In the past two years, with the macroeconomic adjustment, some industries have encountered difficulties, and some regions have even formed regional systemic risks, which inevitably affected the trade financing business. So do you know how to practice and think about trade financing?
The origin of domestic trade financing business
In 1990s, the branches of Ping An Bank (formerly Shenzhen Development Bank, the same below) in South China replaced working capital loans with bill discount business to provide financial support for customers. On 200 1, Ping An Bank launched another important innovative product of trade financing-pledge credit of movable property and goods rights. This business breaks through the traditional credit guarantee mode and sets up dynamic mortgage/pledge with inventory movable property, allowing enterprises to redeem part of the mortgage/pledge for sale at any time on the premise of maintaining inventory liquidity, effectively solving the financing difficulties of a large number of small and medium-sized private enterprises. In 2003, Ping An Bank put forward the concept of "self-compensating trade financing" for the first time in the domestic banking industry, learned from international experience, and integrated trade financing products such as accounts receivable, prepayments and inventories through business process reengineering, and promoted them throughout the bank, laying the foundation for a series of trade financing products.
Self-compensating trade financing rating system creatively breaks the limitation of taking the asset strength or guarantee of the loan enterprise as the financing credit standard in the past, and pays attention to the trade background of the enterprise and the mode of logistics and capital flow control, thus deriving a set of new credit analysis and risk control technologies. Compared with traditional working capital loans, self-compensating trade financing has the following remarkable characteristics:
1. Self-compensation of repayment source
That is, through the design of operation mode, the sales income of credit enterprises will be automatically led back to the specific account of credit bank, and then the loan will be returned or used as a guarantee for credit return. The self-compensation of trade financing is reflected in the fact that the repayment of trade financing based on the real trade background will also be automatically paid off by the transaction income obtained after the transaction is completed.
2. Close the operation
In practice, commercial banks control the whole process from payment to recovery of funds through the structural design of capital flow, logistics and information flow, that is, guarantee or counter-guarantee credit funds, so as to achieve the purpose of risk mitigation.
3. Take post-loan operation as the core of risk control.
In other words, the evaluation weight of enterprise financial statements is relatively reduced. In the aspect of access control, it emphasizes the self-compensation and closed evaluation of trading mode, establishes a professional post-lending operation platform, and implements the whole process control after lending.
4. Specify the purpose of credit granting.
Based on self-compensation, process and inherent requirements, trade financing must be entrusted payment, that is, each offline payment corresponds to a clear trade background, so as to match information such as amount, time and counterparty. This is highly consistent with the spirit of "three methods and one guide" of the regulatory authorities.
For domestic commercial banks, this transformation not only creates a new blue ocean of business, but also provides a new technical means for commercial banks to improve asset quality based on real trade background and transaction process control. Therefore, this is a revolutionary breakthrough. The concept of self-compensation trade financing put forward by Ping An Bank has also become the theoretical guidance for domestic commercial banks to carry out trade financing business, which has influenced so far.
Theoretical basis of trade financing business
Trade financing business originated from small and medium-sized joint-stock commercial banks, which is the result of brutal competition in the financial industry. In the 1990s, with the full opening of the financial industry, the competition among banks became more and more fierce. China Industrial and Commercial Bank, China Bank and other four state-owned banks occupy a huge customer market by virtue of their inherent network and traditional advantages. Small and medium-sized banks like Ping An Bank are caught in an embarrassing situation of lacking core competitiveness and vague positioning because of their unequal status. It is this situation that forces small and medium-sized joint-stock commercial banks to turn their attention to the vast number of small and medium-sized enterprises and find a differentiated road suitable for their own development. Among them, Ping An Bank took the lead in proposing the strategic transformation of the company's business "for trade financing and small and medium-sized enterprises".
It should be said that the birth of domestic trade financing business is a systematic financing arrangement put forward by small and medium-sized commercial banks under the background of fierce horizontal competition, on the basis of in-depth analysis of the financing needs and transaction structure of small and medium-sized enterprises, with reference to the relevant provisions of the Basel Accord and international advanced experience. Therefore, domestic trade financing naturally has two foundations: domestic business practice and international advanced banking theory support.
