Trust operations of banks: their nature and principles of conducting

Recently, in the market of credit services, allthe development of trust operations, that is, the conduct of operations on behalf of the client, based on the trust of the parties. Russian specialists determine the trust operations of commercial banks as a separate form of managing the client's property, which gives the credit institution the right to distribute profits or otherwise dispose of the property of a legal or physical person.

In other words, trust operations involveabsolute confidence in the bank on the part of the client and full confidence that the bank, performing this or that action, does everything to improve the client's welfare. Often, the management of the bank decides on the formation of a separate unit engaged in confidential transactions. If such operations are carried out in large volumes, then this unit may exist separately and constitute a small trust company.

Trust operations may vary in many wayscriteria. The most popular are financial, that is, services for accumulating and distributing the funds of an enterprise's premium fund or a pension fund, which is formed by companies to encourage employees with a long record of service. In some cases, the bank is entrusted to conduct public trusts, that is, funds whose funds are accumulated on a grant basis and distributed to needy individuals. One can also note the kind of discretionary trust operations aimed at managing the share of the shareholder's funds and finding ways to maximize his profits.

A lending institution offerstrust operations as with the ability to fully dispose of property, and without it. By the method of disposition, trust operations of banks are divided into two groups: active and passive. The first group grants the right to sell, lease or pledge property as collateral, but no additional authorization of the client is required. And passive operations allow only to manage property without the possibility of its independent realization.

Trust management servicesare provided by credit institutions both for legal entities and individuals. Individual citizens usually apply for a case of inheritance, as well as assistance in the purchase of securities on the stock exchange, in the disposal of property provided on the basis of registration of guardianship, and so on. But the most popular services are the maintenance of settlement and currency accounts of the client, the preparation of tax returns, and the maintenance of the revenue side.

As legal registration of trustsservices is a contract of parties, which indicates the time, amount of payment, but, most importantly, clearly restricted rights and obligations between the lender and the client. A contract with a legal entity may provide for the right to manage all or part of its assets, conduct collection operations, engage in investment activities at the expense of a certain part of the income. And, of course, the provision of loans and loans to customers in the presence of a temporary shortage of free cash resources.

Why should banks conduct trustoperation? Like any service, this is also considered an additional income. The amount of commission is indicated in the agreement for conducting confidential transactions. And the bank together with the client defines the concrete form of payments. For example, a one-time transfer at the end of the contract in the form of a total for the entire period, or an annual transfer of a portion of the client's income.

In our country, trust operations are onstage of development, therefore some types of services are not yet provided by banks. These include the management of the enterprise's pension fund or the management of individual investments, operations on the stock exchange.