The risks and problems of leasing companies can be divided into several sections: falsification of the real state of the leasing portfolio, falsification of reporting, tax optimization risks, risks associated with financing and portfolio structuring, and risks and problems associated with the development of the company.

Falsification of the real state of the leasing portfolio

Any business, from small to large, hides and improves its real condition. First of all, they hide captivity. Basically, companies issue leases to “left” organizations. CASCO Admitted persons, contracts for tracking satellites, issued powers of attorney can be checked using CASCO policies.

A frequent violation is to change the payment schedule, thereby extending the lease term.

In order to cleanse companies from “bad” leases, they are closed or assigned. There is only one way to track these transactions: request information on leasing agreements that ended in the last 12 months. Usually they are closed not with money, but with the offset of mutual claims. Traces in which the lessee suddenly changes should be especially alarming.

The last problem here is the fake deals. For example, a leasing agreement was concluded for 10 units, but in fact there are only half of them (at best). In this situation, the organizer is the lessee with the participation of managers. As a result, the lessee has the equipment and the supplier still owes the so-called delivery. The problem is that if the lessee disappears, there is nothing to repossess. And the last resort is the leasing company, not the bank.

Falsification of leasing company reports

The leasing company's revenue must be equal to the sum of all lease payments according to the leasing accrual schedules for the year. All offset advances under leasing agreements are also added to this amount. All amounts must cross-match with account turnover.

On a balance sheet, the “Accounts Receivable” line never actually reflects the company's real problems.

Risks of tax optimization

When a company does not develop or the pace of development is noticeably reduced, the company begins to submit everything for VAT payment. Many financiers begin to buy everything and not write it off, because everything will be revealed in the payment to profit. The same frauds can be found in the balance sheet item “Accounts Receivable”. In the transcript of this article you can find something superfluous - this is what these purchases are.

Risks associated with financing and portfolio structuring

There are a number of risks associated with structuring and financing a leasing company’s portfolio:

1. The most common mistake is an incorrectly drawn up leasing schedule in relation to the loan repayment schedule. In the classic version, equal payments are made in the lease payment schedule and in the cancellation of the body. Ultimately, due to the fact that there is also interest on the loan, a positive profit under the leasing agreement arises in the last 1/3 segment. The leasing company pays in addition to the lease payments the first two-thirds of the term in order to cover the loan with interest. The main mistake here is the incompetence of bank employees. Such actions undermine the leasing company.
2. The bank’s responsibilities include not only adjusting the conditions of insurance of the property pledged, but also the place of insurance of this property. These actions are not a formality, but objective problems that the bank independently burdens itself with. In addition, the bank is forced to require insurance of the item from an insurance company for the entire term of the lease or loan with an annual fee. Beneficiaries must also be specified here. All of the above conditions are also reflected in the collateral agreement and loan agreement. The important point is that everything is mirrored in the leasing agreement.
3. The bank should think about securing the issued loan. He is obliged to request a guarantee not only from the beneficiary of the lessee, but also from the beneficiary of the lessor. The bank also requires non-acceptance from all lessor accounts.
4. The bank is obliged to check the security service of all lessees and their financial condition. This procedure can identify any problems in advance and help prevent the situation from getting worse.
5. If the subject of leasing is transport, then the lessor and the lessee are required to make temporary records. In addition, the registration certificate must contain a note about the mortgagee - the bank.
6. The procedure for registering a pledge with a notary in the all-Russian system is carried out independently by the legal department and at its own expense. In this way, unnecessary insinuations can be avoided.

Risks and problems associated with the development of the company

The development of a company, unless it is registered offshore auroracons.com.ua/ru/s_vse_ob_offshorah, carries certain risks and problems. The main formula by which you can assess the real state of development of a leasing company is compliance with the following parameter: Quarterly volume, which represents the cost of leased items excluding VAT, must exceed quarterly revenue by at least 50%.

