The Model Analysis In L/C Financing Of Chinese Commercial Banks

As a common financing means of international trade, L/C financing can effectively solve the enterprises’ problems from international trade, such as the safety and efficiency problems, so that the enterprises’funds can reach the powerful chain of effects. In recent years, L/C financing business has become an important means for the Chinese commercial banks to change the profit model and business model. The development process of L/C financing has gone through from the traditional L/C financing to structured trade financing which mainly contains L/C financing mix products. The Chinese-owned commercial banks are actively working to learn and carry out structured trade finance.L/C financing is an influenced profitable and short turnover financing business. Every bank puts it in an important position. The traditional L/C financing products include L/C issuing with parts margin deposit or without deposit, TR loan, shipping guarantee, the package loan, discounting of L/C and forfeiting etc. Most of domestic commercial banks can now fully operate these L/C financing business, but on using a combination of L/C financing products, there is still a big gap between domestic banks and foreign ones. It can be said that the domestic banks’ L/C financing business is still at the traditional trade financing stage, foreign banks can skillfully use a combination of a variety of L/C financing products, the L/C financing business has developed to the stage of structured trade finance. From these structured trade finance products, foreign banks, can not only get a larger market share, but can also get more abundant intermediate business income.Based on combing China’s commercial banks’L/C financing model and describing the development, this article combines with practice, comparing the Chinese-owned commercial bank’s L/C financing programs with foreign commercial bank’s, draws some useful conclusions. The article further explores the problems in the domestic commercial banks operating L/C financing business. Finally, the article targeted recommends on how to better develop the state-owned commercial banks’L/C financing business.The article is composed of six chapters, the first chapter discusses the background and significance, as well as domestic and international research results on the L/C financing theory, it also introduces the structure and innovation of the article. The second chapter is the general analysis about domestic banks operating L/Cfinancing business. The basic concept financing models, operational processes, and the development process of L/C financing are introduced. The third chapter to the fifth compares the L/C financing’s design, benefits and costs, as well as the pros and cons of the program operated by between state-owned commercial banks and foreign commercial banks. Through comparative analysis of the case, the author summed up the specific problems of the state-owned commercial banks operating the L/C financing business. In order to solve these problems, the sixth chapter proposed optimizations on the state-owned commercial banks’L/C financing business, to help to meet the increasingly fierce competition, and promote the rapid development of L/C financing business in China.