Study On Disposal And Reinvigoration Mode Of Bad Assets Of China’s City Commercial Banks

As a special group of China’s banking industry, after18years ofdevelopment, China’s city commercial banks are rapidly developing tobecome an important member of our banking and financial system. It play animportant role in the promotion of economic development in urban areas,urban and financial services. According to " five Classification", CBRC2012commercial bank major regulatory indicators statement shows that: citycommercial banks bad assets in the fourth quarter was41.9billion￥, badassets ratio was0.81%．While bad assets ratio remains low level, but theabsolute amount of bad assets of commercial banks is still large. It will restrictthe development of city commercial banks. Therefore, the banks shouldstrengthen the city commercial banks’ disposal of bad assets and improve theefficiency of the disposal of bad assets, reduce the risk of city commercialbanks bad assets to enhance the competitiveness of city commercial bankindustry and operational viability. Financial regulators and city commercialbanks regard it as an important issue.This article studies the mode selection of city commercial banks badassets disposal and reinvigoration. First it shows the theory of citycommercial banks bad assets disposal and reinvigoration, Then the articlegives analysis of China’s city commercial banks bad assets disposalproblems of bad assets to reveal the characteristics and causes of urbancommercial banks’ bad assets. I conclude that the main reason caused by thelarge number of bad assets of commercial banks is the historical burdenexistence of bad assets, poor lending business and the lack of effective riskcontrol mechanism. In this article, I make an inventory of bad assets disposal comparison on the basis of domestic and foreign commercial banks. Throughcity commercial banks mode analysis about the disposal and reinvigoration ofbad assets, I can make a conclusion of our city commercial banksmaladaptive pattern of asset disposal and reinvigoration. Stage of citycommercial banks with bad assets can be allocated to local governments forreplacement of assets to achieve effective separation of good and bad assets,in cooperation with financial assets management companies to disposeassets, by their professional experience and the way to dispose bad assets,some big city commercial banks can set up professional asset managementcompanies to dispose bad assets. In addition, city commercial banks’ owninternal reorganization of resources should be carried out to optimize themeans of asset risking regulatory agencies, focused on a combination ofclassification and effectively performing assets disposal and city commercialbanks.The problem of City commercial banks’ bad assets disposal andreinvigoration has been considered by China’s financial regulators and citycommercial banks themselves seriously. The reason about City commercialbanks’ bad assets has both institutional factors different from the generalhistory of commercial banks, there are also common factors, such as: badassets due to mismanagement of lending business, risk oversight andcorporate governance bodies imperfect. City commercial banks’ bad assets istoo much, leading to increased risk of bank assets, hindering thedevelopment of city commercial banks, It is not conducive to servicecommercial banking services to the area. Therefore, we can replace badassets with the local government allocated assets, co-disposal with financialasset management companies, the formation of professional assetmanagement companies, internal reorganization of resources, the use ofmeans of classification and combining centralized disposal, disposal andrevitalize city commercial banks bad assets, which are conducive to the city commercial banks to improve asset quality and reduce the stock of badassets of banks and It has an important significance for city commercialbanks of China’s financial sector.