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The CADB business reform and corporate governance structure of thinking and recommendations

Author: XuDaJun From: www.yourpaper.net Posted: 2010-03-29 03:37:06 Read:
[Abstract] This paper is to start from the the CADB reform Origin and difficult to analyze the current situation and problems of the Agricultural Development Bank's corporate governance structure, and proposed the corresponding countermeasures and suggestions.
[Keywords] Agricultural Development Bank structural reform of corporate governance

First, in recent years the CADB reform and corporate governance structure to improve requirements

1. CADB reform the international background
1970s, the countries in the world recognize the government based project the importance of funding, have established a policy of state-owned financial institutions to give priority to the development of the sector in accordance with the national development plan to the Government provide loans or investments, 80,90 , especially to Latin America and the Asian financial crisis, policy review, policy many serious problems in the banking practice concentrated exposure. National policy banks have therefore embarked on the road of reform and transformation, development banks and even transformed into commercial banks, there are three main types: one is transformed into a development bank for the overall operation of the market, the government will no longer provide direct credit business completely subject to the constraints of the market conditions; temporarily continue to maintain the traditional policy banks positioning in the specification, limit the scope of business while preparing to implement the market-oriented reforms; transition for the main business of market-oriented operation, the special management of government-directed business-class development banks. More prominent in foreign policy Silver reform transition experience two things: First, it emphasizes to improve the corporate governance structure, the establishment of a modern banking system, clear property rights, equity diversification standards by commercial banks to establish the Board, the Board of Supervisors, the company's management. governance structure, improve risk management and control mechanisms, increase transparency, and promote the sustainable development of the financial; stressed the substantial capital buffer banks operating risk, lower operating costs, and rely on the capital adequacy ratio and national backgrounds, to enhance its market credit rating and reduce financing costs.

2. CADB reform domestic background
Agricultural Development Bank was established in 1994, its practice, funds rely on the government to provide capital flows, government policy-oriented guidelines, the formation of the risks and losses by the state's financial burden, financial functions in the extension of the extra-budgetary channels; constraints due to the lack of market-oriented risk exposure is large, easy to default to the formation of the huge amount of non-performing assets, of which a significant portion of only losses are, overdrafts, a heavy financial burden. In April 1998, in line with the reform of the grain circulation system, the Agricultural Development Bank in accordance with the State Council decided to agricultural development, poverty alleviation and other special loans, as well as grain and cotton processing enterprises and affiliated business loans transferred Agricultural Bank, specializing in agricultural acquisition funds owned grain enterprises supply and closed operation management. In May 2004, the grain circulation system began the transition to a full market-oriented, the state-owned grain enterprises gradually lose monopoly various food operations and ownership Yongliangqiye can directly enter the market acquisition, commercial banks also began to provide acquisition of funds, the Agricultural Development Bank exclusive supply pattern of acquisition funds have been gradually broken, shrinking business space and scale, even some grassroots institutions phenomenon without new loans. The same time, credit monitoring is ineffective, the case of frequent, high debt ratios, high defect rate, a single business, the future is uncertain, the Agricultural Development Bank of the outside world, as do the "problem banks", the internal employee emotional instability.

