Perfecting The Client Credit Rating System Of Bank Of China Jilin Branch

The client credit rating system of BANK OF CHINA Jilin branch is the inner integrated index of that bank. It is to evaluate the objective clients, current clients, clients of providing guarantee and to specify these clients accordingly. The result is an important base and reference to judge the authorization administration, the entrance and the exit of clients, the examine dicision,the price and the risk they carry. This system follows the authenticity, independence and coherency closely, taking the principle of evaluating periodically, adjusting timely, managing respectively, implementing fully. The corporate business department is the fundamental unit and the risk management department is the auditing unit. The range is extended to the enterprises and nonprofit organizations that can offer two years'financial report, registered in the industry and commerce management bureau, including individual clients and cooperation clients. The system based on the characters, the scale and the category is divided into four catalogs, ten ranks.The lines of the system are divided into the following ones: enterprises, nonprofit organizations, small scale enterprises and the newly-established enterprises. Enterprises are as followed: manufacturing enterprises, wholesale-retail enterprises, real-estate developing enterprises, construction enterprises, accommodation enterprises, tourisms enterprises, transportation enterprises, the public facility and the integration enterprises. Nonprofit organizations are as followed: education organizations, medical organizations and other organizations. Small scale enterprises are as followed: manufacturing enterprises and circulating enterprises. These lines embraced the following indexes: refundment index, earning index, managing index, fulfill contract index, developing index, the potential index and restrictive index.In recent years, BANK OF CHINA Jilin branch has tentatively achieved the methods of managing the credit risk of client. However, comparing with systems of some international banks in flourishing nations, it's rating method, proofing of the rating result and rating organization still lags far behind, which will definitely restrict the function of the rating system. The exhibition is as followed: the first aspect is about less estimation of the general economy current situation macroscopically; the second aspect is about less analysis of the types of the lines; the third aspect is about less prediction for the future while laid particular the analysis on the financial affairs; the fourth aspect is about less information, distortion of the original material and the data still needs fulfilling.According to the survey of the Basel Committee on Banking Supervision in the year of 2000, such as CITY BANK, CHASE MANHATTAN BANK, their rating systems enjoy the same features as follows: the first aspect is about the evaluating objects, that's to say bank will evaluate all the commercial operations; the second aspect is about the principal part of evaluating, the managers or the staffs will take part in it; the third is about the methods they use to evaluate, the staffs engaged in the principal part will collect the related information of the clients, to compare with the standards or the evaluated-loan so that to get a certain rank; the fourth aspect is the setting of the ranks, to differentiate the assets with different risks, the ordinary ones will be divided into 6-9 ranks, and the loan falls on each rank will be 30% of the total loan at most; the fifth aspect is about the model and the judgment, it is to combine the both, and take the percentage of the client who failed to repay the loan as the variable fectors in statistics model, or compare with the report of professional organization, the figure will be put into consideration; the sixth aspect is about the features of the clients,such as: the staffs make decision under the certain principle considering financial report, profession character,financial information quantity, assets liquidity,management level, influence of countrys or affairs and trading structure, etc; the seventh aspect is about the verification process, to judge in a fair way, to check through year which be taken into a method of considering whether to give the loan or not. BANK OF CHINA Jilin branch will be engaged in the following aspects after analysis and the reevaluation:I. The fundamental elements about the client credit rating system1. Fulfilling the database1.1 The collection of informationAccording to the information we get, to get a further understanding with the help of client,providing unit,saling unit, BANK OF CHINA Jilin branch, media and middle-agencies to get their history, their way of running business and financial strategies.1.2 The coordination and the use of the informationTo give a further and better analysis on the information we get, to get a more authentic differentiation so as to decide to use it or not and if use but how. The most important parts in financial report consists:financial property, receivable accounts, receivable notes, prepared accounts, materials and stock merchandise, processed assets, fixed assets, immaterial assets, long-term processed expenses, proprietor assets, long-term loan, financial expenses, etc. is the bases of the client credit rating system, to get a real situation of the clients is to get a clear index.2. To improvement of the staff engaged in the evaluation2.1. The choice of staff engaged in the evaluation: not only needs knowledge of financial, able to operate, but also should be able to handle some economy and market problems, at the same time, they should to predict precisely.2.2. The train of the staff engaged in the evaluation: to pass on the knowledge about evaluation to the staff engaged in the evaluation, make improvement to work.3. The after-evaluationTo get the spot and non-spot approaches so as to do the after-evaluation.II. The content of the client credit rating system1. The consummation of the objectsTo learn the client credit rating system from the international banks,make evaluation about borrowers (evaluation about comprehensive financial power, nonparticular compensate ability) and debt items(evaluation about debt characteristics,such as: mortgage, initiative or second degree structure,and particular compensate ability), so as to establish a relatively more convincible system.2. The consummation of the methodsAccording to less abundant of the quality index and low comparison, not only making quantity analyzing,but also making quality analyzing in financial analyzing and index predicting, sign quantity.Through further analysis of the data we get to estimate the risk we will carry in the future.3. The consummation of the rankAccording to the Basel agreement, we will have relatively promoting or demotion.III. The index of the client credit rating system1. The consummation of the quantity indexTo enhance the index of the system so as to make a reasonable supplement and reversion.2. The consummation of the quality index2.1 The macroscopical environment: the main analysis will fall on the influence of the macroeconomics, the political environment, the policies on new industries, the supervision of the system. 2.2 The profession environment: the main analysis will fall on the features, the competition, the periodical and the sensitiveness of the profession.2.3 The financial management: the main analysis will fall on the financial policies, the quality of the financial report and the financial flexibility.2.4 The innovation of technology: the main analysis will fall on the clients'new inventions.2.5 The support evaluating: the evaluating of clients'possibility in geting funds of the government,relevant fector and guarantor (the guarantee of the loan, the deposit of the loan, the impawn loan).Through the consummations of the measurement can enable the reconstruction of the client credit rating system of BANK OF CHINA Jilin branch, so as to get the function of the risk-proofing.