A Study On The Cooperation Of China 's Banks - A Perspective Of Trust Companies

In the context of staggering amount of money supply and commercial banks’ extension on credit policy in2009and2010, commercial banks transferred the trust assets from internal part to external part of the sheet in the way of trust, provided an important channel to expand the scale of credit and played a positive and effective role in weakening the financial crisis and impact on China’s economy. However, under the condition of the shift from moderately relaxed monetary policy to prudent one in2011, this kind of practice contains large operational and compliance risks itself, with weakening effect on national macro-economic control at the same time. Meanwhile, in the process of cooperation, there are still some problems,such as trust companies’ vulnerability, single product structure, and inadequate information disclosure.In the dual context of comprehensive management in the financial industry andthe financial crisis, whether commercial banks and trust companies should cooperate or not, and in which kind of way of cooperation, is a very practical question and it is worth exploring.This paper discussed the functions of commercial banks and trust companies, analyzed the necessity and feasibility for both sides, focusing on the perspective from the trust companies, on the basis of the relevant theory about comprehensive management in the financial industry. At the same time, it collected the development course of foreign trust companies and co-development course between foreign trust companies and commercial banks, provided a useful reference for Chinese trust industry in the way of cooperation between commercial banks and trust companies and proposed the appropriate development’s countermeasures and suggestion after a comprehensive and systematic analysis of the current status of such bank-trust cooperation in China.This paper is divided into four parts:The first section presented the relevant theory and significance of bank-trust cooperation; the second part draw the useful enlightenment to the bank-trust cooperation in developing countries by the analysis from the operating conditions of trust industry, bank-trust cooperation and characteristics of each in United States, Japan and Germany;The third part analyzed the current status of Chinese bank-trust cooperation, the difficulties faced by the trust companies and existing regulatory policies; The fourth section presented the objectives and the general idea of bank-trust cooperation in developing countries, and proposed specific recommendations.This paper argued that:As for the cooperation between trust companies and commercial banks, it should be standardized under the premise of facing its necessity and rationality,and it should be relaxed, not be stopped. Although someone has advocated the value of the trust industry should move towards political values, economic values and social values, so called "trinity" direction, regulators also introduced policies to restrict the trust’s "channel" class of business. However, the trust’s asset split management function is just one of the reasons for its rise in modern business. The development of trust industry is bound to take road of the commercialization,and to maximize their own interest as a source of power on their economic value. The cooperation between trust companies and commercial banks should explore the development mode according to the situation of our country, in the right market positioning, following the principle of steady progress. As for specific measures, we should establish the balanced bank-trust cooperation framework, strengthen trust companies’standing in cooperation; strengthen the construction to the based system of trust industry; develop financial products vigorously, improve the additional value and competitiveness of bank-trust cooperation’s product.