CADB recent reforms progress
57 executive meeting of the State Council held in 2004 as a symbol, the Agricultural Development Bank of reform of the management system was launched, the business scope from grain circulation, is gradually extending to the entire food industry chain of production, processing and conversion, and gradually form to the grain cottonseed oil acquisition loan business as the main industrial management of agriculture and agricultural and rural medium-and long-term lending business for the two wings, the intermediary business to supplement the multi-faceted, wide-ranging support for agriculture pattern CADB business growth and The continuing development of new opportunities. However, the commercial business rapid growth accompanied by its huge potential risk. Between the policy and the market in this growing market environment, the operating mechanism is not a big change, a lack of clear direction and boundaries, the government is still open to bank overdrafts channels, prone to multiple motives induce grassroots business blind expansion, the formation of new exposure hidden. It highlights the rapid growth of the commercial medium-and long-term loans in recent years, the Agricultural Development Bank. These project loans government credit guarantee full discount, but more than the non-operating items, long construction period, large-scale investment, more macro-control policy risk and market risk factors; Second, those loans the main public services in rural areas set up by the government at or above the county level agencies or government-controlled enterprises, the senior management of multi-appointed by the executive branch of government is not enough, the autonomy of enterprises the administrative interference obvious change of government, the transfer of personnel and other disturbing factors; Third complex funding sources, and financial management system is not perfect, the information opaque, weak awareness of integrity, project evaluation and management of difficult. And this is the Agricultural Development Bank has long been engaged in the acquisition of loans closed operation supervision, lack of credit product design diversity, rationality is not enough adaptability, a lack of understanding of the credit management process for commercial projects, the quality is uneven, professionals, lack of internal incentives, making the CADB business expand the extent is not commensurate with the level of risk management, there is a larger and long-term credit risk.
The experience of transition from the reform of the foreign policy banks or from the view of the problems existing in the reform front and rear of the Agricultural Development Bank in 2004, the corporate governance structure are CADB reform key. Agricultural Development Bank has proposed the next step in the direction of reform, and will strictly distinguish between policy-related business and commercial business, the implementation of the management of the two types of business segments, split accounting, respectively assessment; commercial business to set up the account of the guidance, the implementation of market-oriented management, capital gold scale and risk provision for the implementation of the standards of the commercial banks, the source of funds raised through market financing, to accept the China Banking Regulatory Commission to the prudential supervision of the core capital adequacy ratio; establish prescriptive account of the policy business, who compensation in accordance with the "Who assigned by" the principle of prior to establishing compensation mechanisms and content, funding sources should be protected, and to accept the relevant departments of the state supervision and assessment. This means that the Agricultural Development Bank will be its basic direction of reform and development, commercialization, policy business insurance this no loss, market-oriented operation of the commercial business, thorough and strengthen risk prevention, elimination of the new generation of non-performing loans, and to achieve this target, the corporate governance structure must also have a big reform.

Second, the Agricultural Development Bank of the status quo and problems of corporate governance structure analysis

Corporate governance structure is a set of institutional arrangements and the checks and balances of power, for the domination of a number of groups have significant stakes in the enterprise - investors (shareholders and lenders), the relationship between the managers and workers, and from this Union to achieve economic benefits. Corporate governance structure, including: (1) how to configure and to exercise the right of control. (2) how the monitoring and evaluation of the board of directors, managers and employees. (3) how to design and implement incentives.

1. The CADB governance structure status quo
(1) Government the the CADB only investment entities, have aloof. Agricultural Development Bank is the the policy wholly state-owned commercial banks, government full funded the creation of the Agricultural Development Bank, the provisions of its nature, functions, tasks and scope of business, the appointment of its main leaders, and provide the conditions for its operations, its final regulatory control of them, the Agricultural Development Bank's business plan, the use of funds, and other important agreed matters should be reported to the government for approval.
(2) the implementation of a vertical management system, highly concentrated. First, the Central Government has given the Agricultural Development Bank head office only a legal personality, in branch at the head office of legal persons authorized to carry out the operation and management activities, the governor at all levels at the same time has a dual identity of principal and agent. Agricultural Development Bank to implement the organizational structure of the total branches made mode, basically administrative divisions to form the head office - provincial branches - ground City Branch - County Branch of the three-level management, a business management mode, under the unified leadership of the head office, the lower line of superior line of responsible departments of Governors is responsible, step by step implementation of the governor responsibility system and the establishment of target management responsibility of the operating system on the basis of a series of evaluation indicators. The third line of party committees at all levels is a decision-making body of the Agricultural Development Bank, to determine the level of line and under the jurisdiction of the operations of the line, the the subordinate line party committee appointed by the higher line responsible for the higher line.
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