A Case Study On Credit Card Non-performing Asset Securitization Of China Merchants Bank

In recent years,consumer finance has developed rapidly in China,and the scale of retail loans for commercial banks has also set a new record.However,the non-performing loan ratio and non-performing loan amount of commercial banks have also increased at the same time.According to regulatory requirements,retail non-performing loans are mostly personal loans,which cannot be transferred in bulk.The innovative means of asset securitization can transfer commercial non-performing loans from commercial banks,which is a breakthrough for the banking industry.The successful issuance of retail non-performing assets ABS has opened up a channel for the open and batch disposal of non-performing assets that meets regulatory requirements.On May 26,2016,China Merchants Bank released “The first period of Hecui”,the world's first asset-backed securities product with a bad credit claim,which marked a restart of the suspended non-performing asset securitization since the financial crisis in 2008.It is also the first time that China used retail non-performing loans as asset securitization products.Therefore,through in-depth research and analysis of the “The first period of Hecui”,the non-performing asset-backed securities issued by China Merchants Bank,it is of great significance for other banks to commence similar business.This paper firstly introduces the principle and operation process of commercial bank's non-performing asset securitization from the theoretical overview of commercial bank's non-performing asset securitization;then introduces the background of the case and analyzes the transaction structure and operational process of “The first period of Hecui”.In the following chapter,combined with the case of “The first period of Hecui”,a detailed analysis is made in this case from four aspects: asset pool and cash flow,credit enhancement and rating,issue price and investor income,risk and follow-up management.By analyzing this paper,we conclude that the standard for asset pool screening of “The first period of Hecui” is strict,and the traditional way of credit enhancement is improved,the number of credit ratings is increased,and the measures of floating reward incentive mechanism are also set.It also shows that the product's pooled assets were uncollateralized,and there are also defects such as onefold credit enhancement and unreasonable incentive mechanism.Therefore,at the end of this paper,by summarizing the results of the case analysis,it is proposed that these shortcomings can be solved by smoothing cash flow,comprehensively using internal and external credit rating,and improving the floating reward incentive mechanism,and put following the advice of developing the similar interbank asset securitization business.The "The first period of Hecui" case selected in this paper is relatively new and representative,which helps to provide reference for the design of future non-performing asset-backed securities products.However,the selected cases are relatively simple,so we can not borrow much from this.and due to data limitations,the article has many shortcomings.