The Discussion Of Credit Risk Management Involving Group Clients Of China’s Commercial Banks

The modern market economy with the characteristic of risk is mainly made up ofcurrency and credit resources. The financial system is the core of the economy. Thecommercial banks’ importance therefore brings the risk in the economy, and thereflects on the most important risk in the whole financial system—Credit Risk. Inrecent years, the group clients are highly developed. They are not only the sign of thelocal industrialization and core competence, but also the main target customers forthe banks. However,while bringing the banks great profits, there also exists creditrisk. Yin Guang Xia, Lan Tian and some other scandals from the corporate involvedso many creditor banks and a huge amount of capital, so did Hai Xin Group and DeZheng Group. The whole financial world in China was shocked. So the commercialbanks need to pay sufficient attention to the credit risk management of groupclients.On the whole, since turning into the new century especially after joining the WTO, thereform of the Chinese banking industry goes deeper and deeper and its credit riskawareness and management is improved dramatically. However, comparing to ourinternational banking peers, the unusual high loan concentration and raised creditrisk involving group clients have become more apparent.In this article, the author started by analyzing the characteristics and credit risk ofthe group clients，and detailed the reasons for credit risk,our current practice inregards to credit control, risk management in dealing with these large clients. Thenthe author brought in the current practice from our international commercialbanking peers with the same issue in mind and analyzed the difference in between. Inconclusion the author summarized what the local banks did well and what could belearned from the international peers and made valuable suggestions including thestrengthening credit management of our banks, the establishment of an informationsharing mechanism by supervisory authorities and the perfect legislation bygovernment.