Articles 192 and 193 of the Basel Accord (June 2004) respectively define commodity financing of SPE (special purpose entity) and financing of reserves, inventories and accounts receivable of general companies. Due to the different credit recipients, although there are subtle differences, the core is the financing arrangement based on the company's own trading behavior and trading structure. Articles 192 and 193 * * isomorphically form the concept of trade financing: trade financing refers to the financing based on inventory, advance payment and accounts receivable in commodity transactions by banks using structured short-term financing tools. For this kind of financing, the borrower has no substantial assets on the balance sheet except the income from commodity sales, so he has no independent repayment ability. The structural feature of this financing is to make up for the borrower's low credit rating. The risk of financing is mainly reflected in the self-compensation degree of financing and the skills of commercial banks in the structural design of transactions, rather than the borrower's own credit rating.
From the transaction chain of an enterprise, a complete transaction chain must include three elements: payment to the upstream, purchased raw materials and finished products, and sales revenue. Accordingly, the trade financing business around the transaction behavior of credit objects must also include three product categories: advance payment financing, inventory financing and accounts receivable financing, which is not only the inherent requirement of the trade financing business principle, but also determined by the actual needs of customers. On the other hand, understanding and mastering the complete transaction chain and structure of credit subjects will be more conducive to the formulation of credit plans and the prevention and control of operational risks of commercial banks. Therefore, trade financing business, including advance payment, inventory and accounts receivable, is also determined by inherent risk factors.
According to the difference of risk control system and the problem-oriented latitude of solutions, Ping An Bank divides the trade financing business into three products: inventory financing, prepayment financing and accounts receivable financing, thus establishing a complete trade financing product system. This classification method conforms to the relevant provisions and concepts of the Basel Accord, and corresponds to the three business groups of commercial banks mentioned in the product line correspondence table of the Basel Accord: export financing, trade financing and factoring. With the development of domestic trade financing business, this classification method is gradually recognized by most other commercial banks. At present, the business structure, department arrangement and function setting of most commercial banks' trade financing business basically refer to this classification scheme.
Business practice of trade financing
Under the guidance of trade financing business theory, Ping An Bank independently developed a risk assessment system for trade financing enterprises. By introducing risk control variables such as core enterprises, logistics supervision measures, capital flow guidance tools, information flow monitoring measures and tracking supervision measures, a series of trade financing products and business solutions have been developed to meet the capital needs of enterprises at different nodes in the trading chain such as advance receipt, inventory or accounts receivable.
Trade financing can be granted according to the rating of business entity or single debt rating. This feature is of special significance to the financing of small and medium-sized private enterprises. Small and medium-sized private enterprises are characterized by small scale, poor operating stability and untrue statements. This situation leads to its low credit status and bargaining power in banks, and it is very difficult to raise funds. Therefore, it is of special significance for banks to directly grasp the trade behavior and transaction information of enterprises and control the capital flow and logistics under trade, which can also effectively improve the convenience for such enterprises to obtain bank loans.
Once the trade financing business was launched, it was widely concerned by small and medium-sized private enterprises, banks, regulatory agencies and the media. The Financial Times published an article that year: Among all kinds of financial innovations aimed at the financing needs of small and medium-sized enterprises, the integrated trade financing business of SDB provides a new way of thinking. This financing mode stands on the whole height of industrial supply chain, conforms to industrial economy and provides financial services, which not only avoids the long-term troubles of small and medium-sized enterprises, but also extends the in-depth services of banks, and is unique in solving the financing problems of small and medium-sized enterprises, especially trade-oriented small and medium-sized enterprises. Corresponding to the media praise, Ping An Bank's trade financing business scale is increasing year by year, its customer base is constantly expanding, and its asset quality is excellent all the year round.
With the successful development of Ping An Bank's trade financing business, many peers in the industry have also smelled a "huge market". Since 2005, other joint-stock commercial banks and four state-owned banks have followed suit and quickly started to compete for trade financing business. Especially in the past two years, with the entry of a large number of local banks such as city commercial banks, they have become imitators. Trade financing business has become an important field for commercial banks and enterprises to expand their development space and enhance their competitiveness. Most domestic commercial banks have set up corresponding trade financing business departments and launched their own trade financing services.
