I. Overview of Credit Risk of Commercial Banks

The types of credit risk can generally be divided into market risk and non-market risk. Market risk mainly comes from the production and sales risk of the enterprise (borrower) (that is, the risk caused by the change of market conditions and production technology in the process of producing and selling goods by the borrower; Non-market risks mainly refer to natural risks and social risks. Natural risk refers to the risk that the borrower suffers economic losses due to natural factors and cannot repay the credit principal and interest; Social risk refers to the risk caused by the behavior of individuals or groups in society.

The prevention of credit risk of commercial banks is mainly the prevention of bad credit. There is a famous saying in ICBC's credit manual: "No matter how high the interest we charge, it is difficult to make up for the loss of credit principal!" In 2002, China fully implemented the five-level credit classification system, and classified bank credit assets into five categories according to the degree of credit risk: normal, concerned, secondary, suspicious and loss. Bad credit mainly refers to subprime, suspicious and loss-making credit. Bank credit risk refers to the possibility that the actual income results deviate from the expected income target due to various uncertain factors in the process of bank operation and management, and there is the possibility of asset loss. Credit risk refers to the possibility that the borrowing enterprise can't repay the credit principal and interest on time for various reasons, which makes the bank's funds suffer losses. Credit business occupies a considerable proportion in bank credit business, with the characteristics of high risk and outstanding income, and occupies an important position in the operation of the whole bank. Therefore, it is of great significance to study credit risk. Generally speaking, the credit risk of commercial banks has the following characteristics:

(1) objectivity

As long as there is credit activity, credit risk does not exist objectively with people's will as the transfer. To be exact, risk-free credit activities do not exist in real banking work.

conceal

The uncertainty loss of credit itself is likely to be covered up by its appearance because of its credit characteristics. Diffusibility. The loss of bank funds caused by credit risk not only affects the survival and development of the bank itself, but also causes a chain reaction.

(3) Controllability

It means that banks can identify and predict risks in advance, prevent them in the process and resolve them afterwards according to certain methods and systems.

Second, the main risks and countermeasures of commercial bank credit

I. Operational risks

1) the concept of operational risk: the fulfillment of the commitment to enter the market makes China's financial market more open to the outside world, and local commercial banks face more fierce competition, which puts higher demands on the risk management of commercial banks. However, the operational risks caused by the lack of property rights, internal control mechanism and improper process design of local commercial banks are increasingly prominent.

According to the definition given by the Basel Committee in paragraph of the agreement, operational risk refers to the risk of loss caused by imperfect or problematic internal procedures, personnel and systems or external events.

According to the causes of risks, operational risks can be subdivided into two categories. One is the risk of operation failure or mistake, including personnel risk, process risk and technical risk, and the other is the risk of operation strategy, which refers to the risk of loss caused by improper strategy when dealing with external events or external environment, such as politics, taxation, supervision, government, society and market competition. The former is mainly related to internal control efficiency or management quality, also known as internal risk, while the latter is mainly related to external events, also known as external events or external dependence risk.

2) Countermeasures and suggestions for operational risk management

According to the new agreement, there are three methods to solve operational risks: basic index method, standard method and internal model method. The core is to allocate capital according to different risk weights. For China's commercial banks, it is difficult to collect data on the operational risk of personal housing credit, and the business development time is short, so it is basically impossible to conduct statistics and information simulation. The unpredictability of operational risk is particularly prominent in China. Therefore, it is more realistic to focus on preventing operational risks from the following four aspects.

1. Strengthen process management

1 Check and sort out the existing processes to eliminate possible loopholes. At present, although all commercial banks in China have laws and regulations departments and risk management departments, there is no special operational risk management department, let alone the operational risk management department of personal housing credit. There are many loopholes in the loan contract and loan process, which will be seriously affected if they are not corrected as soon as possible.

For the development of business.

Conduct careful analysis and market research on newly developed products to avoid blind investment, ineffective investment and high-risk investment. At present, the product renewal of personal housing credit business is gradually accelerating, and various behaviors seize market share, making a lot of innovations in repayment methods, guarantee methods, handling methods and many other aspects. However, it is doubtful whether these innovations have undergone sufficient market research and strict operational risk review. It is understood that before the introduction of new personal housing credit products, China's commercial banks rarely conducted accurate data analysis and prediction, mainly relying on experience and subjective judgment of leaders, not only because the database was not established, but also because China's commercial banks did not pay attention to market research. Establishment and perfection of emergency measures. The loopholes and risks found should be avoided and corrected by reasonable means, and hasty means and overlord clauses should be avoided as far as possible. At present, China's commercial banks have not done enough in this regard, especially in the handling of early repayment. After understanding the possible losses caused by early repayment, banks took measures such as immediately collecting liquidated damages and restricting early repayment, which caused strong social repercussions because there were no corresponding provisions in the loan contract.

