Bank accounting and audit

Strategies for investment policy management of commercial banks.

In practice, commercial banks' investments are aimed at the acquisition of additional revenues for securities with a maturity of more than one year. If a commercial bank purchases a variety of securities issued by different issuers, it may be possible to speak about the investment portfolio of this bank in the diversification of these investments. The management of commercial banks' investment portfolio is essentially different from that of other investors in managing their investment portfolio. Here are the opinions of different investors, different investment companies, and large-scale holding companies. Investment portfolio management includes:

- portfolio planning;

- analyze and regulate the composition of the portfolio;

- comply with the level of liquidity required for the formation and maintenance of the portfolio;

- Reduction of portfolio management activities and others.

In the development of their potential investment policies and the size and structure of the investment portfolio, commercial banks focus primarily on the following peculiarities of the securities:

- usefulness;

- liquidity (efficiency);

- source of capital increase;

- degree of reliability;

- risk.

Commercial banks have the following objectives in investing their own funds into securities: increasing capital by taking additional income in interest-earnings, increasing capitalization on capital and increasing the value of securities based on it, and reducing risks on securities. Banks in these countries are obliged to indicate their investment portfolio assets based on reassessment of their assets. In other countries, for example, in the United States and Japan, due to the fact that the exchange rate is mainly due to the acquisition or nominal value of the investment portfolio of the banks, the Bank will result in a large amount of collateral reserve in banks.

In many countries of the world, existing banking legislation sets specific requirements for the quality of securities in the composition of the investment portfolio of commercial banks. These requirements are mainly focused on the liquidity of the securities in the investment portfolio of the banks. These securities should be freely traded on the market or be pledged as collateral for the Central Bank of the country.

In accordance with the current legislation of the Republic of Uzbekistan, the composition of the investment portfolio of commercial banks may constitute state short-term bonds and other corporate securities.

The strategy of investment activity of commercial banks in the international banking practice provides two strategies:

-passive strategy;

-active strategy:

Bank maintains a moderate level of profitability in its passive strategy for investing activities, namely, at a regular and consistent level of earnings. Banks can use two different ways to implement a passive strategy.

- "stairway" method;

- "halter" method:

Bank uses the first method to buy securities based on investment terms determined by it for a different period of time and place them in the investment portfolio in a straight line. In the case of a passive strategy, the commercial bank invests considerable part of its funds into short-term securities and long-term securities, which are highly profitable for investment portfolio liquidity.

The greater the risk on the securities market, the greater the demand for portfolio managers. The role and significance of this demand corresponds to the period of fluctuations in the paper market (crisis, saturation and growth cycles).

The concept of management in Portfolio is understood to apply methods and technological capabilities of various types of securities. In return for the following: Maintaining investment funds per capita; ensuring maximum return on investment portfolio and so on. In other words, portfolio management is a key feature of keeping and improving the quality of investment and other factors that are relevant to the investor's goals.

From the practice of the stock market of the developed countries, this is closely related to the type of portfolio and its selected strategy. The first of these is a multi-task monitoring.

On the basis of this, the deep and comprehensive analysis of the stock market lies in determining the quality of the securities that are cemented. The ultimate goal of monitoring is to select investment securities that are potentially investment-oriented and adapt to their portfolio. In practice, portfolio types include active and passive control modules.

An effective asset management module is to quickly look for tools that are appropriate for the purpose of investing in the portfolio, and thus formulate the portfolio structure with effective stock tools. However, this method can be used only on the securities market of developed countries, as the stocks in the stock market of Uzbekistan are not subject to significant changes and the risk is not high.

That is why the use of the active monitoring module on the stock market of our country does not give a great result. In the long term, if stock market quotations have changed dramatically, the stock market development is stable, and the stock holders find true holders, and in return, the stock market's profitability increases. As you know, all this leads to the successful use of the active monitoring module.

The acceleration of investment funds and securities transactions largely depends on the outlook for future revenues based on monitoring. In such circumstances, the main task of managers is to search for and effectively identify the most effective types of securities in the short and short period of time, and to reject the low-yielding stock tools.

At the same time, it should strive to avoid the loss of portfolio and its investment capability. In doing so, it is important to compare the value of "new portfolio", profitability, risk, and other indicators of investment by comparing with the same "old portfolio" and making relevant conclusions.

