Graduate work. Precious metals market. The precious metals market is the sphere of economic relations between participants in transactions with precious metals. In terms of profitability, impersonal metal accounts are:

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Activities of Russian commercial banks in the market of precious metals and precious stones Performed by student of group 181 Olga Kopaneva Scientific supervisor: Doctor of Economics, Professor Ekaterina Mikhailovna Popova

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Objectives: to justify the expediency of banks’ work in the market of precious metals and stones, to confirm the prospects of this area of ​​banking activity, to understand what caused the fact that of all the banks licensed to carry out these operations, less than half actually work with precious metals

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Basic concepts: Precious metals - bars of gold, silver, platinum and palladium, as well as coins made of precious metals (gold, silver, platinum and palladium), with the exception of coins that are the currency of the Russian Federation. Banking operations with precious metals - operations to attract deposits and place precious metals. Metal accounts are accounts opened by a credit institution to carry out transactions with precious metals. Metal safekeeping accounts are customer accounts for recording precious metals transferred for safekeeping to a credit institution while preserving their individual characteristics (name, number of valuables, fineness, manufacturer, serial number, etc.). Unallocated metal accounts (UMA) are accounts opened by a credit institution to record precious metals without indicating individual characteristics and carrying out operations to attract and place them.

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Precious metals in the balance sheets of Russian banks, million rubles Operating credit organizations with licenses granting the right to conduct transactions with precious metals

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Problem Possible solutions Lack of financial resources Instead of working with chain enterprises, do everything else (compulsory medical insurance, loans, storage and transportation, etc.) For those banks that already work there, ways to increase activity: participation in exports, changing the terms of cooperation, flexible interest rates on loans. The trust of managers of enterprises in the mining-processing-export chain is concentrated in a few of the largest banks Taxation Eliminate VAT on the sale of physical metal Investment demand of Russians is directed towards jewelry stores Educate the population about the services of banks with precious metals Weak interest of the population in compulsory medical insurance and deposits in precious metals Reduce the minimum lot size Implementation insurance systems for such deposits

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Structure of the precious metals market The precious metals market is a set of various economic relationships between participants in transactions with precious metals, precious stones, securities quoted in gold, including gold certificates, bonds, futures, etc.

Slide presentation

Slide text: Activities of Russian commercial banks in the market of precious metals and precious stones Performed by student of group 181 Olga Kopaneva Scientific supervisor: Doctor of Economics, Professor Ekaterina Mikhailovna Popova

Slide text: Objectives: justification of the expediency of banks’ work in the market of precious metals and stones, confirmation of the prospects of this area of ​​banking activity, to understand the reason for the fact that of all the banks licensed to carry out these operations, less than half actually work with precious metals

Slide text: Tasks:

Slide text: Basic concepts: Precious metals - bars of gold, silver, platinum and palladium, as well as coins made of precious metals (gold, silver, platinum and palladium), with the exception of coins that are the currency of the Russian Federation. Banking operations with precious metals - operations to attract deposits and place precious metals. Metal accounts are accounts opened by a credit institution to carry out transactions with precious metals. Metal safekeeping accounts are customer accounts for recording precious metals transferred for safekeeping to a credit institution while preserving their individual characteristics (name, number of valuables, fineness, manufacturer, serial number, etc.). Unallocated metal accounts (UMA) are accounts opened by a credit institution to record precious metals without indicating individual characteristics and carrying out operations to attract and place them.

Slide text: Main operations of banks in the precious metals market

Slide text: Advantages of banks working in the precious metals market

Slide text: Precious metals in the balance sheets of Russian banks, million rubles Operating credit organizations with licenses granting the right to conduct transactions with precious metals

Slide text: Problem Possible solutions Lack of financial resources Instead of working with chain enterprises, do everything else (compulsory medical insurance, loans, storage and transportation, etc.) For those banks that already work there, ways to increase activity: participation in exports, changing conditions cooperation, flexible interest rates on loans. The trust of managers of enterprises in the mining-processing-export chain is concentrated in a few of the largest banks Taxation Eliminate VAT on the sale of physical metal Investment demand of Russians is directed towards jewelry stores Educate the population about the services of banks with precious metals Weak interest of the population in compulsory medical insurance and deposits in precious metals Reduce the minimum lot size Implementation insurance systems for such deposits

Slide text: Structure of the precious metals market The precious metals market is a set of various economic relationships between participants in transactions with precious metals, precious stones, securities quoted in gold, including gold certificates, bonds, futures, etc.

