CITIC Bank Shenyang Branch Company Loan Classification Standards Research

Loan classification is a process during which the commercial banks classify the loans into different levels according to the degree of the risks. Loan classification can refine loan risks, determine the value of loans. It is a basic tool that the banks use to manage risks. China CITIC Bank Corporation Limited implements five-category loan classification by using the method of qualitative classification standards. This method has many problems in defining the classification standard, evaluating the risk factors, reaching the supervision standard and applying the classification results. Since it has influenced the quality of the risk management in CITIC, it is in a urgent need of improving.There are four chapters in this paper. Chapter one is an exordium. It introduces the background, significance of the selected topic and literature review, it also explains the research ideas and methods. Chapter two brings forward the loan classification's significance, types, the application and the lessons we can borrow from abroad and the native. Chapter three presents the implementation measures of the loan classification in CITIC Shenyang Branch and the analysis of the existing problems. In Chapter four, the author subdivides the five-category loan classification, designs and verifies a kind of score card with quantitative classification standards, and makes the expectation of the design plan.This paper centres on the subdivision of loans, which replaces the original five categories by twelve categories. The author describes the core defines and critical features, designs a loan classification score card which stresses on determining the standard of the loan classification scores. The users can mark the loans on the score card and classify them into twelve categories according to the score standard.Characteristic and innovation:(1) The subdivision of the loan classification, which divides the loans into twelve categories in stead of the original five categories. The loan levels after subdivision accord with the encourage direction of Basel Agreement and the requirements of Chinese supervisory authority. The subdivision resolves the problem that the loan classification cann't effectively distinguish the degree of the loan risks.(2) The formulation of the evaluation index system of the loan classification risk factors. Based on the regularization of the loan classification risk factors and the optimization of the evaluation index, it unifies the evaluation index standard in the loan classification operation, it also resolves the problem of the ill-considered loan classification risk factors.(3) The design of the score card, a loan classification tool with quantified standard. The classification tool determines the quantified standard and the degree that the risk characteristics influence the loan levels. It resolves the problem of the vague loan classification standard, the users can classify the loans into twelve categories effectively.