If a company does not meet this parameter, this means a decrease in development. Then everything goes towards paying VAT. If the company develops well, VAT is always refundable.
The bank should also build a schedule for 4-6 quarters of the gross leasing portfolio (net balance of lease payments receivable). As a result, there should be growth - at least 15% per year.
During a crisis, a leasing company should have a captive rate of no more than 25%; outside of a crisis, 30% is possible. The captive level shows the volume of the leasing portfolio issued to a group of related companies.

The leasing portfolio has a level of equity adequacy, which reflects the volume of leasing transactions financed from own funds rather than borrowed loans. This figure must be at least 25% of the leasing portfolio.

Assessment of the financial condition of the borrower - leasing company (Shatalova E.P.)

Date of article posting: 12/17/2014

Currently, leasing has reached a high level of development in the domestic market, having emerged as an independent business sector. A number of companies, including large ones, operate successfully in the field of providing financial leasing services. Leasing companies are assigned ratings: in particular, companies in the Russian leasing market are assessed by the Expert RA rating agency. How to take into account the industry characteristics of a borrower whose business is the provision of financial leasing services? The article proposes a method for assessing the level of financial condition of a leasing company.

The specifics of the activities of leasing companies involve attracting medium- and long-term financing. This creates an unambiguous prerequisite for their interest in using bank loans, and therefore leasing companies become loyal bank borrowers.
As a rule, the terms of loans to leasing companies range from three to five years, and the partial repayment schedules of loans correspond to similar parameters of leasing agreements concluded by the borrower with lessees.
As collateral for loans, the creditor bank is most often provided with leased objects as collateral, as well as rights of claim against lessees under leasing agreements.
The source of repayment of the principal debt and accrued interest on loans is funds received from lessees in accordance with lease payment schedules.
The range of leasing transactions is very wide and extends to:
- production equipment and machinery;
- road maintenance machinery and equipment;
- road construction equipment;
- passenger and cargo vehicles;
- aeronautical and airport equipment;
- aviation equipment;
- sea and river vessels of various classes, port equipment;
- special-purpose equipment;
- integrated security systems;
- containers for transporting goods.
Large leasing companies can implement complex projects, including those related to the lengthy process of creating the leased asset. As a rule, in such cases they actively cooperate with government departments, departments and agencies, and state corporations. State support allows large leasing companies to develop relevant programs, support government initiatives and actively participate in the development of the country’s economy.
Lessees are enterprises from various sectors of the economy:
- manufacturing enterprises;
- local and regional enterprises of the road sector;
- regional and federal airports, regional carriers, etc.;
- motor transport enterprises.
Leasing companies offer modern domestic and imported machinery and equipment from leading manufacturers. Partnerships with banks allow leasing companies to offer their clients the most flexible loan terms and provide guarantees.
At the same time, the specifics of the leasing business should be taken into account when conducting credit analysis, especially when assessing the level of financial condition of the leasing company.

Transformation of the financial statements of a leasing company

The most important feature of the proposed methodological approach to assessing the financial condition of the borrower - the leasing company is that the credit analyst, taking as a basis the standardized methodology of financial analysis, must first transform the reporting of the leasing company. The purpose of this transformation is a more accurate reflection of balance sheet items in accordance with their economic content.
A standardized methodology for assessing the level of a borrower’s financial condition involves the use of a system of financial ratios consisting of five groups of indicators:
- financial leverage ratios (characterizing the ratio of equity and borrowed capital);
- turnover ratios (allowing one to evaluate the intensity of the business cycle);
- profitability ratios (characterizing the efficiency of own and attracted capital);
- liquidity ratios (characterizing the ability to pay off one’s obligations);
- quality of debt servicing (defined as the ratio of revenue from sales to debt to banks and lenders for short-term and long-term obligations).
After calculating the values ​​of financial ratios to establish the level of financial risk for each of the indicators (groups of financial ratios), the percentage of the amount of points scored is calculated, taking into account the weighting coefficients in relation to their maximum possible number, which can be placed on the rating scale in the form of a distribution table of the indicated percentages (Table 1).

