The topic discussed in principle cannot be presented on one page of printed text. Therefore, we will schematically and fragmentarily show a joint-stock commercial bank with foreign investment. Do banks always develop or do they often degrade (hiding behind bright leaflets)? Is the fate of the institution sold the private business of the buyer only? Is the existing supervision of the Central Bank sufficient for the senior management of a commercial bank?
Brief coverage of the macroeconomic role
The global economy is dominated by two-tier banking systems, headed by central state banks. Their first level is made up of commercial banks - multifunctional agents of the state economy. Under the guidance and in cooperation with the Central Bank of their country, the activities of commercial banks are carried out. The circulation of money (cash and non-cash).
An important economic
function of commercial banks is lending to businesses and households. They, under the control of the Central Bank of their country, carry out currency circulation. In other words, commercial banks are the “workhorses” of the financial system, because they produce most of the cash and settlement services for the economy, servicing the numerous accounts of their customers.
“Bad” foreign management. His strategy
The joint-stock form of organizing commercial banks often involves the purchase of a controlling interest by large foreign banking concerns. They come to our markets because of the high discount rate - the main guideline of “cheap” and “expensive” money. Our money is super expensive.
Our commercial banks are a real Klondike for making profit on loans. For example, commercial bank A, which has a network of 500 branches across the regions, has become the "daughter" of a foreign banking concern. How to consider possible threats to the domestic banking system? When selling, it is important to establish standards for the adequate management of the acquired property complex.
Bad when greed exceeds talent
A bank is a fragile structure, and it should be developed with adequate management. For some reason, the central banks let commercial planning take its course. This is a very important point. Inadequately planned commercial banks are a threat to the integrity of the banking system. Here, all the tricks are good: for example, the high cost of renting. At the same time, the foreign manager gets everything he needs - short-term profit. But foreign managers do not think about the integrity of our banking system, their area of ​​responsibility coincides with the term of the contract. This, incidentally, is an international problem.
Do not forget that commercial banks are large employers who provide income to hundreds of thousands of families. But the employees of the bank “A” branch are unemployed, and the “daughter” is weakening, losing another “workhorse” among their branches. And in our bank “A”, according to the results of the quarter, 20 such branches are being reduced. In three years of such work, only half of the branches will remain with good profitability. Where is the central bank? He is aloof.
Indicators of professional management incompetence
The excessive focus of management on making a profit for their foreign boss should not objectively reduce the attractiveness of bank rates. The principle of non-deterioration of tariffs can be fully agreed upon when selling the organization. After all, domestic commercial banks are a structure that should not initially impair its quality.
The central bank and the state should be interested in the real reason why, suddenly, bank deposits began to resemble current accounts in terms of interest, and loans became objectively non-competitive. The state should develop a scale of personal responsibility of senior management for the deterioration of the quality of bank tariffs - the basis for its further development and a sign of excessive “squeezing” of financial resources from the bank, violation of the harmony of its development.
If the management led to an objective deterioration in the state of Bank A, it would be logical for the Central Bank to have real leverage to rectify the situation.
Concluding the article, I would like to note that commercial banks are institutions that daily and steadily work to ensure that the financial system of the state lives and develops.