Research On Non-performing Loan Securitization Of Chinese Commercial Banks

To deal with large scale of non-performing loans is a very important issue facing all countries. The large scale and growing non-performing loan and the pending open-up of finance sector to the world compel Chinese commercial banks to take full advantage of their own ability to solve the problem of non-performing loan. Securitization is one of the biggest innovations in the international finance arena since recent 30 years. The USA S&L crisis in the 1970s directly resulted in the naissance of securitization. It has been developing greatly since then. Now the measures that commercial banks and asset management companies take cannot meet the need of dealing with large scale of non-performing loans. So to find the best way of dealing is a big issue for the existence and development of commercial banks. Non-performing loan securitization has significant role in ensuring the stable development of our finance industry. Non-performing loan securitization can decentralization, reduce the risk of our commercial banks, improve the capital structure, increase capital adequacy, asset liquidity and advance the competitiveness of our banking industry.First, this paper introduces the relative concept of securitization, its characteristics and terms of use, the core and basic principles, the mechanism of securitization. Then it uses and compares the foreign experiences for reference, and combines the situation of China to analysis the reasons of the naissance of non-performing loan. The innovative aspect of this paper is that it uses the SWOT method to analysis the strength, weakness, opportunities and threats that we face with in the securitization of non-performing loan of Chinese commercial banks. Although there are many defects in market, system, talents, experience in securtization, the feasibility of implementing non-performing loan securitization in China is positive on the whole. Last but not least, it makes some suggestions on the design of model and transaction structure for the development of securitization. At present, the SPC subject to the legislative environment cannot be set up. Adopting the trust model of SPV in secrutization is the realistic choice of non-performing loan securitization of Chinese commercial banks. To promote the development of the non-performing loan securitization of Chinese commercial banks, related legislation and regulation work should be made.