Research On Economic Capital Management Of Agriculture Bank Of China

Economic capital is capital demand produced by vocational risk with function of covering all kinds of risks produced by business affairs. Basel Capital Accord puts forward a claim of banking capital adequacy ratio, regulates computing method, and requirements for supervision and information leaking. Referenced by Basel Capital Accord, China Banking Regulatory Commission makes demand and supervision standard to capital adequacy ratio of commercial banks, and sets up regulatory system corresponding with Chinese banking. The new system puts forwards higher requirements to banks'capital management and risk management. Therefore, the urgent thing is to set up the corresponding economic capital calculating approach to measure capital amount.The main function of economic capital is resisting risk, therefore the fact of economic capital management is risk management. The base of risk management is risk calculating, which calculates variety losses. Facing to national commercial banks, the main risk is credit risk. The calculating measures of credit risk include internal rating-based approach and building block approach. Internal rating-based approach is to measure credit risk by venture measure models. Building block approach is to measure venture weight assets. Venture weight assets multiplied by capital adequacy ratio needs can get regulatory capital.Because there is gap on management ability and technology capacity between Agriculture Bank of China and those international banks, at present, Agriculture Bank of China are not able to carry out the overall economic capital management. Therefore, the writer considers that economic capital management of Agriculture Bank of China should be economic capital management system taking assets risk condition as measure evidence, taking planning management as means, taking controlling assets increase as goal. The research on economic capital managing approach is as follows:I. Creating economic capital measure approach -- internal coefficient method The approach comes from building block approach of credit risk calculating. Without condition to measure business assets risk by venture measure models, such problems as settlement of a legal right and multiple legal rights, exterior credit score, credit risk mitigation are not considered. On base of accounting program of Agriculture Bank of China, to classify the business assets; referenced by the accord and venture weighting by CBRC, and considering the policy orientation of Agriculture Bank of China and actual risk condition, to confirm the economic capital coefficient (capital need ration); and to measure economic capital by visual mathematics weighted models. Although internal coefficient method itself is not a genuine calculating approach of economic capital, but is a good way at present. The method offers convenient approach to calculating economic capital of Agriculture Bank of China, and make base for to realize economic capital management.II. Creating economic capital planning management and increment install system:By operating economic capital planning management to create economic capital increment install system, and then bond the increasing size of branch's risk assets and venture increment, in order to achieve the control goal of capital and risk assets growing in concordance.