as at the expense of funds and on behalf of the client (client investment transactions). The Bank may invest in the form of term deposits in other banks. Deposit transactions are used by the Central Bank to bind excess liquidity.
An investment loan acts as a form of providing a long-term loan on terms of payment, urgency and repayment, in which the bank has the right to return the principal amount of the debt and interest payments, but does not acquire the right to joint economic activities. At the same time, this type of lending has certain differences from other credit transactions, including the specific purpose of the loan, a longer period of provision and a high degree of risk. To reduce investment risks, Russian banks providing investment lending impose a number of additional conditions. The most common conditions are the following:
acquisition of a controlling stake in the enterprise;
providing financial guarantees from the government, reliable banks;
providing highly liquid collateral;
share.
Since an investment loan is issued for a long period, when assessing investment risks during the consideration of a loan application or an investment project, it is important not only to analyze the current creditworthiness of the borrower and his credit history, but also to take into account the dynamics of the financial condition of the enterprise.
Investments in shares, shares and shares, unlike investment lending, are a form of participation of banks in economic activities in which banks act as co-owners of the authorized capital of enterprises and organizations and founders (co-founders) of a company of a financial and non-financial nature.
Investments in the creation and development of enterprises and organizations include two types: investments in the economic activities of other enterprises and investments in the bank's own activities. The bank's investments in the economic activities of third-party enterprises and organizations are carried out through participation in their capital expenditures, formation or expansion of the authorized capital. When participating in the authorized capital through the purchase of shares, shares, shares, commercial banks become co-owners of the authorized capital and acquire all the rights that shareholders and participants in the enterprise have in accordance with the law. Investments in the creation and development of third-party enterprises also take place during the founding activities of the bank, when the latter is the founder (co-founder) of financial and non-financial companies and their associations. Organizations established by commercial banks are predominantly in the financial sector (investment funds and companies, brokerage firms, investment consultants, leasing and factoring firms, depository and clearing institutions, insurance firms, non-state pension companies, holding companies, financial groups, etc.) or services (financial consulting, information, etc.).
Investments in the creation and development of third-party enterprises and organizations may be of an industrial and non-productive nature. Production investments, acting as a form of participation of banks in the capital costs of economic entities, are carried out by providing investment loans and various ways of participating in the financing of investment projects. Commercial banks can participate in the financing of an investment project by providing a loan, corporatization, formation and expansion of the authorized capital, leasing, or various combinations of these methods.
Russian commercial banks often invest in the creation and development of enterprises and organizations, relying not on dividends and interest, but on a side economic result: gaining a foothold in the markets, attracting additional customers, etc. One of the investment conditions, as noted above, is the requirement to obtain control over the enterprise.
Existing laws and regulations contain a number of restrictions on the participation of banks in economic activities. Among them it should be noted:
legislative prohibition to engage in production, trade and insurance activities Federal Law "On Banks and Banking Activity" No. 395-1 dated 12/2/1990 (as amended on 07/29/2005);
limiting the participation of banks in the capital of other enterprises and organizations by 25% of their own funds;
limiting investments in the acquisition of shares (shares) of one legal entity to 10% of the bank's capital;
other restrictions imposed on all business entities (antimonopoly rules, regulations governing participation in financial and industrial groups).
Investments in the bank's own activities include investments in the development of its material and technical base and improvement of the organizational level. The direction of these investments depends on what tasks are supposed to be carried out with their help. Depending on the direction of investment, we can distinguish:
investments that improve the efficiency of banking activities. They are aimed at creating conditions for reducing banking costs by improving technical equipment, improving the organization of banking activities, working conditions, staff training, research and development;
investments focused on the expansion of banking services. Such investments involve the expansion of the resource and client base, an increase in the range of banking operations, the creation of new divisions capable of providing the production of new types of banking services;
investments related to the need to comply with the requirements of state regulatory bodies. These investments are made, if necessary, to meet the requirements of regulatory authorities in terms of creating certain conditions for banking activities.
The effectiveness of investments in the development of the bank is achieved if, as a result of the costs incurred, the improvement of its financial condition is ensured, the transition to a higher rating category. Determining the volume and structure of investments in own activities, carried out in the process of developing a bank's capital investment plan, should be based on accurate technical and economic calculations. Exceeding the required volume of investments may lead to liquidity imbalance, decrease in the bank's revenue base and decrease in the efficiency of banking activities.
1.2 Goals and process of investment activities of commercial banks
The investment policy of commercial banks involves the formation of a system of targets for investment activity, the choice of the most effective ways to achieve them. In the organizational aspect, it acts as a set of measures for organizing and managing investment activities, aimed at ensuring optimal volumes and structure of investment assets, increasing their profitability with an acceptable level of risk. The most important interrelated elements of the investment policy are the tactical and strategic processes of managing the bank's investment activities. Under the investment strategy understand the definition of long-term goals of investment activities and ways to achieve them. Its subsequent detailing is carried out in the course of tactical management of investment assets, including the development of operational goals for short-term periods and the means of their implementation. The development of an investment strategy is thus the starting point of the investment management process. The formation of investment tactics takes place within the framework of the given directions of the investment strategy and is focused on their implementation in the current period. It provides for determining the volume and composition of specific investment investments, developing measures for their implementation, and, if necessary, compiling a model for making management decisions on exiting an investment project and specific mechanisms for implementing these decisions.
Banks, buying certain types of securities, seek to achieve certain goals, the main of which include:
investment security;
return on investment;
investment growth;
liquidity of investments.
Investment security refers to the invulnerability of investments from various shocks in the stock market, the stability of income and liquidity. Security is always achieved at the expense of profitability and investment growth. The optimal combination of security and profitability is achieved by careful selection and constant revision of the investment portfolio.
The main principles of effective investment activity of banks are:
firstly, the bank must have professional and experienced professionals who make up and manage the portfolio of securities. The result of the bank's activity to a decisive extent depends on the effectiveness of investment decisions;
secondly, banks act more efficiently, the more they manage to distribute their investments among various types of stock values, i.e. diversify investments. It is advisable to limit the investment by types of securities, sectors of the economy, regions, maturity, etc.
thirdly, investments must be highly liquid so that they can be quickly transferred into instruments that, due to changes in market conditions, become more profitable, and also so that the bank can quickly get back its invested funds.
The investment portfolio of a commercial bank usually consists of various securities issued by the federal government, municipalities and large corporations.
To assess the feasibility of acquiring certain securities, there are two main professional approaches; most large commercial banks conduct both fundamental and technical analysis.
Fundamental analysis covers the study of the activities of industries and companies, analysis of the financial condition of the company, management and competitiveness. It consists of industry analysis and company analysis. In an industry analysis, the bank determines the industries that are of greatest interest to it, and then the leading companies are identified in these industries, and among them the company whose shares it is advisable to purchase is selected.
Technical experts are based on the study of exchange (or off-exchange) statistics; analyze the change in supply and demand, the movement of stock prices, volumes, trends and structure of stock markets on the basis of diagrams and graphs, predict the possible impact of the situation on the market on the demand and supply of securities. The analysis of companies is divided into quantitative and qualitative. Qualitative analysis is an analysis of the effectiveness of company management; quantitative - studies of various kinds of relative indicators obtained by comparing individual articles of the company's financial report. Comparisons are made with similar enterprises and industry average data of the main absolute indicators of its activity (sales volume, gross and net profit), the study of changes and profitability of sales and profitability of capital, in net income per share and the size of the dividend paid on shares. Investment securities generate income for commercial banks in the form of interest income, commissions for the provision of investment services, and market value growth. World experience has not developed an unambiguous approach to the problem of using banks' own funds when acquiring shares of other legal entities: in some countries, the participation of banks in the capital of other structures is not limited (Germany), in some countries it is strictly prohibited (USA, Canada). The Bank of Russia has chosen an intermediate option for regulating this area - the Central Bank of the Russian Federation can control the work of the bank, but is not in a position to interfere in the activities of other economic entities that are not credit institutions, and, therefore, is not able to determine the degree of commercial risk. The main risks in investing are associated with the possibility of: loss of all or a certain part of the invested funds; · depreciation of the means placed in securities at growth of inflation; non-payment in full or in part of the expected return on invested funds; Delays in earning income · Emergence of problems with re-registration of ownership of acquired securities.
After determining the investment objectives and types of securities to purchase, banks choose a portfolio management strategy. According to the methods of conducting operations, strategies are divided into active and passive.
All active strategies are based on forecasting the situation in various sectors of the financial market and the active use by banking specialists of forecasts for adjusting the securities portfolio. Passive strategies use the forecast for the future to a lesser extent. A popular approach in such management practices is indexing, i.e. securities for the portfolio are selected based on the fact that the return on investment must correspond to a certain index and have a uniform distribution of investments between issues of different maturity. At the same time, long-term securities provide the bank with higher income, and short-term securities provide liquidity. A real portfolio strategy combines elements of both active and passive management.
The most important reason for the significant increase in bank investment in securities: the relatively high level of income on them, less risk and high liquidity compared to lending operations.
The most important characteristic of the forms and types of banking investments is their assessment from the standpoint of a combined investment criterion, the so-called magic triangle "profitability-risk-liquidity", which reflects the inconsistency of investment goals and requirements for investment values.
Banks work mainly not on their own, but on attracted and borrowed resources, so they cannot risk their clients' funds by investing them in large investment projects, if this is not secured by appropriate guarantees. In this regard, when developing their investment policy, commercial banks should always proceed from real risk assessments, economic efficiency, financial attractiveness of investment projects, the optimal combination of short, medium and long-term investments. At the same time, the existing investment system is not only an internal affair of the bank itself. In accordance with the basic principles of banking regulation, an integral part of any supervisory system is an independent review of the bank's policy, operations and procedures related to the issuance of loans and capital investment, as well as the ongoing management of the loan and investment portfolios.
Consequently, commercial banks must clearly work out and formally fix the most important activities related to the organization and management of investment activities. In essence, it is about the development and implementation of a sound investment policy. The development of the bank's investment policy is a rather complicated process, which is due to the following circumstances. First of all, due to the duration of investment activity, it should be carried out on the basis of a thorough long-term analysis, forecasting external conditions (the state of the macroeconomic environment and the investment climate, the investment market and its individual segments, taxation and state regulation of banking activities) and internal conditions (volume and the structure of the resource base of the market, the stage of its life cycle, the goals and objectives of development, the relative profitability of various assets, taking into account risk factors and liquidity, etc.), the probabilistic nature of which makes it difficult to form an investment policy.
In addition, the definition of the main directions of investment activity is associated with large-scale problems of research and evaluation of alternative options for invested decisions, the development of an optimal investment development model from the standpoint of profitability, liquidity and risk. The development of an investment policy is significantly complicated by the variability of the external environment of banks, which determines the need for periodic adjustment of investment policy, taking into account predicted changes and developing a system for prompt response. Therefore, the formation of the investment policy of banks is associated with significant difficulties, even in a steadily developing economy.
A prerequisite for the formation of investment policy is the general business policy of the bank's development, the main objectives of which are priority in the development of strategic objectives of investment activity. Representing an important component of the overall economic policy, the investment policy is a factor in ensuring the effective development of the bank.
The main goal of the investment activity of the bank can be formulated as an increase in the income of investment activity with an acceptable level of investment risk.
In addition to the general goal, the development of an investment policy in accordance with the economic development strategy chosen by the bank provides for taking into account specific goals, which are:
ensuring the safety of banking resources;
expansion of the resource base;
diversification of investments, the implementation of which reduces the overall risk of banking activities and leads to an increase in the financial stability of the bank;
maintaining liquidity;
expansion of the bank's sphere of influence through penetration into new markets;
increasing the circle of clients and strengthening the impact on their activities through participation in investment projects, in the creation and development of enterprises, the acquisition of securities, shares, shares in the authorized capital of enterprises;
Determining the optimal ways to implement the strategic goals of investment activities involves the development of the main directions of investment policy and the establishment of principles for the formation of sources of investment financing. In accordance with these criteria, the following areas of investment policy can be distinguished:
investing in order to receive income in the form of interest, dividends, payments from profits;
investing for the purpose of generating income in the form of an increase in capital as a result of an increase in the market value of investment assets;
investment with the aim of generating income, the components of which are both current income and capital gains.
Orientation to one of the above areas is a key link in the formation of investment policy, which determines the composition of investment objects, the source of income, the level of acceptable risk and approaches to investment analysis.
When the investment policy is oriented towards capital growth, the stability of the increase in the market value of investment assets comes to the fore, and their profitability is considered only as one of the factors determining the value of assets. A policy aimed at capital growth is associated with investing in investment objects, which are characterized by an increased degree of risk due to the possibility of depreciation of their value. An increase in the market value of investment objects can occur both as a result of an improvement in their investment qualities and short-term fluctuations in market conditions. At the same time, the role of the speculative component increases. Features of this type of investment policy determine the strengthening of the role of prospective aspects of analysis compared to retrospective and current analysis in making investment decisions. The choice of the direction under consideration as a priority is characteristic of an aggressive investment policy, the purpose of which is to achieve high efficiency of each investment operation, to maximize income in the form of the difference between the price and acquisition of an asset and its subsequent value with a limited investment period.
In the practice of banking activities, the directions of investment policy can be combined in various forms, which, as a rule, make it possible to strengthen the advantages and mitigate the disadvantages. A variant of such a combination is a moderate investment policy, in which the preference is for a sufficient amount of income in the form of both current payments and capital growth with an investment period not limited by strict limits and moderate risk.
The development of an investment policy involves not only the choice of investment directions, but also taking into account a number of restrictions associated with the need to ensure a balance in the investment investments of a commercial bank. Objectives and restrictions are established by the legislative and regulatory acts of the monetary authorities, as well as the management bodies of banks.
The Central Bank of the Russian Federation regulates the investment activities of commercial banks, defining priority investment objects and limiting risks by establishing a number of economic standards (the use of bank resources to purchase shares, issue loans, reserve for the depreciation of securities, bad loans), differentiated risk assessments for investments in various types of assets.
The organization of the investment policy in the bank involves the development of internal guidance documents that fix the basic principles and provisions of the investment policy. The experience of banking practice testifies to the expediency of formulating an investment policy in the form of an investment program. Reflecting the goals of investment, the investment program determines the main directions of investments and sources of their financing, the mechanisms for making and implementing investment decisions, the most important characteristics of investment assets: profitability, liquidity and risk, their ratio in the formation of the optimal structure of investment investments.
The limit of acceptable risk is the weighted average cost of attracting investment resources. Having established the preferred forms of income in the process of developing the main areas of investment, the investor determines the share of each form in the total income from investment investments. Management of investment activities provides for the analysis of the structure of assets to bring them in line with the structure of investment resources and ensure the required level of liquidity. The liquidity of investment assets should be associated with the nature of the liabilities that are the source of their financing.
1.3 Income and risks of investment activities of banks
The profitability of the investment activities of commercial banks depends on a number of economic factors and organizational conditions, among which the decisive role belongs to such as:
steadily developing economy of the state;
the presence of various forms of ownership in the sphere of production and services, including the banking sector with a predominance of private and joint-stock ownership;
streamlined and well-functioning structure of the financial and credit system;
presence of a developed and civilized securities market;
availability of securities market institutions (investment companies, funds, etc.);
a streamlined system of legislative acts and regulations governing the procedure for issuing and circulation of securities and the activities of the participants in the securities market themselves, used in the practice of international investment activities of commercial banks;
availability and training of highly qualified specialists and entrepreneurs in the investment field of activity and the securities market, etc.
The yield of securities of certain classes and types depends on the market value of the investment portfolio, which, in turn, fluctuates depending on changes in interest rates on bonds and certificates, discount interest, interest on bills, dividends on shares and, accordingly, supply and demand for these securities in the securities market. The main goal of investment management is to maximize return for a given level of risk or minimize risk for a given level of income. The income from the investment portfolio consists of the following components:
income in the form of interest payments
income from capital appreciation of securities held in the bank's portfolio
Commission for the provision of investment services - spread (the difference between the buying and selling rates in dealer operations).
There are the following main types of investment risk:
credit risk
exchange rate risk
liquidity risk
risk of early withdrawal
business risk.
Credit risk is that the principal and interest on a security will not be repaid in due time. Credit risk assessment for various types and separate issues of securities is given by specialized agencies. They assign a rating to securities, which makes it possible to judge the likelihood of timely repayment of obligations. Credit risk is associated with a decrease in the financial capacity of the issuer of securities when he is unable to fulfill his financial obligations, as well as with the obligations and abilities of the government of the state or its institutions to repay debts on loans made by it from the public, in particular, on bonds issued by the government of general character. State securities are considered free from credit risk due to the stability of the economy, from where the government draws funds to pay off its debts and obligations to creditors represented by the public and financial and credit commercial organizations. Banks tend to limit themselves to buying investment grade securities.
The risk of changes in the price of securities. This risk is associated with an inverse relationship between the rate of interest and the rate of hard-interest securities: with an increase in interest rates, the market value of securities decreases and vice versa. This creates big problems for the investment departments of banks, since when the economic situation changes, it often becomes necessary to mobilize liquidity and you have to sell securities at a loss. Rising interest rates lower the market price of previously issued securities, with issues with the longest maturities typically experiencing the largest price declines. Moreover, periods of rising interest rates are usually marked by an increase in demand for loans. And since the bank's top priority is to make loans, many securities must be sold in order to raise cash to make loans. A bank that bought securities in the face of falling demand for credit and relatively low interest rates, i.e. at a high market value, is forced to sell them at increased interest rates and a fall in the market value of securities. Negative foreign exchange differences occur on the bank's balance sheet, which reduce profits. As a rule, the market value of securities and the income of a commercial bank from them are inversely related: when securities prices are low, income from them is high and vice versa. Therefore, investors, buying securities during a period of low interest and other rates, run the risk of facing a decrease in the market value of securities in the event of an increase in rates on them. However, if interest rates decrease, the market value of securities will increase. Therefore, the increase in interest rates on securities has both positive and negative sides.
