What risks do private banks face compared with traditional banks?

With the intensification of competition between state-owned banks, private banks came into being. What risks do private banks face compared with traditional banks?

First of all, other strategies such as lending and loan collection of traditional banks must rely on and cooperate with the economic regulation of the government and the state, and cannot be implemented completely according to their own risk judgment; Private banks need not worry too much about this problem. In other words, when encountering operational difficulties, the government and the state are more willing to help traditional banks, and they are less honored than private banks.

Secondly, due to positioning reasons, private banks are destined to concentrate on their major shareholders, related parties of major shareholders' business and enterprises in the upstream and downstream of the supply chain. This positioning may cause the expansion of the dot to be limited to a certain extent; In the highly competitive deposit market, its business may be sluggish after expanding to a certain extent, and its profitability may be less optimistic in the later period.

Moreover, the loan industry of private banks is highly concentrated, and there is a problem that the proportion of single customer loans is large. Compared with some large state-owned banks and joint-stock banks, it has obvious disadvantages.

Most importantly, private banks will face the risk of business judgment and the lack of their own strength. However, this will not happen to state-controlled banks, and traditional banks will mainly face policy risks. But this is the main difference, after all, most risks are cross-faced.

Generally speaking, the entry of private capital into the financial industry as a contributor can intensify the current banking competition, and there is reason to believe that the front desk service of banks will be better in the future.