The use of this method requires considerable financial costs, since this process is closely linked to information, analysis, expertise and trading in the securities market. To do this, a wide range of independent analysis and expertise require the stock market and the economy of the country in general.

Only large banks and financial companies can carry out such works, as they usually have a large portfolio of investment securities and seek maximum profit from their professional work in this market. One of the main tasks of the managers is to know the stock market, the conjuncture of the situation, and to apply the results of the analysis to the practice.

In order to minimize the cost of asset management, the portfolio manager must have professional skills in implementing his / her conclusions and should be rapidly implemented, but also carefully. Thus, the active monitoring module is a continuous process and therefore it is necessary to regularly review the portfolio of securities.

The use of the "Passive Module" in portfolio management primarily requires a well-diversified portfolio. In this investment portfolio, the standard risk is generally predetermined for a long time. The success of the passive module management depends largely on the quality of the securities market, that is, the replenishment of profitable, reliable and liquidity securities.

The life of the portfolio depends on the stock market stability. Under investment conditions, the use of a "passive module" in the period of the short-term securities, as well as the fluctuations in the stock market, is not effective.

In countries where the transition to market economy, including those in Uzbekistan, has not yet been achieved.

The passive management portfolio is characterized by only low risk types of securities and the share of securities is still significantly lower. The higher the share of long-term types of securities in the securities system, the effectiveness of the "passive module" will remain for a long time. This, in turn, reduces the current cost of passive management as the main advantage.

The choice of management tactics is largely dependent on the type of investment portfolio. That is why the manager or investor needs to quickly identify the types of securities (which should not be more than 10-15) and to predict the status of the securities market, along with determining their share in the portfolio.

If the investor does not have high professional competence, choosing the type of securities or having difficulty determining the optimal time to buy-sell transactions, it would be better for these investors to keep the risk rating diversified. As investors can rely on their professional capability and predict the status of the securities market, they can also use the portfolio structure to change the portfolio structure and choose the type of management.

For example, if an investor uses a portfolio of a portfolio of passive management, it should fill in the portfolio with state securities, in practice, such kind of stock is guaranteed by the government, their profitability is easy to calculate, and it is easier to determine the variability of the market price for the particular investor's ability.

The selection of the asset or liability management portfolio of the investment portfolio and its application in the portfolio management is carried out on the basis of the client's order and its account or by signing a contract.

The use of the active module in the portfolio management is carried out as aforesaid, as the aforementioned special financial institution is responsible for the large current expenses. These financial companies take over the securities portfolio and all issues of their purchase and sale on behalf of the client.

Selecting the types of securities available in the stock market, the portfolio management is responsible for the investor's accountability and optimization, and ensures the implementation of trading and trading transactions based on selected strategy and tactics.

Management benefits are largely dependent on managerial entrepreneurship and risk, and the premium they receive is calculated on the basis of the overall benefit.

If a "passive" module is used in the management, the funds will be transferred to the private management of the portfolio. They will benefit from the use of these funds (investors) on the basis of their orders and on the stock tools available on the market. they receive commissions for the purchase and sale of securities.

In the practice of foreign countries, such operations are called "reliable banking operations". Thus, the effective use of two or more of these modules in the portfolio management is linked to the state and potential of the stock market, so portfolio management, based on "passive" and "asset" monitoring, can fully present its capabilities in the securities market of developed countries .

In many countries, including Uzbekistan, the securities market is steadily advancing, while shares and stocks of some countries (Russian Federation, Kazakhstan) are traded on the stock exchange's largest stock exchanges.

If a "passive" module is used in the management, the funds will be transferred to the private management of the portfolio. They will benefit from the use of these funds (investors) on the basis of their orders and on the stock tools available on the market. they receive commissions for the purchase and sale of securities.

Well done in this area, including the introduction of US Depositary Receipts (ADRs).

In practice, different methods are used to form the optimal structure of the securities portfolio. The majority of them were based on the Marxist method, and in 1951, he proposed the first mathematical problem of finding the optimal structure of the securities portfolio. Later, Markovets won the Nobel Prize for Economics. Issue of government securities is carried out without issuance of the issue certificate and issue of government securities in accordance with the procedure established by the legislation.