The contradiction between liquidity and profitability determines the investment risk, which is considered in the investment activity of the bank as a dispersion of probable options for generating income with minimal damage, ensuring the liquidity of the bank as a whole. Banks should always be aware of the possibility that they may need to sell investment securities prior to maturity. In this regard, the question arises about the width and depth of the corresponding secondary market for this type of securities. The readiness of the leaders of a commercial bank to sacrifice liquidity for the sake of profit and vice versa means consciously taking more or less investment risk, taking into account all its factors.
Risk of early withdrawal of securities. Many corporations and some governments that issue investment securities reserve the right to call these instruments early and redeem them. Such redemption is allowed if the minimum allowable period has passed and if the market price of the bond is not lower than its initial market value. Since such “recalls” usually occur after market interest rates decline (when the borrower can issue new securities with lower interest costs), the bank faces the risk of loss of income as it must reinvest the returned funds at the lower interest rates prevailing on the bank. this moment. Banks usually try to minimize this call risk by purchasing bonds that cannot be called for several years, or simply by avoiding buying callable securities.
Business risk. All banks face a significant risk that the market economy they serve could collapse with declining sales and rising bankruptcies and unemployment. These adverse events are referred to as business risk. They are very quickly reflected in the bank's loan portfolio, where as the financial difficulties of borrowers grow, the volume of bad loans increases. Since the probability of business risk is quite high, many banks rely heavily on securities from other regions to offset the exposure to the risk of their loan portfolio.
Market risk is due to the fact that due to unforeseen changes in the securities market or in the economy, the value of certain types of securities as an investment object of the bank may be partially lost, so that their sale will become possible only with a large discount in price.
2. Analytics of investments of commercial banks in the real sector of the Russian economy
On a national scale, the overall level of investment depends in part on the level of savings of the population, institutions and the government. The amount of savings in a country directly affects the amount of investment in the country. It has already been noted that investments represent expenditures for the acquisition of equipment, buildings and housing, which in the future will result in a rise in the productive power of the entire economy. When a society saves part of its current income, this means that part of the production can be directed not to consumption, but to investment.
Most often, depositors and investors belong to different economic groups. When a family saves a portion of their income, they put their money in the bank. The bank lends this money to a company wishing to make an investment. In this case, depositors (individual citizens) and investors (enterprises) are connected through a financial intermediary (bank). Sometimes intermediaries and investors are the same person. If a business saves some of its profits and uses it to buy a new machine, it is saving and investing money at the same time. Sometimes a company saves its profits by increasing bank deposits. The bank then lends this money to another company that wants to make an investment. In a closed economy, the amount of saving exactly matches the amount of investment. What part of the national income is saved, such a part can be invested. Thus, we can say that in a closed country, domestic investment is equal to domestic saving.
All forms and types of investment activities of banks are carried out at the expense of the resources they generate. The policy of formation of investment resources is designed to ensure the implementation of investment activities on a given scale and directions, the effective use of own and borrowed funds invested in investment assets.
The adoption of bank investment decisions should be focused on achieving the optimal ratio between the volume and structure of investments and their resource provision from the standpoint of maximum profitability and minimum risk, which is the target function of the bank's investment policy. This involves forecasting investment directions in the coming period based on projected changes in the volume and structure of investment investments and sources of their financing.
Thus, the management of investment activity should cover both the formation of the main areas of investment and the determination of the necessary resource support. When forming sources of financing for specific types of investment investments, it is necessary to take into account the specifics of various types of banking resources, which makes it possible to analyze them in terms of the degree of stability, attraction costs and other criteria.
The most reliable and sustainable source of investment financing is the own funds (capital) of a commercial bank. Own funds of the bank, due to the significant specifics of banking, in comparison with other areas of commercial activity, occupy the largest share in the total volume of banking resources.
The main sources of financing active operations, which make up the largest share in the structure of bank liabilities, are deposit funds (term and demand). Demand deposits, in contrast to time deposits, being a cheaper source of resources for the bank, at the same time, constitute a group of liabilities characterized by a high risk of withdrawal.
A significant part of the funds attracted by Russian banks is of an unlimited or short-term nature. This circumstance underlies the negative assessment by many economists of the investment potential of Russian banks. However, even with the current structure of the resource base, there are certain opportunities to use parts of short-term funds to finance medium- and long-term investments without disturbing liquidity.
Despite the constant movement of funds on individual accounts, in their totality, a certain stable, irreducible balance can be distinguished. The transformation ratio, which characterizes the boundaries of the transformation of perpetual resources into urgent ones, according to calculations, is 10-40% of the sum of the balances on demand accounts. The growth of opportunities to raise funds in deposits is also associated with the use of deposit and savings certificates and other financial instruments that have appeared on the Russian market. An increase in the volumes of their issue, the circulation period levels out fluctuations in deposits, contributes to the expansion of the resource base of banks' investments. The strategy of maintaining the stability of deposits is the most important component of the overall strategy of commercial banks.
Resources formed by attracting loans can also be used as sources of investment financing. These include loans from the Central Bank, interbank loans, funds received as a result of the issue of debt obligations (bonds, bills). Borrowed sources are used to finance investments by active banks. To expand the possibilities of financing investment assets and maintain liquidity, they often resort to extensive loans of funds in the financial market. At the same time, the most important condition for the use of borrowed funds is the comparison of the costs of their attraction with the expected income from investment activities. Based on the analysis of the specifics of the movement of various types of banking resources, based on the degree of stability, the following three groups can be distinguished:
the most stable (own funds of banks and long-term liabilities);
stable (term savings deposits, loans from other banks, minimum balance of demand deposits);
unstable (fluctuating balances of demand deposits).
The greater the share of the stable and cheap part of banking resources, the higher, under other conditions, the profitability and stability of a commercial bank. Any shifts in the structure of assets and liabilities affect the profitability and risk of banking operations. These shifts are based on changes in credit and investment policies and the bank, which, in turn, are determined by a number of macroeconomic and microeconomic factors.
Long-term lending, especially in a nascent business environment, could be an important source of investment. There is no need to talk about the importance of long-term loans for the development of production in Russia. Long-term bank loans are primarily aimed at solving strategic goals in the economy. They contribute to a gradual increase in production and, as a result, the overall rise of the country's economy. There is a need to create investment banks that would be engaged in financing and long-term lending of capital investments. In the meantime, the government is forced to finance the necessary programs from the budget, and they are sorely lacking in the budget.
Attracting public funds to the investment sector by selling shares of privatized enterprises and investment funds, in particular, could be considered not only as a source of investment, but also as one of the ways to protect citizens' personal savings from inflation. It is possible to stimulate the investment activity of the population by establishing higher interest rates on personal deposits in investment banks compared to other banking institutions, attracting funds from the population for housing construction, providing citizens participating in investing in an enterprise with a priority right to purchase its products at a factory price, etc. .P.
For the influx of household savings into the capital market, a wide network of intermediary financial organizations is needed - investment banks and funds, insurance companies, pension funds, building societies, etc. control over enterprises claiming to attract funds from the population.
The main factor affecting the state of internal opportunities for financing capital investments is financial and economic instability. However, the lack of domestic investment potential can be considered relative.
2.2 Problems in the development of banking investment
The inflow of private national and foreign capital into the investment sphere is hindered by political instability, inflation, imperfection of legislation, underdevelopment of industrial and social infrastructure, and insufficient information support. The interconnection of these problems enhances their negative impact on the investment situation. Weak investment potential is explained by disagreements between the executive and legislative authorities, the Center and objects of the Federation, the presence of interethnic conflicts in Russia itself and wars directly on its borders, legislation unfavorable for investors, inflation, a decline in production, etc. Russian legislation is unstable, commercial activity encounters many bureaucratic hurdles. However, some changes are already taking place in these areas. All these factors outweigh such attractive features of Russia as its natural resources, powerful, although technically obsolete and chronically underloaded production apparatus, availability of cheap and sufficiently skilled labor, and high scientific and technical potential. In a market economy, the totality of political, socio-economic, financial, socio-cultural, organizational, legal and geographical factors inherent in a particular country, attracting and repelling investors, is commonly called its investment climate. Ranking the countries of the world community according to the investment climate index or its opposite indicator of the risk index serves as a general indicator of the country's investment attractiveness and a "barometer" for foreign investors. Despite the fact that the domestic stock market has been showing steady growth over the past few years, its "narrowness" due to the reluctance of most companies to become public and infrastructure problems act as factors holding back investment. Moreover, recently there has been a tendency to move trading in securities of domestic companies to Western exchanges, while the share of Russian stock exchanges in the total volume of trading in Russian shares has decreased.
Russia still lacks its own system for assessing the investment climate and its individual regions. Investors are guided by the assessments of numerous firms that regularly monitor the investment climate in many countries of the world, including Russia. However, assessments of the investment climate in Russia, given by foreign experts at their regular meetings, held outside the Russian Federation and without the participation of Russian experts, seem to be of little reliability. In this regard, the task arises of forming, on the basis of the studies carried out at the Institute of Economics of the Russian Academy of Sciences, the National System for Monitoring the Investment Climate in Russia, large economic regions and subjects of the Federation. This will ensure the inflow and optimal use of investments, and will serve as a guide for Russian banks in their own credit policy.
Although the domestic stock market currently brings incredible returns (in 2004, the average return on investment in Russian stocks was about 40%, and since 2005 - 10%), it is impossible to say that it is in perfect order, since the apparent prosperity upon closer examination, it turns out to be unsteady and shaky. Experts have serious complaints about pricing on the Russian stock market. Thus, in developed markets, the formation of the market price of a share occurs, as a rule, on the basis of fundamental factors, primarily an assessment of the financial condition of the company (its net profit, revenue and other indicators). In Russia, the current share price largely depends on speculative tendencies, which, of course, carries with it a high investment risk.
The transition of securities from the low-liquid sector to the group of "blue chips" (as the most traded shares of large companies are called) is practically absent - over the past five years, only a few securities have joined the "elite" group of shares. And there are several reasons for this, ranging from a banal misunderstanding by managers of the essence of the stock market and ending with the peculiarities of the domestic application of civil and judicial legislation. The imperfection of the latter serves as a deterrent for companies to enter the open market, because Russian reality knows many examples when businessmen lost their enterprises due to the fact that competitors, having acquired several shares of the company through nominees, went to court, which ruled against the existing ones. at that time shareholders or managers. The problem is exacerbated by the fact that even among the most liquid stocks, only a small share actually circulates on the market. The average share of shares in free float for the largest and capitalized companies in Russia does not exceed 30%; for the shares of the 20 largest Russian companies, this ratio is only 27% of their total authorized capital. The similar figure for the 30 largest companies in the US is 90%, and for the 40 largest companies in France - 80 percent.
If Russia can create a strong stock market, then not only will companies be able to raise relatively "cheap" money in sufficient quantities, but ordinary savers will also benefit from a wider range of investment instruments. That is, ordinary citizens will be able to receive more income from their savings and do it with less risk.
The consequence of the narrowness and relative weakness of the domestic stock market are sharp jumps in the value of securities, which is to some extent good for small and medium speculative players, but for large strategic and institutional investors (commercial banks), as well as ordinary citizens, such excessive market volatility is dangerous . The ups and downs of the market are sometimes so rapid that an investor can either become rich or, conversely, become bankrupt in just a matter of minutes.
In recent years, a layer of enterprises and entrepreneurs who have accumulated large amounts of capital has developed in Russia. Due to the instability of the economic situation in the country, large funds are transferred into hard currency and deposited in Western banks.
The outflow of monetary resources (potential investments) from Russia is several times higher than their inflow. The motivation for the outflow of capital is the feeling by Russian businessmen of political and economic instability in Russia. A significant part of the funds accumulated by Russian businessmen, under the influence of fear of a possible social explosion due to inflation and fear of monetary reform, is transferred by them to Western banks or used to purchase real estate and securities.
Often enterprises use their savings not for capital investments within the country, but for issuing loans abroad. Exporting companies tend to keep their profits in foreign bank accounts instead of bringing them back to Russia and directing them to new investments. This process, known as capital flight, is very often illegal. And yet, despite its illegality, capital flight finds a logical economic justification: it is much safer to put capital in a London bank than in the Russian economy. That is why banks prefer to lend to foreigners (by placing money in a foreign bank), rather than to their compatriots.
The overall scale of the outflow of currency cannot be accurately measured, since financial statistics, of course, take into account only their legal part. The outflow of foreign currency on a large scale outside of Russia prompted the authorities to take organizational and legal measures to tighten control over the return of foreign exchange earnings to the country. In order for Russian banks not to be afraid to invest in the economy of their country, it is necessary to create conditions for reducing investment risk. The degree of risk can be reduced by lowering inflation, the adoption of clear economic legislation based on market potentials.
The technology of carrying out market reforms involves a sequence of steps, along with stimulating capital inflow, measures are immediately taken to prevent its outflow.
2.3 Analysis of the investment climate in the Russian Federation
After making an investment decision, it is necessary to plan its implementation and develop a system of post-investment control (monitoring).
Solving the issues of creating a favorable investment climate, managing investment complexes, creating an effective investment infrastructure and legislative support for investment processes is impossible outside the realities and trends of today's world, without analyzing the processes of globalization of the world economy. Today, globalization is characterized by systemic integration of world markets and regional economies, all spheres of human activity, resulting in accelerated economic growth, accelerated introduction of modern technologies and management methods. At the same time, the changes caused by the processes of integration of economies are of a deep nature, affect all spheres of human activity, set the task of bringing the social parameters of the development of society into line, improving its political structure, technologies of macroeconomic management.
In recent years, there is an increasing opportunity for every entrepreneur in the world, an investor, to protect themselves from the risk of unexpected and sharp changes in exchange rates and interest rates and quickly adapt to unexpected financial shocks such as oil, as well as guarantee some financial discipline for the state, preventing governments from pursuing inflationary policies. and a policy of increasing public debt. Under the dominance of market relations in the global dimension, states are forced to implement a more reasonable economic strategy. Savings and investments are allocated more efficiently. Investors are not limited to their home markets, but can look around the world for those favorable investment opportunities that will yield the highest returns. Investors have more choice in how they allocate their portfolio and direct investments. The total volume of private capital inflow to emerging markets in 2005 is estimated at about USD 200 billion, which is one third more than in 2004. Direct investments will amount to USD 130 billion, portfolio investments USD 42.4 billion and loans USD 26.3 billion. European emerging markets will be in second place in terms of private capital inflows - USD 34.8 billion, of which USD 16.6 billion will come from direct investments, USD 3.3 billion from portfolio investments and USD 14.9 billion from loans. private capital to Russia already exceeds the outflow. Investor confidence in Russia "continues to strengthen," the IMF report "Global Financial Stability" concludes. This trend is based on Russia's strong fiscal position and impressive economic growth, the document says. Judging by the report, Moscow's success contrasts with the overall situation in global financial markets. According to the IMF, it is now determined by such factors as "uncertain and uneven global economic growth" and "the unwillingness of corporations to increase capital investment". The authors of the document state that the "appetite for risky investments" has also weakened. In October, investments in fixed assets grew by only 7.8% year-on-year, which is significantly less than the figures for September 8.7% and August 11.6%. was 11.6%. The number of unprofitable banks has almost doubled since the beginning of the year, Novye Izvestia reports today. During the year, licenses were revoked from 16 commercial banks. According to analysts, the Russian banking system is in for hard times. Another blow was dealt to it in the summer as a result of the "banking crisis". As a result, according to sociologists' estimates, only 25% of Russians have a bank account, of which only 3% have a commercial one. But the main problem is not only in the distrust of the population in commercial banks, but in poverty: 63% of Russians simply do not have savings. As a cure for the summer crisis, the Central Bank is trying to introduce a deposit insurance system.
Sberbank will continue to be the most recognizable banking brand, and the scale of its business makes it possible to consider its reliability comparable to that of the entire banking system. Vneshtorgbank, expanding its branch network, will become more and more universal. Non-residents will increase their presence in the Russian market both through the development of operations of existing banks (in particular, Raiffeisenbank and Citi Bank are fighting for a leading position in the retail lending market), and due to the arrival of new large players.
It is absolutely possible to assume the acceleration of concentration processes, the reason for this will be the exit from the market of some small and medium-sized banks, especially those operating in Moscow. And increased competition, including with the arrival of new non-residents, leaves small banks less and less chance of survival. It is very likely that we will see a significant number of takeovers and voluntary liquidations.
The outflow of capital from the Russian Federation, which, according to forecasts of the Ministry of Finance, will amount to $ 9 billion in 2006. That is, the majority of those who have money prefer to keep it in foreign banks away from Russia.
The reserve assets of the Central Bank of the Russian Federation and the Ministry of Finance have shown steady growth over the past years. Thus, since 2001 their volume has increased 2.8 times and amounted to $76.9 billion as of January 1, 2004. The share in the structure of assets in this period increased from 11.7% to 24.4%. The volume of Russian external financial liabilities as of the beginning of 2004 increased to $323.3 billion, or by 30.3% as compared to the beginning of the previous year.
