Credit rating. Choose your service bank correctly!
Factors Affecting Credit Rating.
Before you opt for one bank that will serve an individual or legal entity, you need to pay attention to such factors:
- whether the bank can offer its client all the necessary range of services and products;
- conditions of service, whether they are suitable;
- ramified infrastructure of the bank, convenient location of ATMs;
- whether this bank is known, what its reputation is.
Not always an ordinary citizen can make up for himself the correct idea of a banking institution, and even more so about its financial viability. And this is a very important factor for which certain knowledge and the ability to think analytically are needed in order to make an adequate analysis based on bank statements on the creditworthiness of this institution. Among other things, it is also necessary to find the necessary data, which is not always freely available. And how in these conditions to make the right decision?
Then you can turn your attention to rating companies, but only those that are independent. Such ratings are assigned by qualified specialists after a comprehensive and complete study of banking activities and its plans for further development. Information about which credit rating is assigned to a particular bank can be found both on the website of the agencies that conducted the research themselves and on the Internet resource owned by the financial institution. In addition to the rating of the bank and its creditworthiness, the agency report also provides information on the financial institution that may be of interest to a potential client. Such a report speaks not only about the existing risks of a given bank, but also about its features.
Agencies and their ratings, what to look for?
NKTSBRF (National Commission on Securities and Stock Market in Ukraine) officially recognizes the estimated ratings of only 9 agencies. Of these, 6 are Ukrainian organizations that are included in the register of the NKZBRF companies involved in the assessment of the banking system, and 3 companies of international level. Ukrainian companies: Credit-Rating and Rurik, Expert-Rating and credit-rating agency of Ukraine, Standard-rating and IBI-Rating. International companies are Moody`s Investors Service and Fitch Ratings, as well as Standard & Poor`s.
Popular ratings or how not to make a mistake when choosing a bank?
There are various ratings that can be assigned to a bank. The most popular is a credit rating.thanks to which you can find out a bank payment opportunity, that is, how this institution pays for its obligations. All official agencies that have the right to give their assessment to financial institutions are obliged to use the National rating scale, which is approved by the Resolution of the CMU, when assessing banks for credit. Officially recognized agencies operating in Ukraine use internationally accepted rating scales, thanks to which a comparison can be made between their creditworthiness facilities located around the world. They also developed their own scales used at the national level for rating financial institutions located on Ukrainian territory. In order to compare the credit ratings of the National Commission for Securities and Stock Market, we adopted special matrices that correspond to the scales of international companies.
The second place in importance is the rating of deposits. With the help of this assessment, it is possible to determine banking opportunities in returning deposits to customers on time. This type of assessment is designed specifically for investors. And although the reliability rating of banks is not regulated by law, agencies have their own rating scales. When assigning such an assessment, rating companies compare the bank with similar financial institutions, which gives a more accurate picture of the level of its deposit reliability. This rating is more convenient for investors than credit.
All information on various credit ratings and scales used to compile it can be found on the websites of special agencies. Also, everyone can find there other information that interprets the use of scales in more detail, describes the terminology, tells what methodology was used in the rating. And a lot of other useful information about financial organizations was provided on the resources of rating companies.
But it is worth saying that due to the financial illiteracy of individuals, a credit rating is little used in Ukraine. This is also due to the fact that it is not common. And in order to strengthen the trust of an ordinary citizen in the financial and banking system, it is necessary to increase and implement knowledge of financial literacy. NABU (Ukrainian Independent Association of Banks) is addressing this problem. Now she is conducting a project called “Improving the financial literacy of the population.” The following events are held within its framework:
- both people of retirement age and schoolchildren can attend open house days;
- quizzes are held to strengthen children’s financial literacy;
- both journalists and entrepreneurs can attend special trainings.
There are also other events that each of us can attend to expand our knowledge of the financial work of banking institutions.
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