Exploration Of The Development Of CD Bank’s Factoring Business

After decades of rapid development and growth, CD Bank is now facing two major challenges, homogenization competition and relatively high concentration of loans, which directly restrict its cross-regional strategy and IPO plans. In author’s opinion, to carry out financial business innovations, to expand the development channels, to change the development mode, and to take the differentiation road are the keys to resolve the problems mentioned above. Based on the current status of CD Bank and market analysis of Chengdu, the author attempts to explore the banking factoring business, combining with the construction of Chengdu Free Trade Zone, to create new profit growth points and competitive products for CD Bank.Factoring, or similar product such as accounts receivable financing and forfeiting have already widely developed in foreign countries. Although these products have existed in the domestic market for quite a while, their development has been limited due to factors such as risk management. Through practical research, the bad debt rate of accounts receivable is not high as long as trade relations between enterprises is stable. Nowadays, the bank factoring business has become a feature business of China’s eastern coastal commercial banks to provide asset financing service to SMEs. Meanwhile, the banking industry is gradually realizing that the developing direction of the accounts receivable financing should be changed from redemption and high percentage guarantee to real accounts receivable guaranteed financing. In other words, the bank factoring needs to be widely developed. It will require the stable improvement of risk management in commercial banks. The thesis is divided into six chapters. Firstly, it will focus on the introduction of CD Bank, including its business development, achievements and major problems. Secondly, the author will illustrate and analyze the development of domestic and foreign commercial banks’ factoring business, including theoretical research, general practice, international factoring system and comparative study of domestic and foreign factoring business. In the third part, the author will point out the challenges and advantages of CD Bank in carrying out factoring business based on its current status. It will be the basis for the later analysis of feasibility. In the fourth part, the author will talk about the importance and feasibility of carrying out the factoring business in CD Bank, and put up the proposal of operations and risk control mechanism. Finally, a comprehensive summary and the related measures and recommendations are proposed to ensure the sustainable and healthy development of this newly adopted business.In the thesis, the author explored the feasibility and operations of carrying out factoring business in commercial banks similar to CD Bank. The exploration includes the basics knowledge, operations, risk precaution and development trends of factoring business, which also have been proposed as the innovations of this research and analysis.Along with the study in SWUFE and its EMBA program, the author analyzed and put forward some suggestions on the factoring business of CD Bank. Some of the suggested measures mentioned in this thesis are being executed. The author will be grateful to the thesis could be referred by some other banks. However, due to the limited knowledge of the author, there will inevitably be some errors and omissions in the contents. Please don’t hesitate to share your views and suggestions. Thanks a lot.