THE BANK'S OWN CAPITAL: FORMATION AND ASSESSMENT OF SUFFICIENCY

Abstract

The article considers the peculiarities of formation of the bank's equity capital. The special role of equity capital in the bank's activities is emphasised, which is due to the functions performed by the bank's equity capital: protective, operational, and regulatory. The general aspects of the formation of equity capital of JSC ‘Pravex Bank’ are considered, which is the basic basis for further assessment of its adequacy in accordance with the Basel recommendations. The structural structure of the bank's equity capital is analysed in terms of elements (authorised capital, reserve capital, share premium, profit). The article focuses on the assessment of the adequacy of the bank's equity capital in view of the Basel recommendations. The general aspects of the formation of equity capital of PRAVEX Bank JSC are considered, which became the basic basis for assessing the level of its adequacy. The structural structure of the bank's equity capital is analysed in terms of elements (authorised capital, reserve capital, share premium, profit). An assessment of changes in the dynamics of the bank's equity capital components is carried out. It is noted that JSC ‘Pravex Bank’ has the necessary amount of equity capital, but the quality of its formation requires immediate improvement (elimination of unprofitable components). The dynamics of the bank's regulatory capital in the context of its components: core and additional capital, as well as risk-weighted assets, which is the main assessment of the adequacy of own bank capital, is studied. The existing losses of the previous and current years significantly affect the bank's compliance with the equity capital adequacy ratios, reducing the amount of regulatory capital of PRAVEX Bank JSC. The necessity of bringing the bank's equity capital structure in line with the Basel III standards is emphasised. The author considers the aggregate exposure of this bank to risk, which is calculated by banks at the end of 2024. It is noted that the high-quality implementation of international banking regulation norms contributes to the timely detection of excessive risks, capital shortages or management deficiencies for domestic banks.