The Risk Management Of Financial Holding Companies

Since the 1970s, financial freedom has become the world trend with the continuing financial innovations and deregulations taken by the developed countries. During this process, the financial holding companies such as Citicorp ,HSBC and Wisuho Holdings have played a more and more, important role in the world financial market.The banks, security firms and insurance companies have been required to operate separately since 1993 in China. This was certainly reasonable at that time. But with the development of the Chinese financial market, the negative effects for such a system have occurred. Now, the financial institution with multifunction has become the trend in our financial industry, as can be clearly observed from the existence of Chinese financial holdings such as Citic and Everbright.But according to the big organizations and complicated equity relationships of the financial holding companies, there will be big problems during its operation. Can the holding companies raise sufficient capital ? Is the inside trading fair for the whole market? Are the different supervision bureaus clear about their duties and their responsibilities? There will be great risks if clear answers couldn' t be found to these questions. What is more important, more and more industrial capital has run into the financial market and tried to set up financial holding companies. Since they are not regulated by the financial supervision bureaus, bigger attentions should be paid to such kind of companies.This paper is devised to find out answers to these questions based on the advanced experience of the western countries as well as Chinese reality.