Customer Credit Rating System Evolution In Bank Of China

Bank is a financial institution which manages the business of accepting and conferring credit in money commodity. From is origin, band unites with the word "credit" tightly at any time. And then, entire modern market economy is one kind of credit economy. With the development of times, credit reinforces in effect in market competition, and the commercial bank credit risks enlarges also. In Basel II ("new Basel capital agreement ") announcing at 2004, the definition to credit risks is: "One kind of uncertainty that bank borrower or counterparty can not bear the paying responsibility of arranging a clause's in advance. On the grounds of World Bank's investigation conclusion, credit risks is maximal risk facing the commercial bank, therefore credit risks quantization administrative system construction is the key that bank risk quantization administrative system builds. If credit risks of bank not centering on measuring a model quantization manages system, cannot only be capable to have the greatest credit assets, and the commercial bank in real meaning can't come into being.In the relatively mature finance system country, internal rating measure has been used to analyze single customer or single loan credit risks by many banks, given to many new function. For instance, internal operation of bank, risk administration and analytical (loan examine and the fund deploys, fix a price and earning ratio analyses). That customer credit rating to be the all-round check out to inherent mass of enterprise and examines, is that the commercial bank ascertains loan risk degree basis and credit assets risk administration basis.As for our commercial bank, the inside grades is in starting phase only , and the time for developing is short and nonstandard , mainly for a monomial loan of credit risks magnanimity . The basic infrastructure construction in regard to just as the data base for breaking a contract, the metastasis matrix is almost a blank space . the development inside of commercial bank grades system is to be used for customer's preparation by screening and the risk early warning more much , the risk quantization to deeper arrangement of ideas manages direction has not yet developed.By studying unceasingly and putting into practice, Bank of China has work out a set of original credit rating system and business criterion, which depended on international experience and domestic reality, and the level of credit rating has kept ahead in China. Customer credit rating is the opinion to the credit conferees and the credit standing of the warrantor. That its result is the important reference to warrant, admittance, and withdrawal, also to the risk examining, fixed price making policy , sort of risks.Bank of China customer credit rating currently in effect adopts model counting and marking model based on Probability of Default (PD). The PD model can calculate the customer's probability of default within the coming 1 year by a series of quantify and qualitative index, and ensure the credit grade by the probability of default. The marking model marks the credit from paying ability, profiting ability, management control, honor an agreement, and other aspects such as development ability and potential. Then, ascertains the customer's credit grade, according to total marks.The PD (probability breaking a contract) model is a logic return model built owing to counting principle, according to the history data of Bank of China. It is the tool to establish the mathematical relations between the the customer characteristic variable and PD. The PD model grades index and standards of grading are ascertained in the model exploitation stage. The quantify index that the present PD model uses is customer's mainly financial targets, including cash proportion, debt coverage rates, rate of inventory turnover, betoken camp business invisible income, pretax profit rate, invested capital bring back a report rate, ratio of assets to liabilities, capital turnover rate etc. Qualitative index all is hardness. Bank of China divides a customer according to credit grade for A , B , C , D four major kinds , AAA , AA , A , BBB , BB , B , CCC , CC , C , D ten bases credit grade. D level is the rank breaking a contract, the others is to be not the rank breaking a contract.Bank of China's customer credit rating system hasn't realized "fixing a price close with interest rate". China customer credit rating index system is mainly short of price-fix index. In every concrete economy environment, the commercial bank has been subjective and phased as the usual price-fix adjustment, and has not realized real time price-fix really, say nothing of pertinence grading price-fix to unitary customer. If don't leading the price-fix index into credit rating system, but factitiously phase in price adjustment , unscientific, no all-round , no timely condition will appear. The above instances demand to introduce price-fix index into grading system. To the banks, price-fix to assets depending customer on credit grade as usual, according to this, customer credit rating is relevant with price-fix directly. Credit rating system needs improvement in the field of price-fix therefore.The principle that Bank of China customer credit rating system improvement is the words " play to the score", that is leading the monetary policy index restricted price-fix ,which embodies economic policy in the different economy environment, into the credit rating index system .And then, the credit rating system can embody the outside environment immediately, and the result is not only guarantee the bank's avails, but also lifting its negotiated price level.The bank extends a loan is for gaining a profit of, and loan price-fix is the key to gaining profit. The active and low-credit-risks enterprise ought to gain especially preferential loan interest, this will promote these enterprise develop in a long range, get fine economic returns and social benefits ultimately. And customer credit rating system is to reflect enterprise credit degree system can most, rank gives different credit to definitely corresponding value therefore, the modulus is very rational but suitable for use as bank fixed price interest rate. But customer credit rating system can most reflect enterprise credit degree system, therefore, giving definitely corresponding value to different credit rank as bank fixed price interest rate modulus is very rational and suitable for use. For example, Bank of China will float 10% under the standard interest rate for the best customer, then, we can define the interest rate modulus of such customer as 0.9 simplely, and so on and so forth, we can work out interest rate modulus list.In 1985, our country unites legal required reserves rates for 10%, when the currency multiplication is 10. If initial currency multiplication is set up for 1, so at present currency multiplication has come down 42.9%, then over-simplicated all the bank avails as the nterest income of derivative deposit going ahead stores, currency multiplication go down implies a bank will use fewer derivative deposit to gain higher avails (do not think that an interest rate bullish factor), therefore,currency multiplication modulus = base period currency multiplication/ should expect currency multiplicationAt present, currency issue scale is also the key factor affecting loan fixed price, therefore, may scheme,currency issue modulus = base period currency issue scale/ should expect currency issue scaleFetch the modulus of interest rate modulus affecting more important to fix the price when contrasts currency issue modulus with currency multiplication modulus, and fix the interest rate ought to will be especially accurate.Above all, today, our country frequently use monetary policy to macro-economy environment, the impact on bank beneficial of being able to fix a price accurately is more and more strong, price-fix manages is imperatively. Price-fix has expanded customer credit rating system's application range , reinforced customer credit rating system's essentiality in the credit conferring of bank, enhance the price-fix's accuracy, thereby ensured bank assets earn profit. Compartmentalize interest rate on the customer with customer credit rating system, puts particular emphasis on and the index coming to amend fixed price in different currency multiplication , the significance being able to make a customer make credit rating and enterprise credit clear especially, has the pertinence field to improve self s credit grade.