1. ALFRED NOBEL UNIVERSITY, DNIPROPETROVSK THE DEPARTMENT OF INTERNATIONAL ECONOMY AND ECONONIC THEORY The Diploma Project on the topic: "THE ESTIMATION OF ECONOMIC EFFICIENCY OF INTERNATIONAL SETTLEMENT SYSTEMS BY BANKS OF UKRAINE" Made by: Karyna Demchenko Checked by: Doct. Sci. (Economics), Full Prof. Yu.E. Petrunya Dnipropetrovsk 2015

2. Contents: PART 1. GENERAL CHARACTERISTICS OF INTERNATIONAL SETTLEMENT SYSTEMS PART 2. ANALYSIS OF GLOBAL INTERBANK TELECOMMUNICATIONS USE IN THE PJSC CB “PRIVATBANK” ACTIVITY PART 3. PERSPECTIVES OF INTERNATIONAL SETTLEMENT SYSTEMS USE IN UKRAINE

3. The aim of the Diploma Project is to increase the efficiency of SWIFT system in PJSC CB "PrivatBank" activity. The objectives of the Diploma Project are to consider the theoretical aspects of international settlements and conduct a detailed analysis of international SWIFT format assignments to improve the efficiency of their use, and to explore the results that emerged after the implementation of some changes. The research object is PJSC CB "PrivatBank", which is the largest commercial bank in Ukraine. The research subject is international settlement systems and SWIFT payments. The research methods used in this Diploma Project are firstly analysis of the literature and regulatory documents. During this work such methods as systematic, structural and functional analyses were used.

4. International settlements are establishing and strengthening relations between the economies of different countries, which have a great impact on the world economy as a whole. The main documents are: The Law of Ukraine "On the banks and the banking activity”, The Law of Ukraine "On the order of settlements in foreign currency“, the Decree of the Cabinet of Ministers of Ukraine "On Currency Regulation and Currency Control“, The Law of Ukraine "On income taxation of enterprises”. Part 1. GENERAL CHARACTERISTICS OF INTERNATIONAL SETTLEMENT SYSTEMS Forms of international settlements are:International settlement systems are: Letters of creditSWIFT CollectionsFEDWIRE Bank GuaranteesTARGET Payment on open accountCHIPS Advance paymentsACH Bank transferEURO 1 EBA

5. PART 2. ANALYSIS OF GLOBAL INTERBANK TELECOMMUNICATIONS USE IN THE PJSC CB “PRIVATBANK” ACTIVITY Main financial indicators of PJSC CB "PrivatBank“ 201420132012 Equity22,696 bln.UAH20,312 bln.UAH18,300 bln.UAH Аssets18,100 bln.UAH16,353 bln.UAH14,898 bln.UAH Net profit7493,036 mln.UAH1,873 bln.UAH1,765 bln.UAH CONTENT OF CREDIT PORTFOLIO BY DIFFERENT SECTORS OF ECONOMY

7. Conclusions: 1.Quantity of payments almost didn’t change in comparison with last year, but charges expenses grew. 2.Charges of third banks for the payment influence on the operating expenses, consequently decrease the bank income. 3.Increase in profit should be done in client payments in euro currency. 4.Difficult economic condition in the country influenced negative on the bank income.

8. Payment systems The main problems related to payment systems in PJSC CB PrivatBank activity are: 1. The difficulty in buying the currency (USD, EUR) in order to transfer to VISA system, 2. The lack of national currency, 3. Charges and difference in exchange rates.

9. PART 3. PERSPECTIVES OF INTERNATIONAL SETTLEMENT SYSTEMS USE IN UKRAINE Old type of transferOld software and non-use of different programs for fast work and control Long term of payment processingUntil 5 banking days High charges Depend on the bank, country, banks- intermediaries High expensesBurden small banks Dependence in internal organization Difficulty of technical system. Appearance of different technical problems Opportunities reducing of payment credit using Reducing of period between debit and credit High cost of entering160-200 thousand of dollars. Burden of medium and small banks The disadvantages of SWIFT system:

10. Ways to improve the system and reduce the disadvantages: -The entering amount of money to the SWIFT system should be reduced. -Outdated SWIFT interface should be replaced with a more advanced interface in those banks, which have the possibility to do this. -In order to reduce the occurrence of various technical problems and failures the bank should simplify the technical system. -To increase the popularity of SWIFT system use. Ways of improvement of SWIFT use in the activity of PJSC CB "PrivatBank“: 1. Replacement of software system 2. Charges reduction 3. Development of guidance of forming commissions to customers when payment order is receiving 4. Creation of a standard requirement for execution of payment orders 5. Costs reduction by increasing charges from client 6. Optimization of payments route

11. Conclusions and recommendations: In the result of the research some steps were made: 1) The legal framework of the International settlement transactions in commercial banks, the theoretical foundations of the international payments were considered; 2) The analysis of operations related to international payments in commercial bank was made; 3) Methods related to reducing the costs of the bank concerning with international settlements were provided; 4) The analysis of cost changes in the commercial bank after implementation of proposed methods was made.

12. As a result of the Diploma Project ways to improve SWIFT payments were found: -Charges reduction for the execution of payment orders and charges of third banks (12.75%) -Guidance development of charges forming to customers (14.81%) -Development of standard requirements for issuing payment orders (3.6%) -Costs reduction by increasing charges for receiving payment order from the client (2.5%) -The optimization of the route of international payments (25%) -Some economic results have been achieved. (58.66%)