More detailed information is given in the table:
Table 1 "Structure of the banking investment portfolio by types of assets, in % to the corresponding items of the total banking investment portfolio"
| 2000 | 2001 | 2002 | 2003 | 2004 | 01.05.2005 | 01.06.2005 | 2005 (estimate) | |
| Structure in rubles, in % of investments in rubles | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
| federal bonds | 39.4 | 26.7 | 12.1 | 10.5 | 8.1 | 11.2 | 11.0 | 8.4 |
| CBR | 14.0 | 19.8 | 25.8 | 27.7 | 21.4 | 22.3 | 24.2 | 21.7 |
| Municipal bonds | 1.8 | 1.5 | 0.6 | 0.3 | 0.5 | 1.2 | 1.4 | 1.1 |
| Corporate bonds | 0.8 | 0.3 | 0.0 | 0.1 | 0.9 | 1.8 | 2.0 | 1.7 |
| Loans | 41.6 | 48.9 | 56.4 | 58.4 | 66.2 | 60.3 | 58.2 | 64.1 |
| loans to the real sector | 33.6 | 36.2 | 48.6 | 52.5 | 58.4 | 50.4 | 48.6 | 55.2 |
| loans to regional authorities | 3.4 | 5.9 | 2.6 | 1.4 | 1.2 | 1.8 | 1.6 | 1.5 |
| loans to the population | 4.6 | 6.9 | 5.2 | 4.5 | 6.6 | 8.2 | 8.0 | 7.4 |
| Company shares | 2.2 | 2.8 | 5.1 | 3.0 | 2.9 | 3.0 | 3.2 | 2.9 |
| Structure in foreign currency, in % of investments in foreign currency | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
| federal bonds | 11.1 | 21.3 | 22.8 | 23.6 | 21.7 | 20.4 | 19.3 | 19.9 |
| Regions of the Russian Federation | 0.1 | 0.0 | 0.1 | 0.0 | 0.1 | 0.0 | 0.0 | 0.0 |
| Loans | 49.5 | 40.1 | 30.6 | 30.0 | 36.2 | 48.4 | 50.0 | 43.4 |
| loans to the real sector | 49.5 | 40.1 | 30.6 | 30.0 | 36.2 | 48.4 | 50.0 | 43.4 |
| loans to the population | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Deposits in foreign banks | 39.3 | 38.6 | 46.5 | 46.4 | 42.1 | 31.2 | 30.7 | 36.6 |
The increase in reserve assets also had a significant impact. The goal of doubling GDP in a decade, orienting the economy towards 7% annual growth, gave rise to an unconscious feeling that if the figure is more than 7%, this is already very good. From this point of view, the increase in investments in the Russian economy in 2006 by 10.9% - this is an excellent result, and the slowdown in the investment process compared to 2005 (12.5%) is not at all dramatic.
One of the main events of 2005 was the increase by the international rating agency Fitch of Russia's rating on borrowings in the national currency. The rating outlook is stable. As noted in the agency's report, the upgrade of Russia's sovereign rating to investment grade is evidence of the recognition of a significant improvement in Russia's creditworthiness in recent years. Exceptional macroeconomic performance, fueled by high oil prices and prudent financial policies, continues to lead to significant reductions in external debt and public debt, accumulation of foreign exchange reserves and an increase in the stabilization fund.
The assignment of the rating opens the way to Russia for a new class of investors operating only in countries that have been assigned an investment rating. This will contribute to a significant inflow of capital into the country and, accordingly, to the stock market, the flow of investment will increase.
Undoubtedly, for most investors, the main signal for activation will be the fact that Russia has been assigned an investment rating by the second world-famous rating agency, as Moody's has already done this. This is good news for the stock market and in the short term, it is no coincidence that the stock market instantly reacted to this news by increasing quotes of a number of Russian issuers.
A positive trend can be observed in various sectors:
Fig.1 Growth of assets in 2007 by segments
Upgrading the rating means lower insurance risks, which is especially important for the insurance business. Considering that the company's rating cannot be higher than the country's rating, Russian companies get this cherished chance - to improve their ratings and, accordingly, join the elite of the world insurance community.
Thus, in 2007, Russian banks significantly increased their capital. The rating agency "Expert RA" conducted a study of the banking sector and identified the main trends in the development of this sector in 2007. As the survey showed, in 2007 banks' own funds grew much faster than assets. Capital increased by 57%, assets - only by 44%. More than 40% of the annual capital growth of Russian banks was provided by the record placements of Sberbank and VTB, during which over $16 billion was raised. By conducting "people's IPOs", Sberbank and VTB strengthened their leadership, and the excess liquidity that was observed at the beginning of the year was partially transferred to interbank lending market. Saved (Gazprombank, Bank of Moscow) and even strengthened (Rosselkhozbank) other major banks controlled by authorities and state-owned companies. The success of large private banks in raising capital on the open market has been more modest. In the course of the SPO, Bank Vozrozhdenie raised about $180 million, and the only IPO of a private bank in 2007, Bank Saint Petersburg, brought shareholders about $270 million. positions to foreigners, whose share in the assets of the top 30 increased from 8% to 9%.
According to "Expert RA", the crisis in the US mortgage sector provoked a shortage of liquidity around the world and worsened the conditions for borrowing by Russian banks. In the fight against the liquidity shortage, the banks survived, but most had to slow down. The top 200's asset growth rate fell by a quarter, from 24% in the first half to 18% in the second.
"The slowdown in the growth of banking assets could have been even more significant if it were not for the timely actions of the Central Bank to provide liquidity in August-December, when the Central Bank provided banks with up to 275 billion rubles a day, and the easing of budget policy at the end of the year," the expert says Department of Ratings of Financial Institutions of the Rating Agency "Expert RA" Stanislav Volkov.
According to the forecasts of analysts of the rating agency "Expert RA", the pace of development of the banking system in 2008 will depend on how this structure will endure new waves of liquidity shortage. The beginning of spring can become especially dangerous, when local peaks in bank payments on taxes and loans will add to the global liquidity crisis. The refinancing instruments worked out last autumn will allow the Central Bank to provide banks with up to 700 billion rubles. and prevent the development of crises. But the high rates of growth in bank lending, which the Russian economy needs to continue its investment boom, can no longer be achieved without state support. Banks, concerned only with increasing the liquidity of their assets, may become not a catalyst, but a brake on economic development.
Also, the flows of the Investment Fund of Russia and its forecast can be displayed in more detail in the table below.
Tab. 2. "Financial flows of the Investment Fund of Russia in 2006-2010"
| Indicators (billion rubles) | 2006 | 2007 | 2008 | 2009 | 2010 |
| Investment RF Fund | 69,7 | 110,6 | 89,2 | 109,6 | 76,5 |
| The rest of the investment RF Fund at the beginning of the year | 69,7 | 176,6 | 229,6 | 278,4 | 294,6 |
| Projects approved by the government commission | - | 1,8 | 5,1 | 16,4 | 21,5 |
| Russian venture company | 5 | 10 | - | - | - |
| Russian Investment Fund inform. - communication Technologies. | - | 1,45 | - | - | - |
| Costs for investment advisors (for METR) | 0,2 | 0,2 | 0,2 | 0,2 | 0,2 |
| The rest of the investment Fund at the end of the year | 66,0 | 140,3 | 168,9 | 218,1 | 247,3 |
Rice. 2 "Financial flows of the Investment Fund of Russia in 2006-2010."
3. Prospects and methods for stimulating banking investments
3.1 Investment promotion methods
The most important part of the stock market development policy is the tax component. World experience shows that stock markets as a source of investment always and everywhere have huge tax benefits. In a crisis, lack of investment and high risks, the creation of tax incentives that compensate for these risks is one of the most powerful tools to encourage people to invest in Russian stocks and bonds.
At the same time, the most common tax methods for stimulating investors in securities, which are widely used in international practice, are not used in Russia. The Tax Code of the Russian Federation establishes the following income tax rates:
24%, unless otherwise provided for in clauses 2-5. Article 284 of the Tax Code of the Russian Federation;
15% - for income in the form of interest on state and municipal securities, the terms of issue and circulation of which provide for income in the form of interest, etc.
In the field of tax policy, the creation of favorable conditions for the intensification of investment activity in the manufacturing sector implies an increase in the effectiveness of tax incentives in the implementation of investments. Tax incentives can be implemented in the form of: exemption from taxation of part of the profits used to finance capital investments in order to develop their own production base and to finance housing construction; discounts, the effect of which is associated with expenses that affect the results of taxation; tax credits; tax holidays.
A more effective type of tax benefits, which has become widespread in Western practice, is an investment tax credit. It provides for a reduction within a certain period and within the permissible limits of payments on profit (income) tax, as well as on regional and local taxes, followed by a phased payment of the loan amount and accrued interest. Unlike other types of benefits, a tax investment loan acts as a direct reduction in the tax liability and takes into account the property status of the taxpayer to a greater extent. If the use of tax credits is more beneficial for taxpayers whose income is taxed at high rates, then the use of an investment tax credit is for taxpayers with low incomes.
In Russia, the procedure for applying an investment tax credit was determined by the Federal Law "On Investment Tax Credit", however, due to the complexity of obtaining a loan and the imperfection of the legal framework, this type of tax benefits has not been widely used. In the Tax Code, the investment tax credit is considered as the main type of benefits that stimulate investment in the real sector of the economy.
The legal basis for regulating the investment sphere is reflected in the Civil Code of the Russian Federation. Meanwhile, in the practical organization of investment activity, a number of problems remain that require legal regulation. These include: guarantees of real security of property rights, the issue of private ownership of land, registration procedures for enterprises associated with the activities of foreign investors, unpredictable and frequent changes in customs duties, as well as the inconsistency and inconsistency of the legal approaches used. The legislative framework should be the foundation for the activities of all economic entities (the state, enterprises, corporations, financial intermediaries, the population).
It is necessary to legislate the limits of administrative influence, increase the role of legal regulation of economic life, create an effective system of judicial review of economic disputes, and switch to the use of normative methods of regulating the economy. Widespread use of regulatory methods of regulation (interest and tax rates, economic liquidity standards, insolvency, financial condition of mandatory reserve norms, regulatory requirements for licensing and registration of business activities, criteria for investment project tenders, etc.) will ensure the objectivity of business decision-making , limit the role of administrative bodies to control the compliance of the activities of economic entities with the standards, requirements and criteria established by law. Thus, taking into account the scale of the tasks to be solved, it is obvious that in order to initiate a sustainable investment boom, coordinated measures are needed to ensure a favorable environment for investment activity, the development of forms and methods of economic regulation that take into account the real investment situation.
To revive investment activity in Russia, it is necessary to create an effective mechanism for creating a favorable climate for investment, and to concentrate the necessary financial resources in the banking system.
The practice of investing in developed countries shows that the integration of investment and innovation activities is successful with a powerful mechanism for attracting cash deposits from the population and banks' own working capital; developed securities market; using the opportunities of leasing and insurance companies, investment funds, mortgage lending.
As for Russia, it is expedient for it to choose such an adaptive strategy for managing the investment and innovation process, in which there would be joint elements of various strategies based on domestic intellectual potential and scientific and innovative resources that contribute to the production of competitive types of products and services, their implementation in the domestic and foreign markets.
Among the measures of a general nature, the following should be mentioned as priorities:
achieving national accord between various power structures, social groups, political parties and other public organizations;
radicalization of the fight against crime;
deceleration of inflation by all measures known in world practice, with the exception of non-payment of wages to workers;
revision of tax legislation in the direction of its simplification and stimulation of production;
mobilization of free funds of enterprises and the population for investment needs by raising interest rates on deposits and deposits;
launching the bankruptcy mechanism provided for by law;
providing tax incentives to banks, domestic and foreign investors making long-term investments in order to fully compensate them for losses from slow capital turnover in comparison with other areas of their activity;
Among the measures to enhance the investment climate, it should be noted:
adoption of laws on free economic zones;
creation of a system for receiving foreign capital, including a wide and competitive network of state institutions, commercial banks and insurance companies that insure foreign capital against political and commercial risks, as well as information and intermediary centers engaged in the selection and ordering of projects that are relevant for Russia, and the search for those interested in their implementation investors and prompt execution of turnkey transactions;
creation in the shortest possible time of a national system for monitoring the investment climate in Russia;
3.2 Prospects for the investment activity of commercial banks
The dominant segment of lending to the population will remain consumer loans, the range of which is very wide - from cars and sophisticated household appliances to medical and tourist services. However, consumer lending also needs to improve the infrastructure. Expanding the circle of borrowers, involving new social groups with lower incomes and property into it, increases the risks of lending, which means that it will require more attention to the analysis of the borrower.
An important prerequisite for this will be the operation of the bank deposit insurance system. There will be significant changes in investment processes and applied investment technologies:
the possibility of information and financial control over the use of investment resources of the investor in the On-line mode, remote at any distance from the place of investment of resources;
introduction of unified information standards for collateral mechanisms, financial statements, presentation of projects and programs, enterprises, regions and states in information systems;
creation of an integrated investment infrastructure (banking, legislative, organizational) for servicing investments.
development and implementation of integral mechanisms and technologies for managing investment processes.
The basis for integrating the mechanisms and tools of the investment market, in my opinion, will be information technology, which will form (together with organizational) the basis of the pyramid of management decisions. All the rest (organizational, investment, financial, legislative) acquire a subordinate character and will develop on the basis of the leading trends in the development of information. The latter will be characterized by the following features:
unification of information reflection and up-to-date support, a deep description of each object of investment and business, which makes it possible to obtain prompt reliable information about this object anywhere in the world;
legislative provision of the reliability of information at any level, coordination of such provision by interstate multilateral agreements of all countries of the world community;
organizational support of ongoing transactions in the markets of goods, finance, services and investments in the Internet environment, unification of elements of economic law of the countries of the world that ensure the security of such transactions;
the final transfer of financial and banking business support to the environment of information and virtual technologies; The legal framework of the global investment market will also represent a harmonious, balanced multi-level system of laws and regulations built on the basis of information technology.
The banking system of Russia should already finally decide on the ways of its development against the backdrop of growing competition from foreign banks. According to analysts, there will be a restructuring of the banking system, mergers and acquisitions in the financial sector of the economy. It is expected that this process will last 2-3 years, as a result of which only the largest and most competitive banks will remain on the market.
According to leading analysts, the following scenario for the development of the bond market is possible in the next year and a half. In the absence of drastic changes in market regulation, it can be expected that the number of issuers will increase and the volume of transactions will increase. There will be an extension of the terms of borrowing, expansion of the range of industries whose enterprises will resort to issuing bonds. By the end of next year, there will be a significant increase in the turnover of the secondary market.
Currently, the shares of many companies listed on the stock market are undervalued. The general rule that has been developed by the world practice of the functioning of stock markets can be summarized as follows:
1. When the market value is greater than the "true" value, the stock is clearly overvalued by the market. Sooner or later, the market will realize this and, consequently, the price will inevitably go down.
2. When the market value is less than the "true" value, the market undervalues the stock under study. Sooner or later, the market prices of these securities must rise. On the one hand, the general underestimation of Russian enterprises indicates the underdevelopment of the economy and, as a result, the securities market in the country, the lack of investment, because the market price of shares is formed primarily under the influence of supply and demand for shares. On the other hand, the share price should still start to grow. Under these conditions, an investor, aimed at medium and long-term investment of capital, must determine exactly those shares that will give the maximum increase in their market value in the coming years.
Legislative (and, first of all, international) acts should ensure the reliability of the provision of information about the investment market, projects and programs, investment applicants, production systems and enterprises, the fulfillment of obligations to investors, the provision of benefits and preferences to the latter for the period of resource development. Bills of the above direction should be a priority for consideration and adoption by our legislature.
On the basis of the main legislative acts and to ensure their functioning, an international legal framework, a unified system of accounting and reporting, an integral package of model legislative decisions should be created that allow the states of the world to quickly harmonize their legislative framework.
The development of investment institutions may be subject to the following changes and be determined by the following main trends:
First, investment institutions should increasingly focus on creating conditions for the penetration of foreign capital, creating favorable conditions for such penetration. We are talking about insuring investment risks, taking into account the difference in foreign exchange rates of national currencies, the long-term provision of investment resources, the liquidity of collateral assets and the guarantees provided. It is the organizational structures that implement the above functions that are the primary task of the near future for the subjects of the investment market.
Secondly, the development of investment tools will be carried out through information modeling of investment services and only then building the necessary (missing) of its material elements.
The organizational infrastructure of the investment market should allow the construction of financial multipliers, create the possibility of placing relatively cheap resources under the provision of various instruments and guarantees, the level of profitability, the level of investment risks. The investment infrastructure being created should be understandable and familiar to the investor, able to comprehensively serve the investor himself, his investment institution, and investment seekers.
International cooperation is one of the real ways to attract significant investment resources to the economies of states. At the same time, international cooperation closes that niche of the investment market that is not interesting for national and regional investment institutions - the niche of small projects.
Russian commercial banks will be significant investors in the ruble corporate bond market, while their share in this segment will decrease in the optimistic scenario (if corporate bond yields fall) and increase otherwise.
Prospects for the development of the corporate bonded loans market at the level of our region will depend primarily on the nature of the region's leadership and economic policy, as well as on the investment activity of enterprises in need of additional financing.
3.3 Generalizing conclusions of the investment activity of banks in the Russian Federation
In connection with the analysis of the causes of the financial crisis and the search for ways to further develop the banking system, some economists consider it necessary to make a transition to the American model, which makes it possible to distinguish between commercial and investment risks.
The profits of banks specializing in individual operations can be quite large, which makes it unnecessary to operate in other areas. At the same time, the last decades are characterized by a clear trend towards the universalization of banking operations. Increasing competition between credit institutions and the emergence of fundamentally new opportunities in the context of the development of a powerful financial market have led many banks to find other ways to increase the profitability of their operations.
The trend towards universalization has led to the development of services: investment project financing, leasing, client investment portfolio management, consulting services, etc. The development of banking services occurs both as a result of the liberalization of banking legislation, and as a result of various methods for circumventing existing laws by banks.
The universal nature of Russian commercial banks is largely forced, due to the underdevelopment of the securities market and the network of non-banking institutions. The universal model is associated with an increased riskiness of the activities of a commercial bank, which increases sharply in crisis conditions, since the bank's risks for investment investments are not separated from the risks for deposit-credit and settlement operations.
Investing in securities in direct connection with the main banking activity in the absence of a risk control mechanism is fraught with the threat of loss of the bank's liquidity.
The organization of investment banks, which are of particular importance for the Russian economy, which is in such need of long-term investments, within the framework of the emerging universal model, most likely can be the creation of investment institutions as subsidiaries of large universal banks or the formation of specialized investment banks operating on the basis of a system of state guarantees and benefits.
