Commercial Banks Corporate Financial Advisory Business Development

Development of Commercial Banks' Corporate Financial Consulting Business

Commercial banks' corporate financial consulting business refers to commercial banks' financial planning and program design for customers' daily business management, financial management and external capital operation and other economic activities based on the customers' own needs, standing in the customers' point of view, utilizing the company's products and services as well as other social resources; and providing enterprises with a full range of Corporate financial consulting and management consulting services. Corporate financial consulting business is a kind of bank intermediate business, it is the centralized performance of the bank's financial innovation and the core embodiment of the bank's overall strength, but also many multinational banks important business growth point and one of the main sources of profit.

First, the commercial banks to carry out corporate financial advisory business necessary

At present, China's commercial banks traditional deposit and loan market has been shifted from a seller's market to a buyer's market, the deposit and loan business has entered an era of micro-profit, the financial institutions deposit and loan growth rate has been a downward trend, the customer's dependence on the bank gradually reduced, the bank's actual deposit and loan spreads in the continuous reduction. The direct consequence is that the profitability of traditional banking business is greatly reduced, and with the further development of the capital market and the marketization of interest rates, this trend will be further strengthened. Banks must change the current status quo, break through the boundaries of the traditional profit model, and vigorously develop intermediate business, while the development of corporate financial consulting business is the best commercial banks to strengthen and expand the intermediate business? The best way to do this is to develop the business of corporate financial consulting.

1, corporate financial consultants - to prevent moral hazard and adverse selection

Commercial banks in the process of carrying out corporate financial consulting business can grasp the internal information of the enterprise, an effective solution to the asymmetry of information, to prevent the occurrence of borrowers of moral choice and adverse selection behavior, to reduce the risk of the bank's own loans, and to strengthen the bank's overall risk prevention and control. Due to the economic environment, market conditions, supply and demand patterns, competitors and other conditions will change at any time, the financial situation of the borrowing enterprise will also follow? s? change, which will inevitably have an impact on the ability to repay the loan. Therefore, it can be said that every loan issued by the bank has a different degree of risk. The bank to carry out enterprise financial consultant, the management of the enterprise has a wide range of participation and strong permeability, the business situation and capital operation, to be able to do a more accurate understanding and estimate, timely detection of problems, to prevent the enterprise's adverse selection behavior, to prevent the risk of lending to reduce the loss of the bank's claims.

2, corporate financial consultants - commercial banks to expand business, new profits

Corporate financial consulting business is the most dynamic of modern commercial banks? The financial advisor business is the most dynamic of the modern commercial banks. The business is the most dynamic of the modern commercial banks. Carrying out corporate financial consulting business can directly obtain consulting fees, but also optimize the structure of the bank's credit assets, expanding the source of liabilities, to achieve benign interaction with the traditional bank assets and liabilities business, the intermediate business and traditional credit and settlement business combined. It can also develop intermediate business such as asset restructuring, corporate acquisition and financing consultancy, which can help drive the development of on-balance sheet business, increase interest income from loans and settlement fee income, and have a demonstration effect on other customers. In addition, under the current situation of diversified investment channels and serious diversion of bank deposits, the development of corporate financial consulting business can become an important means for banks to increase deposits and to identify and cultivate potential high-quality customers. It can be said that to carry out corporate financial consulting business is the direction of financial innovation in China's commercial bank operations, is a low-risk, high-yield gold business that does not directly occupy the cost of capital and does not produce bad debts.

3, corporate financial consultants --- to establish a good relationship between banks and enterprises

Enterprises in the development process will generate a lot of service needs, the bank should provide diversified, multi-level, three-dimensional services for enterprises as a starting point, to help enterprises to solve the problems in the development process, maximize support for the development and growth of enterprises. Commercial banks through the development of enterprise financial advisory business, by all means for entrepreneurs to invest in financial advice. The relationship between banks and enterprises has been further enhanced, thus establishing a new type of bank-enterprise relationship, forming a bank-enterprise? Win-win? The pattern. This brings not only the improvement of the relationship between the bank and the enterprise, but also makes the bank and the enterprise in the cooperation *** with the development.

Second, the domestic commercial banks enterprise financial advisory business development status and problems

In recent years, many banks realize that the development of enterprise financial advisory business not only can bring substantial returns, but also consolidate the development of the bank's traditional business, a number of domestic commercial banks have taken effective initiatives and achieved certain results.