Table 1

Levels of financial risk

The transformation of accounting statements used for leasing companies must take into account the following key point. The property leased is considered by the bank as an element of the working capital structure of the leasing company. In this regard, to assess the level of the borrower’s financial position, the bank transfers the amount of investments in property transferred under financial leasing from the section “Profitable investments in tangible assets” of non-current assets (Section I of the balance sheet) to the section “Financial investments (except for cash equivalents) "current assets (Section II of the balance sheet).
The leasing company's current assets are mainly represented by the following items:
- accounts receivable (debt of lessees - balance holders of leased items, debt of buyers, advances issued to suppliers, calculations of taxes and fees);
- deposits in credit institutions;
- cash (balances on bank accounts);
- other current assets (VAT on advances received, deferred expenses (insurance premium)).
The leasing company's liabilities contain the following main items:
1) own funds: authorized capital, retained earnings, reserve capital, deferred income under leasing agreements. The share of equity capital in the structure of funding sources is about 30% of the balance sheet (the level of autonomy is assessed as high);
2) liabilities of the leasing company (account for about 70% of the balance sheet):
- long-term and short-term loans;
- other long-term liabilities: advances received under leasing agreements, debt to pay insurance premiums, deferred tax liabilities (VAT);
- accounts payable, including advances from buyers, advances received under leasing agreements, debt for payment of insurance premiums, taxes and fees.
Positive signs indicating the success of a leasing company's business are as follows.
1. The value of net assets increases.
2. The borrower does not have a deficit of its own working capital (in this case, it is necessary to take into account the specifics of the lessor’s activities, namely the fact that profitable investments in material assets - leased items - are incorrectly classified as immobilized assets, since at the end of the lease term (the corresponding loan agreement) ) leasing objects are purchased by lessees (depreciated)).
3. The borrower is moderately dependent on external sources of financing and finances its activities with approximately 30% of its own funds, as well as through long-term and short-term bank borrowings.
4. The borrower’s liquidity is maintained, the company has the potential to pay its obligations in a timely manner through the sale (turnover) of assets.
5. The financial result of the borrower’s activities is profit.
6. The borrower has an optimal debt load. In terms of terms and volumes, bank borrowings within the framework of each credit project are coordinated (correspond) with similar parameters (terms and amounts) of leasing agreements.
7. The borrower's asset turnover indicators correspond to the payback periods of leasing projects.

Example. Financial position of the borrower - leasing company.

table 2

Table 3

Financial results report for January - December 2013 (thousand rubles)

