A Research On The Loan Risk Management For The Merger Project Of Hunan Valin Steel Company And FMG Company

With the implementation of the strategy of "going global", some enterprises are participating in multinational mergers and acquisition with bank’s credit support. Thus the banks are inevitably facing the risk when delivering loans for such mergers and acquisitions overseas. This thesis takes the loan applied by Valin Steel Company for acquiring shares of the FMG Company as a research proposal, and analyzes the risk management for this project.This thesis first clarifies the related research background, and presents a summary of the relevant literature. Then, the Valin Steel’s project for acquiring the shares of the FMG company is described, and the political and legal risks, economic and financial risks, business integration and operation risks, resource and technology risks are identified. Based on these risk points, this paper evaluates the above risks using the analytic hierarchy process and Fuzzy Synthetic Evaluation Model. The evaluation results indicate that the risk can be controlled except that the economic and financial risks, business integration and operation risks are relatively large, and the control of latent risks should be strengthened. Finally, the thesis has focused on fixing a rational loan modality and transactional structure to enhance loan risk management. The paper has also put forward relevant measures to be taken by China Eximbank Hunan Branch for assuring risk control such as internal compliance, post-loan management, risk signaling, risk transfer and corporate integration.Following the risk management procedures, the thesis has studied the risk management of the loan. Theoretically, this paper has effectively identified risk types and has designed relevant methods of risk control, which could be referred to by similar enterprises involving mergers and acquisitions as well as banks extending credits to multinational mergers and acquisitions. Practically, through risk identification, risk evaluation and risk control methods, the paper has provided significant decision-making support to China Eximbank Hunan Branch. It has also strengthened the core competitiveness of the company doing mergers and acquisitions.