Loan risk classification refers to the process that commercial banks classify loans into different grades according to the degree of risk, and its essence is to judge the possibility that debtors can repay the loan principal and interest in full and on time. So what are the strategies of credit risk management? Now let's go and have a look! Welcome to read! I hope this article is helpful to everyone!
Credit risk management refers to rating, classifying, reporting and managing risks through risk identification, measurement, monitoring and control, so as to maintain the balanced development of risks and benefits and improve the economic benefits of loans. Credit risk management is a comprehensive and serialized work, which runs through the whole credit business process, from credit analysis before lending, review and control during lending, monitoring and management after lending, to safe recovery of loans.
Credit activity is the use of funds by commercial banks. In this process, commercial banks can take corresponding measures to manage risks according to different situations. Avoidance, transfer, dispersion and retention are the basic strategies of credit risk management of commercial banks.
First, avoid credit risk.
Fundamentally speaking, credit activity is an active behavior of commercial banks. In order to ensure the safety of credit assets, commercial banks should first take the initiative to avoid those risks that should not be borne.
(A) adhere to the principle of prudence
As a financial intermediary with extensive influence on society, banks should always adhere to the principle of prudence in their management. Banks are different from ordinary enterprises. Ordinary enterprises can choose low-risk and low-return investment activities or high-risk and high-return investment activities according to their different risk preferences. Banks should always exist as a low-risk preference, pursuing a reasonable return under tolerable risks, rather than a high return under high risks, which is the basic requirement for commercial banks to choose risks. On the other hand, the bank's credit activities only charge loan interest equivalent to the average social income, which does not allow it to bear excessive risks.
(2) Scientific evaluation and review.
In order to avoid credit risk in time, it is necessary to make a thorough investigation of the borrowing enterprises, objectively evaluate the credit of the borrowing enterprises, strictly examine the loan projects, and then choose those projects that meet their own risk requirements according to their own risks, and give up those that do not meet their own risk requirements. In short, the avoidance of credit risk means that commercial banks can control risks through scientific means according to their own risk preference characteristics. All this should be based on the scientific evaluation of credit risk. We objectively evaluate credit risk by rating credit customers, verifying the maximum risk limit and credit line, and refining the audit format of various credit businesses. Therefore, the process of credit risk avoidance is essentially a process of credit rating and unified credit granting to customers and evaluation and audit of projects.
Second, the transfer of credit risk.
When a bank issues a loan to an enterprise, it bears the credit risk that the enterprise cannot repay the principal and interest on time. In this case, on the one hand, banks should avoid risks as much as possible, on the other hand, they should pass on risks in time. Credit risk transfer refers to a risk control method that banks transfer their credit risk to a third party by way of guarantee while bearing the credit risk of borrowing enterprises, which is divided into the following types:
(1) Transfer of guarantee
Guarantee transfer means that the bank transfers the credit risk of the borrowing enterprise that should be borne by itself to the guarantor by handling the guarantee, but while transferring the credit risk of the borrowing enterprise, the bank also bears the credit risk of the guarantor. Therefore, the effect of guarantee transfer risk depends on the guarantor's credit. If the guarantor's credit level is poor, the guarantee is useless. Therefore, commercial banks generally require that the guarantor's credit standing is obviously superior to that of the guaranteed, and the guarantor must meet two conditions: first, the guarantor must have assets sufficient to compensate the principal and interest of the loan or other credit funds, so the guaranteed credit line must be lower than the amount of guaranteed assets that the guarantor can provide; Second, the guarantor must have the autonomy to handle his own property independently, for example, government agencies cannot act as guarantors.
According to the above requirements, in order to ensure that the guarantor can fulfill his guarantee obligations, the bank must strictly examine the guarantor, and the extension of credit business such as secured loans must be agreed by the guarantor, the borrower and the bank, and a new guarantee contract must be signed or a new guarantor must be found. The extension period changes the term of the loan contract, causes the change of the loan contract, and prolongs the legal liability of the guarantor, which can only take effect with the consent of the guarantor.
The guarantee transfer of credit risk also includes mortgage transfer, which is divided into third-party property mortgage and borrower's own property mortgage. In the case of third-party property mortgage, the credit risk faced by the bank is passed on to the mortgagor; In the case of mortgage with the borrower's own property, although the credit risk faced by the bank is not passed on to the third party, the loss of credit assets can be effectively controlled through mortgage to achieve the purpose of reducing credit risk.
(2) Insurance transfer
Insurance transfer, that is, by handling insurance, transfers the consequences of financial losses suffered by the insured to the insurer. Insurance is an effective way for people to cope with risks. It can provide economic compensation in time after people are hurt, but not all risks can be covered. The customer credit risk faced by bank credit is a dynamic risk, that is, speculative risk, which has both the possibility of loss and the opportunity of profit, and this risk is not insurable. Bank credit risk is an insurable risk. On the one hand, the loan customer may not be able to repay the loan principal and interest on time, which makes the bank suffer certain losses. On the other hand, the customer may abide by the loan contract and repay the loan principal and interest on time, so that the bank can obtain certain interest income. It is precisely because of the speculative nature of bank loans that insurance companies do not insure ordinary bank loans. However, for special purposes, a country may implement insurance for limited bank loan activities, and export credit insurance is a typical example.