Organization "Leasing company"
Type of economic activity - financial leasing

Analysis of the borrower's activities during the year (from January 1, 2013 to January 1, 2014) indicates a continued high level of financial condition, an increase of 1.8 times - from 17,411 to 32,126 million rubles. - the value of net assets (the level of autonomy of the borrower), an increase in the balance sheet currency by 50% - from 65.2 to 97.9 billion rubles, an increase in the annual revenue received by the borrower by 30% - from 12.7 to 16.4 billion rubles.
The borrower's assets are 32% (31 billion rubles) represented by non-current assets, in the structure of which profitable investments in tangible assets (property leased, taking into account depreciation) amount to 28,471.6 million rubles. The property leased is considered by the bank as an element of the working capital structure of the leasing company, and therefore, in order to assess the level of the borrower’s financial position, the bank made the following transformation of the borrower’s asset structure: transfer of the amount of investments in the property transferred under financial leasing from the section “Income investments in tangible assets" of non-current assets (Section I of the balance sheet) to the section "Financial investments (except for cash equivalents)" of current assets (Section II of the balance sheet).
Current assets are represented by:
- accounts receivable in the amount of RUB 57,110 million. (debt of lessees - balance holders of leased items, debt of buyers, advances issued to suppliers, calculations of taxes and fees). During 2013, the borrower created a reserve for doubtful debts (problem receivables) in the amount of RUB 391.8 million, or approximately 1.1% of the lessee debt generated in 2013;
- deposits in credit institutions in the amount of 2 million rubles. (2% of balance sheet currency);
- cash (balances on current accounts with banks in the amount of RUB 4,266 million (4.3% of the balance sheet currency));
- other current assets (VAT on advances received, deferred expenses (insurance premium) in the amount of RUB 1,195 million).
The structure of the borrower's liabilities includes own funds: authorized capital - 10,001 million rubles, retained earnings - 701.6 million rubles, reserve capital - 61.8 million rubles; The borrower's own funds include deferred income under leasing agreements in the amount of RUB 21,362 million. The share of equity capital in the structure of financing sources is RUB 29,560 million, or about 30% of the balance sheet (the level of autonomy is assessed as quite high).
Liabilities - 69.8% of the balance sheet currency, or RUB 68,370 million:
- long-term loans in the amount of 47,999 million rubles, short-term loans, interest on them, bills of exchange and bonds in the amount of 5,812 million rubles;
- other long-term liabilities: advances received under leasing agreements in the amount of 856 million rubles, debt to pay insurance premiums in the amount of 355 million rubles, deferred tax liabilities (VAT) in the amount of 6,663 million rubles;
- accounts payable in the amount of RUB 2,735 million, including advances from buyers, advances received under leasing agreements, debt for payment of insurance premiums, taxes and fees.
Based on the results of the analysis of financial risk factors as of January 1, 2014, as well as their dynamics during the year, the following was revealed.
The value of net assets increased in 2013 in absolute terms by 84.5% - from 17,411 to 32,127 million rubles, their share in total assets increased from 26.7 to 32.8%. The borrower does not have a deficit of its own working capital (in this case, it is necessary to take into account the specifics of the lessor’s activities, namely the fact that profitable investments in material assets - leased items - in the amount of 28,472 million rubles are incorrectly classified as immobilized assets, since at the end of the term lease (corresponding loan agreement), leased objects are purchased by lessees (depreciated)).
The borrower is moderately dependent on external sources of financing and finances its activities with its own funds by 30%, as well as through long-term (47.9 billion rubles) and short-term (5.8 billion rubles) bank borrowings, the share of which in the structure liabilities as of January 1, 2014 amounted to 54.9%.
The borrower's liquidity is maintained, the company has the potential to pay its obligations in a timely manner through the sale (turnover) of assets.
The financial result of the borrower's activities during the period under review is profit. During 2013, the profit received amounted to 317 million rubles, having increased by 2.4 times compared to the same period in 2012.
The borrower has an optimal debt load. In terms of terms and volumes, bank borrowings within the framework of each credit project are consistent with similar parameters (terms and amounts) of leasing agreements. In this aspect, it is necessary to take into account the low share of claims that are problematic for collection, which is about 1% of the borrower’s leasing portfolio.
The borrower's asset turnover indicators correspond to the payback periods of leasing projects. The balance sheet structure is typical for the lessor.
The level of financial risk is assessed as low. The financial position of the borrower as of January 1, 2014 was assessed as good.

conclusions

A key feature of credit analysis of leasing companies, which are characterized by pronounced industry specifics, is the preliminary transformation of the lessor’s financial statements, through which the credit analyst takes into account the specifics of the client’s business, as well as taking into account the features of financial leasing.
The transformation of the reporting of the borrower - the leasing company consists of transferring the amount of investments in property transferred under financial leasing from the section "Profitable investments in tangible assets" as part of non-current assets to the section "Financial investments (except for cash equivalents)" as part of current assets. After the transformation of the financial statements, through which the industry-specific features of the leasing company will be taken into account, a standardized methodology for analyzing the financial statements of the bank client is used, which makes it possible to assess the level of financial risk and determine the financial position of the borrower.

The Rosleasing Association is implementing a new project to improve the conditions for financing leasing activities in order to develop unified approaches to assessing the financial condition and risks of leasing companies, as well as supporting interaction with banks and credit organizations.

According to Elena Skrynnik, Chairman of the Russian Association of Leasing Companies, effective raising of funds to finance leasing activities is a key factor in the success of a leasing company. The most common source of financing for leasing companies is a bank loan. However, obtaining a loan from a bank or other lending institutions is accompanied by many problems.

