2. The strategy of formation of the commercial bank depositary policy on the example of jsc “bta Bank”

The strategy of formation the commercial bank deposit policy includes several blocks. Consider the application of this strategy on the example of "BTA Bank", which is one of the largest banks in republic of Kazakhstan specializing in serving individuals and legal entities. In this regard, analysis of the formation of the deposit policy BTA Bank was chosen as an example of this particular bank.

In order to fully consider the implementation of the policy of the BTA Bank, I suggest to following points:

1. The role of the Bank's market deposit services 2. The main objectives of the Bank to attract deposits 3. The main problems existing in the Bank 4. Analyzing the potential to attract new customers to the bank 5. The formation of the deposit portfolio 6. Analysis of financial results.

1. The role of the Bank's market deposit services.

The main and most important challenge is to identify the role of the bank in the banking market. By determining what is a niche bank in the banking system depends on the realization of further tasks. The bank at this stage, work out, first of all, the concept of work and should make them known. Competitors, investors and the bank's own employees are directly involved in this process. That is their eyes; the opinion must be guided to determine future goals.

JSC "BTA Bank" is one of the largest in size of the authorized share capital and total assets of the bank in the country, which is a strong competitor in the Kazakhstani banking market mainly due to the extensive network of branches. So according to the National Bank of the Republic of Kazakhstan, at the beginning of 2012 the total branch network consisted of 22 branches and 222 cash settlement offices among the cities of Kazakhstan, as well as the 705 ATMs in 22 cities of Kazakhstan. The total number of retail customers of the Bank amounts to about 1.2 million people, customers, small and medium-sized businesses more than 132 thousand corporate clients. In 2010, the BTA Bank celebrated its 85th anniversary. Today BTA Bank has international offices in Russia, United Arab Emirates, United Kingdom and China. BTA’s banking network extends to Russia, Ukraine, Belarus, Kyrgyzstan, Armenia, Georgia, Kazakhstan and Turkey.

BTA - Kazakhstan's core bank, a key shareholder is the Government of the Republic of Kazakhstan on behalf of the National Welfare Fund "Samruk Kazyna" Service to 81.48%.

After NWF "Samruk Kazyna", joined the share capital of BTA Bank, the financial and investment strategy of the bank has changed

BTA refocused its business on the domestic market instead of lending to projects abroad, focusing on quality service for corporate and retail clients and secure profitable investment projects in Kazakhstan. In addition, BTA Bank is an active participant in government programs to support the economy. In 2009, BTA Bank participated in financing small and medium business entities financing the agro-industrial complex, the refinancing of mortgage loans and financing for the completion of housing.

The high reputation of the bank among the population is due to the wide presence in all regions of the country's long history, the presence of established standards and experience with multi-million dollar category of the population, a distinct social orientation of the bank and the traditional support of social programs of the Government of the Republic of Kazakhstan. 2. The main objectives of the Bank to attract deposits.

In the BTA Bank balance sheet liabilities are recognized sources of funds of the bank, while in the asset balance sheet shows how to use (placed) the funds. Deposits are a liability is significant bank balance. In the deposit policy, "BTA Bank" is one of the leading banks in the retail financial services. In the period from 2009 to 2011, a total deposit amount of BTA Bank has dropped significantly.

Thus, at the end of 2009, total deposits stood at 1,537,679,944 thousand tenge. However, at the end of 2010, total deposits decreased by 7% to $ 1,432,191,045 thousand tenge. In 2011, total deposits decreased significantly and amounted to 667,210,536 thousand tenge. The volume of deposits as compared to 2010 decreased by 54%, as compared to 2009 decreased by57%. However, at the end of the first quarter of 2012, the amount of deposits increased by 12.2% to $ 749,091,790 thousand tenge, which indicates the gradual stabilization of the financial and economic condition of the bank and the gradual return of confidence on the part of the population.

Deposit of the population and enterprises. 