Export credit insurance covers the risk that importers refuse to pay for goods under collection, letters of credit, etc. Insurance companies are mostly export credit institutions subsidized by official state representatives or finance. At present, in China, China Export Credit Insurance Corporation can handle export credit insurance. Export credit insurance can effectively help commercial banks transfer credit risk to export enterprises and promote the export of production materials such as mechanical and electrical products.
Third, the dispersion of credit risk.
The dispersion of credit risk means that when banks conduct credit activities, they should pay attention to the dispersion of selecting regions, industries and customers, so as to avoid excessive concentration of credit funds, that is, "don't put all their eggs in one basket", so as to reduce the credit risk that banks may suffer and ensure the efficiency of bank credit assets as a whole. For bank credit business, we should not only concentrate funds to support key areas, industries and customers with good benefits and great development potential, but also pay attention to the fact that credit investment cannot be excessively concentrated in one or several key points, and we should pay attention to regional dispersion, industry dispersion and customer dispersion.
(a) Regional dispersion
Geographical dispersion means that when banks do credit business such as loans, they should invest their funds in enterprises in different regions to avoid bringing huge losses to banks due to the drastic changes in the economic situation in a certain region. Of course, this is mainly aimed at some relatively large banks operating across regions. In recent years, some large banks have set up overseas branches to provide credit services to overseas customers while improving their domestic institutional networks, to a certain extent, for the purpose of diversifying regional risks.
(B) Industry dispersion
Diversification of industries means that banks should consider the industry in which enterprises are located when lending to enterprises, and cannot invest most or even all of their funds in enterprises in one or a few industries. Although a bank may be familiar with one or several industries, it should also take into account the diversification of industries, because the market situation has changed greatly, and the industries we are familiar with and optimistic about are likely to undergo some sudden and unexpected changes. If the bank's funds are only invested in these industries, it will cause greater losses to the bank. In the past, the division of labor between banks in China was contrary to the risk management requirements of decentralized industries, which was not conducive to the safety of bank operations. Therefore, in recent years, China has accelerated the pace of financial system reform and encouraged cross-operation and competition among banks, which conforms to the principle of risk diversification.
(C) customer dispersion
In order to avoid the risk of excessive concentration of loans, financial authorities in various countries have stipulated the maximum amount that a bank can issue loans to the same borrower. For example, the board of directors of the Federal Reserve stipulates that a bank's loan to the same borrower shall not exceed 65,438+00% of the bank's shareholders' equity, and also stipulates the amount and specific use of the loan for the bank's senior staff. China's "Commercial Bank Law" also stipulates that a bank's loan to the same customer cannot exceed 10% of its capital balance. All these regulations are considered from the perspective of diversifying customer risks.
The dispersion of credit risk requires banks to dynamically monitor the distribution structure of credit regions, industries and customers and make timely adjustments, which is also called loan portfolio management. Passive loan portfolio management is only simple risk diversification, while active loan portfolio management is to maximize loan income on the basis of risk diversification, not simple risk diversification, but organic risk diversification.
Four, credit risk retention and compensation
Any risk management strategy will pay a price and cost. With the continuous development of financial innovation, a large number of new financial instruments emerge, risk control technology is developing day by day, people's ability to predict risks is enhanced, and their ability to grasp the frequency and degree of losses is improved. In order to meet the needs of competition under the new situation, banks actively seek more economical and reasonable risk treatment methods, so risk prevention technology has been paid attention to and popularized. The so-called credit risk retention, also known as self-bearing risk or self-retaining risk, refers to a way for banks to bear credit losses on their own. No risk management can fundamentally eliminate risks, and banks themselves must bear part of credit risks.
The bad debt reserve system is an effective means for banks to guard against risks. Banks in China began to implement the bad debt reserve system from 1988. At present, the provision for bad debts is based on the difference of 1% of the loan base at the beginning of each year, that is to say, the scale of retained risks of Chinese banks is basically controlled within the range of 1% of the loan balance.
There are two problems that must be considered in the bank's self-retained credit risk: first, the scale of the loan, the scope of the loss, whether it is partially or wholly damaged, and the possibility of loss; Second, how much money does the bank have to deal with bad debts and unexpected losses? In other words, what is the bank's bad debt reserve and the fund to cope with unexpected losses? These two points are the premise for banks to retain risks. The financial resources of banks limit their risk retention ability, and too much risk retention will affect the normal operation of banks.
Commercial banks are bound to bear certain risks in the process of carrying out credit business activities. Therefore, commercial banks need to appropriately arrange the scale of various credit businesses according to the probability of risks, so as to spread risks, ensure that the income of various businesses is enough to make up for the average risks in the general economic environment, and make their own liquidity enough to make up for the biggest risks in the general economic environment.
Avoidance, transfer, dispersion and retention of credit risk are the basic strategies of credit risk management. The first two are more focused on the management of specific loan risks, belonging to the category of micro-credit risk management. The latter two focus on the risk management of the overall credit business of commercial banks. Regardless of risk dispersion or risk retention, credit assets of a certain scale are the management objects, which belong to the category of macro-credit risk management.
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