ALFRED NOBEL UNIVERSITY, DNIPROPETROVSK
THE DEPARTMENT OF INTERNATIONAL ECONOMY AND
ECONONIC THEORY
The Diploma Project on the topic:
"THE ESTIMATION OF ECONOMIC EFFICIENCY OF
INTERNATIONAL SETTLEMENT SYSTEMS BY BANKS OF
UKRAINE"
Made by: Karyna Demchenko
Checked by: Doct. Sci. (Economics),
Full Prof. Yu.E. Petrunya
Dnipropetrovsk
2015
Contents:
PART 1. GENERAL CHARACTERISTICS OF INTERNATIONAL
SETTLEMENT SYSTEMS
PART 2. ANALYSIS OF GLOBAL INTERBANK
TELECOMMUNICATIONS USE IN THE PJSC CB “PRIVATBANK”
ACTIVITY
PART 3. PERSPECTIVES OF INTERNATIONAL SETTLEMENT
SYSTEMS USE IN UKRAINE
The aim of the Diploma Project is to increase the efficiency of SWIFT
system in PJSC CB "PrivatBank" activity.
The objectives of the Diploma Project are to consider the theoretical aspects
of international settlements and conduct a detailed analysis of international
SWIFT format assignments to improve the efficiency of their use, and to
explore the results that emerged after the implementation of some changes.
The research object is PJSC CB "PrivatBank", which is the largest
commercial bank in Ukraine.
The research subject is international settlement systems and SWIFT
payments.
The research methods used in this Diploma Project are firstly analysis of the
literature and regulatory documents. During this work such methods as
systematic, structural and functional analyses were used.
Part 1. GENERAL CHARACTERISTICS OF INTERNATIONAL
SETTLEMENT SYSTEMS
International settlements are establishing and strengthening
relations between the economies of different countries, which have a
great impact on the world economy as a whole.
Forms of international settlements are:
International settlement systems are:
Letters of credit
SWIFT
Collections
FEDWIRE
Bank Guarantees
TARGET
Payment on open account
CHIPS
Advance payments
ACH
Bank transfer
EURO 1
EBA
The main documents are: The Law of Ukraine "On the banks
and the banking activity”, The Law of Ukraine "On the order of
settlements in foreign currency“, the Decree of the Cabinet of Ministers
of Ukraine "On Currency Regulation and Currency Control“, The Law
of Ukraine "On income taxation of enterprises”.
PART 2. ANALYSIS OF GLOBAL INTERBANK
TELECOMMUNICATIONS USE IN THE PJSC CB “PRIVATBANK”
ACTIVITY
Main financial indicators of PJSC CB "PrivatBank“
2014
2013
2012
Equity
22,696 bln.UAH
20,312 bln.UAH
18,300 bln.UAH
Аssets
18,100 bln.UAH
16,353 bln.UAH
14,898 bln.UAH
Net profit
7493,036 mln.UAH
1,873 bln.UAH
1,765 bln.UAH
CONTENT OF CREDIT PORTFOLIO BY DIFFERENT SECTORS OF ECONOMY
1.
2.
3.
4.
Conclusions:
Quantity of payments almost didn’t change in comparison
with last year, but charges expenses grew.
Charges of third banks for the payment influence on the
operating expenses, consequently decrease the bank income.
Increase in profit should be done in client payments in euro
currency.
Difficult economic condition in the country influenced
negative on the bank income.
Payment systems
The main problems related to payment systems in PJSC CB PrivatBank
activity are:
1. The difficulty in buying the currency (USD, EUR) in order to transfer
to VISA system,
2. The lack of national currency,
3. Charges and difference in exchange rates.
PART 3. PERSPECTIVES OF INTERNATIONAL SETTLEMENT
SYSTEMS USE IN UKRAINE
The disadvantages of SWIFT system:
Long term of payment processing
Until 5 banking days
High charges
Depend on the bank, country, banksintermediaries
High expenses
Burden small banks
Dependence in internal organization
Difficulty of technical system.
Appearance of different technical
problems
Opportunities reducing of payment
Reducing of period between debit and
credit using
credit
High cost of entering
160-200 thousand of dollars. Burden of
medium and small banks
Old type of transfer
Old software and non-use of different
programs for fast work and control
Ways to improve the system and reduce the disadvantages:
-The entering amount of money to the SWIFT system should be reduced.
-Outdated SWIFT interface should be replaced with a more advanced interface
in those banks, which have the possibility to do this.
-In order to reduce the occurrence of various technical problems and failures the
bank should simplify the technical system.
-To increase the popularity of SWIFT system use.
Ways of improvement of SWIFT use in the activity of PJSC CB
"PrivatBank“:
1. Replacement of software system
2. Charges reduction
3. Development of guidance of forming commissions to customers when
payment order is receiving
4. Creation of a standard requirement for execution of payment orders
5. Costs reduction by increasing charges from client
6. Optimization of payments route
Conclusions and recommendations:
In the result of the research some steps were made:
1) The legal framework of the International settlement transactions in
commercial banks, the theoretical foundations of the international payments
were considered;
2) The analysis of operations related to international payments in commercial
bank was made;
3) Methods related to reducing the costs of the bank concerning with
international settlements were provided;
4) The analysis of cost changes in the commercial bank after implementation of
proposed methods was made.
As a result of the Diploma Project ways to improve SWIFT
payments were found:
-Charges reduction for the execution of payment orders and
charges of third banks (12.75%)
-Guidance development of charges forming to customers
(14.81%)
-Development of standard requirements for issuing payment
orders (3.6%)
-Costs reduction by increasing charges for receiving payment
order from the client (2.5%)
-The optimization of the route of international payments (25%)
-Some economic results have been achieved. (58.66%)