Second, standardize and strictly formulate business manuals.

Operators of individual housing loans should have detailed management manuals. At present, some commercial banks have similar management methods, operational norms and implementation rules, but they are far from enough. A complete business manual is a necessary condition for grass-roots personnel to carry out standardized operation. In quite a few cases, the operational risk comes from the operator's unfamiliarity with the business. Such an operation manual must be as detailed as possible, and every possible specific situation should be reasonably explained and handled. The formulation of the manual should pay special attention to the design and handling of links that are prone to operational risks.

Establishment, management and maintenance of database

At present, some commercial banks have attached importance to the establishment, management and maintenance of databases, and started to establish their own personal housing credit databases. It should be pointed out that China's commercial banks have not realized that a good database can play a good role in promoting business development and guiding operational risk prevention. The personal housing credit database is not only

The database of personal information should also include data information such as advance payment, default risk and operational risk. Without these comprehensive data and information, it is impossible to comprehensively analyze and understand the risks faced by individuals and housing loans through mathematical models, and it is impossible to finally formulate effective policies. A good way to prevent the operation risk of fake mortgage is to establish a database to prevent the occurrence of fake mortgage, collect a large number of cases for statistical analysis, and extract highly relevant factors, so as to prevent fake mortgage in specific operations. Unfortunately, although China's commercial banks have encountered a large number of fake mortgages, a similar database has never been established. Until now, the only way to prevent the risk of fake loans is only through the empirical judgment of credit personnel on developers' static statements and project conditions.

Fourth, strengthen personnel management and optimize risk management positions.

The operators of personal housing credit business are obviously different from those of corporate credit business. They are not only responsible for the investigation and approval of the project, but also for the investigation, approval and formalities of the borrower, or they may only be responsible for one of them. Therefore, the management of operators is the most important and difficult part to prevent operational risks. Empirical data show that once bank employees participate, operational risks will bring huge economic losses. Without excellent staffing and scientific incentive mechanism, no matter how perfect the management framework is. Judging from the requirements of market development, the development of commercial banks is a process of constantly seeking a balance between risks and opportunities. Therefore, the establishment of "risk manager system" within the risk management system should be defined as taking benefit as the center, taking risk control and prevention as its own responsibility, and controlling risks at a low level in the credit review and inspection and the management of non-performing loans.

Second, the guarantee risk

1) guarantee risk

Credit guarantee is only a necessary condition for opening a letter of credit, not a sufficient condition for opening a letter of credit. At present, commercial banks still have a wrong understanding of credit guarantee, that is, they attach too much importance to the role of credit guarantee and think that credit can be issued as long as there is credit guarantee. Credit guarantee only disperses the credit risk and provides a compensation function, but it can't change the borrower's credit status and guarantee the full repayment of credit, so it can't fundamentally eliminate the credit risk. There is a lack of standards to judge the assessment qualification of collateral assessment agencies and the accuracy of appraisal conclusions. There are no clear requirements on whether the bank or borrower should hire an evaluation agency, what qualifications to hire, how to evaluate the credit status of the evaluation agency, and how to judge whether the evaluation conclusion of the evaluation agency is accurate. The actual situation is that the appraisal institutions are basically hired by borrowers to pay the appraisal fees. The appraisal agencies hired often consider the requirements of borrowers and overestimate the value of collateral. As long as the bank sees the appraisal report of the appraisal institution, it will recognize it, resulting in the overvaluation of most collateral. When the bank disposes of the collateral, either the collateral is valuable but unusable, or the liquidation value is far below the book value. In addition, there is no standard to judge the liquidity of collateral. In this way, it is impossible to judge whether the collateral is accepted by the market and to what extent.