Through in-depth observation on the trade financing business of representative domestic commercial banks such as Xingye, Everbright, Shanghai Pudong Development Bank, Guangfa and China Merchants Bank, and foreign commercial banks such as Standard Chartered and JPMorgan Chase, it is found that the trade financing business of these banks follows the definition of trade financing in the Basel Accord, and its business composition includes international and domestic trade financing, covering three links: advance payment, inventory and accounts receivable. Among them, Shanghai Pudong Development Bank and Guangfa Bank are particularly worth mentioning. The two banks have carried out business reconstruction and innovation on the basis of traditional trade and financial business theories. In addition to the trade finance business, Shanghai Pudong Development Bank also brought the cash management closely related to trade finance into the unified management of the trade finance management department; In addition to trade financing and cash management, the Global Transaction Service Department of Guangfa Bank, which is responsible for trade financing, also includes the management of asset custody business. The practice of these commercial banks further demonstrates the principle of trade financing, enriches the connotation of trade financing and promotes the further development of trade financing business.
It is worth mentioning that bills and other settlement tools are widely used in trade financing, and the development direction of loan and trade finance has been practiced from the beginning.
Trade financing business is carried out around the transaction link of credit subjects and must rely on transaction settlement. In practice, there are many kinds of trade settlement tools, besides cash, there are bills, letters of credit, collections and other settlement methods. As an innate trade settlement tool, bills are widely used in domestic trade financing, with the characteristics of low cost, clear reasons, strong liquidity and traceability. For credit subjects, the application of bills can significantly improve their credit degree in transactions and save some financial costs; For commercial banks, the origin and traceability of bills just meet the endogenous requirements of trade financing and are also conducive to the control of credit risk.
The use of on-balance-sheet and off-balance-sheet financing instruments has greatly facilitated customers' transactions and settlement, and is also conducive to reducing the capital occupation of commercial banks and effectively promoting the development of trade financing business.
Future development of trade financing business
For a long time, the main profit source of domestic commercial banks has been the deposit-loan spread; In the mode of operation, extensive and high capital occupation. However, in recent years, with the deepening of interest rate marketization and the improvement of regulatory standards, commercial banks have to consider intensive operation, with the goal of achieving business scale growth and profit increase on the basis of reducing capital occupation. Based on its self-compensation, process and product mix, trade financing is obviously superior to working capital loans in terms of profit level, risk control and capital occupation, and the difficulties faced by commercial banks have become opportunities for the great development of trade financing business. In addition, based on the real trade background, trade financing has really solved the financing difficulties of the majority of small and medium-sized private enterprises, which is completely in line with the overall tone of financial services to the real economy. In recent years, floating loan trade financing has begun to take shape. It can be predicted that this trend will be more obvious with the rapid advancement of interest rate marketization and the implementation of new regulatory standards. In the future, the domestic commercial banking industry will surely usher in another wave of great development of trade financing, and its breadth, depth and impact on the real economy will surpass the past.
The premise of the great development of trade financing business is to properly solve the current problems with forward-looking thinking and creative means. Especially in the economic downturn, some problems deserve our attention.
The first is the rigid constraint of capital. After the promulgation of Basel III, on the basis of overall consideration of Basel II and Basel III requirements, CBRC formally implemented the Capital Management Measures for Commercial Banks (Trial) from 20 13 to 1. The New Capital Accord improves the capital adequacy ratio of banks and redefines tier-one capital, so the most direct impact of the implementation of the New Capital Accord is that some commercial banks will face long-term capital pressure. Compared with general floating loans, trade financing business occupies less risky assets as a whole, but it is also affected by the hard capital constraints faced by commercial banks.
