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the Analysis of the factors influencing size of a commission on broker servicing of bank on a securities market

To number of the factors influencing size of a commission of Bank on broker servicing, concern:

- Structure of attraction of clients (distribution of number of clients depending on the initial sum invested in securities);

- Structure of client base (distribution of number of clients depending on the sum of placements in securities);

- oborachivaemost investment portfolioes of clients;

The analysis of the listed factors of influence on the basis of results on broker servicing in I quarter 2006 is more low resulted

Structure of attraction of clients on broker service.

In I quarter 2006 a total sum of call for funds of clients —

Physical persons in securities has made 564,0 million rbl., including at the conclusion of new contracts on service on a formal market of securities - 286,9 million rbl. (50,9 %), at investment

Additional payments under the concluded contracts - 277,1 million rbl. (49,1 %).

The characteristic of initial contributions.

In I quarter 2006 originally, at the conclusion of the contract on service on ORTSB, 51,2 % of clients invested in securities more than 100 thousand rbl. (for comparison - in I quarter 2005 the share of such clients has made 34 % of clients). Thus the investment sum has made 87,3 % from a total sum of call for funds (tab. 3.3).

Distribution of clients with the initial sum of placements in securities more than 100 thousand rbl. in a regional cut (tab. 3.4) is carried out rather in regular intervals, thus the best structure of attraction

It is formed by bank departments in St.-Petersburg (56,4 % from the general number of the concluded contracts).

Table 3.3

Distribution of number of clients depending on the initial sum of placements in securities, in I quarter 2006

The sum, thousand rbl. To

100

100 -

200

200-300 300-500 500-1000 More

1000

Number of clients 757 471 137 102 52 34
Share of clients, % 48,8 30,2 8,8 6,6 3,3 2,3
The sum of investments,

Million rbl.

36,3 55,6 30,6 35,5 30,2 98,7
Share of investments, % 12,7 19,4 10,6 12,4 10,5 34,4

Table 3.4

Distribution of number of clients with the initial sum of placements in securities more than 100 thousand rbl. in a cut of regions in I quarter 2006

Bank departments Quantity of the concluded contracts
IN TOTAL From the initial

The sum more than 100 thousand

Rbl.

Relative density, %
St.-Petersburg 612 345 56,4
Leningrad region 249 112 45,0
The Kaliningrad area 136 62 45,6
Murmansk area 304 158 52,0
Republic Kareliya 119 57 47,9
The Novgorod area 36 12 33,3
The Pskov area 97 50 51,5
Total: 1 553 796 51,2

The characteristic of additional payments.

(Table 3.5) shows the analysis of distribution of additional payments, that 84,7 % from a total sum of payments make money resources of the clients having placements in securities more of 100 thousand of rbl.

Table 3.5

Distribution of number of clients and additional payments under the concluded contracts in I quarter 2006

The sum, thousand rbl. To 100 100-200 200-300 300-500 500-1000 More

1000

Number of clients 584 577 272 274 183 111
Share of clients, % 29,2 28,8 13,6 13,7 9,2 5,5
The sum an investment,

Million rbl.

42,3 49,8 28,8 38,9 39,0 78,3
Share of investments, % 15,3 18,0 10,4 14,0 ' 14,1 28,2

Accordingly, the most perspective, with a view of increase in volume of call for funds in securities, clients - physical persons with the sum of investments more than 100 thousand rbl. are, on them it is necessary:

- 87,3 % from a call for funds total sum in securities at the conclusion of the contract on service on a formal market of securities;

- 84,7 % from a total sum of the additional payments invested in securities, in the course of broker service on a formal market of securities.

On the basis of the above-stated, it is expedient to use the minimum sum necessary for the conclusion of the Contract on service on a formal market of securities in next size:

- 150 thousand roubles for branches in St.-Petersburg;

- 100 thousand roubles for branches in the Leningrad, Kaliningrad, Murmansk, Novgorod, Pskov areas and Republic Kareliya.

Thus, use of the minimum sum necessary for the conclusion of the Contract on service on a formal market of securities, will allow:

1. To carry out improvement of structure of client base and increase in volumes of call for funds of clients in securities.

2. To concentrate efforts to service of current client base and to raise commission incomes of Bank at the expense of increase oborachivaemosti investment portfolioes of clients.

Structure of the clients who are on broker service. Dynamics of change of number of clients and the sum of investments of clients in

Securities it is resulted in table 3.6.

Distribution of number of clients depending on the sum of placements in securities

Table 3.6

Indicator 01.07.04 01.01.05 01.07.05 01.01.06 01.04.06
Clients with the sum of placements in securities to 100 thousand rbl.
Number of clients 5 794 6 162 6 165 5 923 6 221
Share of clients, % 55,2 51,2 47,3 43,0 42,1
The sum an investment, million rbl. 313,4 354,6 359,0 354,4 374,0
Share of investments, % 16,8 15,2 12,9 11,2 10,2
Clients with the sum of placements in securities more than 100 thousand rbl.
Number of clients 4 695 5 871 6 859 7 847 8 544
Share of clients, % 44,8 48,8 52,7 57,0 57,9
The sum of investments, million, rbl. 1 555,0 1 983,9 2 430,8 2 814,7 3 293,6
Share of investments, % 83,2 84,8 87,1 88,8 89,8
TOTAL:
Number of clients 10 489 12 033 13 024 13 770 14 765
The sum of investments, million, rbl. 1 868,4 2 338,5 2 789,8 3 169,1 3 667,6
The average sum of investments, thousand rub - 178,1 194,3 214,2 230,1 248,4

Thus, for the analyzed period in structure of client base - physical persons following changes took place:

- The gain of client base was carried out mainly at the expense of the clients having placements in securities more of 100 thousand of rbl., as a result the share of such clients has increased from 44,8 % to 57,9 %;

- Investments of the clients investing in securities of the sum more of 100 thousand of rbl., make 89,8 % of the general investment portfolio of clients (on 01 %);

- The average sum of placements in securities falling to one client, has increased in 1,4 times with 178,1 to 248,4 thousand rbl. Thus in group of clients with the sum of investments more than 100 thousand rbl. average size of a portfolio of the client makes 385,5 thousand rbl.