The Russian economy needs not only to improve the existing forms of investment activity, but also to use new patterns of relationships between the participants in the investment process.
It is of fundamental importance that banks pursue a more active investment policy and participate in the implementation of highly efficient investment projects. Very important in this regard is the analysis of the participation of banks in developed countries in project financing.
The development of project finance in the country is hampered by an unfavorable investment climate, insufficient resources for large-scale financing of capital-intensive projects, low qualifications of project finance participants, and other factors that exacerbate project risks. In the current conditions, the solution of the problem requires an integrated approach that takes into account the interests of various parties.
The most common tax incentives for investors in securities, which are widely used in international practice, are not used in Russia.
In the field of tax policy, the creation of favorable conditions for the intensification of investment activity in the manufacturing sector implies an increase in the effectiveness of tax incentives in the implementation of investments.
Widespread use of regulatory methods of regulation (interest and tax rates, economic liquidity standards, insolvency, financial condition of mandatory reserve norms, regulatory requirements for licensing and registration of business activities, criteria for investment project tenders, etc.) will ensure the objectivity of business decision-making , limit the role of administrative bodies to control the compliance of the activities of economic entities with the standards, requirements and criteria established by law.
However, in my opinion, despite the tempting prospects for growth in lending to individuals, the main income of banks, as before, will come from loans to enterprises.
An important prerequisite for financial stability will be the start of real operation of the bank deposit insurance system. Most likely, almost all banks that play a significant role in the private deposit market will become its members, and a small number of banks with an insignificant volume of deposits will be weeded out.
The banking system of Russia must finally decide on the ways of its development against the backdrop of growing competition from foreign banks. There will be a restructuring of the banking system, mergers and acquisitions in the financial sector of the economy.
The organizational infrastructure of the investment market should allow the construction of financial multipliers, create the possibility of placing relatively cheap resources under the provision of various instruments and guarantees, the level of profitability, the level of investment risks.
The development of interregional cooperation is one of the ways to international secure and stable economic development and strengthening of statehood.
Conclusion
The problems of participation of Russian banks in the investment process are largely related to the specifics of the formation of the banking system, which took place in isolation from the real sector of the economy. The peculiarities of the formation of the Russian banking system were the short terms of creation and the inflationary basis of the financial potential. In the period following the decline in inflation, the development of banks began to be determined also by the level of banking management, the capture of a market niche.
The action of market mechanisms of competition, the policy of the Bank of Russia aimed at strengthening banks and increasing capital, led to institutional shifts in the banking system, concentration and centralization of banking capital.
Meanwhile, Russian banks are significantly inferior in terms of capital and assets to foreign ones. The resource base is characterized by extremely low equity capital of most Russian banks, high centralization of banking capital in the central regions and the underdevelopment of the regional banking network, low quality of liabilities and assets. Restoring and building up the resource base of the banking sector are the most important prerequisites for enhancing the participation of banks in the investment process.
If there are alternative directions for investing in financial instruments, banks are not economically interested in investing in production investments, which are characterized by lower returns, long payback periods and high risks.
In the new economic situation, the ability of banks to quickly earn money through financial speculation has significantly decreased.
The need to activate banks in the investment process is determined by the interdependence of the effective development of the banking system in the economy as a whole.
The parallel development of the processes of universalization and specialization of the activities of banks has led to the formation of a new type of investment banks, the distinguishing features of which are: the global nature of their activities, the presence of significant free capital, a full range of diversified and integrated services, the creation of their own asset management business, retail operations with small and medium-sized clients through the development of powerful brokerage networks, merging with the insurance business.
An important role in ensuring the investment regime is played by monetary, tax, structural and other methods of stimulating investment.
The organizational infrastructure of investments will become more and more international and integrated. It should not be limited to the territory of the state, or a separate part of it. The more versatile the composition of such an infrastructure is, the more fully it will be able to realize the capabilities of various states, investment technologies and attract resources on more convenient and favorable terms.
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The period of direct forecasting of free cash flows of a nationwide investment project.
It is well known that commercial banks are one of the components of the country's economy. They have the opportunity to influence it through the implementation of investment activities. Relationships with banks take place in various forms, as in a simple daily routine, when an ordinary one enters into a term deposit agreement. But there are also such special clients when, in the course of developing their business, they want to enter the foreign level, launch a new branch of production, but often they do not have the funds for these purposes. In such cases, so that the plans do not remain just on paper, it is necessary to involve a financial intermediary, in the role of which it acts.
Investment bank
When talking about banks and its investments, one must first of all decide what an investment bank is, this has already been discussed above, and it is also necessary to describe its distinguishing features. So, the most important distinguishing feature of an investment bank is that all its activities are aimed at expanding the business of clients and improving its quality. Also, an investment bank differs from the rest in that it chooses the organization of financing for clients, develops special programs aimed at attracting new funds and financing markets. From the foregoing, we can conclude that the main task of an investment bank is to improve the quality of the clients' business, by consulting and financing it.
To understand what this very bank consists of, it is first necessary to define what we mean by the phrase investment activity or investment. In the broadest sense, these are investments of cash equivalent in various, for example, agriculture or industry. The economy knows several models for the implementation of investment activities. The first model for the successful implementation of investment activities is the impossibility of combining investment activities and the activities of an ordinary commercial bank. Economists argue that it is the separation of actions to attract and invest deposits and operations with securities that can lead to high rates. This method was first used in the USA in the 30s of the 20th century. Also, this model is better known as the Anglo-Saxon deposit model. But time has shown that this model not only has a number of advantages, such as attracting large customers, by transforming banks into investment companies, at this time the term appeared. It also became known that this model is practically unable to survive the financial crisis, the banks that united in “exploded” one by one drowning each other, because their assets were interconnected. In order to somehow stay afloat, American banks had to seek help from the Central Bank of the Russian Federation, the Central Bank of the Russian Federation provided several long-term loans, which several, today successful, US banks owe to it. The next model is typical for European banks, it is called continental and almost completely contradicts the previous one. The essence of this model lies in the conduct of investment activities by universal banks, which sell at the request of customers, carry out and attract deposits. Investment activity in Russian banks
Neither model is suitable for Russia. Successful investment activity for Russian banks lies in the synthesis of the two previous models. This is due to the fact that Russia is very developed, which constantly pleases with its growth. Thus, in Russia there are both universal banks and brokerage companies dealing only with investments. Both are legal and have licenses to carry out their activities, so clients have a wide choice for applying for investments and, of course, each bank or brokerage company offers more favorable conditions, thereby developing healthy competition, which has a positive effect on financial Russia. Despite the positive development of this activity, Russian legislation still does not have a clear concept of what investment activity is and what an investment bank is.
In modern society, there are several types of investment. The first and most common type is direct investment. This is the so-called buying up of working assets by the bank in the production itself. The second type is portfolio investment. This is the possession by the bank of a certain percentage of the shares of the total number or the investment of funds in the statutory production, often banks exert a powerful influence on this type of production by means of owning a controlling stake. The third type of investment is very beneficial for small businesses, since it consists in the issuance of subsidies or loans by the bank for the development of production. All this activity is aimed at maximizing both short-term and long-term plans. The maximum effect from such activities is achieved with the help of competent investment policy planning, these issues are dealt with by special services of the bank. Based on the foregoing, we can conclude that in addition to the main three models of the global investment market, this sector of the economy is very diverse and continues to develop, generating more and more novels. For example, junk were an innovation in the middle of the last century, and now they have occupied a free niche in this business and have firmly established themselves. Stay up to date with all important United Traders events - subscribe to our
The investment policy of commercial banks involves the formation of a system of targets for investment activity, the choice of the most effective ways to achieve them. In the organizational aspect, it acts as a set of measures for organizing and managing investment activities, aimed at ensuring optimal volumes and structure of investment assets, increasing their profitability with an acceptable level of risk. The most important interrelated elements of the investment policy are the tactical and strategic processes of managing the bank's investment activities.
Under the investment strategy understand the definition of long-term goals of investment activities and ways to achieve them. Its subsequent detailing is carried out in the course of tactical management of investment assets, including the development of operational goals for short-term periods and the means of their implementation. The development of an investment strategy is thus the starting point of the investment management process. The formation of investment tactics takes place within the framework of the given directions of the investment strategy and is focused on their implementation in the current period.
It provides for determining the volume and composition of specific investment investments, developing measures for their implementation, and, if necessary, compiling a model for making management decisions on exiting an investment project and specific mechanisms for implementing these decisions.
Banks, buying certain types of securities, seek to achieve certain goals, the main of which include:
- - safety of investments;
- - profitability of investments;
- - growth of investments;
- - liquidity of investments.
Investment security refers to the invulnerability of investments from various shocks in the stock market, the stability of income and liquidity. Security is always achieved at the expense of profitability and investment growth. The optimal combination of security and profitability is achieved by careful selection and constant revision of the investment portfolio.
The main principles of effective investment activity of banks are:
- - firstly, the bank must have professional and experienced specialists who make up the securities portfolio and manage it. The result of the bank's activity to a decisive extent depends on the effectiveness of investment decisions;
- - secondly, banks act more efficiently, the more they manage to distribute their investments among various types of stock values, i.e. diversify investments. It is advisable to limit the investment by types of securities, sectors of the economy, regions, maturity, etc.
- - thirdly, investments must be highly liquid so that they can be quickly transferred into instruments that, due to changes in market conditions, become more profitable, and also so that the bank can quickly get back the funds invested by it.
The investment portfolio of a commercial bank usually consists of various securities issued by the federal government, municipalities and large corporations.
To assess the feasibility of acquiring certain securities, there are two main professional approaches; most large commercial banks conduct both fundamental and technical analysis.
Fundamental analysis covers the study of the activities of industries and companies, analysis of the financial condition of the company, management and competitiveness. It consists of industry analysis and company analysis. In an industry analysis, the bank determines the industries that are of greatest interest to it, and then the leading companies are identified in these industries, and among them the company whose shares it is advisable to purchase is selected.
Technical experts are based on the study of exchange (or off-exchange) statistics; analyze the change in supply and demand, the movement of stock prices, volumes, trends and structure of stock markets on the basis of diagrams and graphs, predict the possible impact of the situation on the market on the demand and supply of securities. The analysis of companies is divided into quantitative and qualitative.
Qualitative analysis is an analysis of the effectiveness of company management; quantitative - studies of various kinds of relative indicators obtained by comparing individual articles of the company's financial report.
Comparisons are made with similar enterprises and industry average data of the main absolute indicators of its activity (sales volume, gross and net profit), the study of changes and profitability of sales and profitability of capital, in net income per share and the size of the dividend paid on shares. Investment securities generate income for commercial banks in the form of interest income, commissions for the provision of investment services, and market value growth.
World experience has not developed an unambiguous approach to the problem of using banks' own funds when acquiring shares of other legal entities: in some countries, the participation of banks in the capital of other structures is not limited (Germany), in some countries it is strictly prohibited (USA, Canada). The Bank of Russia has chosen an intermediate option for regulating this area - the Central Bank of the Russian Federation can control the work of the bank, but is not in a position to interfere in the activities of other economic entities that are not credit institutions, and, therefore, is not able to determine the degree of commercial risk.
The main risks in investing are associated with the possibility of: loss of all or a certain part of the invested funds; · depreciation of the means placed in securities at growth of inflation; non-payment in full or in part of the expected return on invested funds; Delays in earning income · Emergence of problems with re-registration of ownership of acquired securities.
After determining the investment objectives and types of securities to purchase, banks choose a portfolio management strategy. According to the methods of conducting operations, strategies are divided into active and passive.
All active strategies are based on forecasting the situation in various sectors of the financial market and the active use by banking specialists of forecasts for adjusting the securities portfolio. Passive strategies use the forecast for the future to a lesser extent. A popular approach in such management practices is indexing, i.e. securities for the portfolio are selected based on the fact that the return on investment must correspond to a certain index and have a uniform distribution of investments between issues of different maturity. At the same time, long-term securities provide the bank with higher income, and short-term securities provide liquidity. A real portfolio strategy combines elements of both active and passive management.
The most important reason for the significant increase in bank investment in securities: the relatively high level of income on them, less risk and high liquidity compared to lending operations.
The most important characteristic of the forms and types of banking investments is their assessment from the standpoint of a combined investment criterion, the so-called magic triangle "profitability-risk-liquidity", which reflects the inconsistency of investment goals and requirements for investment values.
Banks work mainly not on their own, but on attracted and borrowed resources, so they cannot risk their clients' funds by investing them in large investment projects, if this is not secured by appropriate guarantees. In this regard, when developing their investment policy, commercial banks should always proceed from real risk assessments, economic efficiency, financial attractiveness of investment projects, the optimal combination of short, medium and long-term investments. At the same time, the existing investment system is not only an internal affair of the bank itself. In accordance with the basic principles of banking regulation, an integral part of any supervisory system is an independent review of the bank's policy, operations and procedures related to the issuance of loans and capital investment, as well as the ongoing management of the loan and investment portfolios.
Consequently, commercial banks must clearly work out and formally fix the most important activities related to the organization and management of investment activities. In essence, it is about the development and implementation of a sound investment policy. The development of the bank's investment policy is a rather complicated process, which is due to the following circumstances. First of all, due to the duration of investment activity, it should be carried out on the basis of a thorough long-term analysis, forecasting external conditions (the state of the macroeconomic environment and the investment climate, the investment market and its individual segments, taxation and state regulation of banking activities) and internal conditions (volume and the structure of the resource base of the market, the stage of its life cycle, the goals and objectives of development, the relative profitability of various assets, taking into account risk factors and liquidity, etc.), the probabilistic nature of which makes it difficult to form an investment policy.
In addition, the definition of the main directions of investment activity is associated with large-scale problems of research and evaluation of alternative options for invested decisions, the development of an optimal investment development model from the standpoint of profitability, liquidity and risk. The development of an investment policy is significantly complicated by the variability of the external environment of banks, which determines the need for periodic adjustment of investment policy, taking into account predicted changes and developing a system for prompt response. Therefore, the formation of the investment policy of banks is associated with significant difficulties, even in a steadily developing economy.
A prerequisite for the formation of investment policy is the general business policy of the bank's development, the main objectives of which are priority in the development of strategic objectives of investment activity. Representing an important component of the overall economic policy, the investment policy is a factor in ensuring the effective development of the bank.
The main goal of the investment activity of the bank can be formulated as an increase in the income of investment activity with an acceptable level of investment risk. In addition to the general goal, the development of an investment policy in accordance with the economic development strategy chosen by the bank provides for taking into account specific goals, which are:
- - ensuring the safety of banking resources;
- - expansion of the resource base;
- - diversification of investments, the implementation of which reduces the overall risk of banking activities and leads to an increase in the financial stability of the bank;
- - maintaining liquidity;
- - expansion of the bank's sphere of influence through penetration into new markets;
- - increasing the circle of clients and strengthening the impact on their activities through participation in investment projects, in the creation and development of enterprises, the acquisition of securities, shares, shares in the authorized capital of enterprises.
Determining the optimal ways to implement the strategic goals of investment activities involves the development of the main directions of investment policy and the establishment of principles for the formation of sources of investment financing. In accordance with these criteria, the following areas of investment policy can be distinguished:
- - investing in order to receive income in the form of interest, dividends, payments from profit;
- - investing for the purpose of generating income in the form of capital gains as a result of an increase in the market value of investment assets;
- - investing for the purpose of generating income, the components of which are both current income and capital gains.
Orientation to one of the above areas is a key link in the formation of investment policy, which determines the composition of investment objects, the source of income, the level of acceptable risk and approaches to investment analysis.
When the investment policy is oriented towards capital growth, the stability of the increase in the market value of investment assets comes to the fore, and their profitability is considered only as one of the factors determining the value of assets.
A policy aimed at capital growth is associated with investing in investment objects, which are characterized by an increased degree of risk due to the possibility of depreciation of their value. An increase in the market value of investment objects can occur both as a result of an improvement in their investment qualities and short-term fluctuations in market conditions. At the same time, the role of the speculative component increases.
Features of this type of investment policy determine the strengthening of the role of prospective aspects of analysis compared to retrospective and current analysis in making investment decisions.
The choice of the direction under consideration as a priority is characteristic of an aggressive investment policy, the purpose of which is to achieve high efficiency of each investment operation, to maximize income in the form of the difference between the price and acquisition of an asset and its subsequent value with a limited investment period.
In the practice of banking activities, the directions of investment policy can be combined in various forms, which, as a rule, make it possible to strengthen the advantages and mitigate the disadvantages. A variant of such a combination is a moderate investment policy, in which the preference is for a sufficient amount of income in the form of both current payments and capital growth with an investment period not limited by strict limits and moderate risk.
The development of an investment policy involves not only the choice of investment directions, but also taking into account a number of restrictions associated with the need to ensure a balance in the investment investments of a commercial bank. Objectives and restrictions are established by the legislative and regulatory acts of the monetary authorities, as well as the management bodies of banks.
The Central Bank of the Russian Federation regulates the investment activities of commercial banks, defining priority investment objects and limiting risks by establishing a number of economic standards (the use of bank resources to purchase shares, issue loans, reserve for the depreciation of securities, bad loans), differentiated risk assessments for investments in various types of assets.
The organization of the investment policy in the bank involves the development of internal guidance documents that fix the basic principles and provisions of the investment policy. The experience of banking practice testifies to the expediency of formulating an investment policy in the form of an investment program.
Reflecting the goals of investment, the investment program determines the main directions of investments and sources of their financing, the mechanisms for making and implementing investment decisions, the most important characteristics of investment assets: profitability, liquidity and risk, their ratio in the formation of the optimal structure of investment investments.
The limit of acceptable risk is the weighted average cost of attracting investment resources. Having established the preferred forms of income in the process of developing the main areas of investment, the investor determines the share of each form in the total income from investment investments.
Management of investment activities provides for the analysis of the structure of assets to bring them in line with the structure of investment resources and ensure the required level of liquidity. The liquidity of investment assets should be associated with the nature of the liabilities that are the source of their financing.