In 1995, China Construction Bank established a joint venture with Morgan Stanley and other companies. China International Capital Corporation Limited (CICC)? In 1997, Bank of China set up a wholly-owned subsidiary investment bank in London, Bank of China International (BOCI). In 1997, Bank of China set up a wholly-owned subsidiary investment bank in London, which was reorganized and registered in Hong Kong in the following year. The main business activities of the bank include corporate investment and financing, project financing, mergers and acquisitions, asset restructuring/management, debt management, syndicated loan arrangements, corporate restructuring and listing, bond and note issuance, management consulting, research and analysis, training services and corporate diagnostics. Diagnostics Within 1998, ICBC set up a merchant banking division within the Development Planning Department of the head office, and established an investment banking division at the head office in 2002, which mainly carries out corporate listing consultancy, project financing consultancy, and financial consultancy for enterprises operating businesses, including corporate financial management consultancy and planning, and merger and reorganization acquisition consultancy, etc. In recent years, the Agricultural Bank of China, the Bank of Communications, the Bank of Communications, and the Bank of Communications, have all set up their own investment banking divisions. In recent years, Agricultural Bank of China, Bank of Communications, Everbright Bank, Minsheng Bank, Shanghai Pudong Development Bank, Industrial Bank, CITIC Bank and other commercial banks have also set up investment banking department, vigorously expanding corporate financial advisory business. Although the enterprise financial advisory business as China's banking industry to carry out new business, has been the initial development, but the banks marketing enterprise financial advisory projects are mostly financing consultant projects, other types of enterprise financial advisory marketing less or have not really started marketing, and most of them do not have a special department for systematic management, from the overall point of view is still in the initial stage, the scale of the small, the direct benefits are not obvious; there are still some problems in development. Some problems, some banks to carry out corporate financial advisory business scope is narrow, few varieties, low starting point, the pace of development is extremely slow, can not provide customers with a full range of multi-variety, package financial services to meet the diversified needs of customers; in addition, the lack of innovative human resources and incentives, the long-term impact of the planned economy, the ability to keep up with the demand for financial innovation and economic development.

Third, the market positioning of the enterprise financial advisory business and focus on the direction of development

At present, in China's small and medium-sized enterprises will soon be launched and the western development of the policy background, commercial banks should be listed companies, listed companies, private enterprises, multinational corporations, large-scale infrastructure projects as the main customers, subdivided into the target market and focus on strengthening the development of small and medium-sized enterprises in financial advisory services, to provide investment, financing consulting services, and to provide financial advisory services. Provide investment and financing consulting services to meet the needs of a wide range of corporate financial advisers in the field of asset reorganization, mergers and acquisitions, bond issuance, etc., with its own talent advantage and capital advantage of some of the small and medium-sized risk investment in the work of financial advice and guidance.

1, strengthen the SME financial advisory business

First, the development of corporate financial advisory business can help commercial banks to reduce market information asymmetry. Due to incomplete access to information, commercial banks can not fully understand the business situation of some small and medium-sized enterprises, in order to prevent moral hazard and adverse selection, caused by the commercial banks of non-performing loans rate is too high, some banks directly take ? One size does not fit all.

Secondly, with the upcoming launch of China's Growth Enterprise Market, the role of corporate financial advisers on the Growth Enterprise Market will be crucial to the role of enterprises listed on the Growth Enterprise Market will be indispensable to the financing of enterprises listed on the Growth Enterprise Market, it will be the enterprises listed on the Growth Enterprise Market to finance the designers and coordinators, play a role in consulting and advisers, design and planning, organization and coordination. Therefore, GEM will be an opportunity and a challenge for commercial banks to carry out corporate financial advisory business. Future GEM listing will be very different from the main board market, GEM market listed companies are mostly engaged in high-tech business, with high growth, but often established for a shorter period of time, smaller scale, performance is not outstanding, commercial banks with their own advantages, can be in a large number of enterprise groups, to discover suitable for listing in the GEM enterprises; for its pre-listing financing or to find and introduce domestic and international strategic investors or venture capital funds. The financial consultant of the enterprise will also help the enterprise to conduct business negotiation with the sponsor, auditing institution, law firm and appraisal institution to select the most suitable intermediary organization to provide services for the listing of the enterprise, under the principle of maintaining the same interests with the listed enterprise. Provide services. In the process of listing declaration, the financial advisor of the enterprise will also act as a coordinator to coordinate the relationship with the listing related organizations. Therefore, before the upcoming launch of the GEM, commercial banks should make timely preparations to carry out the GEM market corporate financial consulting business, to seize the market share in advance, and lay a good foundation for the bank's future development.

