Research On The Legal Regulation Of Non-Performing Asset Securitization Of Commercial Banks In China

In 2016,the central bank restarted the non-performing asset securitization that has been suspended for nearly eight years.The development of non-performing asset securitization has played a significant role in defusing the banking system's financial risks,diversifying market investment varieties,revitalizing bank deposits,and improving the ability of commercial banks to serve the real economy.The securitization of non-performing assets is prone to cause socio-economic risks due to the low credit level of the underlying assets,unstable cash flow and asymmetric information,etc.Therefore,the risk regulation of NPL securitization has become the core problem for commercial banks.On the basis of these,this paper studies the problems existing in the risk regulation of non-performing asset securitization,and puts forward some suggestions for this problem.Non-performing asset securitization refers to the behavior of commercial Banks or some financial institutions that attempt to invest the non-performing assets in the financial market in order to deal with the non-performing assets by improving their liquidity and finding ways to improve their credit rating.The reasons for its occurrence are mainly divided into internal and external ones.As for external factors,it contains inadequate social credit system,poor credit environment,unclear property rights system and lack of effective financial supervision.In addition,inadequate laws and regulations may lead corporate operations in trouble.Internal reasons may include inadequate loan management systems of commercial banks and low operating efficiency of banks.Compared with traditional non-performing asset disposal methods,non-performing asset securitization also has clear advantages in dealing with non-performing assets through commercial banks.On the one hand,the bank's liquidity can be improved,and it is also conducive to the development of the bank itself.On the other hand,more assets are invested in the financial market,which is also conducive to increasing the activity of the financial market.So far,the development of non-performing asset securitization had established a preliminary solid legal foundation for its practice.More importantly,it is gradually becoming an increasing reasonable system.However,more attention still need to be paid to its relatively simple product structure and small amountof products at this stage.The mechanism of risk isolation is mainly achieved through the "Real Sales" of assets and the construction of special purpose vehicles(SPV),from a risk perspective.In practice,owing to incomplete "Real Sales" and SPV systems,it is easy to generate SPV's "entity merger" risk and its own bankruptcy risk.At the same time,credit risk,market risk,and liquidity risk are also prone to occur in the securitization process due to complex structure of securitization transactions,complicated transaction subject and the legal relationship.Imperfect legal systems and conflicts with existing laws and regulations also have magnified the risk of loopholes and legislative deficiencies in the law.In addition,the securitization of non-performing assets will also be subject to risks from ratings,double taxation,and accounting risks.Subsequently,it tries to describe the existing legal issues of non-performing securitization of commercial banks in China in detail: Barriers in the legal hierarchy of current laws and regulations,low market participation,deficiencies in the existing regulatory system,non-performing assets,the information disclosure system in securitization and its conflict with the right to financial privacy.Worldwide,the United States and Britain early had a wealth of practical experience on carrying out the practice of non-performing assets securitization.While Japan and South Korea have many similarities with China's current commercial banks in the background,underlying assets,initiator and product structure of NPL securitization.In terms of supervision mode,the unified supervision mode of supervision subject in Japan and South Korea is worthwhile to consider.In terms of risk prevention,the United Kingdom,the United States,Japan and South Korea all take the SPV governance structure and risk isolation system as the risk focus of non-performing asset securitization.Most of them set up specialized institutions to carry out non-performing asset securitization,and all of them strengthen the construction of information disclosure system,credit rating system and securities stratification system.By analyzing the non-performing asset securitization experience of commercial banks in other countries,the experience of risk regulation in line with China's national conditions can be learned,so as to provide reference for improving the risk regulation ofnon-performing asset securitization of commercial banks in China.Finally,the thesis proposes legal measures to regulate risks.The author personally suggested that China should speed up the legislation of asset securitization at the legislative level,and improve the relevant provisions of trust law,contract law and other relevant laws on the types,scope and asset transfer of non-performing assets.The trust SPV system still needs to be improved,and the legal nature,organizational structure and business scope of the SPV are clearly defined.As the legal standard for determining the "true sale",the risk from the originator is minimized through the authenticity of the intention expression,the consistency of the underlying asset transfer with the risk and equity transfer,the revocability of the transfer,and the fairness and rationality of the transfer price.At the same time,it is also necessary to improve the information disclosure system from the aspects of the disclosure of basic assets,especially the pledge of pooled assets and the prediction of cash recovery rate,which can be regulated by strengthening the supervision of securitization carriers,asset transfer institutions,issuance and trading of securities.In the construction of relevant supporting systems,the relevant credit rating system,tax and accounting system still need to be improved to comprehensively regulate the risks brought by the securitization of non-performing assets.