Research On The Whole Process Risk Management Of PPP Project Of Commercial Bank

Government and social capital cooperation model(PPP)is a partnership based on franchise right between government and private organizations,which is aimed to jointly develop and construct the city’s infrastructure projects or provide some public goods by signing the contract to stipulate the rights and obligations of each other.Government and the private sector settle a special purpose vehicle(SPV),which is fully responsible for the design, financing, construction and operation of the project,by signing franchise contracts.In the past, the local governments heavily relied on the traditional financing methods in the construction of infrastructure.These methods of financing is not sustainable.By providing credit implicit endorsement,the local government gains the risk in project’s planning, constructing,financing,operating of the market and so on.Under the background of economic’s new normal,economic development claims the revolution of traditional mode in project financing which is a new financing method based on risk return matching principle, participating by multiple fund.The promotion of PPP mode is not only the micro level of technological innovation, but also a macro level of system reform.The PPP method can continuously and effectively promote the revolution of investment and financing system, resolve local government debt risk and the transformation of public goods supply mechanism.In the future,PPP model is bound to replace the local financing platform to become the dominant financing method of infrastructure projects.It will rovide effective operating mechanism for private capital to enter the field of public facilities construction.Under this background,role of the bank in the project financing will be a fundamental change.This change will make bank face a series of major challenges in Legal status, financing object, source of repayment, risk management and role positioning and so on.The essence of PPP model is an organic cooperation alliance between government, enterprises and other organizations based on the project,which provides achievements of the win-win situation to government and social capital。From the perspective of the future, to resolve local debt reasonablly and orderly and to promote the new urbanization will lay a broad foundation for PPP.The gradual establishment of the modern financial system will provide a good Einrichtungsgarantie.From this point of view,PPP will be the largest investment opportunities in the whole society.It will become a long-term quality of assets that banks and other financial institutions competing for.PPP will have a profound impact on the bank’s infrastructure projects and the risk management of the whole line while brings a series of great opportunities for the development of the bank’s management.Based on this, this paper analyzes the characteristics of PPP project financing.By combining commercial bank service plan of PPP project, basing on the risk management of commercial banks,this paper divided the whole life cycle of the project into six stages: preparation, bidding, financing, construction, operation and maintenance and transfer.We will identify risk factors for each stage, and classify them into the traditional risk categories of banks.In PPP mode banks will participate in all aspects of the development of the project.It requires the bank must fully cover the whole life cycle of the project in risk management.The bank can participate in all kinds of contracts and terms and conditions at the beginning of the project, which significantly improves the information asymmetry。By distributing to different risks to the parties of the project using strict legal contracts,it significantly reduces the risk and return mismatch.Banks must improve the ability to fund actuarial, clear and control the risk of credit funds.In the post loan management, the project’s own cash flow will become the first source of repayment,while local financial revenue will only assume general responsibility for security.This shows that banks must do a good job in the project profitability analysis and solvency analysis, design a reasonable financing structure, in order to obtain profits from risk management.This paper puts forward some suggestions on the risk prevention of commercial banks.Taking Tai’an Ningyang County city water resources comprehensive utilization project as a case, this paper will analysis the service mode and risk management of commercial banks in the process of PPP project.I hope to promote the PPP project financing mode in the research and development in china.