The Research On Cross-regional Business Risk Management Of City Commercial Banks

With the development of the market economy, the city commercial banks have sped up thepace of cross-regional development in china and the risks the city commercial banks are facing inthe process of inter-regional expansion are also increasing, such as the risk of losing the resourceadvantages; the risk of being difficult to adapt to the local political and economic environment; therisks of increasing operating costs, elongating management chain, weak internal control and fiercecompetition, etc. Therefore, the practical significance to study the risk of inter-regionaldevelopment of city commercial banks is very clear.The cross-regional business of city commercial banks starts to be popular in recent years.There are only a few studies on cross-regional business risk management, and what’s more, moststudies are based on the head office of the city commercial banks, while few on the cross-regionalbranches. Therefore, this article will explore the risk management issues of city commercial banksin the cross-regional development from the perspective of city commercial branches. It expects toprovide reference for the city commercial banks to understand and manage the risks andsupplement for the risk research of city commercial banks.This paper, taking Hankou Bank as an example, studies the risks faced by the citycommercial banks in the cross-regional business and the regulatory strategies the city commercialbanks should take. The main contents of the paper are as follows:(1) An in-depth study of the status and risks the city commercial banks are facing in thecross-regional business. Pushed by the internal and external factors, the city commercial banks areexpanding powerfully and quickly and have make remarkable achievements. While at the sametime the city commercial banks are facing fierce competition and have to bear the special risksarising from the cross-regional business.(2) An analysis of the risks Hankou Bank is facing in the cross-regional business. The resultsshow that Hankou Bank has gone through smooth and successful development in theinter-regional business, but also are facing many problems and risks. First, the risk managementframework of Hankou Bank needs to be improved; second, the major risks Hankou Bank needs toprevent and manage in the process of cross-regional business are management risk, credit risk,operational risk, environmental risk.(3) Making risk management suggestions for Hankou Bank in the cross-regional business.The paper starts from the risk management status of Hankou Bank, focuses on the practicalproblems Hankou Bank needs to solve and makes such suggestions as optimizing the riskmanagement organizational structure in the cross-regional business, improving the riskmanagement system in the cross-regional business, improving the head office and branchescontrol model, and strengthening the management of credit risk, operational risk and other risks. Itexpects to benefit the risk management of the city commercial banks in the cross-regionalbusiness.