Citic Bank Chengdu Branch Of Credit Risk Seminar

Banks are hubs of capital flow of the economy of a society. Capital flow is a movement of merchandise production in terms of value. Production and exchange of merchandise cannot exist without capital flow. To a certain degree, capital flow directly reflects the continuing production of a society, the control and regulation of capital and continuing production. Therefore, the leverage of bank loan and lending, functioning via monetary means, is closely related to effective regulation of merchandise production of a society and the growth of its economy.Bank loan and lending resource has historically been a type of society resource in many countries. Efficiency of utilizing this resource will affect the development of all industrial sectors of national economy, which in turn affects the efficiency, as a result, will further affect macroeconomic development and periodic trend. Bank loan and lending has played a very important role throughout different stages of economy development and growth of our nation, strongly supporting the development of socialistic market economy and stimulating burgeoning of the service sector of bank loan and lending of our nation from zero at the birth of the nation to the current market of about 2.1 billion RMB. Bank loan and lending is still currently the major business activity of commercial banks of the nation, which represents about 2/3 of total revenues.The risk of loan and lending is inevitably the major risk of a bank whose major business is bank loan and lending. At present, recognition, appraisal, management and control of financial risk of bank loan and lending have been well studied in developed countries; in contrast, risk appraisal and management in commercial banks of our nation are still at the early stage . Since our nation joined the WTO, economic reform has further become free market-oriented. Commercial banks of our nation will face unprecedented challenges once the restriction on business activities related to RMB of foreign banks is lifted. These banks will be over-competed even to face bankruptcy if they fail to quickly upgrade risk management and improve qualities of loans and lending.China International Trust and Investment Industrial Bank (CITIC) is one of many commercial banks of our nation, and it is a financial subsidiary of CITIC group. Founded in 1987, CITIC keeps innovating and rapid growing as a result of following the guideline of"steady progress and compete to be first-classed"and business strategy that focused on its customers and follows the market direction. It has pioneered the public offering of commercial banks of the nation and contributed to the development of national economy. CITIC just became a publicly-owned company, its initial pubic offering was successfully made in both A share stock market of the mainland and H share of Hong Kong stock market. As a publicly owned company, CITIC's capital adequacy ratio, capital quality and asset profits are under close scrutiny from the SEC, investors and the public. Capital quality, the lifeline of a bank, particularly draws attention and questioning. Therefore, improving risk management of bank loan and lending, reducing and avoiding financial risks during lending and improving capital quality are especially important to publicly-owned banks.This thesis discusses theories on risks and summarizes the current status of risk management of loan and lending and types of risks at ChengDu division bank of CITIC. This thesis further examines this divisional bank's shortcomings in concepts and policies during the process of risk management of bank loan and lending and explores ways to improve loan and lending policies and management. The first part of this thesis gives a brief introduction of the concepts of bank loan and lending and the basic theories of risks, which set up major theoretical foundations for this thesis. The second part uses several important cases to summarize and categorize risks of bank loan and lending faced by ChengDu division bank and investigates causes of these risks, covering factors both from the macro environment and inside the divisional bank. The third part discusses the concepts and behaviors of risk management of bank loan and lending in ChengDu division bank retrospectively. The fourth part proposes several recommendations on how to perfect related policies on managing bank loan and lending, process of loan and lending, and on how to make the structure and framework better, based on the author's understanding and knowledge.