The Central Bank of Russia increases control over high-street banks

The Central Bank of Russia establishes a new department, aimed to control the most important credit organizations, in order to prevent possible shocks in the financial system of the country, where a problem in the one of high-street banks may spur a chain reaction and bring on a crisis. The new institution begins to work from October 1st, 2013. It was the case of late meeting of the board of directors of the Bank of Russia.

Definitely, the Central Bank, as a financial super moderator, having concentrated on itself not only supervisory role over credit system of the country, but also since recently over organized securities market, doesn’t divest itself of power to have control over other banks. However, the Central Bank will keep a wary eye on the most important institutions.

As expected, the list will include about twenty credit organizations. It will be certified in the beginning of the next year, and one of the main criterion to qualify a bank as a key one is obviously the number of its assets and borrowings, including private deposits. These banks, in case of force-majeur, may claim for government support and financial recovery, which is generally speaking, has become a common practice in the EU and the USA, as a result of financial crisis in 2008. Following the international experience, this policy of the Central Bank of Russia seems to be reasonable. It is destined to give positive signal not only to the citizens, but also to the business, and to enhance confidence to all the banking system of the country.

The CredInform information agency is preparing to implement an independent index of banks, which will reflect the degree of their financial capacity and reliability, and also let the concerned persons estimate the risks of partnership with banking institutions.

Franchise pros and cons. Prospects in Russia.

Not many businessmen can answer the question what franchise or franchising means. Although all over the world franchising perfectly proved itself as the way of rapid advance in trading. If what statistics said is true, then in 80% cases using this system of doing business gives an opportunity to pass a five-year milestone in development of the company and to continue working with high economic indicators, whereas the majority of self-developed companies rarely come to two years.

Franchise or franchising is the way of partnership when a copyright holder (franchisor) grants a user (franchisee) the right to use in its entrepreneurial activity a range of exclusive rights owned by the franchisor on a fee basis, such as trademark, service mark, know-how and etc. In other words, it’s a business-system that allows making money out of brand name selling. In Russia franchises are mostly common in service industry, retail and public nutrition.

Companies have long ago started to use franchising for branching out and coming into new markets. For a franchiser it is a good way to save on initial investments, and for a franchisee - on advertising and promotion. At the same time, franchisee pays holding company initial installment (lump-sum payment) and periodical payments (copyright royalties) except initial investments.

Certainly, franchising wins in the speed of the business development. It is profitable for both sides. There is a so-called «grass effect», i.e. the initiative of business development comes from below, and it isn’t planted from above. Franchisee is interested in the development of his own enterprise, the success of the company brings the profit, and the failure - serious losses. Rationally organized franchise is the symbiosis: some get an opportunity to branch out without key investments, others – to have a ready-made business with recognizable name. But Russian reality makes changes in this rose picture.

Many experts note that the biggest problems in Russia arise due to the fact that the difference between franchise and own business start-up from greenfield is understood by halves. Franchisees come across the limitation of their freedom in all things: from selection of premises to company’s development strategy, along with constant control on the part of franchisor. However it’s not infrequent that rich people buy franchises. But due to lack of experience in business dealing even well-known brand can’t help. Smashup of “Pyatyorochka” in Perm is an example.

Despite essentially opposed profits from franchise for franchisor and franchisee, it’s important for both to minimize the possible business smashup risks. Therefore before making a deal it’s essential to check the prospective partner for trustworthiness and solvency.

Information and analytical system GLOBAS-i ® helps to find all the necessary information about the company you are interested in on-line. The Solvency index helps to estimate the financial position of the company and the Reliability index reveals fly-by-night companies.