In this regard, the BTA Bank carries out intense work to expand the customer base, increase in retail and corporate network clients, conducts a flexible tariff policy, expanding the range of deposit products, increases the level of marketing services, focusing on the analysis of demand deposit services of the bank and deposit services, accumulation of ideas that promote growth and profitability of operations. Deposits in BTA are taken as the name of the contributor, and in the name of another person. The amount of down payment is not limited and received additional contributions and partial delivery of the deposit taken in the national and foreign currency. Deposits of BTA bank are accepted for a certain period of 7 days and more. The minimum size of deposit is 3000 tenge, 25 USD or 25 Euro. The investor has the right to receive interest, numbered among the remnant of the contribution amounts, which were kept in the account during the period specified in the inputs. In the case of contributions before the due date interest income is paid at the rate of demand deposit.

BTA Bank Deposits - are one of the most reliable deposits in Kazakhstan. BTA Bank is the first member of the system of compulsory collective guaranteeing (insurance) contributions (deposits) of individuals with evidence of the Republic of Kazakhstan № 001 participants. All deposits of BTA Bank insured by the Deposit Guarantee Fund of Kazakhstan, regardless of the amount of the deposit and interest rates. This means that in the case of forced liquidation of the bank, it is possible to always get the amount of bank customer’s contribution, in accordance with the Law "On obligatory guaranteeing deposits placed in banks of Kazakhstan." Since the discovery of a deposit in BTA Bank for bank customers secured the right to receive any information bank customers need about the current state of bank customer’s contribution. BTA Bank has the widest network of branches in the Republic of Kazakhstan, both of which It is possible to place a deposit. Thus, there is no need to travel far from home to place a deposit. Another feature of the branch network of BTA is the fact that open a deposit, as well as to close it, It is possible to at any of the office (without reference to a specific branch), which is located near bank customers. Also for the convenience of our customers open new service - the completion of the deposit over the Internet in real time. Large selection of placement of funds, allows bank customers to plan cash flow for a specific period selected.

For all contracts of bank deposit (which includes partial exemptions) establishes the requirement for mandatory placement of monies received into a savings account by bank transfer within 30 days. If bank customers are not subject to this requirement and withdrawal in cash on saving account of money received by means of transfer, and laid in a savings account less than 30 days from the date of receipt, the Bank shall hold the commission for cashing out:

- 1.0% of the amount of money issued in tenge; - 1.1% of the amount of money issued in foreign currency.

The emphasis on the involvement of the bank makes short-term deposits for a period of 3 and 6 months, as these terms are well corresponded with the terms of lending customers. Another factor is the priority of these deposits, that in this case is easier to build a short-term forecasts of profitability of banking operations, and therefore easier to respond to the rapidly changing situation on the financial market by varying the rates of remuneration. Deposit services to individuals by means of Retail bank system (Novosibirsk), as well as systems Biscuit (Banking Integrated System (Moscow)). Subsystem contributions to the latter system are very flexible and can adjust to any type of deposits. Bank creates new types of deposits, in order to increase customers' interest in keeping foreign exchange Bank is working to increase the profitability of foreign currency deposits of citizens with the differentiation of interest rates. Increased revenues from these types of deposits are secured their popularity among the population. Leadership of "BTA Bank" in the banking market, strong financial condition was the key to the growth of deposit base, which allowed diversifying risks for liabilities. "BTA Bank" has a stable funding base in the Republic of Kazakhstan. The Bank offers several types of deposits which are accepted in both national and foreign currency:

VIP Contribution «Platinum» could be opened in the national currency and in foreign currency. The term of deposit is from 3 to 24 months.

This type of contribution does provide various benefits for customers, with the possibility of a partial withdrawal within the minimum amount of 1 500 000 tenge, 10 000 USD or Euro. Capitalization is made on a monthly basis and the deposit could be held simultaneously in three currencies according to the discretion of the client. As additional bonus, BTA provides:

1. Issue of Visa Gold/MasterCard Gold payment cards completely free of charge during the whole term of deposit.

2. Possibility of obtaining the credit at preferential interest rates;

«Platinum» Interest rates

Terms of deposit	3	6	12,5	18	24
KZT
1 500 000 - 6 999 999	4,2%	5,0%	6,5%	6,4%	6,3%
7 000 000 - 14 999 999	4,5%	5,2%	6,8%	6,7%	6,6%
15 000 000 and more	4,9%	5,5%	7,0%	6,9%	6,8%
USD
10 000 - 54 999	2,5%	2,9%	3,3%	3,2%	3,1%
55 000 - 99 999	2,7%	3,1%	3,5%	3,4%	3,3%
100 000 and more	2,9%	3,3%	3,7%	3,6%	3,5%
Euro
10 000 - 54 999	1,0%	1,0%	1,0%	1,0%	1,0%
55 000 - 99 999	1,0%	1,0%	1,0%	1,0%	1,0%
100 000 and more	1,0%	1,0%	1,0%	1,0%	1,0%

*Source: BTA bank’s official website

Deposit «Premium» could be opened in three currencies, the minimum amount of contribution is 15,000 KZT, 100 USD, or 100 Euro. 

The interest rate unchanged for the entire term of the deposit. Additional contributions are accepted in cash and cashless. Opening an account is possible through Internet banking, while the investor is able to track your deposit to replenish it in standalone mode via the Internet. Deposit term is 12 months in tenge, U.S. dollars, and euros. The payment is carried out at the end of the contribution, however, provides for the possibility of partial withdrawal of deposit, subject to maintaining a savings account minimum balance of 15,000 tenge, 100 USD, or 100 Euros.

As additional bonus to this contribution, BTA provides the free payment card and provide the lottery cash prizes to its customers.

«Premium» Interest rates	12 Months
	Basic Rate	Efficient Rate
From 15 000 KZT	8,0%	8,3%
From 100 000 KZT	8,5%	8,8%
From 750 000 KZT	9,0%	9,4%
From 100 USD	4,7%	4,8%
From 1 000 USD	5,2%	5,3%
From 5 000 USD	5,7%	5,9%
From 100 Euro	2,0%	2,0%
From 1 000 Euro	2,5%	2,5%
From 5 000 Euro	3,0%	3,0%

*Source: BTA bank’s official website

Deposit «Success Formula» could be opened in three currencies with the minimum amount of contribution is 15,000 KZT, 100 USD, or 100 Euro. 

Additional contributions are accepted in any time and the deposit term is 3, 6, 12, 18 and 24 months in tenge, U.S. dollars, and euros. The payment is carried out at the end of the contribution, however, provides for the possibility of partial withdrawal of deposit, subject to maintaining a savings account minimum balance of 15,000 tenge, 100 USD, or 100 Euros.

As additional bonus to this contribution, BTA the lottery cash prizes to its customers.

«Success Formula» Interest rates
Terms of Deposit in months	3	6	12	18	24
KZT	4,0%	4,5%	7,0%	6,8%	6,5%
USD	2,5%	3,0%	3,7%	3,6%	3,5%
Euro	1,0%	1,0%	1,0%	1,0%	1,0%

*Source: BTA bank’s official website

Adding to this, BTA Bank has another version of deposit shown above:

«Success Formula - Capital» with increased sum and terms of deposit and higher interest rates, however without any additional benefits like payment cards and lotteries.

The minimum sum of deposit is 1000 USD or Euro or 150,000 KZT and the terms of deposit are 12, 18, 24, 36, 37 and 60 months.

«Success Formula - Capital» Interest rates
Terms of deposit	12	18	24	36	37	60
KZT	7,3%	7,5%	6,8%	6,7%	6,5%	6,0%
USD	3,0%	3,7%	3,6%	3,5%	3,4%	3,3%
Euro	2,0%	2,0%	2,0%	2,0%	2,0%	2,0%

*Source: BTA bank’s official website

«Children’s Multicurrency Deposit» is taken in 3 currencies; term of the deposit is fixed and equal to 5 years or 60 months. The maximum term of the deposit is governed by the condition the child reaches 18 years of age. Special conditions: the contribution made in the name of a minor contributor to 16 years. Depositor money in the name of the depositor may be any person, irrespective of the presence / absence of relationship to the depositor on the provision of necessary documents. Minimum deposit amount: 10,000 tenge, 100 USD, or 100 Euro. The basic interest rate is fixed during the whole period of deposit. The contribution is made by depositor in the name of the depositor who has not attained the age of 14, managed by the legal representatives of the depositor (the parents, adoptive parents, guardians), and on reaching the age of 14 - itself a contributor. Payment of the contribution of the minor contributor who is under 16 years of age, upon presentation of the last of the birth certificate of a citizen of the Republic of Kazakhstan, only in the presence of his legal representatives (parents, adoptive parents). Contributions and interest on it can be issued only on the depositor a written denial of the depositor or his legal representatives, if the contributor has not reached the age of 14, when they must be present at the bank.

