A Study Of Securitization Backed By Non-Performing Assets In Commercial Bank

The non-performing assets in Chinese commercial bank not only result from external factors, such as macroeconomic fluctuation, government intervention and the legal system construction, as well as some internal factors, for example, corporation framework, risk management mechanism and the incentive motivation system. Generally speaking, the value of the non-performing assets will diminish gradually with the passage of time, which is known as"popsicle effect". Moreover, the non-performing assets which can not be collected timely will do harm to the financial security and the social stability. Hence, it is of great importance to deal with the non-performing assets effectively as to Chinese banking industry and national financial security.Firstly, this thesis introduces the current status of the non-performing assets in Chinese commercial bank, discusses the reasons why the non-performing assets occurred and its development trend. Then based on the analysis of some traditional methods, which include the cash collection, the debt reorganization, countervailing debts with assets, bad debt cancellation after verification, the thesis introduces securitization to solve the problem of non-performing assets. Then this paper focuses on the analysis of the rights and duties of all parties involved in the assets securitization, and the whole transaction process, then comes to a conclusion that there are two basic legal relationships in the assets securitization. Moreover, this paper makes a viewpoint that the relationship of assets transferring from the seller to the Special Purpose Vehicle, which is always actualized by the means of trust in China because of its characteristics of independence and limited liability, is the presupposition of assets securitization. Based the above research, the paper discusses the advantages of normal assets and non-performing assets securitization respectively.Secondly, this paper evolves the research of the legal environment of the assets securitization in China. After that, the thesis makes a thorough study of some newly-issued assets backed securities, and concludes that the nature of the newly-issued non-performing assets backed security is more likely fixed income security sold from the seller to the investors, and as a result the risks and proceeds are not effectively transferred from the seller to the investors.Lastly, this paper gives some practical suggestions about the transaction process, the legislation, the accounting system, the tax policy and the risk management in the non-performing assets securitization originated by the Chinese commercial bank.