A Study Of Intermediate Business Risks In Chinese Commercial Banks

From the aspect of the demands of domestic and international competition, the commercial banks should face the competition from the domestic market by the foreign banks, and should also " walk out " to beach the foreign market. One of the main battle fields where the business fights for is the intermediate business. It is estimated that the foreign capitals share the domestic market from 2% to 30% in ten years. The foreign banks have already succeeded in captured the market shares relying on the advantages such as talents, technology, products. And this tendency is unmanageable. And this will accelerates the development of the intermediate business greatly.With the development of financial innovation, the intermediate business will change from not using their own funs or not using their own funds directly to using the funds of the commercial banks, from accepting the customers' commissions to selling the bank credits, from not undertaking the risks to undertaking the risks. And will set foot in the high risky intermediate businesses. The implying risk of derivative service trade is great, and once these factors embody as realistic risks, then it will bring great loss to banks. So our commercial banks should fully realize the risks of the intermediate business and analyze the reasons why the risks of intermediate business emerges, thus take the effective measures to defend or prevent the risks.The People's Bank of China fully realize the risks that exist in the intermediate business, So the regulation, 《The Temporary Provisions of Commercial Banks for The Intermediate Business》 which issued in June of 2001, divides the entry system of the intermediate business into two categories according to their risks degree: examination and approval system and registration and recording system. And the examination and approval system is suitable for those intermediate business who has the asset-liabilities or will form the asset-liabilities and also those business who has great relation with the intermediate business. And the registration and recording system is suitable for those intermediate business who has not asset-liabilities or will not form the asset-liabilities. The government should supervise the commercial banks to set up, monitor and alsocontrol the mechanism of the intermediate business, and define the management responsibility, so that can promote the development of the intermediate business. However, the complexity of the risks often go beyond people' routine thought of them. During the process of the commercial banks intermediate business innovations, a lot of unexpected risks will arise. So the risk management of the intermediate business should be regarded as an important component of the banks' risk management and should be brought into the modern management system of commercial banks. All these require the commercial banks have a prefect financial regulatory system and also sound inside controlling mechanisms.However, comparing with the western countries, the operation of the commercial banks' intermediate business is deficient in the risk management system, financial supervision mode, informationization degree and quantization of the intermediate business's risk management. This will cause the great potential danger to the robustness of the intermediate business. So, the article attempts to proceed with the development trend of the intermediate business and use the western advanced experience of managing the commercial banks' risks and fully utilize the Bank of Basel's research results about the intermediate business and also combine the reality and do a lot of beneficial exploration to the risks of the intermediate business, and the article also tries to set up the controlling mode of the intermediate business and discuss the all kinds methods of controlling the risk of the intermediate business.