«Children’s Multicurrency Deposit» Interest rates
Terms of deposit in months	60
KZT	7,0%
USD	3,7%
Euro	2,0%

*Sourse: BTA bank’s official website

The «Pension» deposit could be opened in KZT, USD and EUR for a period of 3, 6, 12, 18 and 24 months. 

The peculiarity of the contribution lies in the fact that investors may make individuals over the age of 50 years, or a person under the age of 50 years, presenting the pension certificate. Interest rate on the deposit remains the same during the term of the deposit. Payment of earned interest is based on a monthly basis, every 30 days from the date of the contract of bank deposit. Ability to replenish the deposit shall be allowed provided the minimum amount of additional fee is 3000 tenge, 25 USD or 25 Euros, but the possibility of a partial withdrawal of contributions is also available within the minimum amount of deposit. The minimum deposit amount is 3000 tenge, 25 USD or 25 Euro.

As additional options BTA Bank provides the free Payment card and possibility to win some amount of money in Lotteries.

«Pension» Interest rates in months
	3	6	12	18	24
KZT	4,5%	5,5%	7,0%	6,7%	6,5%
USD	3,5%	3,5%	3,7%	3,6%	3,5%
ВEuro	1,0%	1,0%	1,0%	1,0%	1,0%

*Source: BTA bank’s official website

In addition to a variety of types of deposits, the BTA Bank has flexible pricing policy that focuses on the inflow of deposits with long-term storage, as well as carries out conversion of deposits. Conducted by the marketing department of the bank customer segmentation on retail products, sales channels and pricing principles for each segment. The Bank is increasing its presence in the market by creating a highly profitable customer VIP-centers and personal banking. For all types of deposits at the bank holds prize drawings among the depositors of the bank, including cash prizes, household appliances and the main prize of a car. Circulations are held at the bank branches all over Kazakhstan. Just 14 years there is a culture of bonuses and extra compensation for their investors.

• Improvement of public services in this area BTA just constantly a number of activities to introduce new technologies, improve the quality of the staff, and conducts a variety of programs. So in BTA at the moment there are 22 centers of personal service, keeping the entire client, conducting a personal financial advisory service, provision of various services account manager, which is an authorized representative of the client and also, the bank shall receive Internet contributions, as is correspondence on complaints and statements of the bank's clients, all of the questions are given exhaustive answers, and the same shall be consulted by telephone.

Improving the system of deposit insurance, since 2002 there is a new tariff scale of compensation for guaranteed deposits of individuals. Pursuant to come into force October 24, 2008 Law of the Republic of Kazakhstan "On making amendments and addenda to some legislative acts of RK on the stability of the financial system" sum of guaranteed compensation increased from seven hundred to five thousand KZT million tenge. Payment of the warranty reimbursement is made in the currency of the Republic of Kazakhstan. On January 1, 2004 only banks participating compulsory collective guaranteeing (insurance) contributions (deposits) of individuals will be able to attract deposits (deposits) money to individuals and assets of pension savings funds. In accordance with the guidelines of the financial sector of Kazakhstan, will be undertaken with a view to full compliance with the deposit insurance system in Kazakhstan with international best practice;

Training staff to work with the deposits in this area in the BTA Bank is working to improve procedures for the technical training of personnel, personnel are tested once a quarter, held in-service training of staff to develop new software products and computer technology, a half-yearly evaluation of bids conducted "Best Controller-cashier", "Best Manager", etc., created by the director's fund for the promotion of workers' winners, and rising wages to individual employees, all of these measures is a manifestation of human resources policies;

