Research On The Risk Of Market-oriented Debt-to-equity Conversion Of China's Commercial Banks

At present,China's macro economy is in a downturn,and the speed of economic development is slowing down.Some large state-owned enterprises are facing outstanding problems such as excessive leverage and overcapacity,which seriously hinder the development of enterprises.At the same time,as the owner of the corporate creditor's right,the commercial bank's debts that are not repayable by the enterprise will be represented by the bank's non-performing loans.In this context,in order to maintain the stability of the financial market and cooperate with supply-side reforms,commercial banks actively promote market-oriented debt-to-equity swaps.At present,the scale of China's five state-owned commercial banks' debt-to-equity swaps has broken trillions,and the large-scale debt-to-equity swaps have brought challenges to commercial banks' risk control.The article firstly sorts out the theory and experience of debt-to-equity swap at home and abroad,and elaborates on the operation mechanism,scheme design,pricing strategy,exit mechanism and operational risk of debt-to-equity swap.And compare the two rounds of debt-to-equity swaps from various aspects,highlighting the characteristics of the new round of debt-to-equity swaps.Secondly,it analyzes the current situation of China's commercial banks to carry out market-oriented debt-to-equity swaps,and discusses the main operating modes and risks of market-oriented debt-to-equity swaps.This paper takes the representative WISCO Group's market-oriented debt-to-equity swap as a case to analyze the risks faced by CCB in the implementation of debt-to-equity swaps.First,there are problems such as adverse selection,multi-interest gaming and information asymmetry in the process of debt-to-equity swap.It is likely that the bank will mistakenly implement debt-for-equity swaps.Second,CCB,as the largest commercial bank with the largest share of shares,may increase its capital use and increase its capital adequacy ratio,which in turn will affect the bank's profits.Third,due to the frequent internal management and operation problems of WISCO Group,the construction bank willface greater operational management risks after the debt-to-equity swap.Fourth,in the market-oriented debt-to-equity swap,commercial banks will eventually withdraw from the enterprise in the form of listing of target enterprise subsidiaries,but the economic activities such as mergers and acquisitions in China's capital market are not active,and the operational effects of the target enterprises will be very large in the future.Certainty,so the commercial bank's equity exit is doubtful.By analyzing the case of WISCO Group's debt-to-equity swap,the author finds that there are many risks in the actual operation of commercial banks' market-oriented debt-to-equity swaps.These risks will not only hinder the implementation of debt-to-equity swaps,but also affect the stability of the banking industry and even the financial market..Therefore,in response to these risks,this paper proposes risk response recommendations from the policy level and the commercial bank level,in order to promote the orderly development of market-oriented debt-to-equity swaps,and at the same time promote the transformation and upgrading of state-owned enterprises and the comprehensive development of commercial banks,and comprehensively deepen.Financial system reform.