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PROBLEMS AND PROSPECTS OF DEVELOPMENT OF INVESTMENT ACTIVITY
OF BANKS
U.A. Ganiyeva, senior lecturer Tashkent institute of finance (Uzbekistan, Tashkent)
DOI: 10.24411/2411-0450-2018-10298
Abstract. Investment banking is the division of a bank or financial institution that serves governments, corporations, and institutions by providing underwriting, mergers and acquisitions advisory services. Investment banks act as intermediaries between investors (who have money to invest) and corporations (who require capital to grow and run their businesses). In this article, the concept and essence of investment banking.
Keywords: bank, investment banking, investment activity, investor, bond, financial advisory.
Today, the situation in the modern economy is such that the banking sector institutions have the greatest investment potential. The advantages of the banking sector lies primarily in its exceptional position and in the unique ability to use funds in the form of credit issue, as well as the ability to channel these funds through the existing channels of the credit
system.
The investment activity of banks is the implementation of investments, as well as all the necessary measures and actions to translate these investments into income or positive effects of any kind [1].
Difference of commercial banks and investment banks [2]
Investment Bank
1. Companies/ Start-ups
2. Borrows to finance the growth of a company.
3. Investors - Creditor & Companies - Debtor
4. Earns money through the fees charged for providing services
1. Individual or small to mid sized companies.
2. Loans to buy a house or future education etc.
3. Bank- Creditor & General Public - Debtor
4. Earns money through the interest charged on loans
L. J
Nowadays, on practice investment bankers mainly do these types of things:
1. Advise companies on mergers and acquisitions.
Bankers help their clients to:
- identify potential targets
- provide valuations for the assets and help buy them at the best possible price;
- or in the case of selling, help find a suitable buyer at a great price
- evaluate the merger proposals
- seal the financial deal by helping them acquiring company to seek funds
- prepare valuation models
2. Advise companies on raising large amounts of capital. This could again be via two ways:
- raise money by issuing and selling the company's shares.
- raise money by issuing debt in the form of bonds or other similar interest bearing products.
3. Corporate Broking Services
Help their clients hedge risk with the help of complex derivative products and serve as country, industry or product (as in equity, debt or derivatives) experts to their clients.
4. Equity Research
Determine the attractiveness of an equity and accordingly guide the investors. In short, their financial advisory services spans across risk management, research and assistance in asset management [3].
Today, Uzbekistan faces the task of creating an efficient banking sector with a modern banking infrastructure. The implemented program of reforming the banking system determines the main directions of its liberalization by intensifying the process of privatizing banks, attracting additional foreign and domestic investments into capital of banks, further commercializing their activities, expanding business access to bank financing and increasing investor confidence in banks.
In the most general form, the main directions of participation of banks in the investment process include the mobilization of funds by banks for investment purposes, the provision of investment loans, investment in securities, equity participation, etc.
Despite the achieved success, there are problems of development of investment activity of banks of the republic. The main factors hindering the activation of bank investment in production are:
- a high level of risk of investments in the real sector of the economy;
- the short-term nature of the existing resource base of banks;
- the lack of market effective investment projects.
Commercial banks need to constantly analyze all the most important factors on which its activity depends, both now and in the foreseeable future, including external factors: the state and development trends of the country's economy as a whole and the region, its individual sectors, including banking; market conjuncture, including banking; demand for banking services (including new ones) in the region where the bank operates and compliance with the supply of such services; development of new banking products and new financial instruments; the actual and possible
place of the bank in the banking services market as a whole and in its individual segments; relationship with customers and the range of potential customers of the bank; bank competitors. Without this, the normal organization of its work is absolutely impossible.
Commercial banks of Uzbekistan, in addition to performing their classic functions, are active participants in the stock market. In recent years, in order to increase their competitiveness, they have significantly intensified their activities in this rapidly growing segment of the financial market. With the growth of turnover in the national securities market, commercial banks become one of the most active institutional participants. They purposefully expand the volume of emission activities, types of operations and range of services provided. Therefore, when analyzing the development of the securities market, it is necessary to single out the problems concerning the development of the stock market as a whole and the stock exchange as the organizer of securities trading. Among the major problems of the functioning of the stock exchange as an organizer of securities trading are the following:
- limited number of securities circulating on the stock exchange;
- insufficient degree of information disclosure by the joint-stock companies included in the official stock exchange bulletin;
- a small number of enterprises included in the highest listing category;
- the lack of special units for investor relations, as well as a special group of investment institutions that provide training and promotion of companies on the stock exchange listing;
- absence of special institutions that quote securities and support liquidity of securities;
- a limited number of investment institutions participating in exchange trading.
Nevertheless, in the medium term, there are two main strategic objectives that will determine the development of the banking sector of Uzbekistan. First, increasing the financial stability of banks and expanding the range of financial services in the domestic market. Secondly, the revitalization of Uzbekistan's banks in the international capital mar-
ket. All these measures, of course, testify to the desire and readiness of the country to integrate into the globalizing world economy.
From the point of view of the internal aspect, the focus will be on strengthening the financial condition of viable banks and removing problem banks from the market, raising banks' capitalization and capital quality, expanding the range of banking services, and strengthening the interaction of banks with
References
1. Инвестиционная деятельность банков. https://investicii-v.ru/
2. Difference of commercial banks and https://www.slideshare.net/suruchi2019/investment-banking
3. What is investment banking? https://www.proschoolonline.com/
the real economy, bringing development indicators of the banking sector of Uzbekistan international standards.
From the point of view of the international aspect, in the long run, it is necessary to really integrate into the world banking system, i.e. to act not only as its borrowers, but to become full participants in international monetary and credit relations.
investment
banks.
ПРОБЛЕМЫ И ПЕРСПЕКТИВЫ РАЗВИТИЯ ИНВЕСТИЦИОННОЙ
ДЕЯТЕЛЬНОСТИ БАНКОВ
У.А. Ганиева, старший преподаватель Ташкентский финансовый институт (Узбекистан, г. Ташкент)
Аннотация. Инвестиционный банкинг - это подразделение банка или финансового учреждения, которое обслуживает правительства, корпорации и учреждения путем предоставления консультационных услуг по андеррайтингу, слияниям и поглощениям. Инвестиционные банки выступают в качестве посредников между инвесторами (у которых есть деньги для инвестирования) и корпорациями (которым требуется капитал для роста и ведения своего бизнеса). В данной статье понятие и сущность инвестиционного банкинга.
Ключевые слова: банк, инвестиционный банкинг, инвестиционная деятельность, инвестор, облигации, финансовый консалтинг.