The second is information asymmetry. The self-compensation and process of trade financing require commercial banks to master the business flow and logistics information generated by trading links, which depend on the cooperation between credit subjects and third-party partners. However, due to the cooperation limitations of third-party partners and the opaque financial information of small and medium-sized enterprises, the information asymmetry between banks and enterprises has not been fundamentally solved. This information asymmetry, on the one hand, makes it impossible for banks to judge the market prospects of credit enterprises, on the other hand, it also makes it difficult for commercial banks to conduct accurate risk management.
Third, the legal environment needs to be further improved. With the domestic economy entering the stage of medium-speed development and the gradual deepening of economic restructuring, some hidden risks in the past began to appear due to economic fluctuations. The causes of risk events and the difficulties faced by commercial banks also highlighted the imperfection of laws and regulatory mechanisms related to domestic trade financing business and the lack of integrity of some enterprises. Among them, it is particularly prominent that there are certain risks in the confirmation of ownership of inventory business and the realization of collateral.
To solve the above difficulties in trade financing, on the one hand, the government and regulatory authorities need to improve the system and laws, and effectively solve the shortcomings and obstacles in the system and laws; More importantly, commercial banks should constantly innovate and reorganize their business according to market demand and relying on technological progress. Judging from the development trend of trade financing business, with the rapid development of internet technology, internet finance and industry consolidation, the trade financing business of commercial banks is bound to embark on the development direction of structure, big data and investment banking.
1, structural trend of risk mitigation and trading arrangement
From traditional bill financing and chattel pledge financing to "1+N" industrial chain financing relying on core enterprises, trade financing has always had certain structural characteristics in its development process. From the global experience, structured commodity trade financing refers to a financing method in which banks master the rights of goods and arrange funds through a series of structured designs such as commodity pledge, commercial paper, commodity supervision, delivery notice, commodity repurchase, capital flow management and futures hedging according to the specific financing needs of enterprises. Its core is the application of structured risk mitigation tools and the arrangement of structured capital transactions, which complement each other. (Financial Times: Actively use the futures market to carry out innovation in structured commodity trade financing business, Jacky Jiang)
Through the structural arrangement of trade financing, the threshold for enterprises to obtain bank credit can be effectively lowered, and risks can be transferred or dispersed. In the application of structural risk mitigation tools, banks can not only introduce professional insurance institutions, but also cooperate with futures companies to hedge commodities, thus establishing a new credit risk sharing mechanism. At the same time, we can actively promote securitization of credit assets formed by trade financing, selectively introduce cash flow cutting technology, and issue hierarchical asset securitization products supported by trade cash flow, supplemented by priority and secondary, through cooperation with securities, trusts, exchanges and other institutions, so as to spread the systemic risks faced by banks to different types of investment groups in the bond market.
From the structural point of view of capital transaction arrangement, traditional trade financing business mainly designs products according to customers' transaction behavior, but there are some shortcomings in the design of capital arrangement. In today's increasingly diversified financial innovation, through the structured arrangement of capital transactions, the role of commercial banks as transaction organizers and risk managers in the upstream and downstream transaction chains will be fully exerted, and the enterprises in the industrial chain will be gradually guided from simple transaction relations to winners of industrial interests by establishing risk buffer margin pools and industrial funds led by leading enterprises in the industry, so as to realize the long-term benign development of the enterprise ecosystem in the industrial chain with the support of bank credit.
2. Big data of information sources and applications.
Internet has not only changed people's lives, but also had a great and far-reaching impact on various financing activities. At present, the innovation of the financial industry and the Internet industry is still in the stage of financial internetization-the offline products, operations and sales are migrated to the Internet, but the value core "data" of the Internet has not been effectively utilized.
Based on the inherent requirements of self-compensation and process, trade financing has a stronger demand for enterprise information, and even needs the assistance of a third party to collect and control business flow and logistics information in the trade process. However, in the past, commercial banks only used data for process management, but failed to timely and accurately analyze the important information such as enterprise behavior and abnormal changes reflected behind the data.