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Slide text: Precious metals market example: Gold market Gold supply (tons) Top five gold producing countries (2010): China (345 tons) Australia (255 tons) USA (230 tons) South Africa (207 tons) Russia (190 tons)

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Slide text: Prospects for investing in precious metals (gold) Gold does not have a government, but currencies do The safety of investments in precious metals is maximum relative to any other assets Low risks of changes in the value of gold as a separate instrument Gold is the leading investment asset for investing in most countries Investments in silver, platinum and palladium diversify investments into precious metals

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Slide text: Thank you for your attention

From a functional point of view, the market for precious metals and precious stones From a functional point of view, the market for precious metals and precious stones is a trade and financial center in which trade in them and other commercial and property transactions with these assets are concentrated.

Current trends in the precious metals market: the investment attractiveness of precious metals is growing due to positive price dynamics; precious metals in their future do not have a tendency to completely depreciate, unlike currencies; The “top four” of the precious metals market are gold, silver, platinum and palladium; gold, the leader of the precious metals market, despite the latest disappointing quotes, still retains its position and does not lose its investment attractiveness; silver has high volatility, which causes a significant difference between the upper and lower price limits of its value; Platinum and palladium are industrial metals; this sector is characterized by relatively low growth rates and significant prospects for medium- and long-term investment.