In order to identify the main difficulties associated with organizing financing for leasing companies, the Rosleasing Association conducted a “pilot” study.

The survey results showed that the main problem that leasing companies face when contacting credit institutions and banks is the lack of a unified methodology for analyzing the financial condition and assessing the risks of a leasing company. In most cases, a leasing company is treated as an ordinary borrower, without taking into account the specifics of its activities.

There are a number of objective reasons that make it difficult to correctly interpret the values ​​of generally accepted financial analysis ratios.

• In various segments of the leasing market, growth is unstable and extremely uneven. This makes it difficult to predict the leasing company's future cash flows based on the results of financial analysis.
• A special feature of the leasing business is the high share of borrowed funds in the structure of liabilities of leasing companies. This negatively affects the final indicators of financial stability and solvency. And in the end, the decision to issue a loan is made.
• Low turnover of receivables and payables associated with the timing of leasing transactions.

Another important factor is the company’s lack of additional security in addition to the object being leased and the rights to receive lease payments.

All this makes it difficult for leasing companies to finance their transactions using borrowed funds, which significantly affects the efficiency of leasing activities.

In this regard, Rosleasing is implementing a new Project to improve financing conditions for leasing companies. The main goal is to develop unified approaches to assessing the financial condition and risks of leasing companies for banks and credit organizations. The project includes the following stages:

• Identification of key problems in attracting financing. In the near future, the Association plans to conduct a more in-depth study of the problems of financing leasing activities using mass surveys;
• Development of a Methodology for risk assessment and financial analysis of leasing activities, which will be recommended to banks and other credit organizations;
• Support for interaction of leasing companies with banks and credit organizations. Providing advice on financial analysis and preparation of necessary documentation.

Introduction

Leasing is an agreement under which the lessor undertakes to acquire ownership of the property specified by the lessee from a seller identified by him and to provide the lessee with this property for a fee for temporary possession and use for business purposes.

The purpose of the task is to describe leasing participants as independent leasing companies, namely: characteristics of the bank, characteristics of the insurance company, characteristics of the brokerage company.

Bank as a participant in a leasing transaction

Leasing operations are operations based on the provision of lease of non-current assets for a long-term period for the purpose of their production use. Non-current assets include buildings, structures, equipment, vehicles, and intellectual property rights.

The role of banks in leasing is increasing. The bank's participation can be direct, if it directly rents out machinery and equipment for temporary use, and indirect, for example, providing loans to leasing companies. In this case, the bank acts as a loan provider.

In a classic leasing operation, three parties are involved: the lessor, the lessee, and the supplier (seller of the property). The lessor is usually a commercial bank, the lessee is enterprises of various forms of ownership, the suppliers of property are its manufacturers, supply and sales, trading and other organizations are property owners.

The mechanism of the leasing transaction is as follows. The tenant submits an application to the bank to purchase equipment. The bank makes a conclusion about the solvency of the tenant and the effectiveness of the leasing transaction. After this, the bank finds a supplier and buys the equipment. A leasing agreement is drawn up between the bank and the tenant. During the execution of the leasing agreement, the lessee pays rent, which includes depreciation, interest on the loan, and value added tax.

Advantages of banks when participating in leasing operations:

• 1. expanding the range of banking operations and increasing the number of clients,
• 2. reducing the risk of losses from client insolvency,
• 3. depreciation charges on property leased out are not taxed and can serve as a source of funds for the purchase of new property,
• 4. the amount of rent for the provision of property under leasing may be higher than the interest rate on long-term loans issued for the same period.

Central Bank of the Russian Federation (Bank of Russia)
Press service

107016, Moscow, st. Neglinnaya, 12
www.cbr.ru

The license to carry out banking operations from Kranbank JSC was revoked

By order of December 13, 2019 No. OD-2850, the Bank of Russia revoked the license to carry out banking operations from the Joint Stock Company “Kranbank” JSC “Kranbank” (reg. No. 2271, Ivanovo, hereinafter referred to as Kranbank). In terms of assets, the credit institution ranked 204th in the banking system of the Russian Federation 1 .