Improvement of banking technology in connection with the bank conducts intensified efforts to attract customers through a comprehensive and systematic maintenance, since the BTA Bank moved to the system of structural unit of a centralized database. The advantages of these technologies is the operational processing of information and the formation of all types of accounting and statistical reporting, the ability of customers of the bank deposit operations in any structural unit regardless of where the account opening, a centralized enrollment of non-cash income to the depositors' accounts. In 2003 began the introduction of electronic queue that will significantly improve service quality, increase the speed of transactions, including deposits. The advantage is the privacy provision of banking services, the operating window can be only one client. The main tool is the dispenser is equipped with six buttons, which are the main types of banking operations (one time deposit). Customer must select the operation and press, after which the device issues a card with the number of turns, while waiting for their turn for the customer in the room provided a comfortable chair. When you call the customer number is displayed on the display cards which specify the operating cash box to which you want to apply. Queue management, using advanced technology and an introduction to the structure of the cash settlement offices office managers, is the next step of the BTA Bank to achieve international standards work.

3. The main problems existing in the Bank.

Problems faced by the banks to work with deposit operations. It can be external and internal. 

The internal include: • Lack of risk assessment for deposit operations: • Insufficient development of human resource management; • The loss of customers confidence

The external problems are: • Increased competition in the deposit market; • Changes in foreign exchange of foreign currency; • Insufficient development of the productive sector; • Lack of social protection of population.

4. Analysis of potential to attract new customers to the Bank.

To attract new customers in the BTA Bank conducted market research of deposit services, is working to create a brand new deposit products that can attract new customers, advertising policy is conducted. But it should be noted that in the BTA Bank is insufficient active advertising policy than successfully use the bank's main competitors, along with this, the BTA Bank has a strong position in deposit market thanks to its 80-year history. The bank has emerged as the leader thrift industry.

5. The formation of the deposit portfolio. 

In 2010, the Bank held a leading position in the banking sector of RK: Third in terms of assets (1994 billion or 13 519 million U.S. dollars), 4th place in terms of the deposit portfolio of legal persons (419 billion or 2841 million U.S. dollars) and a deposit portfolio of individuals (255 billion or 1726 million U.S. dollars). As of January 1, 2011 the total deposit portfolio of the Bank amounted to 674 billion tenge, an increase of 14.6% compared to January 1, 2010. Dynamics of changes in the deposit portfolio is characterized by steady growth, reflecting increasing confidence in the bank. The strategies is aimed at funding the Bank’s domestic market and provide an active capacity of the deposit base by attracting deposits of natural persons and legal entities. In 2010, the Bank held 11.4% market share of term deposits, while at the beginning of 2010 the Bank's market share in this segment accounted for only 8%. The highest relative increase in retail deposit base (62.2%) was observed at the Bank, while the volume of deposits in the general population of the market increased by only 16%, in addition, the company is taking steps to increase funding and increase the maturity of borrowed funds. In the BTA Bank is monitoring the amount of funds raised, tracked and quantitative and qualitative dynamics. Increasing amounts of borrowed resources indicates the growth of the bank's deposit base. When monitoring obligations account used to record the bank deposit operations on the objects and terms. To assess the stability of the deposits of individuals using indicators such as average length of storage and the level of settling funds received for deposits. Liabilities on demand deposits are the cheapest of the resources involved in connection with this BTA conducting enhanced efforts to attract corporate clients through a comprehensive and systematic maintenance.   6. Analysis of financial results. 

Calculation of financial indicators must be performed on the basis of the bank's financial statements prepared in accordance with applicable at the time of reporting requirements in current prices. An important role for the bank's clients is the availability and transparency of financial information in connection with this BTA publish annual reports and balance in the press and places the financial information on its website. These publications allow customers to monitor the financial position of the bank, and provide the most reliable information about its activities.  Thus, the selection and implementation of the strategy of forming a deposit policy is the prerogative of each bank. Each step of this strategy has its own characteristics that banks should examine when entering the market. 

Chapter III. Priority directions of depositary policy in the Kazakhstani banks practice