Distribution of number of clients, the investment portfolio sums of a commission depending on the sum of investments in I quarter 2006 is resulted in table 3.7.

Table 3.7

Distribution of number of clients, the investment portfolio and the sum of a commission depending on the sum of investments in I quarter 2006

Range,

Thousand rbl.

Number of clients Portfolio of clients The commission
% Million rbl. % THOUSAND rub; %
From above 5 000 38 0,3 400,9 10,9 250,5 5,4
From 2 000 to 5 000 150 1,0 447,2 12,2 489,5 10,5
From 1 000 to 2 000 274 1,9 369,8 10,1 460,0 9,8
From 500 to 1 000 859 5,8 577,6 15,8 695,9 14,8
From 300 to 500 1 395 9,4 532,4 14,5 634,4 13,5
From 200 to 300 1 673 n, z 402,2 11,0 595,9 12,7
From 100 to 200 4 155 28,2 563,6 15,3 641,3 13,7
From 50 to 100 4 423 30,0 312,0 8,5 562,9 12,0
Less than 50 1 798 12,1 62,0 1,7 354,8 7,5
ИТОГО* 14 765 100,0* 3 667^6 іоо; about ї 4 685,2 ' ' 100,0;

According to the resulted data it is received:

- 42,1 % from the general number of clients are made by clients with the sum

Placements in securities less than 100 thousand rbl. which form 10,2 % of the client investment portfolio and provide 19,5 % from

Commission;

- 57,9 % from the general number of clients are made by clients with the sum

Placements in securities more than 100 thousand rbl. which form 89,8 % of the client investment portfolio and provide 80,5 % from

Commission. Thus most perspektivnoj.gruppoj clients with a view of commission growth clients with the sum of investments more than 200 thousand rbl. are

Thus, with a view of increase in incomes of granting of brokerage services and decrease in expenditures of labour at service. Clients servicing with the sum of placements in securities over 200 thousand rbl. the Given group of clients is optimum provides about equal shares in the client investment portfolio and the sum of the commission income received by Bank.

Oborachivaemost investment portfolioes of clients.

The sum of a commission formed at the expense of service of each group of clients, is defined by size of the applied tariff and activity of clients at fulfilment of securities tradings. As the data resulted in tab. 3.8 show, in I quarter 2006 of securities trading spent 43,0 % from the general number of clients with the sum of investments to 200 thousand rbl. whereas among clients with the sum more than 200 thousand rbl. the share of active clients above and averages 69,6 %.

Besides, oborachivaemost investment portfolioes of clients with the sums to 200 thousand rbl. more low, than at more well-founded clients. The analysis of turns on securities tradings shows (tab. 3.8), that factor growth oborachivaemosti portfolios of bonds occurs at the sum

Investments more than 200 thousand rbl., the factor increase oborachivaemosti share portfolioes takes place at the sum of investments more than 300 thousand rbl.

Table 3.8

Distribution of number of active clients, turns and factors oborachivaemosti the investment portfolio in I quarter 2006 depending on the sum of placements in securities

Range,

Thousand rbl.

Number

The active

Clients

Turn on operations

Purchases-sales

Factor

oborachivaemosti

Portfolio

% * Million rbl. % Bonds Actions
From above 5 000 23 0,61 212,8 13,3 2,29 1,88
From 2 000 to 5 000 108 0,72 253,5 15,8 1,88 2,89
From I 000 to 2 000 205 0,75 195,3 12,2 1,87 2,87
From 500 to 1 000 559 0,65 244,7 15,2 1,43 2,9
From 300 to 500 822 0,59 209,8 13,1 1,36 2,97
From 200 to 300 1 338 0,80 151,4 9,4 1,42 2,16
From 100 to 200 1 330 0,32 186,4 11,6 1,28 1,91
From 50 to 100 1 745 0,39 104,4 6,5 1,27 2,18
Less than 50 1 326 0,82 47,8 3,0 2,57 6,14
TOTAL 7 456 0,51 1,606,2 ’ 100,0 1,55 2|59*

*- Percent from number of the clients having placements in securities

At the same time, factors oborachivaemosti portfolios of bonds and share portfolioes of well-founded clients with the sum of investments more than 200 thousand rbl. are approximately equal among themselves and do not depend on the sum of placements in securities. It means, that, despite available potential, well-founded clients do not use possibility on carrying out of short-term securities tradings at change of run of market of securities.

Thus, operations on re-structuring of investment portfolioes mainly are made by well-founded clients with the sum of investments more than 200 thousand rbl. the Given group of clients is the most perspective from positions of growth of turns on securities tradings and increases in a commission for granting of brokerage services. Improvement of quality of service of well-founded clients and growth of level of their knowledge of market condition of securities promotes increase in commission incomes of broker service at a securities market.

3.3.

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A source: JASKEVICH Alexey Dmitrievich. BROKER SERVICING In the BANK OF COMMERCE. The dissertation on competition of a scientific degree of a Cand.Econ.Sci. St.-Petersburg -. 2007

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