China Commercial Bank M & A Loan Business Risk Prevention

With development of the enterprises in China, intensified competitions and mergers of domestic and overseas markets, more and more merger and acquisition cases were seen in recent years, featuring large and rapid growing financing requirements on mergers and acquisitions, while annexation loans have become an important driving force accelerating development of the merger and acquisition businesses. Annexation loans are a kind of brand new high risk loan, whose risky nature and complexity are both higher than those of traditional loans. Therefore, risk prevention becomes the most important task of those commercial banks in China when they are issuing annexation loans; how to prevent annexation loan risks is also the problem of ultimate importance that must be solved before annexation loan businesses are to be carried out.This article selects annexation loan risk prevention as the topic of its study. It first summarizes risk theories and methods about annexation loan businesses based on detailed analysis of the China Banking Regulatory Commission's Market Risk Management Guidelines for Commercial Banks and then studies current annexation loan risk prevention measures and management methods taken by the Chinese commercial banks and summarizes specific details and inadequacies therein, in combination with experiences learned from overseas annexation loan business development, where annexation loan business patterns and risk prevention experiences of the US and Japan are emphatically recommended as important resources for the commercial banks in China to refer to. Meanwhile, this article analyzes these specific measures and train of thoughts from the perspective or solid evidences, integrating theory with reality. Last, this article puts forward some proposals aiming at annexation loan risk prevention from the viewpoint of commercial banks.Major innovations of this article distinguishing it from other related theses are:Its discussion on annexation loan business risk prevention focuses on the aspect of operation as well as studies of cases and solid evidences, boasting of comparatively more real-world guideline significance. Through this in-depth and systematic analysis, the author puts forwards such risk prevention proposals as "fours principles to obey for Chinese commercial banks to prevent annexation loan risks", "expanding commercial bank business scope and introducing the creditor corporation governance mechanism", "strengthening whole-process risk preventive measures and promoting enterprise finance consultation businesses", "adopting rational equity evaluation means for maximum insurance of annexation loan fund safety", "strenuously promoting syndicated loans to collectively share the risks", "strengthening M&A talent cultivation to consolidate annexation loan brand competitiveness of commercials banks", and etc, with further studies on annexation loan risk prevention measures of Chinese commercial banks, while providing some methods and train of thoughts on development of China's annexation loan businesses.