Thesis on the topic: “Operations of commercial banks with precious metals: problems and development prospects (on the example of the Miass branch No. 4910 of Sberbank OJSC)” Completed by: Amineva A.R. Group: MF-502 Scientific supervisor: Khakimova E.A. Slide 1 Object Commercial banks Subject Features of operations of commercial banks with precious metals Goal Identification of problems and ways to improve the organization of activities of commercial banks in the precious metals market Objectives 1. Study the theoretical aspects of banking operations in the precious metals market. 2. Reveal the features of legal regulation of the activities of commercial banks with precious metals. 3. Research technologies for conducting banking operations with precious metals and identify risks when carrying out these operations. 4. Characterize the operations of commercial banks with precious metals using the example of Miass branch No. 4910 of Sberbank OJSC. 5. Analyze the investment attractiveness of investments in precious metals in a commercial bank using the example of Miass branch No. 4910 of Sberbank OJSC. Slide 2 Structure of the precious metals market in Russia Precious metals market Primary Secondary Direct internal Interbank Intermediary internal Wholesale Direct export Retail Exchange Export Slide 3 Classification of banking operations with precious metals Banking operations with precious metals Profit generation and risk insurance Securing a loan Speculative operations Gold hoarding Metal accounts Pledge of gold arbitration Purchase of gold bars Gold certificates Pledge of silver swap Purchase of gold coins Federal loan bonds secured by gold Pledge of platinum Pledge of palladium Slide 4 Risks arising when carrying out operations with precious metals and methods of managing them Credit risk Market risk Operational risk Management methods: 1. Creation of reserves to cover losses; 2. The procedure for covering losses with the bank’s own capital; 3. Determination of the scale of different types of margin based on the degree of risk; 4.Control over the quality of the loan portfolio; 5.Tracking critical indicators by type of risk; 6. Transactions with derivative financial instruments; 7. Motivation of business units and personnel associated with risky operations of the bank; 8.Pricing (interest rates, commissions) taking into account risk; 9. Setting limits on risky transactions; 10. Hedging of individual risks. Liquidity risk Slide 5 Volume of each type of transactions with precious metals in Miass branch No. 4910 of Sberbank OJSC bullion coins 3% 11% loans 13% Compulsory medical insurance 73% Slide 6 Advantages and disadvantages of investing in precious metals in Miass branch No. 4910 of Sberbank OJSC View investments in precious metals in Miass branch No. 4910 of Sberbank OJSC Advantages Disadvantages 1. Opening of impersonal metal accounts (UMA) - when opening an OMS, VAT is not charged; - no commission for opening, closing and maintaining compulsory medical insurance; - precious metal can be bought and sold any day. - VAT payment upon closure of compulsory medical insurance with receipt of real metal; - presence of a spread, i.e. the difference between the lowest selling price and the highest purchase price of the product; - increased risk. 2. Buying physical precious metal in bullion - psychological comfort; - a beautiful and prestigious gift. - VAT is added to the cost of the bullion; when reselling the goods, VAT is not returned to individuals; - when selling an ingot to a bank, the sale price should not be lower than the sale price plus 18% VAT, plus the bank will take its commission for processing the transaction; - when buying back with physical damage to the metal, the bank may require a discount - a discount to the market price; - additional costs for mandatory examination, which confirms the authenticity of the metal in the ingot. 3. Purchase of coins - when purchasing investment coins, the transaction is not subject to VAT; - demand for investment coins is increased, and supply is limited => gradual rise in prices. - fairly high spreads for investment coins; - if coins are damaged, their price decreases greatly. Slide 7 Calculation of the client's profitability when investing gold on compulsory medical insurance Dynamics of profitability of investments in gold on compulsory medical insurance for clients of Miass branch No. 4910 of Sberbank OJSC from 01.01.2006 to 01.05.2008 80.000 40.000 20.000 01.05.2008 01.03.2008 01.01. 2008 01.11.2007 01.09 .2007 01.07.2007 01.05.2007 01.03.2007 01.01.2007 01.11.2006 01.09.2006 01.07.2006 -40.000 01.05.2006 -20.000 01.03.2006 0.0 00 01/01/2006 Profitability,% 60.000 -60.000 date for 0.5 year r(09 .01 .08 .9 .05 .08) r(17 .01 .08 17 .03 .08) for 1 year for 1.5 years (purchase 09.05.2008 sale 09.01.2008) 366,100 (09.05 . 2008 09 . 01 . 2008) sale 09 . 01. 2008 (purchase 03/17/2008 sale 01/17/2008) 366,100 (03/17/2008 01/17/2008) sale 17. 01. 2008 for 2 years (653,82,713,80) 365,100 121,713,80 (737,28,704,12) 366,100 60,704,12 25,35% 28,73 Slide 8 Gold purchase and sale quotes by Miass branch No. 4910 OJSC "Sberbank" from 01/09/2008 to 05/12/2008 1200.00 London fixing, Bank of Russia rate. rub/y $US/tr. oz 1000.00 600.00 05/07/2008 04/30/2008 04/23/2008 04/16/2008 04/02/2008 03/26/2008 03/19/2008 03/12/2008 03/05/2008 02/27. 2008 Purchase rate by Miass branch No. 4910 of Sberbank OJSC, rub/y 02/20/2008 02/13/2008 01/23/2008 01/16/2008 0. 00 02/06/2008 200.00 01/30/2008 Sales rate by Miass branch No. 4910 of Sberbank OJSC, rub/y 04/09/2008 400.00 01/09/2008 rub/y 800.00 date Purchase Sell Central Bank L. Fixed. (pm) Slide 9 Problems Solutions Expected result 1. Risks arising when carrying out operations with precious metals - constant improvement of the risk management system based on the principles of risk awareness, delimitation of powers for assessing and accepting risks, unified approaches to assessment and establishment limits and restrictions, control of accepted risk; -prohibition of carrying out new banking operations that are subject to risks in the absence of regulatory documents or relevant decisions of collegial bodies regulating the procedure for their implementation; - use of modern information technologies that allow you to quickly respond and eliminate the source of risk or minimize its impact. - compliance with the main standards of the Bank of Russia, - ensuring a positive financial result, - improving the quality of operations, - timely prevention of consequences in the event of a risk event. 2. Collection of VAT on the sale of bank bullion and coins made of precious metals to real investors - removal of VAT from transactions with measured bullion; -removal of VAT from transactions with commemorative coins made of precious metals, based on the experience of Western countries. -increased liquidity of the market for bullion bars made of precious metals, -increased profitability from transactions with precious metals in the asset structure, -development of impersonal metal transactions on accounts, paper certificates with metal backing, metal shares in investment funds, etc. 3. The need to increase the competitiveness of Sberbank of Russia in the precious metals market - the introduction of multi-metallic impersonal accounts and deposits, which provide for the possibility of the bank, at the client’s request, converting gold into another metal; - introduction of credit lines in gold for specialized participants in the gold market, similar to foreign exchange ones, providing for the reservation of funds for the consistent development of a loan; - introduction of gift measured gold bars from 1 to 50 g. - increasing the competitiveness of a commercial bank in the precious metals market; - strengthening the bank’s image; - increasing the interest of citizens with average and high income levels in coins and bars, not only as investment objects, but also as newfangled gifts. Slide 10 Slide 11