To create a bank, you need to create a statutory fund. This is the minimum amount of funds required to carry out activities. According to the legislation of the Russian Federation, its volume is 5 million euros in ruble terms. The volume of capital of the organization determines the possibility of its growth and development. For this, there is a special indicator of the adequacy of own funds. Read about what constitutes the H1 standard and how it is calculated.
Bank capital
It includes the amount of equity and additional funds. This indicator is calculated by the following formula:
UK = OK + DC, where:
UK - the capital of the bank,
OK - the amount of equity
DC - additional paid-in capital.
Sources of the formation of the UK for banks in the form of AO:
- par value of ordinary shares actually put on the market;
- share premium;
- par value of preferred shares, provided that the constituent documents stipulate that dividend non-payment is allowed on them, if this does not entail the formation of debts to holders of securities;
- funds that are formed at the request of the Central Bank;
- profit of the current year, which is confirmed by the conclusion of auditors;
- the difference between the authorized capital and the insurance company, if after the reorganization the amount of the bank’s own funds decreases.
The source of the formation of the insurance company for banks in the form of LLC is the payment of the shares of the founders.
Economic regulations
The Central Bank regularly analyzes the amount of equity of credit institutions. It must comply with the indicators specified in Instruction No. 1 “On the procedure for regulating the activities of banks”. The most important of them is H1, the capital adequacy ratio. It regulates the risks of bank inconsistency, shows the minimum amount of equity required to cover losses. Calculation of the standard H1 occurs according to the following formula:
1 = SK / (SUM (-) + p. 8807 + p. 8957 + PC + + p. 8992 + 10 + ), where:
- SK - bank capital;
- Cree - Ai-go asset risk coefficient;
- page - line number in the statements;
- risks:
- - for contingent liabilities ;
- Cattle - for derivatives transactions;
- OR - operating;
- PP - market;
- PC - increased ratio.
1 - capital adequacy ratio - for banks with equity of more than 5 million euros should be 10%. If the authorized capital is less, then the coefficient should be 11% or more.
According to the methodology of the Basel Committee, the sufficiency level is calculated separately for capitals of the first and second levels. First, the volume of repurchased shares, the reserve fund and the profit of past years are calculated. The second level capital includes revaluation reserves for losses and various hybrid securities.
Liquidity ratios
Norm H2 is determined by the ratio of highly liquid assets and the amount of demand liabilities:
H2 = La / (Bv - 0.5 x Bv1), where:
H2 - instant liquidity ratio;
La - highly liquid assets (cash, precious metals, foreign currency, balance sheet “nostro; balances on correspondent accounts with the Central Bank; investments in government securities);
Bv - 20% of the balance of accounts on demand;
Bv1 - minimum aggregate balance of funds on accounts of individuals and legal entities on demand.
The calculated value of H2 should be 15% or more.
Current liquidity ratio:
H3 = La / (From - 0.5 x Bv1)
Where:
From - demand liabilities with a term of up to 30 days: balances on current accounts, loro, deposits and deposits; loans, guarantees and sureties and other obligations;
Bv1 - the minimum aggregate balance of funds on accounts of individuals and legal entities on demand for a period of up to one month.
The calculated value of the coefficient should be less than 50%.
Long-term liquidity ratio is calculated for liabilities and loans with a maturity of more than 12 months:
H4 = Cr / (CK + D + 0.5 x O), where:
Cr - loans provided by the bank in rubles and foreign currency. This figure should also include 50% of guarantees and sureties of a bank with a similar validity period;
D - deposits and loans received;
- the amount of the minimum total account balance with a maturity of up to 1 year.
The calculated value of the coefficient should be less than 120%.
Sanitized banks have not complied with the security standard for obligations N1
This was shown by the results of the financial analysis of credit institutions. In particular, Mosoblbank in February did not comply with the H1 standard. The coefficient value of the credit institution was 0%, with the required 10%. The organization also lacked basic, fixed capital, and long-term liquid assets. Things are no better at Finance Business Bank. The current liquidity ratio exceeded the required value by 4.32%. The standards of adequacy of basic and fixed capital were also violated. The third sanitized organization, Inres, did not comply with the requirements of the Central Bank for 19 days, and BTA-Kazan for 15 consecutive days. In the TRUST National Bank, the value of the adequacy ratios of basic, fixed capital, marginal level of large and the use of own funds and funds of other legal entities amounted to 0%.
Bimbank
This credit organization took over financial rehabilitation ROST for reorganization last fall. But problems arose for all participants in the process. “Growth Bank” at the end of January violated the H1 standard, did not accumulate a sufficient number of long-term assets and exceeded the risk level per client. The credit organization Kedr, which is also a member of this financial group, did not have enough of its own funds to support activities throughout January. In addition, the institution exceeded the limit of major risks, guarantees and sureties and the level of insider risks. 01/12/15 Bimbank also lacked fixed capital to support activities. But in the future the situation improved.
Effects
The list of other organizations that violated the H1 standard includes: NPO Petersburg Settlement Center, deprived of the license Sudostroitelny, Tavrichesky, and Financial-Industrial Banks. For credit organizations that are at the stage of financial recovery, various measures of influence are not applied. But when the capital adequacy ratio of Bank N1 was violated by Svyaznoy, questions began. According to the law, the Central Bank can revoke a license if the coefficient value drops to 2%. During the reporting year, this happens to banks quite often due to technical failures. But if, after correcting the malfunctions, the coefficient value has not increased, then the Central Bank may request a financial rehabilitation plan or introduce its manager into the structure. At Svyaznoy, this ratio decreased to 9.19% for just one day due to the fact that the bank needed to increase its deductions to reserves.
New Market Leader
Legislatively established standard N1 for banks at 10%. Since 2013, Tinkoff has been the most capitalized. The coefficient value then reached 15.8% and remained high, despite market trends. According to the results of the first quarter, this figure decreased to 15.22%. Russian Standard set a new record - 17.65%. Other credit institutions have a low indicator value: Home Credit - 13.9%, Renaissance - 12.89%, OTP - 12.34%.
Russian Standard restructured Eurobonds, extending their term until 2020, received additional capital in the amount of $ 350 million and increased H1 by 4%. For this, the bank paid investors a bonus of 5 percentage points. from the face value of the bond and increased the rate to 13% for one coupon. Today, the capital of the Russian Standard is 64 billion rubles. Due to this, the organization can attract liabilities through tenders, lend more to related companies. Loss covers first level capital. Its sufficiency level is low - 6.26%. But this is because
subordinated bonds are not included in it
.For the first quarter, the bank lost 6.5 billion rubles. At the end of 2014, profit amounted to 1.4 billion rubles. If you do not reduce losses, then the pressure of capital of the first level will only increase. Competitors in the market have a higher value of this indicator: Home Credit - 8.42%, Tinkoff - 9.4%, Vostochny - 6.74%.
Sberbank does not want to stand out on the market yet
The organization received a subordinated loan from the Central Bank in the amount of 500 billion euros. At the moment, this figure is listed in the capital of the second level. If you convert it, then the standard N1 from 12% will increase by 1.2 percentage points Compared to competitors and the organization’s position in the market, the coefficient value is not high. But taking into account the macroeconomics and the situation in Ukraine, the results are quite acceptable.
Conclusion
For successful functioning in the market, the bank needs its own funds. Their volume should advise the established standards of sufficiency. The central bank regularly checks the value of these ratios. If the estimated figure drops to 2%, then a credit institution may be revoked a license.