Article/Han Wei, columnist of Sina Financial Opinion Leader (WeChat official account kopleader)
Why did the A-share and H-share banking sectors fall in panic last Friday after the "12th Five Year Plan"? Then triggered the overall slump of Shanghai, Shenzhen and Hong Kong markets? Why can't bank credit standards be relaxed?
On the evening of November 10, regulators clarified that the "One Two Five Year Plan" target for private enterprise loans was not a rigid assessment indicator, and credit standards were not relaxed. The Report on the Implementation of China's Monetary Policy in the Third Quarter of 2018 released by the People's Bank of China no longer mentions "firmly do a good job in structural deleveraging". These responsible, pragmatic and diligent practices have been highly praised by many market people.
Why did the A-share and H-share banking sectors fall in panic last Friday after the "12th Five Year Plan"? Then triggered the overall slump of Shanghai, Shenzhen and Hong Kong markets? Why can't bank credit standards be relaxed?
In the market economy environment, there are two basic logic: first, the insufficient capital and lending capacity of banks will inevitably restrict the speed of economic development. Therefore, in order to maintain the long-term steady development of the economy, commercial banks must continue to grow and strengthen. Second, as we all know, if people have panic doubts about the overall credit of commercial banks, they will inevitably fall into the vicious circle of large-scale bank runs, panic inflation, and devaluation of the local currency exchange rate, which will lead to economic collapse and even social collapse. The recent experience of peer-to-peer finance should not occur in the field of commercial banks.
"If the world is different, things will be different, and if things are different, things will be ready for change.". We must not treat today's commercial banks with the old ideas of the 1990s. The theories and ideas in resolving financial risks and preventing financial crises need to keep pace with the times. Compared with the 1990s, the scale of deposits and loans, the degree of openness, the degree of marketization, the degree of capitalization, and the ideology of citizens of China's commercial banks have undergone tremendous changes.
At present, domestic commercial banks are facing a series of unprecedented challenges. Even if the profit level of banks remains high at present, just because the profit growth rate has dropped, the bank shares listed at home and abroad have fallen below the issue price in a large area, and even the prices of many bank shares have only reached about half of the net assets, which is at an almost unprecedented freezing point in history. It fully reflects the serious lack of confidence of domestic and foreign investors in China's commercial banks, and investors are very worried about the adverse effects of non-performing loans, potential bad debts, reduced deposits, devaluation of local currency, foreign bank competition, Sino US trade friction, hollowing out of immigrants, economic recession and other aspects on the banking industry.
The bank is a business based on confidence and trust. Confidence and credit may be destroyed in a flash. It often takes a huge price and a long time to recover. At present, we should not only find ways to prevent the lack of confidence in the banking industry and excessive worry from spreading from investors to depositors, but also try to improve the confidence of the public and global investors in the asset quality of China's banking industry, so as to promote the development of the real economy more effectively.
In 2008, domestic banks in China luckily escaped the impact of the global financial crisis. At the same time, most famous overseas banks suffered heavy losses, and the image of overseas banks was almost completely destroyed in China. Now the credit level of domestic banks has been able to meet the challenge of financial openness. At this critical moment, domestic banks must not abandon their martial arts and relax their credit standards. Otherwise, the achievements made by domestic banks in the past ten years will probably disappear.
The common sense of finance tells us that enterprises with high risk should first rely on direct financing rather than indirect financing. As an indirect financing provider, banks' risk control is obviously the first priority. The bank is entrusted with the trust and trust of the masses to keep their deposits. It is obviously unfair, unreasonable, uneconomical and unbearable to take the hard-earned money of the masses to pay for enterprises with backward production capacity and radical gambling.
On the premise of stabilizing prices, the exchange rate should be stable. By vigorously improving the credit level, capital strength, deposit scale, risk identification ability and risk control level of commercial banks, it is natural to improve the risk tolerance of commercial banks, and loans will benefit a wider range of economic entities more efficiently. We can further reduce taxes and fees, expand direct financing channels for small and micro enterprises, establish special guarantee support funds for private economy and support funds for inferior projects, and treat state-owned, private and foreign-funded economic entities fairly in the principle of marketization.
Bank is the mother of all industries. Just like when the plane loses pressure at high altitude, passengers with children should first wear oxygen masks to protect themselves before helping others. Similarly, when the economy is stalling, the first thing to do is to support the yuan and strengthen the foundation, protect the foundation of bank credit, and do not encourage the public to shake their confidence in the banking industry.
(The author of this article introduces: famous hedge fund manager, Tsinghua MBA supervisor, vice president of Tsinghua MBA Alumni Association Financial Association, guest of CCTV2, and general manager of Hengfeng Taishi. With more than 20 years of professional experience as investment director of futures, securities, public offering and private funds.)