2) Countermeasures and suggestions for guarantee risk management

1) Banks must improve the guarantor's guarantee system, strengthen the risk review of the guarantor, and make an in-depth analysis of its solvency: First, from the perspective of a single guarantor, evaluate the guarantor's guarantee ability, whether its financial situation can bear the number of external guarantees, and whether the total amount of external guarantees is within a reasonable proportion to its tangible net assets; Secondly, from the perspective of risk control, the guarantor of mutual insurance is regarded as a group of borrowers, and its credit concentration is audited to prevent excessive concentration of risks caused by insufficient guarantee; The third is to set the guarantee amount of credit enterprises and strictly limit the credit access of excess enterprises. Strengthen the analysis of the financial strength of the guarantor. When analyzing the financial strength of the guarantor, we should first analyze and master the financial status, cash flow, credit rating and contingent liabilities of the guarantor. Secondly, through the analysis of this information, it is necessary to judge whether the guarantor has the ability to fulfill his obligations. Key points of analysis: first, the contingent liabilities of the guarantor, especially the quantity and amount currently provided by the guarantor; Second, whether the total amount of external guarantee and the tangible net assets of the guarantor are within a reasonable proportion.

2) Strengthen the analysis of collateral. Collateral and pledge should be evaluated according to the principle of marking the market day by day. For collateral, we should consider the realizability and future realization value of collateral; For stocks, shares and charging rights, we should consider the influence of company situation and market changes, the future price changes of stocks, and the uncertainty of charging rights of schools and highways in order to effectively protect the creditor's rights of banks.

3) Investigate the qualifications and reputation of the appraisal institution and appraisers, including: whether there is any capital or other interest relationship between the appraisal institution and the borrower; The relationship between the evaluation institution and the borrower or the internal personnel of the bank; Whether the evaluation method adopted by the evaluation agency is applicable to the evaluation project and whether the previous evaluation conclusions of the evaluation agency are in line with the actual situation.

4) Standardize credit guarantee institutions. First, the guarantee company should be managed as a credit customer, and its guarantee amount should be determined through unified credit granting. At the same time, when granting credit, explore the establishment of a credit evaluation and credit system that conforms to the actual operation and management of the guarantee company. Second, carefully examine whether the guarantee amount disclosed by the guarantee company is comprehensive, whether the guarantee amount exceeds a certain multiple of the registered capital of the guarantee company, and whether the risk compensation mechanism is sound. Third, pay attention to prevent the risks arising from the joint fraud of banks by borrowers and guarantee companies, and investigate whether the counter-guarantee measures set by guarantee institutions are complete. For the evaluation report of the guaranteed enterprise issued by the guarantee institution, the bank also needs to send someone to investigate the borrowing enterprise.

Third, moral hazard.

1) The concept of moral hazard

Moral hazard refers to the possibility that the party with information advantage may take actions against others in order to maximize its own interests and encroach on others' interests after the client signs a contract with the agent, thus causing others to suffer losses due to information asymmetry. There is a multi-level and multi-faceted principal-agent relationship in the operation and management of commercial banks, and the moral hazard caused by information asymmetry inevitably arises and exists objectively in the operation of commercial banks. The main profit source of China's commercial banks is still credit business, and the moral hazard of credit business has also become a major hidden danger for commercial banks in recent years.

The research focus of risk prevention.

2) The level of moral hazard and its manifestations in the credit process of China's state-owned commercial banks.

According to the management system and operation flow of credit business of commercial banks, moral hazard mainly exists in the following three levels and is listed in detail.

Now:

Moral hazard in the decision-making level of commercial banks' credit business: At present, the credit decision-making level of commercial banks is mainly the leaders of banks at all levels and the credit approval personnel. Under the current property rights system of China's commercial banks, most credit decision-makers do not have property rights that are compatible with their functions and powers. In fact, they don't have enough economic ability to be responsible for the decision-making results, or they only bear negligible responsibilities. Moreover, under the current internal management mechanism of China's commercial banks, the unequal responsibilities and rights of decision-makers to the risks and benefits of credit creation are the fundamental reasons for the moral hazard of decision-makers, which are embodied in the non-marketization of decision-making behavior, the softening of binding force on senior management and illegal behavior.

Moral hazard of the management of commercial banks: the management of commercial banks mainly refers to the credit business managers who manage banks at all levels. The moral hazard of decision-makers increases the moral hazard of management, such as expressing opinions instead of proceeding from reality but "catering to the upper meaning", short-term interests, different forms of ultra vires operation when the binding force of decision-makers on management softens, insensitivity or even acquiescence to violations at lower levels, off-balance sheet operation, manipulation of accounting statements, artificial adjustment of statistical data, good news but not bad news, and so on.

