Research On Chengdu A Bank’s Risk Management Of Foreign Exchange Fund Business

At present, foreign exchange fund business in commercial banks mainly includes foreign exchange trading, money market operations, bond business, derivatives business, and so on. During the process of internationalization of China’s banking sector, commercial banks are increasingly involved in the global financial markets. Some small and medium sized commercial banks have even begun to set up branches abroad for the sake of enriching their commercial products, in which foreign exchange fund is one of the main business, thus a sound risk management system for foreign exchange determines the width and depth of commercial banks’development.Chengdu, as the political, economic and cultural center of the southwest China, riches in financial resources. Following with the holding of Fortune Global Forum, the world Chinese Entrepreneurs Convention, its external influence continues to expand, the domestic and foreign enterprises have settled here, forming a rich financial resources. Thus competition of banks here is intense and severe, especially in the area of foreign exchange. Under the background of interest rate marketization, banks are making efforts to improve their own business ratio among the whole banks profits. As an important pillar for the future development in commercial banks’intermediate business, the foreign exchange funds are highly valued by the banks management.A Bank in Chengdu is a local corporate bank, whose registered capital ranks the forefront among similar banks. Based on the RMB business institutions, International Department which offering foreign exchange business was set up since2011. Thus, its formed a good situation of coordinated development of the foreign currency business. Along with the international business department settings, A bank is meeting a progressive development of foreign exchange business. In order to meet the need of trade financing and improve business revenue, A bank gradually carries out the foreign exchange fund business with the place settings and personnel agencies. The fund itself is qualified with a high-liquidity and high-risk, while foreign exchange fund performance much more prominent, and how to enhance its safety and efficiency has arouse the management’s great attention. Foreign exchange fund business brought huge profits for the bank A, but also made A bank face enormous risks. In the near future, commercial banks compete in foreign exchange business largely in their risk management capabilities. A bank has not yet to establish a well risk management mechanism. Therefore, it is urgent for A bank to improve its risk management capability and innovation in foreign exchange business.This article does not list a lot of data, but concentrating on key breakthrough, unifying the qualitative analysis and comparison. On the one hand, the paper draw a lesson from risk management at home and abroad, especially the advanced ideas a bout foreign exchange risk management.On the other hand,the paper referrer to some excellent domestic banks’ practices. On that basis, this article makes a comprehensive, systematic and in-depth research on the risk management innovation of A bank’s foreign exchange fund, by means of comparative analysis, case analysis as well as qualitative analysis. Finally it puts forward some practical measures, on the basis of taking examples from international advanced risk management ideas and practices.According to a certain logical relationship,this paper establishes the overall framework. Specifically, this article is divided into four parts. The first part is introduction, which make a comprehensive analysis of the research purpose, main contents, the methods used in the study as well as the research statue of the theories and practices in home and aboard.The second part defines the concepts, its empirical analysis provides essential support for the following, which mainly include foreign exchange business, foreign exchange business risk management and innovation as well as its relevant theories. This part tries to achieve a appropriate level of detail analysis, focuses on key points, but not concentrate on a wide coverage. The third part emphasizes the main problems that lie in risk management of foreign exchange fund business, and further analyses the necessity and urgency of the innovation of risk management in foreign exchange business for A bank. Here are the main problems in A bank at present,firstly, the bank did not incorporate the business of the foreign exchange funds into the bank financial risk management system. Secondly, specialized rules and regulations for the foreign exchange business of risk management have not been established,alternatively system is not well established. Thirdly, the construction of information system for market risk management lags, which also lack of strong support. Fourthly, lack of market risk management personnel restrict the comprehensive, in-depth development of risk management work. Fifthly, do not make assessment and analysis on the exchange rate risk’ characteristics and its level. What’s more, quota management business of the risk monitor is not perfectly settled. The last one, monitoring of the exchange rate risk is in vacuum management, risk supervision is backward, which can not provide guarantee and sustainable development for exchange fund business.The fourth part puts forward a series of operational suggestions for A bank on risk management innovation of foreign exchange fund business. Based on the A bank foreign exchange business development scale and stage of its development, as the author suggest,its better to establish a preference index system of foreign exchange funds risk management as soon as possible, cultivate and promote the risk management culture, create an efficient risk management team. Meanwhile, Continue to improve the risk management framework, formulate and implement a comprehensive risk management strategy, in order to realize the reengineering process of foreign exchange capital that based on the. modern risk management theory.