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Banking System of Business Planning and Budgeting
The system of business planning and budgeting for a commercial bank is based on the planned and actual data with a clearly defined method of obtaining and analyzing the information. Budgeting is seen as a technology of business management throughout all levels of the bank, including goal setting (planning), performance monitoring, summarizing, analyzing and introducing the necessary changes.
The main components of the system of planning and budgeting are:
- Financial reports (budgets) including balance, equity, revenue, and expenditure budget (REB)
- Operating budgets intended for planning of financial report items at more detailed level. When developing operating budgets for active and passive products transfer pricing should be implemented.
- Estimate of administrative expenses and revenues, estimate of capital investment. It is possible to redistribute total income and expenditures to certain centers for financial responsibility with regard to their geographic location and in accordance with the specified proportions (allocation system with the specified allocation keys).
The system provides the following measurements for financial reports (budgets):
- Report items
- Centers for financial responsibility (CFR)
- Geographic location of bank branches
- Currencies
- Timeline
- Version.
CFR Structure:
| Profit Centers | Cost Centers |
Corporate business
Small and medium-sized business Documentary operations
Retail business
Operations department
Treasury | Management
Accounting
Financial department
Internal audit
Legal department
HR Department
IT Department
Security service |
Financial and operation budgets are divided into the following logical groups:
- Banking Products
- banking products for corporate clients and banks
- banking products for individuals
- Other areas of banking and business
- Commission fees and other banking revenues and expenses
- Overhead costs
- Fixed assets (FA), intangible assets, material assets (MA) (Low Value Assets - LVA)
- Taxes
- Budgets Consolidation Group
The system provides the following operating budgets:
- Banking products for corporate clients
- Loans
- Leasing
- Factoring
- Securities (acquisition)
- Securities (issue)
- Letters of credit
- Guarantees
- Deposits
- Funds on correspondent accounts
- Current accounts
- Public offers and fundraising activities at the interbank market (for a period of 1+ month)
- Banking products for individuals
- Loans (car purchases, real estate acquisitions, consumer loans)
- Deposits
- Current accounts
- Overdrafts
- Credit cards
- Commission fees and other banking revenues and expenses
- Rental and lease payments (revenues and expenses)
- Cash
- Commission fees on transactions with corporate clients
- Commission fees on transactions with individuals
- Commission fees at the foreign exchange market
- Other banking income and expenses
- Overhead costs
- Personnel costs
- Other overhead costs
- Fixed assets (FA), intangible assets, material or Low Value Assets (LVA) assets
- Acquisition of FA (calculation of residual value and depreciation)
- Acquisition of LVA
- Intangible assets
- Other assets and liabilities
- Taxes
- VAT, land and real estate taxes, ecological tax, local tax, and profit tax
- Budget Consolidation Group
- Capital
- Multicurrency balance
- Balance converted to a single currency
- Multicurrency revenue and expenditure budget
- Revenue and expenditure budget converted to a single currency
- Balance adjustment (short-term public offer and fundraising at the interbank market)
- Allocation keys
The implemented system allows for automated data interchange between operating and financial budgets.
The IBA solution includes:
Training: 52 hours of practical training. As a result of a course, bank employees are able to work independently, and to support and develop the system.
Licenses: 10 user licenses IBM Cognos Enterprise Planning Contributor and 1 administrator license IBM Cognos Enterprise Planning Modeler.
Service: Installation of the system and synchronization of the relevant catalogues. The work is carried out together with the bank’s specialists who were previously trained to work with the system. The installation does not require any system modification or refinement. The installation of the system takes less than two months.
If necessary, the IBA specialists or the specialists of the bank can introduce modifications to the system. In case the IBA expertise is required, IBA and the customer conclude an agreement on enhancement of the system. The agreement includes evaluation of labor efforts and cost estimation. It is also possible to define the list of necessary changes before the implementation of the system, thus the contract value may be estimated at this stage.
To organize the implementation of the plan vs. reality analysis, the customer may require additional information and analysis tools. The development of such tools is not a part of the solution and may be the subject for a separate agreement.
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Last modified: 23 January 2012
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