Bank Of China Jilin Branch About Credit Appraisal Of Local Governments Financing Platform

Since the financial crisis in the second half of 2008, the consciousness of risk unprecedented is enhanced in commercial banks. As the commercial banks have steadily improved the risk assessment means to the traditional industrial and commercial customers, crediting business in commercial banks developed well. However, with the announcement of 4 Trillion Yuan Stimulus Plan at the beginning of this year, municipal infrastructure became the main engine for driving the economic, commercial banks have also mainly supported such items projects. But with the continuous increase of the endorsement project of the government's financial strength, the financial risks of the local government become increasingly apparent. How to control and resolve financial risks of the local government has become key issues for commercial banks which needs to be resolved urgently.The government financing platform is the research object in this paper, I described the characteristics of the fiscal risks in local government based on the analysis of the government financing platform ,and also establish a financial liability model according to some experience and practice abroad as well as the existing assessment methods in our bank , quantify the main indicator to educe the largest debtor finance size of a region and the credit scale in our bank, and also propose policy recommendations in bank credit.This paper is divided into five chapters.The first chapter introduces the background, proposed the research ideas, research contents and research significance of the topics of this paper.Chapter Two expatiate the building status quo of the government financing platform from the development process, status, types of the government platform as well as the problems faced by government financing platform. The development of the government financing platform began in 1994 sub-Tax Reform, gone through three stages including the primary stage, extension stage and the development stage. The type of Government financing platform is increasing, and the operating philosophy is also increasing year by year, as well as established a relatively sound corporate governance gradually.This chapter focuses on the financing model of the government financing platform, including BOT, TOT, PPP, PFI, ABS, etc and also analyzed the status of its application. For the management features of the government financing platform, this chapter also highlighted the financing problems of government platform. Including the single financing channels, high degree of risk concentration, financing pressure, lack of financing capability and the irrational structure of financing etc.Chapter Three integrated the development of government financing platform in Jilin province, describes the development features of our government financing platform as well as the credit of the government financing platform customer. As the level of economic development in our province is relatively backward, the local government financial strength is not strong. It not only restricts the development of the provincial government financing platform, but also determines the operating characteristics of my provincial government financing platform. local government finances are still the main or only source of repayment, which is not conducive to carrying out the project investment and credit risk which financing bank faced is relatively higher. Based on these reasons, as the local commercial banks should focus on the analysis of local government financial solvency when evaluating such credit projects. This is also the written reasons of this paper in our actual situation in my province.Chapter Four focuses on the financing risk of government financing platform ,the risk of overfund, risk analysis and the credit assessment practices of local government financing platform, as well as major experience in domestic banks. As China's local governments at all levels, according to live within its means, fiscal balance, the deficit is not out in the principles of the preparation of financial statements, government financing, credit is essentially the platform ahead of Utrecht of the future revenue, financial ability to achieve expected revenues will directly affect the repayment of bank loans This is the stage of commercial banks can not avoid facing the reality of the risks. In addition, since government financing platform, the government has a strong background it is difficult to extend a bank guarantee approved mortgage, it is also a lack of banks face the risk of a second source of repayment. Finally, since government financing loans for lack of a complete platform for class statistics and effective monitoring, leading to greater potential risks of such loans.In response to these risks, it is difficult to make an objective and fair evaluation to local governments'fiscal solvency solely relying on the traditional industrial and commercial customers for all commercial banks at present. In this stage, the assessment of government financing is limited to judgment of access of standard ,the single means of credit assessment for the banks buried large hidden risks.Chapter Five describes Credit Appraisal of Local Governments Financing Platform. Briefly summarized from the local government finance, local government borrowing causes, and several other aspects of local government finance. Clear revenue and expenditure, consider the object, solvency. And on this basis, through a large number of financial data analysis and research, combined with international practice, chapter five presents the concept of the financial liability model, quantified the scale of local government debt through the adoption of the scale of the financial liability. The basic idea of the model is analyzed from the city, fiscal revenue, solvency, debt maturity structure and internal management capacity based on the credit customers of our bank in the calculation model classification, finally, finally I calculate the credit ceiling line can be used in the area of the government finance platform. Through a series of indicators, the establishment of financial liabilities, the final model, the adoption of the model can be intuitive, clear estimates of each city or region's largest line of credit liabilities, and the size limit.This chapter presented the overall credit policy of our bank to the government financing platform projects through the analysis of the government financing platform and local government finance, combining with the features of the economic development of Jilin Province and the development strategy of our bank which are'strict entry criteria, appropriate credit support'. Specifically, in the choice of the city, the credit mainly for Changchun City, in principle we don't support the city that outside Changchun City; in project selection, we actively doing commercial or quasi-commercial projects; for the general public, it should be cautious to intervene; for customer choice, mainly support national, Jilin Province, Changchun municipal government level, as well as financing platform, taking into account a strong financial strength to undertake major projects of the district-level platform for government financing, in principle we don't support the county-level government financing platform.I suggested the credit guidelines of our bank on this basis. Government financing platform projects should be consistent with national industrial policy orientation and included in the development plan which was established by Development and Reform Commission, and the relevant government departments have agreed to undertake the project preparatory work for the project. The operations should in line with relevant state laws and regulatory requirements. The syndicated loans form should to be actively chose while providing credit to the government financing platform. Increasing negotiation position with local governments to reduce the risk. In principle, the term of the loans should be less than 10 years. Loan period should be matched with the first source of repayment. Implement an effective security as far as possible, such as third-party guarantee, the right to charge, receivables, land-use right to arrive, pledge. Pay close attention to the impact of the change of leadership in the Government on bank lending.