The Research On The Credit Risk Management In Loan Of China Construction Bank Hunan Province Branch

Credit risk is the main factor concerning the commercial bank. For the prevalence effect, once the credit risk is accumulated to some degree, bank crisis, currency crisis and finance crisis may arise, which can even cause the crisis of society, politics, and the state. So credit risk has a bearing on the development of a bank, and even on rise and fall of a nation. As a first class branch of Chinese Construction Bank, Hunan Construction Bank shoulder heavy responsibilities on management of credit risk. Then, how to strengthen the proper management of credit risk? How to keep away and control credit risk effectively? This article studies on the management of credit risk of Hunan Construction Bank from four steps as follows: Identification, Evaluation, Pre-warning, and Controlling on the flow of credit risk management.Taking the advanced Internet technology as the backbone, and the credit management information system as the flat roof, this article imagines and designs the Evaluation & Pre-warning System on credit risk of Hunan Construction Bank through principles on identification and evaluation of credit risk. This system first measures and evaluates the risks on occupation, district, product, and occupation-region. In this system, clients risk evaluation module is introduced through calculation result as the medium; all of the analysis will be finally figured as the PD(probability to disobey the contract), and according to the distribution of PD, the clients risk levels will be divided into ten levels ranging as AAA-D (AAA is the highest level with lowest risk); Meanwhile, according to the distribution of the prefigured loss ratio, the risks on occupation, region, and products will be divided into five levelsA- E (Alevel refers to the lowest risk; E level refers to the highest risk. ),B level (middle-lower risk) and C level (middle class risk) are defined as the Blue Pre-warning State; D level (middle-higher risk) and E level (highest risk) are defined as the Red Pre-warning State. The Blue Pre-warning State will be determined as secondary key inspection object and the Red Pre-warning State will be determined as key inspection object. Finally, according to such status, the system will create automatic instruction policy on risk management. The simulated rehearse on credit status in December 2003 in Hunan Construction Bank preliminarily proved the feasibility of Evaluation & Pre-warning System on credit risk.Based on the identification, evaluation and pre-warning, credit risk defense policies are introduced: To use credit conferring methods; to confirm credit amount; toconstitute credit policies; to establish and perfect the credit duty system; and to enhance occupation training for improving the overall quality of credit staff. After the establishment of proper credit risk evaluation and pre-warning system, we should fulfill the periodical check after providing a loan, track the effect of management policies, and effectively control the credit risk of bad loans. Through the above methods, the specific measures should be proposed accordingly.