Moral hazard in the management of commercial banks: the management of commercial banks refers to the direct managers of credit business. They are information collectors and the richest level of micro-information. Because they have the largest micro-information, when the supervision of management is not in place, they become the highest frequency level of moral hazard in commercial banks. For example, staff use system loopholes, high-quality personnel use computers to commit crimes, and credit and non-performing assets managers delete unfavorable information or provide false information to mislead management.

3) Countermeasures to prevent moral hazard in the credit business of commercial banks in China.

Due to the complex causes and many influencing factors of moral hazard in the credit business of commercial banks in China, it is necessary to comprehensively prevent moral hazard from internal and external factors, systems, people and all levels.

First of all, establish a modern enterprise system with clear property rights, clear rights and responsibilities, separation of government from enterprises and scientific management. It should be said that domestic commercial banks have made great progress in establishing modern enterprise system and improving corporate governance structure. However, as the main body of China's commercial banks, state-owned commercial banks have not completely got rid of the situation of separating government from enterprises. The role of shareholders in small and medium-sized joint-stock commercial banks is still limited, and it is difficult to effectively solve problems such as unclear property rights and insider control. The shareholders' meeting and internal supervision system of commercial banks failed to effectively restrict decision-making and senior management. It is necessary to establish a management system in which the decision-makers of commercial banks are responsible for the bank's operating results with their own rights and interests, and the operators are directly responsible for the economic failure, so as to achieve satisfactory results in controlling the moral hazard of commercial banks' credit business.

Secondly, further improve the internal control system of commercial banks, and change the risk management mode of decentralized operation of commercial banks in China into process management and system management. According to the daily management behavior of commercial banks, risk control is divided into business process risk control and management process risk control for separate research and design. Under the established organizational structure, strengthen the planning, organization, coordination and control of various departments, effectively control the risks in various management work and workflow, and give full play to the role of internal control system in preventing moral hazard.

Thirdly, establishing adequate information disclosure system and strengthening external supervision can effectively reduce the internal moral hazard of commercial banks. Give full play to the role of CBRC and banking associations, such as establishing a database of financial practitioners, fully disclosing information that is not suitable for senior management positions of commercial banks, and improving the ability of commercial banks to obtain human resources information; All commercial banks are required to improve the transparency of punishment for those responsible for illegal operations. At the same time, it is also necessary to clarify the responsibilities of the regulatory authorities and establish a system of accountability to ensure the timely and effective external supervision. Therefore, the appointment of senior managers by commercial banks is not limited to the qualification examination of banking supervision departments, but from the perspective of their own risk control, they should consciously strengthen the prudence of personnel appointment and reduce the moral hazard of management in the credit process of commercial banks.

Fourth, we should use laws to restrain and increase the punishment of credit personnel engaged in moral hazard behavior.

Formulating a strict and rigid legal system plays an important role in preventing the moral hazard of bank credit personnel, such as according to Hong Kong

Article 9 of the Prevention of Bribery Ordinance (Chapter 20 1 Laws of Hong Kong) stipulates that it is illegal for bank credit business personnel to accept anything of value from customers, such as money, gifts, positions, services, preferential treatment and other benefits, for themselves or their relatives, in order to give preferential treatment in handling credit business. The maximum penalty is 7 years' imprisonment and a fine of HK$ 500,000, and they are prohibited from serving as any corporation or public company for up to 7 years. Through severe punishment, it has played a great deterrent role in maintaining financial order, curbing the greed of credit business personnel, preventing credit business personnel from breaking the law and preventing moral hazard behavior in credit business.

Fifth, build a corporate culture of honesty and establish a team of honest and efficient credit personnel.

Corporate culture is the core mode and belief that determines the operation of enterprises. Sound moral culture is the decision-making basis for employees at all levels to handle daily affairs. If the credit business personnel at all levels can spontaneously maintain a high moral standard, banks don't have to worry about illegal behavior. Strengthen the credit management of credit personnel by establishing a credit enterprise culture. Always pay attention to the behavior of credit personnel at all levels and find problems as soon as possible; Contact customers through different people to prevent them from corrupting credit personnel; Report all kinds of fraud through the internal complaint mechanism; According to the specific situation of employees, we should arrange a careful training plan, such as often carrying out preventive education such as case analysis and case statement, so that credit employees can realize risks, deepen their understanding of laws, regulatory provisions and ethical norms, and improve their vigilance against moral dilemmas and skills in dealing with related issues.