Research On Financing Of Preferred Stock In Commercial Bank

In recent years,China accelerate the process of financial reform,especially for the full liberalization of lending rate in 2013,make the bank deposit and lending spreads narrowed,Commercial banks expanded their loans through low price competition for achieving profit targets.According to the requirements of “ The Basel accord III ” and “ The Commercial Bank Capital Management Measures”,commercial banks need to further improve the capital level,due to the constraints of common stock issuance is varied and it may cause the conflict of control.So commercial banks finances through the issuance of preference stock for adapting the changes of the financial market,supplementing tier one capital for meeting the needs of bank deposit and loan business,capital structure,supervision and others.and mainly analyzes the influence of the issuing of preference stock on commercial banks from the capital adequacy ratio and capital,capital structure,capital cost,earnings per share of common stock,and rate of return.The study found that there still exists some problems and risks about the issuing of preference stock,and the author will give the corresponding countermeasures.This paper takes the commercial bank as the representative,and hackles the distribution status of preference stock,analyzing its influence.Through case analysis,it finds that: for bank financing,preference stock issuance will make the financing methods of commercial banks become more flexible,and meet the diversified needs of investment and financing party,which is beneficial to establish a new and direct financing channel for the company.It can ease financing pressure,can supplement tier one capital to meet capital regulatory requirements,can optimize the capital structure of the company,can reduce asset liability ratio and can maintain and enhance the debt ability of company for avoiding financial crisis and bankruptcy risk caused by debt financing.Meanwhile,it can also prevent the right to be decentralized,when the enterprise obtains the long-term fund.For investors,the characteristics of fixed income of preference stock make investors more flexible in choosing the asset allocation method.When banks issues preference stock,the regular dividend must be paid on a regular basis.The preference stock,will restore voting rights as soon as the dividend is defaulted,influencing the corporate ownership structure and even the controlling stake.For the capital market,on the one hand,preference stock can reduce the impact of financing on market liquidity,reducing market volatility.On the other hand,a stable dividend payout can convey positive signals to the market,reducing market information asymmetry.It is beneficial to the construction of multi-level capital market,and to promote the stable and healthy development of the securities market.It is also found that there are some problems in the preference stock issuance,it is recommended that the regulatory authorities should improve the legal system,reduce the threshold for issuance,reduce the tax burden to promote the widespread implementation of preferred stock in our country.