不良贷款管理中英文对照外文翻译文献

不良贷款管理中英文对照外文翻译文献

不良贷款管理中英文对照外文翻译文献

(文档含英文原文和中文翻译)

不良贷款管理中英文对照外文翻译文献

Non-performing Loans Management and Recovery

William J. Bauman and Alan S. Blinder

Abstract

With the deepening of China's economic system reform development and continuous improvement of the system of the market economy, banks ' lending business becomes completely open to individuals, personal loans of business growing, continues to expand the scope of business, especially the development of individual housing loan more quickly. Personal housing loan business in China at the time of its development, there are bad credit risks as well as the competitive situation is not optimistic, to a certain extent, hamper the development of individual housing loans, to sustainable development, research management must be strengthened on a number of issues. This article from the current development status of individual housing loan business to start, pointed out that because of the existing problems as well as problems and focus on how to develop personal housing loan bad credit risk reduction, foreign experiences and lessons learned, and thoughts and countermeasures for management, to promote the healthy and rapid development of the business.

Key words: Housing loans to individuals; Bad credit risks; present situation; problem; Countermeasure

1. Introduction

Under the five-category loan classification, substandard, doubtful and loss loans are defined as non-performing loans. Because the reasons behind non-performing loans formation are different, credit associates must take effective measures to manage, recover and dispose of these parts of asset according to their different characteristics. The bank should first find out the responsibilities of the guarantor and dispose of the security in time. Only when they confirm that the guarantor has lost the guarantee abilities and the security is not sufficient to pay off the loan, can they begin to dispose of the non-performing loans.

不良贷款管理中英文对照外文翻译文献

2. Reasons

There are many reasons why banks have poorly performing loan portfolios. Irrespective of these causes, banks have an obligation to shareholders, depositors and creditors to maximize cash flow from assets, the most troublesome aspect of which has been the poor record of banks in recovering loans. It is this factor that has contributed the most to bank insolvency, and liquidity constraints.

There are several complementary options available to banks to restructure problem loans and portfolios, including:

? Exercise of collateral (liens against property, inventories) through judicial or extra-judicial means.

? Out-of-court settlement that may focus exclusively on debt negotiation, restructuring and repayment, or lead to the financial, physical and operational restructuring of the enterprise.

? Bankruptcy/liquidation procedures through formal court proceedings. This may involve liquidation, reorganization or privatization of an enterprise to enforce partial or total loan repayment.

(Besides the bank itself, sometimes government also leads a restructuring program to help the bank to solve the problem of NPL in order to stabilize the banking industry or the whole economy, for example, Asset Management Company (AMC), a special purpose company, buys or exchanges NPL from bank and disposes of them).

3. Work-Out Unit

With aggregate loan portfolios universally troubled by delinquencies and defaults, some banks have opted to develop work-out units to improve loan portfolio quality. When work-out units are established, they are usually set up to deal with most of a bank's problem loans, effectively sectioning off non-performing loans from the broader bank portfolio of performing loans. The benefits expected from work-out units include;

? ?

Concentrated focus on the recovery of problem loans;

More developed banking expertise and credit risk evaluation skills;

? Improved internal bank system (early warning systems, collateral requirements, credit information needs).

Work-out units can make a significant difference in restructuring loan portfolios, particularly when supported by effective technical assistance.

4. Loan Restructuring and Loan \

Case-by-case loan restructuring is common in market-oriented economies, particularly

不良贷款管理中英文对照外文翻译文献

when borrowers are unable to meet the original terms of the loan agreement due to external factors. These restructuring invariably changes in the amount, terms and /or schedule of interest rates, principal repayment, and collateral values. Loan covenants ( ratios, report requirements) often change to facilitate compliance. In some cases, radical measures such as replacing management are involved.

This approach is similar to what work-out units attempt to do: recover portions of loan portfolios which have deteriorated and are non-performing. However, workout units are often organized on the basis of sector, location or bank exposure. Case-by-case loan restructuring is conducted on an individualized basis. The benefits of individual case-by-case loan restructurings include:

?