INTRODUCTION
CHAPTER 1. ECONOMIC FOUNDATIONS OF INVESTMENT ACTIVITIES OF COMMERCIAL BANKS
CHAPTER 2. REVIEW OF INVESTMENT ACTIVITIES OF RUSSIAN COMMERCIAL BANKS
2.1 Problems in the implementation of investment activities by Russian banks
CONCLUSION
APPS
BIBLIOGRAPHY
INTRODUCTION
The investment activity of commercial banks is of strategic importance not only for a particular element of the banking sector, but also for the country as a whole. Solving the problem of increasing the efficiency of investment activities by commercial banks is associated with economic growth, raising the living standards of the population, ensuring socio-economic stability and economic security. A rational investment policy will also ensure the effective development of the commercial bank itself. That is why consideration of the topic "Investment activity of commercial banks" is relevant today, in the context of the increasing role of the banking sector.
The object of this course work is the activity of a commercial bank.
The subject of the research is the investment activity of a commercial bank.
The purpose of the work is to identify the problems of investment activities by Russian commercial banks and ways to overcome them.
To achieve this goal, the following tasks will need to be solved:
To study the theoretical foundations of the investment activities of commercial banks
Consider the forms and principles of investment activity, as well as the features of the investment policy of a commercial bank
Describe the ways and prospects for the development of this area of activity of the banking sector
Consider the practical aspects of the investment activities of a particular commercial bank (on the example of Alfa-Bank OJSC)
To identify problems in the implementation of investment activities by Russian commercial banks
On the basis of the identified trend and principles for the development of investment activities of CB Alfa-Bank, to propose the most effective ways of implementing the investment activities of other Russian banks.
In the course of writing the term paper, research methods were used: the method of analyzing economic literature on the theoretical and methodological foundations of the study of the investment activities of commercial banks, methods of economic analysis, synthesis, and the comparison method.
The first chapter of the study is devoted to the theoretical foundations of the investment activities of commercial banks, the second chapter presents an overview and analysis of the investment activities of Russian commercial banks. The third chapter of the work deals with the implementation of investment activities by specific commercial banks - Alfa-Bank OJSC.
CHAPTER 1. ECONOMIC FOUNDATIONS OF INVESTMENT
ACTIVITIES OF COMMERCIAL BANKS
1.1. The essence of the investment activity of a commercial bank
Today, the banking system is one of the most important and integral structures of a market economy, in which commercial banks play a basic role.
Commercial banks act, first of all, as specific credit institutions, which, on the one hand, attract temporarily free funds of the economy, on the other hand, satisfy the various financial needs of enterprises, organizations and the population through these borrowed funds.
The activity of a commercial bank is determined by the following functions:
Accumulation (attraction) of funds;
Placement of funds (investment function);
Settlement and cash services.
The economic basis of the bank's operations for the accumulation and placement of credit resources is the movement of funds as an objective process that influences the formation and use of loan values. By organizing this process, a commercial bank acts as a commercial enterprise that provides a profitable placement of accumulated credit resources.
Thus, the functions of a commercial bank are closely interconnected, that is, the accumulation of funds by the bank implies the further execution of the investment function. The instrument for implementing the latter is investment activity.
Analyzing the essence of the investment activity of a commercial bank, let us turn to the consideration of some concepts that determine the theoretical basis of this issue.
The term "investment" in foreign practice means, as a rule, funds invested in securities for a long period. Based on this approach, the investment activity of banks is considered as a business of providing two types of services. One of them is to increase cash by issuing or placing securities on their primary market. Another is the organization of a virtual meeting of buyers and sellers of already existing securities in the secondary market, that is, the function of brokers or dealers. But this point of view is one-sided and does not consider the entire range of areas of investment activity of banks.
In the domestic economy, the term "investment" appeared relatively recently. Previously, the concept of "gross capital investments" was used, meaning one-time total costs for the reproduction of fixed assets. Investment is a broader concept than capital investment.
Modern domestic economists define investments as long-term capital investments in their own country or abroad in enterprises of various industries, entrepreneurial projects, socio-economic programs, innovative projects. At the same time, it is emphasized that investments give a return after a considerable period of time after the investment. Based on this definition, investment activity is the investment of funds, investment or the total activity of investing money and other values in projects, as well as ensuring the return on investment.
But it is important to note that investments are understood both as all areas of placement of resources of a commercial bank, and as operations for the placement of funds for a certain period in order to generate income. In the first case, investments include the entire range of active operations of a commercial bank, in the second, its term component.
Bank investments have their own economic content. Investment activity in the microeconomic aspect - from the point of view of the bank as an economic entity - can be viewed as an activity in which it acts as an investor, investing its resources for a period of time in the creation or acquisition of real and purchase of financial assets to generate direct and indirect income.
At the same time, the investment activity of banks has another aspect related to the implementation of their macroeconomic role as financial intermediaries. In this capacity, banks help meet the needs of business entities for investment. Demand for them in a market economy arises in monetary form. In addition, banks provide an opportunity to turn savings and savings into investments.
The implementation of investment activities by banks is expressed in the investment process.
The investment process is defined as a sequence of stages, actions, procedures and operations for the implementation of investment activities. The specific course of the investment process is determined by the object of investment and types of investment (real or financial investments).
Since the investment process is associated with long-term investments of economic resources to create and receive benefits in the future, the essence of these investments is to convert the investor's own and borrowed funds into assets that, when used, will create new value.
It is customary to single out three main stages in the investment process.
The preparatory stage - the stage of making a decision on investment, is determined by the following set of phases that replace each other:
Formation of the investment goal;
Investment directions are determined;
Selection of specific objects, preparation and conclusion of an investment agreement, which defines the rights and obligations of participants in relation to the amount of invested funds, the timing and procedure for investments, as well as the interaction of the parties in the implementation of the investment process, the procedure for using the investment object, ownership of the created investment object, distribution future income from the operation of the facility.
The second stage of the investment process is the implementation of investments, practical actions for their implementation, put into a legal form by concluding various agreements. They may be documents related to the transfer of property; contracts aimed at the performance of work or the provision of services; licensing or other civil law agreements. This stage ends with the creation of an object of investment activity.
The third (operational) stage is associated with the use of the created object of investment activity. At this stage, the production of goods, the performance of work, the provision of services are organized, a system of marketing and sales of a new product arises. In addition, there is a compensation of investment costs, income is generated from the sale of investments. This stage coincides with the payback period of investments.
Thus, the investment activity of credit institutions has a dual nature. Considered from the point of view of an economic entity - a bank, it is aimed at increasing its income. The effect of investment activity in the macroeconomic aspect is to achieve an increase in social capital.
The basis of fundamentalism of the investment activity of commercial banks is the interpretation of economic indicators. An indicator is understood as a characteristic of the object under study that is accessible to observation and measurement, which makes it possible to judge its other characteristics that are inaccessible to direct research.
The indicators of investment activity include:
Volume of investment resources of commercial banks;
Index of real value of investment resources;
Volume of bank investments;
The share of investment investments in the total assets of banks;
Structural indicators of banking investments by objects of their application;
Indicators of the effectiveness of the investment activities of banks, in particular, the increase in assets and the increase in profits based on the volume of investments;
Indicators of alternative profitability of investing in the manufacturing sector compared to investing in profitable financial assets.
It should be noted that from the point of view of economic development, the investment activity of banks includes investments that contribute to generating income not only at the level of the bank, but also of society as a whole (unlike those forms of investment activity that, while providing an increase in the income of a particular bank, are associated with the redistribution public income). Therefore, from the point of view of macroeconomics, the criterion for referring to investment activity is the productive orientation of the bank's investments.
1.2. Forms and principles of investment activity of commercial banks
The need to intensify the participation of banks in the investment process stems from the interdependence of the successful development of the banking system and the economy as a whole. On the one hand, commercial banks are interested in a stable economic environment, which is a necessary condition for their activities, and on the other hand, the sustainability of economic development largely depends on the degree of reliability of the banking system and its effective functioning. At the same time, since the interests of an individual bank as a commercial entity are focused on obtaining maximum profit with an acceptable level of risk, the participation of credit institutions in investing in the economy occurs only under favorable conditions.
According to Belikov A.V., the main areas of participation of banks in the investment process can be defined as:
Mobilization by banks of funds for investment purposes;
Providing loans of an investment nature;
Investments in securities, shares, equity participations (both at the expense of the bank and on behalf of the client).
These areas are closely related to each other. By mobilizing capital, savings of the population, other free funds, banks form their resources for the purpose of their profitable use. The volume and structure of operations for the accumulation of funds are the main factors influencing the state of the credit and investment portfolios of banks, the possibility of their investment activities.
The classification of the forms of investment activity of commercial banks in the economic literature is somewhat different from the generally accepted one, which is determined by the peculiarities of the investment activity of commercial banks. Bank investments can be divided into the following groups:
In accordance with the object of investment, it is logical to distinguish between investments in real economic assets (real investments) and investments in financial assets (financial investments). Banking investments can also be differentiated by more private objects: investments in investment loans, time deposits, shares and equity participations, in securities, real estate, precious metals and stones, collectibles, property and intellectual rights, etc.;
Depending on the purpose of investments, bank investments can be direct, aimed at ensuring the direct management of the investment object, and portfolio, not pursuing the goals of direct management of the investment object, but carried out in the expectation of receiving income in the form of a stream of interest and dividends or due to an increase in the market value of assets;
According to the purpose of investments, it is possible to single out investments in the creation and development of enterprises and organizations and investments not related to the participation of banks in economic activities;
According to the sources of funds for investment, a distinction is made between the bank's own investments made at its own expense (dealer operations), and client investments made by the bank at the expense and on behalf of its customers (brokerage operations);
According to the terms of investments, investments can be short-term (up to one year), medium-term (up to three years) and long-term (over three years).
Investments of commercial banks are also classified by types of risks, regions, industries and other characteristics.
The most important characteristic of the forms and types of banking investments is their assessment from the standpoint of the combined criterion for investing funds, the so-called profitability-risk-liquidity triangle, which reflects the inconsistency of investment goals and requirements for investment values.
There is a stable relationship between profitability, liquidity and risk as investment properties of investment objects, which are averaged over a significant amount of data. They are expressed in the fact that, as a rule, as the profitability increases, liquidity decreases and the risk of investments increases. This indicates that, in principle, there are no investment values that maximally meet all the criteria at the same time. At the same time, in practice, paradoxical variants of connections may arise in any object of all investment qualities.
The choice of optimal forms of investment by commercial banks in these conditions, taking into account various factors affecting their activities, involves the development and implementation of investment policy.
1.3. Investment policy of commercial banks
The economic interests of banks, arising from the essence of these institutions as commercial structures, are to ensure the profitability of their operations while maintaining their liquidity and reliability. Banks work mainly not with their own, but with borrowed and borrowed resources, so they cannot risk their clients' funds by investing them in large investment projects if this is not provided with appropriate guarantees.
In this regard, when developing an investment policy, commercial banks should always proceed from real risk assessments, economic efficiency, financial attractiveness of investment projects, the optimal combination of short, medium and long-term investments. At the same time, the existing investment system is not only an internal affair of the bank itself. In accordance with the basic principles of banking regulation, an integral part of any supervisory system is an independent review of the bank's policy, operations and procedures related to the issuance of loans and capital investment, as well as the ongoing management of loan and investment portfolios.
In general, investment policy is understood as a system of measures aimed at establishing the structure and scale of investments, directions for their use and sources of receipt in areas and sectors of the economy.
When forming an investment policy, a bank must take into account a number of objective and subjective factors:
Macroeconomic: the general state of the country's economy, the monetary policy of the Central Bank, the financial policy of the Government;
Sectoral and regional: the state of the economy in the regions and industries served by the bank; composition of clients, their need for credit; presence of competing banks;
Intrabank: the amount of own funds (capital) of the bank, the structure of liabilities, the ability and experience of staff.
For the successful development of an investment policy by a commercial bank, its employees must constantly monitor the macroeconomic situation in the country and forecast the main indicators of the development of the investment market. This is the most difficult stage of work, requiring the involvement of extensive information. Assessment of investment market indicators includes three stages:
Formation of a list of primary observable indicators reflecting the investment climate and the current state of the investment market;
Analysis of the current conjuncture of the investment market;
Study of upcoming changes in factors and conditions affecting the development of the investment market, and development of a forecast for this development.
Let us describe in more detail the content of each of these stages.
The formation of a list of primary observable indicators is carried out in the process of creating an investment market monitoring system. It can be built in the following sections:
The main indicators that determine the macroeconomic development of the investment market as a whole;
Key indicators of the development of the capital investment market;
Key indicators of the development of the market for privatization objects;
Key indicators of the development of the real estate market;
Key indicators of the development of the stock market;
The main indicators of the development of the money market.
Each of the listed sections of monitoring includes a number of primary informative indicators, which allow, depending on the goals of analysis and planning of investment activities, to develop any system of subsequent analytical indicators.
The information base for monitoring the formed primary indicators of the study of the investment market is the published statistical data and materials of the current observation of its individual segments. According to the complete system of observed indicators, monitoring of the investment market provides for fixing individual indicators once a quarter (in connection with the quarterly deadlines for the submission and publication of statistical reports). For the most important indicators, monitoring is carried out on a monthly basis (based on the results of current monitoring and generalized monthly statistical reporting).
Analysis of the current situation in the investment market is based on a system of analytical indicators that characterize this market as a whole and individual segments included in it. The bank determines the list of such analytical indicators taking into account the goals and directions of its investment activities. Based on the primary indicators included in the monitoring of the investment market, indicators of dynamics, indices, ratio and elasticity coefficients are built (the possible number of analytical indicators of market research is an order of magnitude higher than informative ones).
When analyzing the conjuncture of the investment market and its individual segments, it is important to identify its general dynamics, as well as the connection with the phases of the economic development of the country as a whole, since the most significant changes in the conjuncture occur when individual phases of the cyclical development of the economy change. The economy, with varying frequency, goes through four phases, which together make up one economic cycle: crisis, depression, revival and recovery.
The study of upcoming changes in factors and conditions affecting the development of the investment market, and the development of a forecast for this development complete the process of macroeconomic market research. The information base for such a study is the various state programs for the development of certain sectors of the economy. A special role in predictive studies related to the development of the Russian investment market is played by consideration of the following conditions and factors in the coming period:
Planned dynamics of gross domestic product, national income and industrial output;
Change in the share of national income spent on accumulation;
Development of privatization processes;
Change of tax regulation of investment and other types of entrepreneurial activity;
Changing the discount rate of the Central Bank and the conditions for obtaining short-term and long-term loans;
The development of the stock market.
A macroeconomic study of the development of the investment market serves as the basis for further assessment and forecasting of the investment attractiveness of economic sectors and individual regions, which is a necessary factor for determining the bank's investment policy.
CHAPTER 2. ANALYSIS OF INVESTMENT ACTIVITIES OF RUSSIAN COMMERCIAL BANKS
2.1. Problems in the implementation of investment activities
The problems of participation of Russian banks in the investment process are largely related to the specifics of the formation of the banking sector in our country. This gives rise to the need to analyze the participation of banks in investing in the economy, both in terms of assessing their investment opportunities and in terms of forms of banking investment, in conjunction with the process of forming the domestic banking system.
In the process of carrying out market reforms in the Russian economy, the centralized banking system was replaced by a two-tier one with a large layer of non-state banks. Features of the formation of the Russian banking system are characterized by the following features: the minimum time for its creation and the inflationary basis for the reproduction of banking capital.
As studies of the banking sector note, at the initial stage of the formation of the domestic banking system, there was a rapid quantitative growth of credit institutions. In 1988–1991 their number increased mainly due to the fragmentation of the former state-owned specialized banks, and the capital was replenished through the transfer of budgetary funds. In the 1990s the process of formation of new banks has slowed down. At the same time, the scale and pace of liquidation of inefficient credit institutions increased. This testified to the completion of the extensive stage of the formation of the banking infrastructure and the transition to a new stage of development. The process of outflow from the financial market of small and medium-sized banks has accelerated, which is associated both with the action of market mechanisms of competition and concentration, and with the policy pursued by the Bank of Russia to consolidate banks and increase their own capital.
The financial crisis of 1998 caused a sharp deterioration in the liquidity and solvency of a significant part of banks. The share of financially stable banks in the total number of operating credit institutions for the first 9 months of that year fell sharply from 66 to 56.2%, and the share of assets of financially stable banks in the total assets of operating credit institutions decreased from 68.3 to 29.1%.
In such a situation, financial stability was maintained by those banks whose share of investments in production exceeded investments in speculative operations. Basically, these banks turned out to be small and medium-sized regional banks, which focused on the gradual attraction of clientele and slow, evolutionary, qualitative growth. At the same time, the share of small and medium-sized banks in the total assets of the banking system was insignificant: due to their small financial capacity, they objectively could not carry out large-scale investment activities, although many medium-sized and small banks had better capital adequacy ratios than large ones.
The most important task of the next period was to overcome the most acute forms of the banking crisis. Favorable macroeconomic conditions, the efforts of the Bank of Russia and the Government aimed at restructuring the banking system have made it possible to improve the situation in the banking sector. In March 1999, there was a turning point in her condition, characterizing the beginning of the transition from an unstable position to relative stabilization.
However, even at present, the financial resources of the Russian banking system are clearly not enough to effectively support the real sector, meet the needs of all sectors of the economy - in particular, industry, which (unlike the banking system, characterized by the predominance of small and medium-sized banks) is highly concentrated. At the same time, the problem lies in the fact that in the current situation, banks do not effectively redistribute even the investment potential available to them.
The insignificant role of banks in the Russian economy compared to similar indicators of other countries is evidenced by the fact that the ratio of total net assets to GDP is much lower than in developed countries. According to experts, commercial banks currently hold about 600 billion rubles in accounts with the Central Bank. .
