Study On Credit Management Of State-owned Financing Platforms In A Bank

Fighting against the world financial crisis of2008, Chinese government has not only rapidly carried out the RMB4000billions revitalization plan, but also activity taken part in a lot of unclear projections, especially railway, freeway and civic infrastructure, by State-owned Financing Platforms (SFPs). With the increase of investment, SFPs’loan is added at a very high speed, so that it has become an important part of the bank’s credit assets since2008.Increase of SFPs’loan is closely related to Chinese government’s fiscal and tax systems, the mode of economy growth and government public service function of china. Today, SFPs actually provide much social and economical public service that should be done by government, so they could be regarded as part of the government to some degree. In fact, SFPs play a special role to some degree and their debt should be regarded as the government’s. On the other hand, a lot of projections SFPs invested are non-profitable, and SFPs must depend on the government to pay off the debt.Too many debts will destroy economy security. The government has to face more and more SFPs’debts and balance its payment ability and fiscal pressure.Prudent management is necessary to commercial banks because SFPs’loan could become a potential credit risk to the bank. What’s more, government used to affect SFPs’management, which aggravated potential credit risks. So, since June2009, the government began to pay attention to SFPs’loan. The State Council, central bank, Banking Supervision Commission and National Audit Office have made many rules to order the banks to manage SFPs’loan.For economy security, we should research business behaviors of the banks, analyze quality of credit assets, find out possible problems and risk, and discuss related preventive measures. As some other banks did, A bank offered great loans to SFPs in2008and2009. So, we choose A bank as the research sample, analyze its business behavior over SFPs’loan according to its internal rules and demand of eternal supervision organization, try to find out how to reduce potential credit risk of the loan and have the bank come back to the basic principles of bank management:security, liquidity, profitability.Industrialization and urbanization are basic characters of China. Because government plays an important role in China, it is necessary for the banks to know how to utilize effectively government resources. So, based on research of SFPs’ loan of A bank,we wish to study possible developing tendencies of SFPs and how bank should use two kinds of resources, the government.and the bank, to ensure itself sustained, rapid and sound development.