Case Study Of Bank Of China’s Investing And Lending Linkage

According to the 2018 Science and Technology Enterprise Entrepreneurship Outlook,88% of science and technology enterprises believe that China’s financing environment is very serious.Most of the capital sources of science and technology enterprises are venture capital and private equity,but other financing channels,such as bank loans,mergers and acquisitions,and government funding,are only account for 13%.Under the background of “mass entrepreneurship and innovation”,the government has actively introduced relevant policies to support science and technology enterprises.Since 2016,the development of the investment and loan linkage business has been written in the government report many times.The government encourages the banking industry to adopt the “Investing + Lending” model to support science and technology-based SMEs.This paper first describes the background of the investment and loan linkage business and summarizes the research on the financing of technology-based SMEs and linkage of investing and lending.Then it launched a general analysis of the investment and loan business,defined the concept of science and technology-based SMEs and linkage of investing and lending,and sorted out the main domestic and international models and cases of commercial banks’ investment and loan linkage business.Then,according to the development of China’s investment and loan business,the relevant policies of commercial banks and the status of pilot banks’ business were compiled.Subsequently,the first investment and loan linkage case of BOC after the introduction of the investing and lending linkage guidance--the investment and loan linkage business of BOC Beijing Branch,BOC International Investment Co.Ltd.and Xuntengzhike was analyzed.The case analysis mainly discusses four aspects of investment and loan linkage business model,risk control,effect evaluation and business issues.In terms of operational mode,Bank of China chose the internal linkage model.This paper analyzes the standards and reasons for BOC’s choice of partners and target customers,and points out that the main role of the group linkage model is to reduce information costs and enhance efficiency,and then analyze the feasible exit methods of BOC’s loan and equity.The second part of the risk analysis explores the operational risks of Xuntengzhike,the loan risk of BOC Beijing Branch,the risk of equity investment of BOC International and feasible risk control measures.In the third part is the impact of the investment and loan linkage business on the participants,which is explained from the micro perspective,and the profit expectations of the BOC Group are calculated.From the analysis,it was found that: among the three parties in the business,BOC was in a win-win situation in the shortterm.The Bank of China resumed the principal and interest on schedule,and the current equity investment account of BOC International remained profitable.In the half year after the loan linkage agreement,the company raised more funds,the new three board transactions are also active,and the company’s various operating indicators have remained relatively stable within one year.However,the analysis finds that the investment and loan linkage business has only had a positive impact on the short-term development of Xuntengzhike.From a long-term perspective,it still needs the enterprise to improve its various capabilities and the improvement of the market mechanism.At the same time,financial institutions also need incentives and government policy support to conduct business.There are still many risks in the target company,and BOC also has problems in the whole system of investment and loan linkage.Finally,this paper summarizes the case and proposes solutions and suggestions.The government should focus on establishing a credit risk compensation mechanism,improving the liquidity of the New Third Board market and promoting the science and technology board as soon as possible.BOC should improve the investment and loan linkage business system and take the lead in establishing a joint investment and loan information platform.In addition,the proposal also explored the model of “Internet + Linkage of Investment and Lending”,hoping to provide some reference value for the development of BOC and the entire banking industry.