Reinforcement of the bank-client relationship.

? Retention of the loan by the bank on its balance sheet, even if provisions are made for possible losses.

? Preservation of the firm's relations with other parties (trade creditors, other banks, buyers, employees), thereby maintaining its reputation without embarrassing and costly bankruptcy / liquidation procedures.

As with debt-equity swaps, the risk to the bank is that it is overly optimistic about prospects, and that additional resources are committed to the borrower adding to bank losses and reduced loan able funds at a future date. This has occurred frequently in transition economies (such as China, East European countries, former Soviet Union). In transition economy banks, the closest approximation to the Western loan restructuring has been the loan \has been a common practice. Rollovers generally involve the following two techniques:

? Simple rollover of principal on/before the due date, with the enterprise meeting interest obligations.

? Rollover of principal on/before due date, with interest added back to the principal amount (“interest capitalization\

The first technique is legitimate and rational unless the enterprise is unable to repay principal, and likely to remain impaired in the future. The second technique often reflects a troubled loan and enterprise, and has been typically practiced in transition economy banking systems. Further more, the latter technique has been accompanied by accounting treatment which mistakenly recognizes these assets as performing loans, artificially inflating income statements and balance sheet book values.

5. Debt-equity Swaps and Loan Sales / Asset Swap

Debt-equity swap results in bank ownership of enterprises occur with differing frequencies in different countries. In some countries, bank ownership of enterprises is common (German interlocking directorates), while in other countries it is strictly regulated (USA) or strictly prohibited (In China, debt-equity swap is done through asset management company). By swapping NPL for equity, banks can exercise more direct

不良贷款管理中英文对照外文翻译文献

control/supervision over enterprise management while the enterprise benefits from increased debt capacity. The risk to bank is excess exposure to a risky investment which may jeopardize deposit safety and bank capital, and demand scarce management time and resources.

Debt-equity swap represents nascent venture capital operation. Perhaps only one in 10 of these investments may succeed, but this should be sufficient to cover the risk of the other nine losing investment. Given existing low book values and the currently thin market that is likely to improve in the coming years, banks are prudent to allocate a small percentage of assets to enterprises they believe will generate significant profit at a later date. At that point, banks can sell their shares, and reap significant profit to bolster capital. All of this makes more sense given the current downside risk, which is limited, as most of these transactions are paper transactions that do not further impair bank liquidity.

But bank equity swap may be indicative of the failure of banks in some countries to properly define bank's roles as financial intermediaries, streamline their operations, specialize in a few key areas within the limit of their current managerial and staffing capabilities, write down their assets to more accurate values, and progress toward a more stable and prudently managed system devoid of excess risk. Investment in losing enterprises raises the risk of future liquidity being drained to prop up these enterprises in the hope of eventual profitability, which puts depositors and shareholders at risk.

In addition to debt-equity swaps, loan sales swaps are an option that could be used to restructure bank balance sheets. However, this option has not been commonly found in transition economy due to absence of secondary market development.

6. Securitization of Non-performing Loan

Non-performing loan securitization is a pooling of non-performing loans packaged and issued as securities to investors through arrangements of legal structure, cash flow, and credit rating mechanisms. Non-performing Loans are also known as bad loans, overdue loans, receivables under collection, and loans still under normal payment statuses, but with circulating bonds rated lower than CCC level. During the securitization period, the originator (seller) will select the most ideal portfolio based on a set of eligibility criteria, such as debtors' locations, credit period, currency, and overdue ratings from all available non-performing loans.

After the screening process, bank will proceed with the risk assessment, cash flow simulation and credit tranche. The securities are then offered to investors after confirmation from credit rating agencies and regulatory approval obtained. The asset management agency is particularly important to a non-performing loan securitization since the asset management agency's expertise is instrumental to increasing collection rates of these non-performing loans. Investors' risks are minimized through credit enhancement techniques; default risks, prepayment risks, etc. are also emphasized to evaluate the risk profile of non-performing loans.