Loan Risk Management Problems And Solutions Of CCB RH Subbranch

Loan is an essential business line to CCB RH Subbranch. Considering the environment of banking industry in China, loan risk consists mainly of credit risk and operational risk. The survival and competitiveness of a bank relies on its capability of loan risk management. Theoretically, the studies on risk management mainly focus on risk measurement. Risk management techniques are becoming more modeling. However, in practice, commercial banks in China are still struggling to survive loan risk, and enterprise risk management theory can provide guideline to the banks.Through detailed loan procedure and current loan operation analysis, combined with two loan case study in RH Sub-branch, comparing with the theoretical framework of risk management, the problems are found on risk selection, risk identification, risk measurement and risk coping strategies, such as an unstable credit portfolio, the incomprehensive client investigation, superficial post-loan management, inaccurate asset rating, and the problematically arrangement of risk mitigation. The reasons for these problems can be concluded to external and internal ones. The external reason is the information asymmetry. The internal reasons for the problems are defects on rules, regulations and human resource arrangement, and the absence of risk management culture and the lack of motivation to risk management contribute to the problems as well. Aiming at the problems, a few practical solutions as countermeasures are elaborated. The solutions are to adjust loan structure, to improve due diligence, to take post-loan management more seriously, to measure risk accurately, to arrange proper risk mitigation strategies, and to optimize internal control.