Nevertheless, one can note a growth trend in indicators characterizing certain areas of investment activity of Russian commercial banks (see APPENDIX 1,2,3).
As a result of the growth of disproportions between the development of the real and financial sectors of the economy, the prerequisites were formed not for involvement, but, on the contrary, for ousting banking capital from the real sphere. The current dependence of banks on the short-term money market, with the deterioration of the financial situation of enterprises and organizations in the real sector of the economy, led to the accumulation of crisis potential. At the same time, a relationship has been formed between crisis processes in the real and banking sectors of the economy. The deterioration of the financial position of non-financial enterprises and the corresponding contraction of funds in their bank accounts led to a decrease in the resource base of commercial banks and their investments in production. With a decrease in the volume of bank investments and loans, there was a further decline in the solvency of enterprises, which caused an increase in investment and credit risks. In turn, the growth of risks was the most important factor that discouraged the investment activity of banks, since with an increase in risks, the contradiction between the activation of investment and the task of maintaining the financial stability of banks increased, and the gap between interest rates increased (with an increase in the risk premium included in the interest rate) and production profitability.
The cardinal transformation of the nature of the connection between banks and production is the most important condition not only for the recovery of the economy, but also for strengthening the banking sector itself. Therefore, the strategic direction of the restructuring of the banking system should be effective interaction with the real sector of the economy.
In the new situation, the possibilities of “quickly earning” money through financial speculation have significantly decreased. This encourages banks to look for opportunities to effectively allocate their funds. At the same time, the reduction in interest rates on bank loans with the growth of the average industry profitability of social production contributes to an increase in the availability of borrowed money for the real sector of the economy.
The main part of credit investments of banks falls on short-term loans. The share of long-term loans in the total volume of credit investments remains extremely low.
The main factors hindering the activation of banking investment in production are:
High level of investment risk in the real sector of the economy;
Short-term nature of the existing resource base of banks;
Unformed market for effective investment projects.
Traditional credit risks increase in the Russian environment due to a number of economic and legal features. Among them, firstly, the general state of the Russian economy, which, despite some improvement, is characterized by the financial instability of a number of enterprises, unskilled management, etc. Secondly, the imperfection of the legal protection of the interests of the bank as a creditor, inherent in the current rights to client property. In these circumstances, there is a significant concentration of credit risks in a limited number of borrowers.
The next risk factor is the discrepancy between the short-term liabilities of Russian banks and investment needs, as a result of which investment lending poses a threat to the bank's liquidity. The calculation of the ratio of funds attracted and placed by banks indicates that short-term investments are the most balanced in terms of resource endowment. As the terms of investments increase, the gap between their volumes and sources of their financing increases up to five times for funds invested for a period of more than three years.
If many commercial banks are engaged in short-term lending to one degree or another, then the provision of investment loans and the financing of investment projects are the sphere of activity of certain categories of banks, which, due to their specifics, are able to reduce investment risks. These categories of banks include:
Banks included in the financial and industrial group. Participation in FIGs allows them to make long-term investments, set lower interest rates (since in this case the bank's interest is covered by the interests of the association as a whole) control the risks of loan default;
Corporate banks formed on an industry basis and serving the relevant industries;
Banks participating in projects of international institutions (World Bank, EBRD, etc.), whose interest rate policy is regulated by relevant agreements;
Large banks that have formed a reliable client base, making productive investments, subject to obtaining a block of shares that ensures control over the efficiency of the use of allocated funds, as well as expanding the zone of influence.
In this case, project financing in international practice refers to the financing of investment projects, characterized by a special way of ensuring the return on investment, which is based on the investment qualities of the project itself, the income that the newly created or reconstructed enterprise will receive in the future. A specific project financing mechanism includes an analysis of the technical and economic characteristics of an investment project and an assessment of the risks associated with it. And the basis for the return on invested funds is the income of the project remaining after covering all costs. The stages of the project cycle in the bank are:
Preliminary selection of projects;
Estimation of project investments;
Negotiation;
Acceptance of the project for financing;
Project implementation control;
Retrospective analysis.
Usually banks do not develop the project. They can assist in the preparation of a package of documents. However, in cases where banks participate in the capital of the project company or provide financial advice in carrying out their functions as a consulting company, they may also take over the development of the project.
At the same time, in the real conditions of the Russian economy, in which the securities market has recently been characterized by the predominance of speculative investments and high volatility, the priority importance of credit forms of meeting investment demand will remain for quite a long time. Therefore, when determining the role of banks in the investment process, one should take into account the dual nature of their activities.
In essence, the market for investment projects has not been formed either. The proposed projects are characterized by insufficient elaboration. Banks are forced to independently deal with the entire range of work associated with project financing
From the point of view of providing loans, the most attractive for banks are stable industries with a fast turnover of capital, which are very few today. Hence the increased credit risks. Unfortunately, the need for borrowed funds from Russian enterprises has recently arisen not due to the expansion of production and the need to finance the increase in working capital, but due to financial difficulties as a result of non-payments. At present, forced mutual financing of industries has become widespread. All branches of production are clearly divided into net creditors and net borrowers (according to the balance of mutual offset of receivables and payables). Net creditors - construction, fuel industry, electric power industry, transport; net borrowers - all the rest (engineering, agriculture, chemical, metallurgical and other industries).
There are at least three reasons for this situation:
Low economic efficiency of the second sector (net borrowers) associated with an excess of capacity after a fall in demand for products;
The enterprises of the first sector (net creditors), mainly natural monopolies, dictate inflated prices;
A radical change in the ratio of prices for products of various industries during the 1990s.
All the above circumstances are connected mainly with the transition period in the Russian economy, when the market mechanism finally began to operate. Relative prices (price ratios between different types of goods and services) have changed radically, which, in essence, is inevitable and useful for the formation of optimal proportions at the macroeconomic level. However, there are always specific industry features that affect the process of bank lending, namely:
Features of the production and commercial cycle of enterprises in the industry;
Sectoral cost structure (costs).
Profitable enterprises with a rapid turnover of capital, a short production period, and a uniform receipt of proceeds from the sale of products are, from the point of view of banks, the most attractive for lending. Such properties are possessed, first of all, by wholesale and retail trade enterprises or manufacturing organizations that produce consumer (especially food) products, that is, goods with low price elasticity of demand. Attractive for banks are the export-oriented raw material industries, which are favored by the external economic situation and high world prices for their products.
Sectoral differences in the cost structure may also lie in the increased risks of banks in lending, especially in the context of general economic instability in the country. The fact is that a bank loan has a dual effect on the activities of enterprises. On the one hand, it increases the strength of financial leverage: borrowed funds make the company work for its financial result, while at the same time increasing the return on equity, which is positively assessed.
On the other hand, a bank loan simultaneously increases the strength of the operating (economic) leverage of the enterprise, which is determined by the dynamics of the profit indicator when the amount of incoming revenue changes, which is assessed negatively. Companies that have a high share of fixed costs in the composition of production costs that do not depend on changes in the volume of production (depreciation, rent, a constant part of the wage fund) in the event of a drop in sales volume lose profit faster compared to enterprises with a small share of fixed costs. Interest on a bank loan in the amount equal to the refinancing rate plus 3% is charged to the expenses of the organization, increasing their constant part. Interest in excess of the specified limit is included in the financial result, reducing the company's profit. Thus, enterprises with a high share of fixed costs in their cost are more susceptible to adverse changes in market conditions. Banks should take this into account when lending.
In addition to the mentioned methods of reducing the credit risk of banks (diversification of the loan portfolio, a preliminary analysis of the creditworthiness and solvency of the borrower, the use of methods for ensuring the repayment of the loan - collateral, guarantees, guarantees, insurance), banks also create a reserve to cover possible losses on loans.
Credit risks are assessed by banks for all loans and all customer debt equated to a loan, both in Russian rubles and in foreign currency, namely:
For all granted loans, including interbank loans (deposits);
On promissory notes purchased by the bank;
For amounts not recovered under bank guarantees;
For operations carried out in accordance with a financing agreement against the assignment of a monetary claim (factoring).
Reducing credit risk is one of the most important tasks in managing a bank's loan portfolio.
2.2. Prospects for the development of investment activities of Russian commercial banks
The banking sector in the Russian Federation operates on market principles. As evidenced by the results of the assessment of the financial sector of the Russian Federation, conducted by the mission of the International Monetary Fund and the World Bank in 2002-2003, a number of components of the banking regulation comply with, or as close as possible to, internationally recognized approaches.
After the financial and economic crisis of 1998, the banking sector has been developing against the background of a generally positive macroeconomic situation in the country, due, among other things, to favorable conditions for foreign trade. The production of goods and services, real incomes of the population are growing, and investment activity is increasing.
The dynamics of the main parameters characterizing the state of the banking sector in 2002-2004 testifies to the strengthening of the trend in the development of the banking sector. The assets and capital of credit institutions are growing rapidly, their resource base is expanding, especially by attracting funds from the public. The growth of confidence in banks on the part of creditors and depositors is one of the most important signs of the Russian banking sector during this period.
The activities of credit institutions are more focused on the needs of the real economy. There is a steady growth trend in loan investments, according to the reports of credit institutions, the quality of their loan portfolios remains generally satisfactory. There is a certain development of competition in the banking services market, especially for deposits of individuals. As a result, the share of the Savings Bank of the Russian Federation (Sberbank of Russia) in the funds of individuals attracted by the banking sector in deposits (deposits) tends to decrease.
The financial performance of credit institutions is improving. In 2004, the profit of the banking sector amounted to 177.9 billion rubles, in 2003 and 2002 - 128.4 billion rubles, respectively. and 93 billion rubles.
At the same time, the development potential of the banking sector has not been exhausted. The Government of the Russian Federation and the Bank of Russia proceed from the fact that the banking sector can and should play a more significant role in the economy.
Internal obstacles include poor management systems, weak business planning, poor management in some banks, their focus on questionable services and unfair commercial practices, and the fictitious nature of a large part of the capital of individual banks.
External constraining factors include high lending risks, unresolved a number of key problems of pledge legislation, limited resource capabilities of banks, primarily a shortage of medium-term and long-term liabilities, and an insufficiently high level of confidence in banks on the part of the population.
In addition, the Russian economy as a whole and the banking sector in particular have a relatively low investment attractiveness, as evidenced by the dynamics of investment, and, in relation to the banking sector, by the declining share of foreign capital.
The administrative burden placed on banks in connection with the diversion of resources to perform functions that are unusual for them is still significant. The procedure for capital consolidation (mergers and takeovers of credit institutions) is unreasonably complicated. The issue of reporting by banks only in electronic form has not been resolved.
Along with the above factors, there are such methodological problems as the need for further development of the refinancing system, including by expanding the range of liquidity management tools.
The main problems in the implementation of investment activities by commercial banks are the high capital intensity and long payback periods of infrastructure projects, the lack of transparency of the legal framework that ensures the protection of long-term investments, in particular, concession legislation. There is no clear practice of tax incentives for investors investing in capital-intensive and long-term projects. There is no systematic approach to investments, investments are fragmented. But according to leading experts of the banking sector, this problem can be solved. To do this, at the state level, it is necessary to determine the priorities of the areas of investment activity, stimulate the flow of funds through the provision of benefits and the creation of free economic zones, taking into account the negative experience of the 90s.
Analyzing the structure of Russian credit institutions' investments in securities over the past three years, one can clearly trace the growth trend of indicators: in comparison with 2005, in 2006 the volume of this type of investment doubled, by 93.00%. Moreover, the share of investments in rubles increased in % of the total volume compared to 2005 (73.80%) and reached 83.20% at the beginning of 2007, which indicates an increase in the stability of the Russian currency. The share of the trading portfolio in this structure of investments is the largest - 63.30% or in absolute terms 1096.80 billion rubles, which is 590.70 billion rubles. more than in 2005. (See APPENDIX 1)
A typical situation also develops when Russian credit institutions invest in debt obligations. Moreover, the main share in this case is the debt obligations of the Russian Federation: about 47.5% at the beginning of 2006, and 40.1% at the beginning of 2007.
The structure of credit institutions' investments in shares is characterized by the predominance of investments in such types as shares of residents, with the exception of credit institutions (55.9% of the total in 2006), and investments under resale agreements (40.5% of the total in 2006). 2006). (see APPENDIX 3).
Thus, one of the most important tasks of the banking sector is to increase the efficiency of the activities carried out by the banking sector to accumulate funds from the population and organizations and their transformation into loans and investments.
2.3. Ways to improve the efficiency of investment activities of commercial banks
An important role in improving the efficiency of the current system of channeling credit resources into production is played by the interest rate policy of commercial banks, which should be designed in such a way that the provision of investment loans is beneficial to both the bank and the borrower. Important and promising areas of lending that need to be developed are syndicated and mortgage loans in the manufacturing sector.
The use by banks of such a credit instrument for financing investments as leasing remains very limited. Meanwhile, leasing could become one of the most important tools for mobilizing investment resources and boosting investment activity, acting as a means of strengthening the ties between bank capital and production in conditions where the limited liquidity of enterprises hinders the large-scale development of production, and banks are faced with the need to diversify risks and investment areas to increase its reliability. For banks, leasing operations could be an attractive form of asset allocation. In this case, the bank can act as both a direct lessor and a party financing a leasing transaction.
Currently, leasing operations are carried out only by some, mainly large, banks. Large banks operate a significant part of today's specialized leasing companies. Despite a certain increase in leasing operations, the share of leasing in the total investments of banks is less than 1%.
The scale of such a form of investment activity of commercial banks as investments in securities and shares of enterprises is also insignificant. The share of bank investments in corporate securities in total assets does not exceed 5%.
In the structure of bank investments in shares of non-financial enterprises and organizations (other shares), a high proportion is speculative investments. At the same time, in recent years there has been a decrease in the share of speculative investments and a corresponding increase in the share of shares purchased for investment.
When investing in shares of credit institutions (both residents and non-residents), banks mainly pursue investment goals. The share of shares purchased for investment in total investments ranges from 85 to 90%. The participation of banks in subsidiaries and dependent companies is growing. This reflects, first of all, the growth of banking investments in the development of the financial business itself, and the growing trend towards the integration of financial structures. This trend can be traced in the processes of mergers and acquisitions of credit institutions, the accession of small and medium-sized banks to larger ones as branches, the growth of mutual participation of banks in each other's capital, the conclusion of cartel agreements, the creation of banking consortiums and holdings.
The need to ensure sustainability and pool efforts in a difficult economic situation was an important, but not the only circumstance for strengthening the interaction of financial structures. Solving the problems of prospective placement of assets while reducing the possibility of using speculative financial instruments determines the choice of reliable and most controlled ways of investing, which is investing in the financial business. At the same time, the integration of financial structures is one of the most important prerequisites for investing in the real sector of the economy, since it will not be possible to ensure large-scale investment in production on the basis of low-capacity banks even if the most favorable conditions are created.
It should be noted that in domestic practice, in essence, there are no mechanisms that stimulate the development of industrial investments of commercial banks. Russia does not use such instruments generally accepted by world standards as a preferential procedure for reserving borrowed funds, special conditions for refinancing commercial banks for real investment projects. With the unformed economic conditions that allow attracting the bulk of commercial banks to participate in the investment process, only a few banks carry out productive investments, the total volumes of which are not comparable not only with the needs of the economy, but also with the available investment potential of the banking system.
The creation of a system for stimulating and insuring investments is of great importance in increasing the investment activity of the banking system. One of the conditions for the provision of long-term loans by banks for investment projects with high credit and investment risks in the production sector is the availability of state guarantees. Among the measures that contribute to the growth of industrial investments of commercial banks, one can also include the differentiation of economic standards depending on the share of their investments in the real sector of the economy and preferential taxation.
Revision of the previous regulatory system in accordance with the declared priorities of economic policy involves changing the forms and methods of influencing the banking sector, restructuring the banking system, taking into account the tasks of implementing the investment functions of banks in the economy. The restructured banking system must meet the requirements of high reliability, manageability and investment orientation, guarantee the necessary level of supply of credit resources at interest rates affordable for the industrial sector.
CHAPTER 3. Analysis of the investment activity of Alfa-Bank OJSC
3.1. General characteristics of Alfa-Bank OJSC
Alfa-Bank was founded in 1990. Alfa-Bank is a universal bank that carries out all major types of banking operations on the financial services market, including servicing private and corporate clients, investment banking, trade finance and asset management.
Alfa-Bank is one of the largest banks in Russia in terms of assets and equity. According to the audited financial statements (IFRS) for 2006, the assets of the Alfa-Bank group, which includes OJSC Alfa-Bank, subsidiaries and financial companies, amounted to 15.2 billion US dollars, total capital - 1.3 billion US dollars, loan portfolio minus reserves - 9.5 billion US dollars. Net profit in 2006 amounted to 190.3 million US dollars (according to the results of 2005 - 180.6 million).
Alfa-Bank serves over 45,000 corporate clients and over 2.4 million individuals. Lending is one of the most important products offered by the Bank to corporate clients. Alfa-Bank's lending activities include trade lending, working capital and capital investment lending, trade and project finance. Among the Bank's clients there are large enterprises, while the main borrowers are medium-sized enterprises. Alfa-Bank is diversifying its loan portfolio, gradually reducing its concentration.
Alfa-Bank's strategic line of business is retail business. Today, more than 30 Alfa-Bank branches are open in Moscow. In 2004, the Bank entered the consumer lending market.
The investment business of Alfa-Bank is successfully developing. The Bank effectively works in the capital markets, fixed income securities, foreign exchange and money markets, in the field of operations with derivatives. The Bank consistently maintains its position as one of the leading operators and market makers in the foreign market for sovereign Russian bonds and debt instruments of the Russian corporate sector.
Alfa-Bank has created an extensive branch network. There are 229 branches and branches of the bank in Moscow, regions of Russia and abroad, including subsidiary banks in Kazakhstan and the Netherlands and a financial subsidiary in the USA.
Alfa-Bank is one of the few Russian banks that has been audited internationally since 1993 (PriceWaterhouseCoopers).
