On The Risk Prevention Of State-Owned Commercial Banks

With the quickening of the transition from the planned economy to socialist market— oriented economy and the commercialization of the banking system, the long — term accumulated finance risk became visible through the marketing system, and hence increasingly influences the normal finance activities. This is the reason why finance risks are being paid much more attention to Finance risk mainly appears in the form of banking risk and banking risk chiefly results from state-owned commercial banks. Therefore, the prevention of risks from commercial banks has become a common issue that is urgent and needs immediate solution.The thesis analyses the risk sources of state-owned commercial banks. To prevent bank risk, firstly external circumstances of state-owned commercial banks should be improved. Secondly, system should be reformed to turn state-owned banks into real commercial banks, this is the key to preventing risk. Thirdly, strengthening risk management and internal control of state-owned banks. Finally, structuring effective risk supervisory system.Based on above thoughts, the thesis is divided into eight parts as follows: Chapter 1 IntroductionElaborating the aim and significance of the study of this thesis; Summarizing the trends of the study at home and abroad; providing the thoughts and methods of this thesis. Chapter 2 Theoretical analysis of bank riskOn the basis of economics, the causes of bank risk can be concluded into four factors diversity of social division of labor and trade, natural disposition of main-body of economic activities, uncertainty of bank conditions and Specific characteristics of bank management.In marketing economy, bank management is not an isolated economic phenomenon, but an entomic synthetically reflection Behaviors of main-body of economy decided bank risk directly. Government behaviors have a great influence on central bank and commercial banks. Government may influence monetary policy, financial supervision and credit activities.A practical analysis shows that the central government directly intervenes in the state-owned banks through the medium of the central bank, and that the local governments interfere in the credit activities, the negative effete of intervene enlarges bank risk.As a main-body of economic activities, enterprises have a tight credit connection with the state-owned commercial banks. If enterprises fall into trouble, the credit relationship between banks and enterprises must be destroyed and as a result about bank risk, especially credit risk. If enterprises have different ownership, organization structure, investment behavior and financingform, they will have different effect on management activities. Risk of credit activities of banksis decided by above-mentioned aspects. Usually, if enterprises have definite ownership relation, its their organization structures are reasonable, their investment behaviors are perfect, and their financing structures are standard, chances are that the possibility of risk will be low. Chapter 3 Positive analysis of risk of state-owned commercial banksRisk of state-owned commercial banks is showed through the following aspects first, management efficiency decreases, and capacity of earning descends, second, assets quality of banks is low and has payment crisis, thirdly, capital adequacy ratio decreases uninterruptedly, and it reduces the ability of defending risk, fourthly, internal management is weak, and violating regulations is serious, fifthly, the staff quality is inferior, so there are some hidden perils existing in bank management.Risk of state-owned commercial banks not only has general properties of bank risk in marketing economy, but also have its own characteristics; firstly system is the source of risk, secondly risk has been formed for a long time, thirdly, risk concentrative, fourthly, risk remains under-cover, fifthly, risk and earnings are not corresponding, etc.The following aspects are the reasons of risk form: the operating mechanizing of state-owned commercial banks is defective the change of financing mechanism turns state-owned commercial banks into main undertakers of in vestment risk; low efficiency of state-owned enterprises causes the relationship between banks and enterprises to be abnormal the function of finance and banking is not divided clear; government intervenes reduce the ability of defining risk of banks; supervision of central bank is not effective; reform of social safeguard system is show; restraints law and regulations are not intense, economic moral principles are abnormal. Chapter 4 Requirement of external circumstancesPreventing risk is depended on improving external circumstances in degree. Transferring function of government is the guarantee of improving the relation-ship between government and state-owned commercial banks, and it is a prerequisite site for preventing bank risk. A key link is separating ownership function from managing economy function. Meanwhile, the relationship between central government and local government should be standard according to requirement of marketing economy.Deepening state-enterprises' s reform is a microcosmic base of preventing risk. First, state-enterprises should be reorganized strategically, second, modern enterprise system must be established quickly, third, enterprise debts must be handled.Quickening the tempo of financial market construction is an important way to disperse risk. First, it should be persisted in that direct finance is major and that indirect finance is minor. Second, breeding internal mechanism of financial market should be paid attention to. Third, development of capital market should be active and safe. Finally, market plan should be perfect, and market order should be standard.Perfecting social safeguard system is an essential condition to prevent bank risk. First,social safeguard system should be scientific > socialized and legalized second, stress should be put on social insurance in order to deal with the pre sent outstanding questions. Finally, unified planning and macroscopic management of social insurance should be strengthened.Enhancing construction of law and moral principles is an effective action to prevent risk. Chapter 5 System reform for preventing bank riskThe key to prevent bank risk lies in reforming system totally. We should reform ownership resources disposition, arrange ownership structure better, create scientific internal administrative structure, reform organization system according market principles, and put all-round business system in practice. In order to turn state-owned commercial banks into real commercial banks, it is the best choice to transform from state-owned commercial banks into limited-liability company.Establishing perfect and effective legal person administrative structure, we should make great efforts to explore following aspects-transferring government function, perfecting its management function; reforming ownership system of state-owned commercial banks, improving its ownership structure; establishing board of directors quickly, building mechanism of staff choice and encouragement; strengthening restraint effect on bank manager from market supervision and social supervision.Organization system reform includes rearranging external organization from and adjusting internal function department. The thought of reforming external form is perfecting structure frame of general-branch system, changing administrative style of setting up branches, and setting up branches in big middle cities. The thought of adjusting internal function department is according to taking customers as center and market as guide, non-business departments should be merged and reduced; asset-liability committee and risk management committee should be established; in creasing market department.With the quickening of the commercialization of the banking system, classified business system will not adapt to economic development, it must be replaced by all-round business system. Being restricted by actual conditions, this transit ion is a gradual process. Chapter 6 Risk management of state-owned commercial banksUsing the risk management experience of banks in marketing economy for reference, the thesis designs scientific procedure of risk management, it includes risk identification risk quantification > early-warning and risk control. Preventing risk is the core of risk management. State-owned hanks must establish mechanism of preventing risk themselves. First, mechanism of asset-liability management should be improved. Second, according to the principle of unified decision, different levels management and condition each other, scientific decision mechanism should b e established. Third in order to strengthen the ability of risk control, self-discipline mechanism should be perfect. Finally, credit management mechanism adapting market should be created.Chapter 7 Internal control of state-owned banks Internal control being characterized as risk control is the prerequisite and base to ensure bank operating safely and orderly. According to "core principles for effective banking supervision" produced by the Basle Committee On Banking Supervision, the thesis puts forward designing train of thought on internal control system for state-owned banks. It includes system position and requirements designing principles, objective and pattern of system , component part of system and different level function.At present there are some measures to strengthen internal control-raising understanding of tightening construction on internal control: transferring operating mechanism actively; consummating organization structure; strengthening risk prevention on new and developing business; strengthening internal audit; setting up perfect accounting risk control system; strengthening computer management; strengthening team construction of internal supervision. Chapter 8 Risk supervision system of state-owned banksRisk supervision system of commercial banks is the premise and guarantee to prevent risk and to control risk. The thesis sets up the pattern of risk supervision in china. According to the pattern, central bank and deposit insurance company should supervise state-owned commercial banks together. The thesis also constructs risk supervision system, it includes effective and authoritative organization system of supervision, scientific risk monitoring system, advanced and reliable information system, internal control system of state-owned banks and independent whole supervision system. Meanwhile, supporting system should be established. It includes perfect law system, risk monitor and early-warning system, grading system on bank risk.