Study On The Evaluation Of Non-performing Assets In State-owned Commercial Banks

The price of non-performing assets(NPA) has become the core of commercial banks and asset management corporations(AMC) dealing with NPAs. The NPA evaluation in commercial banks is completely studied in the paper in order to provide the foundation, credible and effective, for disposing of NPAs.The transferring process of NPA is divided into two approaches: NPA is peeled off from commercial banks to AMCs in the first, and is disposed of by AMCs in the second. The NPA evaluation in two approaches is presented in detail and the principles and methods are discussed separately at length according to the characters of NPA and the conditions of asset evaluation in China.In the first approach, the risk of NPA is reclassified on the basis of five classes by the means of ABC method. The average loss of each class is calculated. As a result, the value of each loan can be worked out. In the second approach, the evaluation of the creditor's rights is focused on. If the financial stuff and other basic information about debtors can be gained and the creditor is one of the greatest creditors, the ability of refund can be evaluated for the creditor's right. Assumptive liquidation or DCF method can be adopted according as whether the debtors can go on running. Otherwise the value of the creditor's rights can be analyzed with AHP and comparative method. AHP can be widely used in practice because of its advantages while if there are some similar cases, the latter method can be better. Then two cases are chosen to do demonstration with the above methods. Some suggestions are put forward in the last part of the paper.