Alfa-Bank has received many awards over the years of its work, including in 2005 the Bank was recognized by Global Finance magazine as the “Best Provider of Foreign Exchange Services” in Russia. Alfa-Bank also twice - in 2004-2005 - received the international award The Operational Risk Achievement Award "For the implementation of the best operational risk management system in a company operating in emerging markets", which is an unprecedented case in international practice.
3.2. Characteristics of the investment activity of Alfa-Bank OJSC
Alfa-Bank is one of the leading investment banks in Russia. Traditionally, in 2000, business developed successfully in the corporate finance market, where Alfa-Bank conducts all types of operations included in the arsenal of world banks. Basically, these are mergers and acquisitions, restructuring of companies and, to a lesser extent, transactions to raise financing. The client base is consistently growing, and the professional level of employees is growing, without which further development is impossible.
Several significant transactions were made in the field of mergers and acquisitions. Thanks to one of them, the merger of the Novosibirsk city telephone network and the Telecommunications of the Novosibirsk Region, Alfa-Bank received the right to become a financial adviser on the merger of regional telecom operators in Siberia and the Far East.
As far as the equity market is concerned, in the past year Alfa-Bank, despite the unsatisfactory state of the Russian stock market, strengthened its position, as evidenced by the following:
Significantly increased the base of Russian clients and expanded the range of services provided to clients in the corporate securities market;
The Bank is one of the leading companies in the corporate securities market;
One of the leading companies in terms of turnover in the Russian Trading System (RTS);
The Bank is represented on all leading stock exchanges, in all trading systems and on all brokerage platforms trading in Russian securities;
Alfa-Bank representatives are members of the Boards of Directors of NAUFOR, PAUFOR, MFB and other committees that regulate trade relations and the development of the Russian corporate securities market;
The bank was one of the first to develop and at the end of 2000 launched a modern full-featured system for trading securities via the Internet (Alfa Direct).
At the end of last year and at the beginning of this year, the Bank's subsidiaries were opened in London and New York. Alfa Securities has been licensed by the SFA to conduct securities transactions in the UK and other European countries. For the first time since the August 1998 crisis, the Russian financial structure has received such a sign of confidence from Western regulators. This is another key factor in the development of our business and cooperation with international partners.
In the fixed income securities market, the Bank confidently takes the 1st-2nd place. This business is very efficient and has a great future in Russia.
Alfa-Bank's investment policy in the regions is promoted by its branches. In many of them, deputy managers for investment activities appeared in the reporting year.
This year, the Bank's Investment Block faces three strategic tasks. The first of them is the development of client business. First of all, in the work on the stock markets. Thanks to a highly professional team of specialists, the Bank intends to expand its presence both in Russian and foreign markets. At the same time, expanding its presence in foreign markets is a priority. In addition, work with Russian clients through the Alfa-Direct system will be further developed.
In the field of corporate finance, one of the main tasks is to increase the client base, create a system of new investments based on regional branches.
The third task is to develop an algorithm for "investment" interaction between branches and the Central Office. Ideally, this is the interaction of the deputy investment manager, a professional account manager, and a professional team from the center, which is involved in certain specific investment transactions. This is the only way to build investment business flows in the regions.
Analyzing the investment activity of Alfa-Bank OJSC, four directions can be distinguished in which it is carried out:
Corporate finance;
Work in the stock market;
Work in the currency and financial markets;
Work in the securities markets with fixed income.
Let's take a closer look at each direction:
In recent years, the Bank has managed to significantly strengthen its market position in corporate finance. In 2000, Alfa-Bank confidently ranked 3rd - 4th in terms of the volume of corporate finance transactions among Russian and international investment banks operating in Russia, according to the results of the rating conducted by the financial information agency Skate-press.
The main activity of the Corporate Finance Department (UCF) today is to provide Russian and foreign clients with the services of a financial advisor on mergers and acquisitions.
In 2000, UKF successfully capitalized on the advantages of Alfa-Bank as a universal financial institution providing both traditional commercial banking and investment banking services. An innovation for the Russian market was the deal where Alfa-Bank, acting as a financial advisor on the acquisition of the business, also provided financing for the deal. The successful interaction of the UKF with the divisions of the commercial bank made it possible to effectively use all the resources of the universal financial institution.
The Bank's services in this market are used by such large companies as:
Tyumen Oil Company, which ranks third in Russia in terms of proven reserves and fifth in terms of production;
Svyazinvest, a holding company that controls almost all regional telecom operators, as well as the operator of long-distance and international communications - Rostelecom;
Golden Telecom, owned by the American company Global TeleSystems, is one of the largest players in the market of alternative communication services in Russia and Ukraine. Golden Telecom has a holding structure and controls TeleRoss (traditional telephony, data transmission), GTS-BTS (the largest alternative operator in Ukraine), and also owns a 50% stake in the largest Russian alternative telecom operator Sovintel;
Wimm-Bill-Dann, leader of the Russian market of juices and dairy products. The company has 9 dairy plants and a distribution network covering the whole of Russia.
Going forward, UKF plans to focus its efforts on large-scale M&A transactions for both Russian and foreign investors. It is also planned to participate as a financial advisor in private placements and IPOs for promising Russian companies, subject to favorable conditions in international capital markets.
Alfa-Bank remains one of the leaders among Russian brokers, actively participating in the Russian Trading System (RTS), MICEX, and the ADR market. Having gathered an international team of highly qualified sales specialists and a strong group of analysts, having created an extensive network of branches throughout the country and beyond its borders, the Bank has a strong potential to serve clients both in Russia and abroad. The equity market focuses on helping clients and providing investors with a wide range of innovative products and services. Over the past five years, the volume of client business has grown steadily, as has the Bank's share of the RTS.
The Russian market is still characterized by high volatility and sharp fluctuations in liquidity. Investors view Russia as one of the most dynamic and, despite all the problems, attractive emerging markets.
On the equity market, Alfa-Bank is represented by the Markets and Equities Department (URiA), which specializes in five areas: equity trading, international equity sales, sales to Russian clients, analytical research and securities transactions on the Internet.
Unlike most other areas of the Bank's activities, foreigners are the Bank's main clients and main competitors in the stock market. URiA also works with Russian clients - individuals, corporate clients and regional brokers - through the Sales Department for Russian Clients and through a new securities trading system on the Internet. Another goal of the bank is the preparation of up-to-date analytical publications aimed at increasing sales. Clients will work with us if they can rely on our analytical and research knowledge, our understanding of the Russian market.
In June 2000, the Bank opened a London subsidiary, Alfa Securities, licensed by the UK Securities and Futures Authority Ltd. (SFA). Thanks to the accreditation, Alfa Securities has gained the right to organize transactions with securities and implement projects in the field of corporate finance - not only in the UK, but throughout the European Union. For the first time since the August 1998 crisis, a Russian financial company received an SFA license. Alfa Securities will become an international equity trading center and will facilitate mergers and acquisitions. In the work of Alfa Securities, the depth of market analysis will be combined with Western professionalism.
At the beginning of 2001, a representative office of the Bank was opened in New York. Alfa Capital Markets provides brokerage and investment services, focusing primarily on portfolio investment and advising corporate clients on direct investment in Russia. The Bank's New York subsidiary is regulated by the National Association of Securities Dealers (NASD).
In 2008, the Russian stock market is likely to continue to be characterized by high volatility and at the same time remain attractive to investors. Alfa-Bank will continue its active promotion to the domestic and international equity markets, providing its clients with a wide range of services.
During the reporting year, Alfa-Bank strengthened its leading positions in all sectors of the Russian financial markets and maintained high profitability of operations. In 2000, the growth of trade turnover in the domestic foreign exchange market continued. This was due to an increase in the volume of both client transactions and the Bank's own transactions in the interbank market and MICEX. The Bank is constantly increasing its market share in foreign exchange and deposit operations. The share of the Russian ruble/dollar market covered by the Bank is up to 12-15%.
The total daily turnover on ruble/dollar transactions increased by more than 1.5 times (from $90 million in January to $150 million in December). Also, client turnovers on buying/selling US dollars increased by more than 1.5 times during the MICEX Single Trading Session (from $7 million in January to $10 million in December).
The volume of operations of correspondent banks was constantly increasing. The attraction of new banks was largely due to favorable conversion conditions provided by the Bank to its customers, narrowing of spreads, extension of the operating day until 15:00, and improvement of settlement conditions. This became possible due to the fact that in 2000 Alfa-Bank strengthened its position as one of the market-makers of the domestic foreign exchange market. The bank's position in the CIS currencies market has strengthened, new clients have appeared using accounts in limited convertible currencies to pay for contracts through Alfa-Bank. The volume of transactions in restricted convertible currencies (RCC) increased. The Bank is confidently on the list of leaders in the OKW market, occupying a market share of 20%, providing the full range of services in this market to its customers and correspondent banks. The active work of Alfa-Bank in this market segment was noted by the Central Bank of the Russian Federation, which included our Bank in the top five operators of the OKW market for determining the exchange rate of the Central Bank for the currencies of the CIS countries. Operations in the currencies of the CIS countries, qualified consultations, provision of market quotations made it possible to attract banks from the CIS countries to Alfa-Bank for settlement services.
Thanks to the active policy of the Bank, a flexible approach to the needs of the client, the offer of various types of services, we have managed to increase the client base of both legal entities and correspondent banks. Accordingly, the volume of transactions increased and the Bank's position in the interbank lending market strengthened. Almost twice, up to 900-1000 million rubles, the average daily volume of attracted resources increased, which was the result of both an increase in the confidence of counterparties and an increase in their number. Thanks to clear planning, the Bank's current liquidity has always remained at a high level. New forms of work with clients - legal entities - such as work on lines and short interbank loans for the largest clients are actively used.
The UVFO infrastructure has been raised to a new level: the entire regulatory base of operations has been revised, relations with the Treasury and the Commercial Bank have been optimized. UVFO was the first in the Bank to successfully master two systems at the first stage of Omega.
In recent years, Alfa-Bank has managed not only to maintain, but also to strengthen its leading positions in the fixed income securities market. For 2006, the profit plan was exceeded by more than 2 times, the profitability of the Bank's own portfolio exceeded the corresponding indices in all market segments. Thanks to active marketing, about 100 new clients began to conduct trading operations with Alfa-Bank across the entire range of offered instruments. In the reporting year, the foundation was laid for bringing new products to the market, including derivatives, REPO transactions, structured products, bills, etc.
3.3. Analysis of financial statements on investment activities of Alfa-Bank OJSC
According to the financial statements of OJSC Alfa-Bank, the profit in 2007 reached 6486807000.00 rubles, which is 40% more than the level of the previous year (see APPENDIX 4). First of all, this is due to the fact that the bank's investment policy is based on effective principles and methods for its implementation.
The Markets and Equities Authority's total transaction volume exceeded $50.0 billion, more than double the previous year's results. The number of active clients has increased significantly, especially among Russian investors. With a general increase in the volume of trading and the number of players, the Bank retained its share of the market turnover on the MICEX at the level of 6.0%.
2006 was a transitional year for the Russian capital markets, both in terms of the total capitalization of companies and in terms of the number of transactions. Russian firms' total IPOs exceeded US$18.0 billion, including the largest public offering of state oil company Rosneft in Russian history, raising US$10.7 billion.
Alfa-Bank participated in this transaction as a bookrunner, and also participated in several other large placements, including the IPO of OKG-5, the generating asset of the Russian energy giant RAO UES of Russia.
In addition, the Bank acted as a senior co-manager during the IPO of Varyag Resources on the Stockholm Stock Exchange.
In 2006, Alfa-Bank maintained its position as one of the leading operators and market makers on the foreign market for Russian sovereign bonds and Russian corporate sector debt instruments. The share of client business remained high in the total volume of operations. At the same time, the market saw a redistribution of volumes from the trading segment of sovereign foreign currency bonds and corporate Eurobonds to the trading segment of ruble corporate bonds and foreign currency credit notes (CLNs and LPNs), where Alfa-Bank is simultaneously the arranger and market maker for many issues.
In 2006, Alfa-Bank actively traded, within its own portfolio, the debt obligations of foreign countries, mainly countries with developing market economies. The Bank's clients were also provided with services for entering the debt markets of these countries, as well as the bond markets of the US Treasury and the G8 countries.
In the reporting year, Alfa-Bank significantly increased the volume of operations in the domestic ruble bond market. The total turnover of the Bank in the market of these instruments in 2006 was one and a half times higher than in 2005 and reached USD 5.2 billion. The Bank retained its leading position in terms of turnover of corporate and subfederal bonds on the MICEX, and a steady increase in the Bank's income was observed both on its own and on client transactions.
The Bank conducts its own operations and provides brokerage services to clients in all sectors of the ruble bond market (state, municipal, corporate).
Throughout the existence of the ruble-denominated debt market, Alfa-Bank has maintained its leading position among arrangers of bond issues for Russian companies. In 2006, Alfa-Bank took part in the organization and placement of 29 bond issues for a total amount of about 61.0 billion rubles, which is 1.8 times higher than in 2005. Among the issues organized by the Bank is the largest corporate issue of ruble bonds in 2006 – the issue of JSC “MOESK” for 6.0 billion rubles.
Currently, Alfa-Bank offers its clients comprehensive services for arranging ruble bond issues, including advice on loan structure, preparation of issue documents, analytical support for the issue, organization of marketing events, formation of an underwriter syndicate, placement of the issue and organization of the secondary market.
Many clients choose Alfa-Bank as the organizer of their bonded loans again, which confirms the high quality of the range of services provided by the Bank in this area. This also testifies to the professionalism of the team involved in the process of organizing and placing ruble bond issues.
During the initial placement, the Bank seeks to ensure the widest possible distribution of the issue. As the arranger of the issue, Alfa-Bank maintains quotes with a narrow spread, which ensures high liquidity of bond issues.
In the reporting year, Alfa-Bank significantly increased the volume of operations in the domestic and foreign derivatives markets. Such growth became possible thanks to a significant expansion of the range of instruments and services, especially in the field of futures contracts for the shares of Russian companies.
The dynamics of the Russian derivatives market turned out to be very positive.
Regulations made it possible to gain access to futures and options for new categories of market participants. In 2006, stock options were in high demand, while client interest in currency options fell. The securities market-oriented business has transformed into a business of complexly structured products.
Among the new clients on the derivatives market are Russian mutual funds and investment companies that carry out trust management of wealthy clients' capital. The number of foreign partners also increased, signing with the Bank ISDA and other documents necessary for further business expansion.
The Bank's Derivatives Department structured the procedure for issuing bonds secured by payment orders. For the first time, such a program of a Russian private bank received an investment rating of debt obligations. The issue proved to be innovative not only in Russia, it was highly regarded by Credit magazine as one of the most difficult transactions in this class of instruments in the world.
In 2006, the Bank issued bonds under this program twice. The volume of total borrowing amounted to more than 900.0 million US dollars. Among the investors who bought the bonds are the largest Western pension funds. For some of them, these papers became a debut on the Russian stock market. Due to strong investor interest, the volume of the second issue of these bonds was the largest ever issued in the world in this class of products not insured by monoliners. This emphasizes the reputational importance of the program not only for Alfa-Bank, but for the entire Russian market as a whole.
In 2006, the Derivatives Department initiated projects to securitize the Bank's assets.
Today, Alfa-Bank is a leader in the foreign exchange markets (US dollar / Russian ruble), including both the interbank market and the MICEX. The Bank works on behalf of its clients, as well as on its own behalf. The total turnover of foreign exchange transactions in rubles and US dollars in 2006 amounted to about 300 billion US dollars, which is approximately 5.0% of the Russian foreign exchange market.
In 2006 Alfa-Bank constantly increased the number of trading operations on the international currency market. Their total volume reached 1.3 billion US dollars, which accounted for 15.0% of the market share as of December 31, 2006.
In 2006, Alfa-Bank took a leading position in the foreign exchange markets of the Baltic and CIS countries. The economic integration of Russia, Kazakhstan and Belarus made it possible to increase the turnover and profitability of operations with the national currencies of Belarus and Kazakhstan.
Among the Russian participants in the foreign exchange markets, Alfa-Bank continues to maintain its leading position. The cumulative daily turnover remains at a high level and at the end of 2006 reached almost 2 billion US dollars. The volume of ruble transactions in the ruble interbank market is almost 15.0% of the total turnover in this sector.
Euromoney magazine, in its 2006 foreign exchange survey, named Alfa-Bank the best foreign exchange service provider in Russia in 2006. Alfa-Bank, according to the Moscow International Monetary Association, entered the top ten banks in the Best FOREX Desk 2006 and Best Forward Desk 2006 nominations.
3.4. Principles of the investment policy of CB Alfa-Bank as a basis for improving the efficiency of investments of Russian commercial banks
According to the analysis of the activities of Alfa-Bank OJSC, the most effective areas of investment are corporate financing, investments in shares, and work in various financial markets. But the key to the effectiveness of the bank's work in this direction is also provided by the need to create a clear mechanism for the interaction of the network of branches with the "center".
An important component of investments is not only work with corporate clients, but also work with individuals - the population, lending to which is an effective tool for financial investments.
As one of the areas of investment by commercial banks, work with small businesses can be distinguished. Today, it is this sector that needs to increase the volume of investments. The most promising in this aspect are industrial enterprises. In addition, the development of small business in our country in recent years has been influenced by the activities of state authorities that give preference to this sector.
Investments of banking institutions in the foreign market are also quite promising. In this regard, consideration of options for a corporate merger is also relevant.
Further updating of Russian legislation will allow banking institutions to expand their capabilities in the implementation of investment activities. But still, the main problem today remains the instability of the Russian economy, in comparison with the European one, which is a determining factor in drawing up an investment strategy.
When considering the most effective methods of investment policy of Alfa-Bank, it is necessary to take into account the fact that this commercial bank has enormous financial resources, high potential and a wide network of branches - the most important channel for the distribution of services and products.