The rapid development of e-commerce and the progress of Internet of Things technology have laid the foundation for big data in trade financing. Commercial banks can obtain trade data, logistics data, warehousing data, price data and other information from modern logistics information systems, ERP systems and Internet of Things through cooperation with core enterprises, logistics enterprises and electronic trading platforms, and establish a series of trade financing models based on big data by using tools such as machine learning and data mining. These models can not only be used to analyze customers' trading behavior and customize appropriate financial products and services, but also improve the internal process management level and risk management efficiency of commercial banks.
Information source and application of trade financing business Big data is based on data analysis and modeling of four-stream integration, and its essence is to model and simulate the trade behavior of enterprise groups (including trading behavior, transportation behavior, turnover behavior, production behavior, inventory behavior, etc.). Through the data output of the model, it can provide dynamic and real-time risk judgment and marketing decision support for commercial banks to operate trade financing.
3. Trade Finance Investment Bank
The basic attribute of a bank is financial intermediary, and the connotation of financial intermediary goes far beyond financial intermediary, including a series of intermediary businesses such as information intermediary and transaction intermediary. Traditional commercial banks mostly operate foreign exchange and commodity business in the role of capital intermediary, while investment banks play the role of information intermediary and transaction intermediary. With the increasingly obvious trend of financial mixed operation in China, various commercial banks have launched investment banking business, and trade financing has more investment banking foundation than other commercial banks because of its characteristics of commodity trading.
Take Goldman Sachs as an example: since 198 1, Goldman Sachs has bought J. Aron & since the company was founded, Goldman Sachs has been immersed in the field of commodity trade financing for more than 30 years. In 2009, Goldman Sachs made a profit of $5 billion in this field. Lloyd blankfein, the current chairman and CEO of Goldman Sachs, emphasized that commodity trade financing is "a core and strategic business" of the bank, and "commodity trade financing flows in the blood of Goldman Sachs". It is the successful investment banking business in the field of commodity trade financing that has enabled Goldman Sachs to rapidly develop from a small and medium-sized investment bank on Wall Street in the 1970s to the number one investment bank in the world today.
In China, the process of investment banking of trade financing has just begun. Traditional trade financing pays more attention to financing itself, and meeting the diversified needs of customers is mostly regarded as an additional service. Investment banking of trade financing means that under the current pattern of separate supervision in the financial field, commercial banks are embedded in the trade process of enterprises in the form of investment banks, providing trade matching and financing under trade, and directly participating in trade as a party in the trade chain. Trade financing investment banking business can also effectively combine commodity hedging financing, basis transaction matching, cross-border multi-currency trade, overseas expansion, trade syndicates and other services. On the one hand, it can effectively broaden the sources of bank credit funds and reduce the occupation of risky assets, on the other hand, it can increase the proportion of intermediary business income of banks, make the business model of banks more diversified and meet the differentiated financial needs of enterprises.
The investment banking operation of trade financing enables commercial banks to truly participate in and match the whole process of enterprise trade, which not only strengthens the grasp of the authenticity of trade background, but also truly realizes the integration of capital flow, logistics, business flow and information flow.
With the acquisition of Commodity Trade Finance Department of Standard Bank of London by ICBC, Natixis Commodity Department by GF Securities, BOCI Global Commodities, a subsidiary of China Bank specializing in commodity trade financing, and the cooperation between Ping An Group and futures to launch commodity financial services, China financial institutions have officially sounded the clarion call for trade financing to go to investment banks.
Trade financing is a systematic and structural financing arrangement provided by commercial banks for enterprises in the trade chain. Its premise is the real trade background, and its purpose is to support the smooth completion of the transaction with financing, thus invigorating the whole economy. Since its birth in the late 1990s, trade financing has experienced rapid development for more than ten years, which has solved the urgent financing needs of the majority of small and medium-sized enterprises with innovative means and prospered the market economy. This decade is also a process of continuous innovation and optimization of trade financing itself, and products and business models are constantly enriched. Today, with the adjustment of economic structure and the diversification of financial demand, the change of demand and the dilemma of development have prompted trade financing to be structured, big data-oriented, investment-oriented, and constantly innovative. At the same time, all innovations must be based on the real trade background, and the starting point is to better promote the development of trade. If so, trade financing will continue to play its powerful role in lubricating trade and promoting economic development.
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