Research On Debt To Equity Issues About Commercial Bank's Non-performing Assets

Banks and enterprises,the financial sectors and real entities are boomed and depressed together.At present high debts and high leverages of some enterprises in our country affected the creditor's money safe.Unable to recover the bank funds smoothly on the creditor's rights,people think of the way of converting creditors' rights into equities,to help Banks and enterprises to achieve the "win-win".But rational people have realized that debt-for-equity effect may be far from the best in the imagination.The benefits and risks of debt-for-equity coexist.As we use the methods of debt-for-equity,there is a risk of uncertainty.It may equal to delaying the time and may even cause new risks.The final availability of creditor's rights depends on the improvement of the economics and enterprise management.This paper discusses the debt-for-equity histories and experiences in detail,and analyse A corporate's macro industry status and micro financial valuation,and reveal the risk of debt-for-equity external environment factors and internal factors,by using the related theories of debt restructuring and corporate finance.We make a conclusion that the debt-to-equity swap was generally positive.Under the condition of existing realities,the design of debt-to-equity swap itself helps Banks and companies to improve the performance of enterprise management and operation,and reduces the loss of bank creditor's rights and Banks' defective rate on books.On the background of the reform of supply side,the debt-to-equity swap can provide an opportunity for the enterprise to achieve the purpose of reducing the capacity and corporate leverage,and alleviating high-quality corporate debt burden.Avoiding great loss in debt's big-discounted transfer for the bank,the debt-to-equity swap will be part of TouDai linkage business to strengthen the ability of investment banking business and improve bank's comprehensive management level at the same time.First,This paper introduces the theories of debt restructuring and the cost of capital,and reviews the historical experiences and the pros and cons of debt-for-equity.Secondly,through the analysis of shipbuilding industry's risk factors,company A's competitive strategy and financial valuation,this paper points out the possibility and inevitability of debt-for-equity operation for bad loans.Then,the measures,which support the implementation of the scheme of debt-to-equity swap and risk points in the operation,are discussed to point out that debt-for-equity withdrawal mechanism is the key to successful scheme,and the fruitful strategic adjustments and the improvements of the corporate governance structure are the guarantee of successful exit.Finally,the article summarizes the key points of debt-to-equity swap operations and gets two implications:one is that debt-for-equity transformation has a positive role to deal with non-performing loans' transfer after the analysis of full discretion to the appropriate enterprise,the second is that enterprise management adjustments must be carried out in the process of debt-for-equity operation to ensure the timely and effective exit after the debt into equity.