Basel Ⅲ: The Risk Analysis And Strategies To Commercial Banks In China

At the end of 2009. the Basel Committee published a draft version of "Basel AccordⅢ". After being discussed for nearly one year, this accord had been recognized by FSB (Finance Stability Board) and all the leaders of G20 in Sep.2010. and then got approved at the summit meeting of G20 two month later in Seoul. South Korea. The international regulatory organization hope to deal the problems exposed from the subprime crisis erupted in U.S. and the following worldwide finance crisis with this accord. In order to enhance the stability of the bank system and to improve the risk management of commercial bank. "Basel AccordⅢ" proposed stringent standards about capital and liquidity which will be an enormous challenge for worldwide commercial banks.Experts inferred that banks in developed countries or areas as America and Europe will encounter a severe capital shortage under those harsh standards. So these countries tend to make prudential decisions on whether and when to implement this accord. Comparing with banks at foreign countries, commercial banks in our country have abundance capital, and many experts considered that it might be a good opportunity to accelerate internationalization development for our commercial banks. However, there could be a lot of uncertain risks if we stride over'Basel AccordⅡ'to execute'Basel AccordⅢ'. From this point, it's very important for us to known how to implement this accord.'Both domestic regulators and commercial banks focused on this accord intensively.'Dr. Wang Gang of CBRC (China Banking Regulatory Commission) said'and it is the top priority for experts to analysis the influence accompanied by executing the accord. Being inspired by Dr. Wang. I chose this topic.This paper can be divided into three parts. The first part analyzes the influence of 'Basel AccordⅢ'based on the study of its content, and emphasis on the challenges and opportunities to domestic commercial banks, meanwhile, I give opinions for execution strategy in China. The second part introduces credit risk management of commercial bank and KMV credit risk measuring model, then modifies this model for four industries, respectively and applies the modified model to analyze the credit risk of these industries. The last part gives several recommendations and strategies based on my professional knowledge and practice in the corresponding commercial field.