A joint-stock bank is a type of commercial bank that is created in the form of a joint-stock company.
A joint-stock bank is a type of commercial bank that is created in the form of a joint-stock company.
The line ministries and their subordinate enterprises tried to mobilize as much money as possible for the development of the industry and become independent of the credit and financial policy pursued by the state through the so-called specialized banks – Prombudbank, Agroprombank, Zhitlsotsbank.
Gradually, state-owned specialized banks gained commercial status. Thus, Ukrsotsbank was organized on the basis of the republican Zhitlsotsbank, Agroprombank – JSB “Ukraine” JSC, Prombudbank – name. Such privatization of these banks led to the creation of unequal conditions for the activity of banks in the banking system of Ukraine, making the situation of the newly created ones difficult. After all, the former state specialized banks were provided with premises, office equipment, vehicles, personnel, and had a large and solid clientele. They are still receiving significant assistance from the state and the NBU. Newly established commercial banks did not have such a base.
It would be more correct for the former state-owned banks to leave the status of state-owned specialized banks, through which the state credit and financial (policy) support would be directed to the priority directions of economic development. Thus, in most countries, such support is provided to the development of agriculture, science, state-owned enterprises, housing and others.
In a market economy, significant changes have taken place in banking control. If in the past banks played the role of state controllers over the activities of economic entities, now this control is carried out on partnerships between banks and their customers. However, in some cases the state imposes on banks control over certain business operations of their clients. For example, the completeness of the delivery of proceeds to the bank in cash and the implementation of cash discipline.
Commercial banks are classified on a number of grounds. Depending on the form of ownership, they are divided into private and public. Currently in Ukraine, only Eximbank (export-import bank) and Oschadbank are state-owned commercial banks.
In terms of organization, private banks are dominated by joint-stock companies in the form of open or closed companies. The Verkhovna Rada of Ukraine, with the latest amendments to the Law “On Banks and Banking”, has banned commercial banks from acting in the form of closed-ended JSCs and all existing latter must re-register as open-ended JSCs.
Commercial banks, depending on the operations performed, are universal and specialized. Now in Ukraine, all commercial banks strive to be universal, although not all of them perform the full range of banking operations. There are no specialized banks yet. However, some banks began to create specialized branches (investment, deposit and others).
Depending on the area of activity, commercial banks are divided into international autobiographical narrative topics, national and regional. International banks are formed with the participation of foreign capital and may have branches (branches) in other countries.
In Ukraine, they are just beginning to emerge. The first is the Ukrainian International Bank and others. Their creation is not supported by the NBU due to the overflow of key portions, which include banking, which is a great danger to our economy, which is in a state of deep economic crisis, accompanied by inflation.
In the future, when the economic situation in the country normalizes, there will be no obstacles to the establishment of international banks, as well as the opening of branches, affiliates and representative offices of foreign commercial banks. After all, foreign investment in Ukraine’s economy will soon be made through banks with which foreign investors are accustomed to working and whom they trust.
Republican commercial banks include Prominvestbank of Ukraine, Ukrsotsbank, Eximbank of Ukraine and Oschadbank of Ukraine, which have an extensive network of branches and affiliates throughout Ukraine. They are closely connected with all public authorities and the Boards of Banks. Some new commercial banks (Gradobank, Privatbank, JSPPB “Aval” “Ukrinbank”), which appeared together with the beginning of development of market economy in the country, are approaching the status of republican. Many other banks are also starting to open branches. Of course, this will help increase competition in the banking sector, but as a result, the quality will improve and the number of banking services will increase, and so on.
Commercial banks are autonomous, independent commercial enterprises. On the one hand, they are formed to satisfy the interests of the bank’s owners (shareholders or individuals) and the public interests of the clientele – legal entities and individuals served by the bank.
On the other hand, commercial forms are enterprises of a special type that organize and carry out the movement of loan capital to ensure the profit of the bank’s owners. As an important part of the banking system of the state, commercial banks concentrate the bulk of credit resources and provide a wide range of banking operations and financial services for legal entities and individuals. Commercial banks are legal entities.
