Trust operations of banks: their essence and principles of

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Recently, the market of credit services to increasing development gained trust operations, ie, operations on behalf of the client, based on the confidence of the parties.Russian experts define trust operations of commercial banks as a separate form of property management client, which gives the right to the credit institution engaged in the distribution of profit or otherwise dispose of the property of a natural or legal person.

In other words, trust operations require absolute confidence in the bank by the client and complete confidence in the bank, performing a certain action, does everything to improve the well-being of the client.Often, the bank's management decides on the formation of a separate entity in charge of trust operations.If such operations are carried out in large quantities, then this unit can exist separately and be a small trust company.

Trust operations may vary according to many criteria.The most popular are considered to be financial, ie services on accumulation and distribution of assets of the enterprise, or the premium pension, which is formed by companies to reward employees with more work experience.In some cases, banks charge to conduct public trusts, ie funds, funds which are accumulated on a grant basis and distributed to those in need.It may be noted, and this kind of as a discretionary trust operations aimed at the management of shares of shareholders' funds and finding ways to maximize its profits.

credit institution offers trust operations both with the possibility of disposal of property, or without it.By disposition trust operations of banks are divided into two groups: active and passive.The first group gives the right to sell, lease, or mortgaging property as collateral, and the additional authorization of the client is not required.A passive operations allow only manage the property without the possibility of independent implementation.

Trust services are provided by credit institutions for both legal entities and individuals.Individuals are usually requested on the conduct of the case of inheritance, as well as assistance in the purchase of securities on the stock exchange at the disposal of the property granted on the basis of registration of guardianship and so on.But the most popular services are considered as representing current and foreign currency accounts of the customer, preparation of tax returns, maintaining revenues.

as legal registration of the contract of trust services in favor of the parties, which shall include the terms, the amount of payment, but, most importantly, clearly limits the rights and obligations between the lender and the customer.The agreement with the entity may provide for the right to manage all or part of its assets, carrying out operations of collection, engaging in investment activities due to a particular part of the income.And, of course, the provision of loans to customers if there is a temporary shortage of available cash resources.

Why banks need to conduct trust operations?As with any service, it is also considered additional income.The amount of commission specified in the contract to conduct trust operations.And the bank, together with the client determines the specific form of payment.For example, a one-time transfer at the end of the contract as a lump sum for the entire period, or an annual listing of the client's income.

In our country, trust operations are under development, so some services not yet provided by banks.To those include the pension fund management company or investment management of physical persons, operations on the stock exchange.