The Bank of Russia made this decision in accordance with paragraphs. 6 and 6.1 of the first article. 20 of the Federal Law “On Banks and Banking Activities” 2 , guided by the fact that Kranbank:

- committed violations of Bank of Russia regulations in the field of combating the legalization (laundering) of proceeds from crime and the financing of terrorism. The credit institution provided the authorized body with incorrect information on transactions subject to mandatory control;- carried out operations that had signs of asset withdrawal;

- underestimated the amount of reserves required for the formation of possible losses. According to the Bank of Russia, adequate reflection of accepted risks in the financial statements of a credit organization leads to a significant (more than 45%) decrease in capital and, as a consequence, the emergence of grounds for taking measures to prevent insolvency (bankruptcy), which creates a real threat to the interests of creditors and depositors;

- violated federal laws regulating banking activities, as well as regulations of the Bank of Russia, and therefore the regulator over the past 12 months has repeatedly taken measures against him, including introducing restrictions on raising funds from individuals.

During the inspection, the Bank of Russia revealed the impairment of a significant part of Kranbank's assets. An order was sent to the credit institution with requirements for an adequate assessment of the risks taken and reflection of its real financial position in the reporting.

Kranbank made large payments that had signs of asset withdrawal under concluded lease agreements. The terms of these transactions were non-market in nature and obligated the credit institution to make preliminary payments several times higher than the cost of the leased real estate. Information about transactions carried out by a credit institution that have signs of criminal offenses was sent by the Bank of Russia to law enforcement agencies.

A temporary administration of the Bank of Russia has been appointed to Kranbank 3 , which will be valid until the appointment of a bankruptcy trustee 4 or liquidator 5 . The powers of the executive bodies of the credit organization have been suspended in accordance with federal laws.

The State Corporation "Deposit Insurance Agency" (hereinafter referred to as the Agency) attracted Zarubezhenergoproekt JSC together with Kranbank as an investor to participate in measures to prevent the bankruptcy of JSC CB Solidarnost. In connection with the revocation of the license to carry out banking operations from Kranbank, Zarubezhenergoproekt JSC will perform the functions of an investor within the framework of the Agency’s Participation Plan in the implementation of measures to prevent the bankruptcy of Solidarity CB JSC on its own.

Information for investors : Kranbank is a participant in the deposit insurance system, so deposit amounts will be returned to depositors 6 in the amount of 100% of the balance of funds, but not more than 1.4 million rubles in total per depositor (including accrued interest on deposits).

Payment of deposits is made by the Agency. Detailed information on the payment procedure can be obtained by depositors around the clock by calling the Agency’s hotline (8 800 200-08-05), as well as on the Agency’s website on the Internet ( https://www.asv.org.ru/ ) in the “Deposit Insurance/Insured Events” section.

_________________________________

1 According to reporting data as of December 1, 2019.

2 The decision of the Bank of Russia was made in connection with the credit organization’s failure to comply with federal laws regulating banking activities, as well as Bank of Russia regulations, repeated violations within one year of the requirements of Bank of Russia regulations issued in accordance with the Federal Law “On Combating the Legalization (Laundering) of Income obtained by criminal means and the financing of terrorism,” taking into account the repeated application within one year of the measures provided for by the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)”, taking into account the presence of a real threat to the interests of creditors and depositors.

3 In accordance with the order of the Bank of Russia dated December 13, 2019 No. OD-2851.

4 In accordance with Articles 127 and 189.68 of the Federal Law “On Insolvency (Bankruptcy)”.

5 In accordance with Article 23.1 of the Federal Law “On Banks and Banking Activities”.

6 Investors are individuals, including those engaged in entrepreneurial activities (individual entrepreneurs), as well as legal entities classified as small enterprises in accordance with the Federal Law “On the Development of Small and Medium-Sized Enterprises in the Russian Federation.”