2, corporate financial consultants --- the development of venture capital

At present, the government has fully recognized the development of venture capital's great role and importance, is vigorously promoting the development of venture capital industry. Venture capital is a high-risk, high-growth, high-return investment and financing methods, the investment direction is mainly focused on emerging, rapidly developing high-growth, high-tech small and medium-sized enterprises. It is conducive to improving the efficiency of resource utilization, changing China's traditional mode of economic growth, and plays an important role in promoting the development of high-tech industries. The whole process of venture capital operation is a systematic project, which needs the guidance of professional consulting units. The selection of venture capital projects, the input of funds, the time and quantity of input, when to exit, exit mode, timing and quantity, etc. are not a simple thing. And rely solely on risky enterprises and venture capitalists to complete the entire operation is almost impossible, and commercial banks can use their own talent advantage and capital advantage of venture capital of the work of financial consulting and guidance, but also to provide financial support to expand the bank's business.

3, corporate financial advisers --- mergers and acquisitions

China has become a global mergers and acquisitions and reorganization of business in an emerging market. After the establishment of the new state-owned assets management system, in order to promote the strategic adjustment of state-owned assets and state-owned enterprises to establish a modern property rights system, the operational state-owned assets in urgent need of restructuring; most of the private enterprises are faced with the task of the second time to start a new business and the transition to modernization of the enterprise; the enterprise capital operation of the cross-border activities are becoming more and more frequent, these factors for the commercial banks to carry out corporate mergers and acquisitions and restructuring of the business to provide a good external conditions.

The globalization of the economy and the intensification of market competition have made mergers and acquisitions (M&A) a trend for enterprises to develop and expand rapidly and improve their competitiveness. In the new and mergers and acquisitions, enterprises choose mergers and acquisitions as a means to achieve industrial upgrading, which helps to shorten the input and output time and reduce the barriers to entry. Economic globalization has made the boundaries between the internal market and the external market of each country increasingly blurred, and multinational corporations need to directly face the global market in order to gain competitive advantages, and cross-border mergers and acquisitions have become a rational choice for the expansion of the enterprise's internationalization. M&A calls for professional guidance, M&A pricing, M&A strategy procedures, anti-merger strategy and post-merger integration, etc. require very professional financial knowledge and practical experience, so only professional financial sector can take up the M&A corporate financial adviser, mergers and acquisitions to guide. Banks have a large number of high-quality financial and financial experts, able to mergers and acquisitions for theoretical and practical guidance, and reorganization and integration of mergers and acquisitions to provide advice; banks have a natural capital advantage, when mergers and acquisitions need financial support, the bank is naturally a better choice; the bank has a good reputation and the relationship between all parties advantage of the bank and the government, the relevant enterprises and departments have a better relationship with the policy to grasp a more comprehensive, and credibility than the general finance company, the financial adviser. Comprehensive, and credibility than the general finance company. So the bank as a merger and acquisition of enterprise financial adviser to become a correct and reasonable choice.

4, corporate financial adviser --- project financing

Project financing as an important part of international finance, in recent decades has developed into a large-scale engineering projects for the construction and development of funds to raise funds for the effective and increasingly mature means of operation is more flexible and diverse, it is the output of the project as a guarantee that the amount of capital available to obtain a small amount of capital is much larger than the loan. The capital can be used as a guarantee for the output of the project, and the amount of loan can be obtained with less capital than that of the capital. Focus on financing for large-scale public infrastructure construction and large-scale energy development projects, because of its small inputs, high leverage, the rapid development of large-scale engineering projects become an important form of financing. China began in the 1980s, in the stable cash flow of electricity, roads and bridges, airports and other large-scale capital construction also began to use this financing, and has since gradually expanded to science and technology, services and other fields, project financing is used to ensure that the main source of loan repayment is limited to the project's future net cash flow and the value of the project's own assets, so that the project borrower's responsibility for the project and its own The project borrower's liability for the project and its own other businesses are to a certain extent separated, and to a certain extent, the project borrower can be exempted from the risk of bankruptcy due to the failure of the project. This type of financing is of great practical significance for developing countries that are experiencing rapid economic growth and lack of domestic capital but have many good investment projects. Project financing involves more relationships and is very complex. Commercial banks can be actively involved in the planning and evaluation of the project, including the risk assessment of the project, determine the structural financing program, arrange financing methods, organize loan syndication, supervision and management.

In short, corporate financial consultants in addition to the above points, corporate financial consultants can also provide services for corporate syndicated loans, structured finance and asset management, etc., the financial consulting business is often closely integrated with bridging loans to meet the needs of enterprises. Therefore, the development prospects of corporate financial consultants is very broad.