H Bank Trade Finance Risk Management Research

Thanks to the development of economic globalization, China's foreign trade has made great achievements since China joined the World Trade Organization (WTO). This also improves the international trade financing of commercial banks and boosts the international settlement amount. High yield, low risk, and quick effect, are the three major advantages of the trade financing operation. So the trade financing operation is viewed as a gold mine, and has become the focus of many commercial banks. The increasingly fierce competition in the banking business makes the international trade financing operation a key developmental direction of each commercial bank. To keep a place in the intense competition, all commercial bank have tried many innovative approaches in the international trade financing operation, from the financing of a single transaction to the financing of the whole supply chain and trading service. A wide range of product portfolios and trading portfolios are also developed. At the same time, along with the development of the international trade financing product, the risk of commercial banks in terms of international trade financing becomes more and more complex, and also more and more diversified. So, it is of great interest to study the risk management in the international trade financing operations of the commercial banks in our country. It is also important to explore precaution measures to prevent the risks. This thesis is divided into seven parts. The first part is introduction, and it mainly elaborates the background, purpose, and significance, of the research, and also the research status in this area. The second part is a summary of the relevant theories, such as theories about the international trade financing risk management and also theories about comprehensive risk management. The third part is an analysis about the risk management in the trading financing operation of H bank. We introduce the background of H bank, discuss the condition of the trade financing operation at H bank, and analyze the current risk management of H bank. The fourth part further explores the problems in the trade finance risk management process of H bank, and also the causes of these problems. The main problems in the trade financing risk management of H bank includes, inadequate understanding of trade financing risks, deficiency in the credit risk management system, and lack of high level risk management personels. We also analyze the external causes and internal causes of these problems. In the fifth Dart, we propose a plan to improve the trade financing risk management at H bank. We think that the improvements can be implemented from four aspects:using the more advanced comprehensive risk management concept, diversifying the marketing strategy, diversifying the risks of customers, and training more employees with knowledge and experience in trade financing. In the sixth part, we propose several measures to improve the credit risk management of trade financing at H bank. In the seventh part, we assess the effect the improvements to the trade financing risk management, and also concludes this thesis.