system not only allows banks ensure their profitability

 - Reliability.  The system must operate continuously and smoothly.

  - Optimality.  Optimum control system characterized
 establishment between the elements of rational relations at all levels.

  - Cost.  Cost includes obtaining the necessary
 result in minimum cost [23,26,55].

 Credit risk management system not only allows banks
 ensure their profitability and efficiency lending, but
 Advancing the bank loan is its role in the circulation of money.
 Issued and defaulted loans during this period increased money supply
 in the country, contributing to inflation.

 Credit risk management system includes object entities
 software tools and subsystems (Table 1.1).



 Table 1.1 - System Credit Risk Management

 Elements of upravlinnyaHarakterystyka elementa12

 Object - individual credit risk (the risk of a particular
 borrower);

  - Portfolio credit risk (the risk of the portfolio), Subjects General Meeting
 shareholders (participants), the board, the board;

  - Credit Committee, 

Credit risk management system must meet certain requirements.

Credit risk management system must meet certain requirements.
 Among them:

  - Integrity.  The control system should be consistent, because
 violation of integrity may change the relationships between parts
 system and its operation mechanism.

  - Resistance.  The control system must remain effective in
 to external and internal factors.

  - Commitment.  Commitment involves the development of goals and
 objectives and ways to achieve them.

  - Flexibility.  Flexibility is the ability and willingness to change in
 result of the emergence of new problems.

  - Uniformity.  Uniformity implies the subordination of all
 elements of the principles of construction and operation.

  - Efficiency.  The system must be operational in order to for
 during the adoption and enforcement of no change has occurred in which
 implementation of decisions is irrelevant.

implementation of proper analytical

dnoshennya return and risk.  The purpose of this activity
 is to create conditions creditor protection by setting limits and
 diversification of loan terms, implementation of proper analytical
 diagnosis of the financial condition of the borrower, which should include
 analysis of the client's cash flow and a comprehensive analysis of its
 creditworthiness, the choice of the optimal form of collateral. [21]

 Credit risk is an integral part of the banking risks, which
 a specific strategy with their relationships, properties,
 attributes and relationships.  The credit risk of the bank - a
 formalized process with a clear sequence of phases, mechanisms and
 methods by which the bank identifies risks, assesses their level.
 Monitor and control its risk positions.  Management
 Credit risk is the carrying out actions aimed at maintaining
 a risk level that meets stated objectives of the bank.

decreased in profitability banking sector

  in the course of their activities.  Its appearance is caused, first of all,
 delayed detection of problem loans and the lack of established
 under these provisions, and the imperfection of credit control in banks.
 Increasing interest in the assessment of the credit risk associated with an increase
 the loan portfolio of banks decreased in profitability
 banking sector, prompting banks to take on high credit
 risks.  All this has caused and the urgency of improving existing
 introduction of new techniques and assessments of credit risk.

 The main areas of regulation of credit risk is the development and
 implementation of measures to prevent or minimize the associated
 losses.  Minimizing credit risk involves complex
 measures to reduce the probability of occurrence of events or
 circumstances that lead to credit losses and (or) a decrease
 (Limitations) of the potential credit losses.

 The Bank manages credit risk at the level of individual loans and on
 levels of credit portfolio as a whole.

 The source of individual credit risk is a separate specific
 counterparty bank - borrower, debtor, issuer of securities.
 Evaluation of individual credit risk assessment involves
 individual counterparty creditworthiness, ie, the unique
 ability to timely and fully pay for accepted
 obligations.  The results of assessing the creditworthiness of the customer are the
 Based on the decision to grant or loan.  Based on
 creditworthiness of the borrower's bank determines that the amount of risk it
 can take over.  After giving workers credit loan
 unit should be in constant contact with the borrower with
 to monitor compliance with the terms of credit.  Control of credit
 operation allows time to detect changes in the financial and legal status
 client and react to changing quality of the loan.

 The credit risk in lending is made through:

  - Modifying the terms of the loan agreement;

  - After termination (restriction) loans;

  - Controlling the movement of funds in the accounts of the borrower
 bank debit funds from the borrower;

  - Setting the term loan and more.

 Portfolio credit risk - a measure (degree) riskiness of credit
 portfolio (the aggregate of all credit transactions) commercial bank.  He
 shown to reduce the value of bank assets.  The source of portfolio
 Credit risk is the total debt to the bank for transactions
 which is exposed to credit risk (loan portfolio, portfolio of securities
 securities portfolio of receivables, etc.).

 The credit risk of the bank consists of the following steps:

  - Assessment of credit risk;

  - Monitoring of credit risk;

  - Control of credit risk;

  - Minimizing risk.

 Overall credit risk management can be seen as a set of
 measures to minimize costs in order to establish
 optimum ratio of return and risk.  The purpose of this activity

the urgency of improving

 in the course of their activities.  Its appearance is caused, first of all,
 delayed detection of problem loans and the lack of established
 under these provisions, and the imperfection of credit control in banks.
 Increasing interest in the assessment of the credit risk associated with an increase
 the loan portfolio of banks decreased in profitability
 banking sector, prompting banks to take on high credit
 risks.  All this has caused and the urgency of improving existing
 introduction of new techniques and assessments of credit risk.

 The main areas of regulation of credit risk is the development and
 implementation of measures to prevent or minimize the associated
 losses.  Minimizing credit risk involves complex
 measures to reduce the probability of occurrence of events or
 circumstances that lead to credit losses and (or) a decrease
 (Limitations) of the potential credit losses.

The basis of modern banking is to optimize

 Strict and consistent adherence to these stages will allow more
 carefully monitor the credit process and, consequently, provide
 quality of the loan portfolio and, consequently, the effectiveness of
 banking institution as a whole [64].



 1.3 The system of credit risk management of commercial bank



 The basis of modern banking is to optimize the parameters
 risks causing the need for an integrated approach to the creation of
 management. 

 Optimization methods and technology risk management in banks was
 one of the main prerequisites for gaining competitive advantage, attracting
 customers and increase the profitability of the banking business [54]. 

 Credit risk - the main financial risks faced by
 banks in the process of their work.  Its appearance is caused, first of all,

been engaged with the client after receiving his loan

In the loan agreement provided as is usually some force majeure
 circumstances that give guarantee banks and customers in the event of losses due to
 circumstances beyond their control.

 At the fifth stage, the bank has been engaged with the client after receiving
 his loan.  This work provides for enforcement
 loan agreement and the search for new forms of cooperation with the client.  In the case of
 deterioration of the financial situation of the client and the risk of default
 loan loan officer makes note of guidance to
 could take appropriate action. 

 Sixth stage - the repayment of interest and closing credit
 case - the final stage of the bank lending relationships with
 borrower.  Cases outstanding loans should be reviewed annually
 (More cases to be considered outstanding NPLs) at
 that all information should be adjusted.  The latter involves
 analytical assessment of the borrower and lending services, calculation,
 compliance with loan agreements, etc.