Risk Prevention And Control Of Industrial Capital Finance Holding Company

Since the 1990s, under the impetus of economical globalization tide, the financial integration has accelerated to develop, the developed country has relaxed the financial control one after another, and the mixing industry management has become an international financial circles' major tendency. Annexation and purchase of financial organ surges wave upon wave, such us the bank, insurance, negotiable securities and so on, which causes the global large-scale comprehensive finance service group unceasingly to emerge by the unprecedented speed. In November, 1999, US "Financial Service Modernization Bill" officially became effective, which symbolized the end of the financial minute industry management time thoroughly. Many countries, such us English,Japan and so on, carried on the big detonation -like finance reform in abundance, gradually realizes the mixing industry management. In this process, the Citigroup of American, the HSBC group of England, and the Mizubo Financial Group of Japan are playing the more and more vital role as representatives of financial holding companies on the international money market.Along with the comprehensive opening of banking industry, challenges and pressures which our financial organs face are more and more tremendous, and requests and powers of the mixing management have strengthened day by day. Under the premise of no tremendous changes in the existing supervising and managing system, the financial holding company becomes an inevitable choice if we want to impel steady transitions from finance service industry into the mixing industry management in our country. In fact, under the frame of minute industry management and minute industry supervising and managing, there has already existed nonstandard financial holding company form at present. In December, 2002, the first financial holding company in domestic that agreed by the State Council and authorized by the People's Bank of China——the CITIC Holdings Limited, was licensed to be founded. Some groups such as Shanghai international group and the Shanghai industrial investment co., Ltd proposed the plan to set up the financial holding group. At the same time, The four state-owned commercial banks also stepped up to Construct the financial holding company, such as BOC international, CICC ,ICEA finance holdings Ltd. and so on. By registering the non- bank subsidiary company in the overseas or being specially authorized, these state-owned banks went round the limit in "Commercial bank Law" that forbids the bank investing. Moreover, as representativeness of the industrial capital , large state-owned enterprises, such as Haire Group, Shanghai Baosteel Group, Lu neng group, COSCO and so on, also hold the opportunity to involve the bank, the negotiable securities and the insurance industry in abundance, and positively makes the skeleton of the financial holding company. At present, the laws and regulations or the State Council Department concerned department rules and regulations have not made the strict definition limits to the financial holding company, so these industry and commerce enterprise groups have abilities to seek the opportunity to invest holding financial organs in abundance, and as a result, the development of industrial capital finance holding groups is more and more fast. On the one hand, as a kind of effective pattern of the mixing industry management, the industrial capital finance holding company has more superiority than tradition financial organs in building a union between the industrial capital and the financial capital effectively, carrying on the financial innovation on the base of large-scale property and developing the market unceasingly in dodging the risk. And it has brought the vitality and the vigor for the finance market. On the other hand, by setting up the industrial capital finance holding company, it can promote the industrial capital to flow fast, enhance the capital disposition efficiency, and provide a new way for the industrial group's property management.However, because the surveillance and management of financial holding group is at the exploration stage which is unable to be possible to depend on at present, and because the group has a complex structure, imperfect management system, and a flaw in the company governs structure, and especially because the industrial capital has not supervised and managed by any department, the latent risk of industrial capital finance holding company is bigger relatively. Except the credit risk, the interest rate risk, the exchange rate risk and the operation risk, the industrial capital finance holding company also has its unique risk decided by its complex organization structure and internal network relations. It mainly includes capital insufficient risk, the financial release lever ratio excessively high risk, the improper transaction risk, the risk transmission and the risk overflow, the supervising and managing risk and so on. In order to guarantee the stable and the health development of our finance industry long-term, we must pay more attention to the industrial capital finance holding group and implement full and effective supervising and managing. This article believed that, it should guards against from exterior supervising and internal managing to control risks of the industrial capital finance holding company. The exterior supervising mainly includes the consummating legislation, making standards of entering or withdrawing the market, putting the qualification examinations of the administrative personnel in practice, establishing the prompt and effective mechanism to disclose information, speeding up to establish the mechanism of risk-warning in advance, establishing and perfecting the finance supervising and managing organization system and innovates exterior supervising and managing and so on. And the key point of internal risk guard and the control lies in setting up the comprehensive risk management idea, consummating the structure of interior management of the company, perfecting the internal control system, developing the technology of risk management, choosing appropriate risk management pattern and establishing and perfecting the mechanism of evaluating interior transaction risk and so on.Only when this work done practically, can it enhance strong points and avoid weaknesses, and ensure the stable and health development of industrial capital finance holding company in our country. And we believe that there will appear our own world-famous industry giants like GE in few years.