They are economically independent and completely independent of the executive and administrative bodies of state power in decisions related to their operational activities, as well as on requirements and instructions that do not comply with applicable law.
Like any legal entity, banks have their own characteristics:
Ownership of property on the rights of ownership or on the rights of full economic management, the presence of the authorized capital, which is reflected in the independent balance sheet of the bank. The authorized capital of a commercial bank is formed at the expense of the shareholders’ own funds or share contributions of the bank’s founders in cash. It is prohibited to use budget funds, funds received on credit and as collateral for the formation of the statutory fund, as well as to increase the statutory fund to cover losses. The size of the authorized capital of the bank is determined by the founders, but may not be less than the size set by the NBU. The legislation sets the minimum size of the bank’s authorized capital in the amount equivalent to ECU 1 million. Existence of all rights of a legal entity: organizational unity, participation in economic relations, independent responsibility, as well as mandatory indication in the bank’s charter that the bank is a legal entity. Commercial banks carry out business activities for profit: offer on contractual terms credit, cash and other banking services to enterprises, institutions, organizations and individuals by performing banking operations and providing various banking services. For the provision of services, customers pay a fee, which generates profits for the bank.
Commercial banks are subjects of a market economy, they act simultaneously on the mechanisms of self-regulation and self-government, work in conditions of risk. As an important sector of the economy, commercial banks supply the economy with additional monetary resources. The activities of banks are not limited to the accumulation and placement of funds of enterprises, organizations and individuals.
They contribute to the accumulation of capital, not only by actively interfering in all spheres of economic life, but also directly involved in the functioning of capital or exercising control over it. Thanks to banks, there is a mechanism for the distribution and redistribution of capital by areas and industries, which largely ensures the development of the national economy depending on the objective needs of production.
By financing the additional needs of industrial, transport, and agricultural enterprises, banks enable the formation of a progressive reproduced structure of the national economy.
Commercial banks are prohibited from activities in the field of material production, trade, insurance. The law limits the ability of a commercial bank to own real estate.
It is of exceptional importance to enshrine at the legislative level the separation of responsibilities between the state and commercial banks. Banks are not liable for the obligations of the state, and the state is not liable for the obligations of banks, except when the parties assume such responsibility (Article 5 of the Law of Ukraine “On Banks and Banking”).
The law also provides for the possibility for commercial banks to establish unions, associations and other associations to coordinate their activities and protect their interests.
Commercial banks, being legal entities and carrying out economic activities, as a rule, should not exercise administrative powers. However, according to the rules of the NBU, commercial banks are required to verify compliance by enterprises, organizations with the procedure for conducting cash transactions, as well as control over foreign exchange transactions of residents and non-residents, carried out through authorized banks.
The role of commercial banks is due to the main functions:
Mobilization of temporarily free funds and their conversion into capital. Lending to enterprises, the state and the population. Making calculations and payments on the farm. Issuance of credit money. Issuing and founding activities carried out through the issuance and placement of securities. Consulting, providing economic and financial information.
Recently, in the field of commercial banks there have been trends of expanding their functions in order to universalize the work, increase the efficiency of banking and make a profit.
Commercial banks can be classified according to various criteria, the main of which are functional and customer characteristics.
According to the functional specialization, there are banks of reconstruction and development, investment, savings, mortgage, trust, issue, foreign trade. By form of ownership – state, cooperative, private, mixed. According to the affiliation of the statutory fund and the method of its formation – unit and joint-stock banks. Share banks are formed at the expense of share contributions of founders in the form of limited liability companies. Joint-stock banks in Ukraine are created closed or open.
A joint-stock bank is a type of commercial bank that is created in the form of a joint-stock company. The procedure for the establishment and operation of joint-stock banks is determined by the Laws of Ukraine “On Banks and Banking”, “On Business Associations”, “On Securities and the Stock Exchange”, etc.