Adopting the positive experience of the investment policy of Alfa-Bank involves the creation of the most convenient infrastructure for clients to use the opportunity to invest funds. For example, such a system in Alfa-Bank is the Alfa-Direct Internet system, which allows for full-fledged trading in securities via the Internet.
To carry out the development of an investment policy for any commercial bank, it is necessary to analyze the financial and markets and other objects of investment of financial resources. The activities of Alfa-Bank OJSC are based on these principles, which ensures the steady growth of the most important financial indicators.
Consequently, commercial banks must clearly work out and formally consolidate the most important activities related to the organization and management of investment activities. In essence, we are talking about the development and implementation of a sound investment policy.
CONCLUSION
In this study, the essence, economic nature, specifics and forms of banking investments are considered and clarified, ways to enhance the investment activities of commercial banks are revealed. The theoretical foundations of the investment activity of commercial banks have been studied, the problems of its implementation have been identified, and the ways and prospects for development have been characterized. On the basis of the studied material, which characterizes the practical side of the investment policy of OJSC "Alba-bank", its most effective principles were identified, the application of which would help to increase the effectiveness of investments in the banking sector.
The practical side of the investment activity of commercial banks is considered on the example of Alfa-Bank OJSC. The course work presents indicators that characterize the investment activity of this banking institution, analyzes the structure and dynamics of profits in recent periods.
The value of the investment activity of a commercial bank is especially high today, in the context of an increase in the growth rate of the banking sector in our country.
Bank investments have their own economic content. Investment activity in the microeconomic aspect - from the point of view of the bank as an economic entity - can be viewed as an activity in which it acts as an investor, investing its resources for a period of time in the creation or acquisition of real and purchase of financial assets to generate direct and indirect income.
At the same time, the investment activity of banks has another aspect related to the implementation of their macroeconomic role as financial intermediaries.
On the basis of the studied theoretical material, the opinions of leading experts in the banking sector, the paper presents the concept of investment activity, which most objectively reflects its economic essence. Thus, investment activity is the investment of funds, investment or the total activity of investing money and other values in projects, as well as ensuring the return on investment.
According to the principles of the investment policy of Alfa-Bank OJSC, which can be used as the basis for developing an investment policy strategy for any commercial bank, the following can be distinguished: the need to increase and develop the client base, expand the network of bank branches, develop a mechanism for interaction between them and the Central Branch. At the same time, strict control and constant analysis of investment activities carried out in various areas is necessary. The solution to this issue involves changes in the organizational structure of the bank, through the creation of separate divisions, whose activities will be aimed at regulating the investment policy in each area: corporate financing, work on the stock market, on the currency and financial markets, on the securities market with fixed income.
Annex 1
Table 1 Structure of credit institutions' investments in securities (excluding promissory notes)
| 1.01.05 | 1.01.06 | 1.01.07 | 1.07.07 | 1.09.07 | ||||||
| billion | VC | billion | VC | billion | VC | billion | VC | billion | VC | |
| rub. | total | rub. | total | rub. | total | rub. | total | rub. | total | |
| Investment volume - total | 893,5 | 100,0 | 1329,3 | 100,0 | 1732,1 | 100,0 | 2469,2 | 100,0 | 2501,5 | 100,0 |
| - in rubles | 659,8 | 73,8 | 1003,0 | 75,5 | 1441,6 | 83,2 | 2121,8 | 85,9 | 2189,3 | 87,5 |
| - in foreign currency | 233,7 | 26,2 | 326,3 | 24,5 | 290,5 | 16,8 | 347,4 | 14,1 | 312,2 | 12,5 |
| Including: | ||||||||||
| trading portfolio | 506,1 | 56,6 | 706,9 | 53,2 | 1096,8 | 63,3 | 1534,0 | 62,1 | 1680,7 | 67,2 |
| - in rubles | 472,6 | 52,9 | 698,5 | 52,5 | 1086,6 | 62,7 | 1522,9 | 61,7 | 1647,2 | 65,9 |
| - in foreign currency | 33,5 | 3,7 | 8,4 | 0,6 | 10,2 | 0,6 | 11,1 | 0,5 | 33,5 | 1,3 |
| investment portfolio | 367,7 | 41,2 | 557,5 | 41,9 | 555,4 | 32,1 | 818,4 | 33,1 | 702,9 | 28,1 |
| - in rubles | 180,4 | 20,2 | 265,9 | 20,0 | 303,6 | 17,5 | 513,9 | 20,8 | 457,6 | 18,3 |
| - in foreign currency | 187,3 | 21,0 | 291,6 | 21,9 | 251,8 | 14,5 | 304,6 | 12,3 | 245,3 | 9,8 |
| controlling interest portfolio | 19,6 | 2,2 | 64,9 | 4,9 | 79,8 | 4,6 | 116,6 | 4,7 | 117,7 | 4,7 |
| - in rubles | 6,7 | 0,7 | 38,6 | 2,9 | 51,2 | 3,0 | 84,9 | 3,4 | 84,3 | 3,4 |
| - in foreign currency | 12,9 | 1,4 | 26,2 | 2,0 | 28,5 | 1,6 | 31,7 | 1,3 | 33,4 | 1,3 |
Diagram 1
Dynamics of investments of credit institutions in securities (excluding promissory notes)
APPENDIX 2
Table 2 Structure of investments of credit institutions in debt obligations
| 1.01.05 | 1.01.06 | 1.01.07 | 1.07.07 | 1.09.07 | ||||||
| billion | VC | billion | VC | billion | VC | billion | VC | billion | VC | |
| rub. | total | rub. | total | rub. | total | rub. | total | rub. | total | |
| Investment volume - total | 752,6 | 100,0 | 1036,6 | 100,0 | 1341,2 | 100,0 | 1824,0 | 100,0 | 1835,0 | 100,0 |
| - in rubles | 533,5 | 70,9 | 745,7 | 71,9 | 1090,5 | 81,3 | 1566,3 | 85,9 | 1581,6 | 86,2 |
| - in foreign currency | 219,0 | 29,1 | 290,8 | 28,1 | 250,7 | 18,7 | 257,7 | 14,1 | 253,3 | 13,8 |
| including: | ||||||||||
| debt obligations of the Russian Federation | 435,6 | 57,9 | 492,0 | 47,5 | 537,2 | 40,1 | 615,6 | 33,7 | 629,8 | 34,3 |
| - in rubles | 299,7 | 39,8 | 364,4 | 35,2 | 436,9 | 32,6 | 520,1 | 28,5 | 527,0 | 28,7 |
| - in foreign currency | 135,9 | 18,1 | 127,6 | 12,3 | 100,4 | 7,5 | 95,5 | 5,2 | 102,8 | 5,6 |
| debt obligations of the Central Bank of the Russian Federation | 352,3 | 19,3 | 341,0 | 18,6 | ||||||
| - in rubles | 352,3 | 19,3 | 341,0 | 18,6 | ||||||
| - in foreign currency | 0,0 | 0,0 | 0,0 | 0,0 | ||||||
| debt obligations of subjects of the Russian Federation and | 79,1 | 10,5 | 88,2 | 8,5 | 100,4 | 7,5 | 117,2 | 6,4 | 109,4 | 6,0 |
| local authorities | ||||||||||
| - in rubles | 79,1 | 10,5 | 88,2 | 8,5 | 100,4 | 7,5 | 117,2 | 6,4 | 109,4 | 6,0 |
| - in foreign currency | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| debt obligations of credit | 23,4 | 3,1 | 30,7 | 3,0 | 49,2 | 3,7 | 63,0 | 3,5 | 63,6 | 3,5 |
| organizations - residents | ||||||||||
| - in rubles | 23,4 | 3,1 | 30,6 | 2,9 | 49,1 | 3,7 | 63,0 | 3,5 | 63,6 | 3,5 |
| - in foreign currency | 0,0 | 0,0 | 0,1 | 0,0 | 0,1 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| 108,0 | 14,3 | 221,5 | 21,4 | 402,3 | 30,0 | 358,7 | 19,7 | 374,4 | 20,4 | |
| residents | ||||||||||
| - in rubles | 107,4 | 14,3 | 220,8 | 21,3 | 402,0 | 30,0 | 358,5 | 19,7 | 374,3 | 20,4 |
| - in foreign currency | 0,6 | 0,1 | 0,7 | 0,1 | 0,3 | 0,0 | 0,2 | 0,0 | 0,1 | 0,0 |
| debt obligations of foreign | 19,4 | 2,6 | 66,1 | 6,4 | 58,7 | 4,4 | 60,7 | 3,3 | 40,0 | 2,2 |
| states | ||||||||||
| - in rubles | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| - in foreign currency | 19,4 | 2,6 | 66,1 | 6,4 | 58,7 | 4,4 | 60,7 | 3,3 | 40,0 | 2,2 |
| debt obligations of banks | 23,6 | 3,1 | 36,1 | 3,5 | 35,3 | 2,6 | 35,4 | 1,9 | 36,5 | 2,0 |
| non-residents | ||||||||||
| - in rubles | 0,0 | 0,0 | 4,4 | 0,4 | 11,1 | 0,8 | 11,1 | 0,6 | 11,6 | 0,6 |
| - in foreign currency | 23,6 | 3,1 | 31,8 | 3,1 | 24,3 | 1,8 | 24,4 | 1,3 | 24,9 | 1,4 |
| other debt obligations | 36,2 | 4,8 | 61,3 | 5,9 | 67,8 | 5,1 | 78,8 | 4,3 | 92,4 | 5,0 |
| non-residents | ||||||||||
| - in rubles | 0,0 | 0,0 | 0,0 | 0,0 | 1,9 | 0,1 | 2,6 | 0,1 | 9,5 | 0,5 |
| - in foreign currency | 36,2 | 4,8 | 61,3 | 5,9 | 65,9 | 4,9 | 76,2 | 4,2 | 82,9 | 4,5 |
| debt obligations under agreements with | 26,1 | 3,5 | 38,5 | 3,7 | 89,8 | 6,7 | 141,9 | 7,8 | 145,3 | 7,9 |
| resale | ||||||||||
| - in rubles | 24,0 | 3,2 | 37,2 | 3,6 | 88,9 | 6,6 | 141,4 | 7,7 | 145,0 | 7,9 |
| - in foreign currency | 2,2 | 0,3 | 1,3 | 0,1 | 0,8 | 0,1 | 0,6 | 0,0 | 0,2 | 0,0 |
| debt obligations under loan agreements | 1,1 | 0,1 | 2,0 | 0,2 | 0,3 | 0,0 | 0,3 | 0,0 | 2,3 | 0,1 |
| - in rubles | 0,0 | 0,0 | 0,1 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| - in foreign currency | 1,1 | 0,1 | 1,9 | 0,2 | 0,3 | 0,0 | 0,3 | 0,0 | 2,3 | 0,1 |
| overdue debt obligations | 0,0 | 0,0 | 0,1 | 0,0 | 0,2 | 0,0 | 0,2 | 0,0 | 0,2 | 0,0 |
| - in rubles | 0,0 | 0,0 | 0,0 | 0,0 | 0,2 | 0,0 | 0,1 | 0,0 | 0,1 | 0,0 |
| - in foreign currency | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
Diagram 2
Dynamics of credit institutions' investments in debt obligations
APPENDIX 3
Table 3 Structure of credit institutions' investments in shares
| 1.01.05 | 1.01.06 | 1.01.07 | 1.07.07 | 1.09.07 | ||||||
| billion | VC | billion | VC | billion | VC | billion | VC | billion | VC | |
| rub. | total | rub. | total | rub. | total | rub. | total | rub. | total | |
| Investment volume - total | 121,3 | 100,0 | 227,9 | 100,0 | 311,2 | 100,0 | 528,6 | 100,0 | 548,8 | 100,0 |
| Including: | ||||||||||
| - shares of resident credit institutions | 3,0 | 2,5 | 2,5 | 1,1 | 3,7 | 1,2. | 8,1 | 1,5 | 7,5 | 1,4 |
| of which unquoted | 1,2 | 1,0 | 0,9 | 0,4 | 1,1 | 0,4 | 0,9 | " 0,2 | 1,0 | 0,2 |
| - other shares of residents | 92,1 | 76,0 | 115,6 | 50,7 | 173,9 | 55,9 | 288,2 | 54,5 | 274,3 | 50,0 |
| of which unquoted | 36,7 | 30,3 | 32,5 | 14,3 | 43,9 | 14,1 | 109,5 | 20,7 | 102,0 | 18,6 |
| - shares of non-resident banks | 0,3 | 0,2 | 0,5 | 0,2 | 0,6 | 0,2 | 3,0 | 0,6 | 2,8 | 0,5 |
| of which unquoted | 0,3 | 0,2 | 0,5 | 0,2 | 0,6 | 0,2 | 1,3 | 0,3 | 1,2 | 0,2 |
| - other shares of non-residents | 0,7 | 0,6 | 8,4 | 3,7 | 6,5 | 2,1 | 52,0 | 9,8 | 18,9 | 3,4 |
| of which unquoted | 0,0 | 0,0 | 5,8 | 2,6 | 5,4 | 1,7 | 51,0 | 9,7 | 17,8 | 3,3 |
| - under agreements with resale | 21,9 | 18,1 | 100,8 | 44,2 | 126,2 | 40,5 | 177,0 | 33,5 | 245,0 | 44,6 |
| - under loan agreements | 3,2 | 2,6 | 0,1 | 0,0 | 0,3 | 0,1 | 0,3 | 0,1 | 0,3 | 0,1 |
Table 4 Main financial indicators of Alfa-Bank OJSC in terms of consolidated balance sheets as of 01.01.2007, 01.01.2006, 01.01.2005
BIBLIOGRAPHY
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In the English-Russian banking encyclopedic dictionary B.G. Fedorov, an investment bank is defined as a bank specializing in organizing the issue, guaranteeing the placement and trading in securities; also consulting clients on various financial issues; however, it is focused mainly on wholesale financial markets (in US conditions) or as a non-clearing bank specializing in medium and long-term investments in small and medium-sized companies (in UK conditions).
It should be noted that different countries have different terminological systems. So, in the UK, the term investmenttrust (company) is more suitable for the essence of an investment bank, rather than the term investmentbank, the phenomenon closest to the American understanding is such a phenomenon as an investment banking house (investmentbankinghouse).
From the above definitions, as well as from many other definitions, the following features can be distinguished that are characteristic of those commercial organizations that will be referred to as investment banks:
- · it is a large universal commercial organization that combines most of the permissible activities in the securities market and in other financial markets;
- main activity - attraction of financial resources through securities;
- · carrying out operations, primarily in the wholesale financial markets;
- · Priority is given to medium- and long-term investments;
- · the basis of the portfolio - securities, while most investment banks are most focused on non-government securities.
All other institutions of the securities market are guided by the performance of certain specialized operations. At the same time, they are not capable of investment banking.
It should be noted that fundraising activities are usually described as investment banking. The simplest definition of an investment bank would be the following: an investment bank is a financial institution engaged in investment banking (investment banking).
However, this definition is not entirely accurate. It implicitly assumes the specialization of this institution in investment banking. But the fact is that it is impossible to specialize only in investment banking, because its implementation is possible only within the framework of a truly universal institution in which all other types of investment banking activities are sufficiently developed. Activities to attract financial resources is impossible without the presence of a well-organized and developed work in other areas, characteristic of an investment bank. It can be said that all other activities of an investment bank form the basis for the development of investment banking within this bank. In addition, investment banking is not only the most prestigious direction in the work of an investment bank, but also the most profitable. Therefore, all large companies in the securities market tend to receive projects to attract financial resources, i.e. aspire to grow into an investment bank.
Moreover, the term investmentbanking is often understood in a narrow sense, namely as the activity of managing consortiums of underwriters, i.e. become almost synonymous with the term underwriting. The term investmentbanking itself appeared in England in the middle of the nineteenth century. (in the USA - at the end of the 19th century) - after banks began to fully redeem new issues of securities for their subsequent sale to end investors on their own behalf.
It is the activity of attracting financial resources for its clients through the placement of their securities that is the main one that determines the company as an investment bank. At the same time, the implementation of this activity presupposes the presence of many other activities, which together form the universality of an investment bank.
Today, institutions have emerged that really show a tendency to become an investment bank and declare themselves precisely as investment banks, and characterize their activities as investment banking. However, in the corporate name of such institutions, the phrase "investment bank", as a rule, is not found. The fact is that the text of the Law "On Banks and Banking Activities" gives such a definition of the term "bank", from which it follows that any bank is a commercial bank and, therefore, must have a license to carry out banking operations. Therefore, the use of the word "bank" in the corporate name of the institution, which is essentially an investment bank, should be recognized as irrational at present.
In Russia, in the absence of a legislative description of an investment bank, those enterprises that developed into structures that, according to their characteristics, correspond to the concept of an investment bank, for the most part had an investment company license. However, in addition to those operations that, according to Russian regulations, were within the scope of the activity of an investment company, an investment bank usually performs functions that are characteristic of other specialized market participants. An investment company and an investment bank can also be contrasted in terms of their work with the funds of the population. Investment companies in Russia did not have the right, in accordance with regulatory documents, to attract funds from individuals, but due to their small size, they tried to attract funds from the public through various ingenious schemes. Investment banks, by contrast, in countries with developed markets do not have legal prohibitions on working with private funds, but refuse to do so for economic reasons. In addition, in Russia there is an opinion about the investment company as an institution, the main activity of which is the conduct of dealer operations.
An investment bank is similar in most general terms to a commercial bank. Both of them attract funds from small investors and place them among large consumers of financial resources. In other words, banks are the link between end investors and end users of financial resources. But a commercial bank allocates resources by entering into loan agreements with borrowers, and an investment bank buys securities of various issuers. In addition, the term "commercial" indicates the short-term nature of financing (the original meaning is trading operations, which are characterized by a relatively short time period during which there is a need for financial resources), and the term "investment" indicates a longer-term financing, associated as as a rule, with the renewal of the fixed capital.
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