Академический Документы
Профессиональный Документы
Культура Документы
2009-12-01
Ruokun HUANG**
Any sensitive description in this report has been removed. However, any disclosure, copy and/or use of any content in this report are to be permitted by the author and/or other entity(ies). ** Ruokun HUANG, Finance Dept., School of Economics and Management, Tsinghua University, Beijing, China.100084 Email: huangrk.06@sem.tsinghua.edu.cn
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Contents
I. II. Background ............................................................................................................................................... 3 Job Description......................................................................................................................................... 3 a) Risk Analysis Report.......................................................................................................................... 3 b) Market Information ........................................................................................................................... 4 III. My Comments ........................................................................................................................................... 4 a) Decision Making Process in Commercial BankA Contradiction ................................. 4 b) Hierarchy in Enterprises.................................................................................................................. 5 IV. V. Conclusion ............................................................................................................................................. 6 Acknowledgements ................................................................................................................................ 6
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I. Background
I worked as an internship employee at Company A. This department is responsible for the trading financing, i.e. credit insurance, forfaiting and export factoring.
countries. Among them, a specific country enjoys the highest risk rating, while the country I was concerning about is a little bit inferior. Besides, my mentor also mentioned a case that several huge banks formed a syndicated loan to a provincial government of China. The big ones thought that under provincial governments guarantee, this loan should not have any problem. However, after a period of time, the government said that it has no funds to pay the loan. The big ones began to find China Central Government to ask for payment. Beyond all expectations, the former Premier ZHU Rongji, denied the obligation of payment. The reason is that China is a centralized nation, which means provincial government has no right to make a loan arrangement as in this case. Finally, the provincial government defaulted. From this case, we can draw a conclusion that it is highly important that every businessperson should be very careful facing proprietorship issues.
b) Market Information
In the second half of July, I was responsible for the market information gathering for my mentor. For example, my mentor had been considering co-operate with a U.S. company, for a syndicated loan case. A few days later, there was a piece of news coming out that this company was going bankruptcy and searching for government assistance. My mentor stopped this project immediately. My job is to gather various kinds of information on the internet and report business related materials to my mentor. I believe this kind of training is good for my business sense.
III.
My Comments
making process in commercial bank, F.O. employees are responsible for find customers, preliminarily examine their risk level and knock off a price. They would use IRR or ROE method to evaluate this project. M.O. employees will check this deal, especially from risk management view. When the contract is signed, M.O. would examine this deal on routine basis. They will ask F.O. to re-evaluate this project and provide indispensible capital. This kind of pressure will compel F.O. to ask their customers to pay their bills. In my opinion, this system is to provide enough protection to risk exposure of a bank. More specifically speaking, this system can somewhat prevent business immoral behavior from happening between F.O. and customer. However, it is the F.O. employees who directly contact with the customers. It is them, not M.O. and researchers who are more familiar with the risk levels of customers. F.O. employees often spend a lot of time persuading their colleagues to accept their suggestion to take one project. Sometimes, M.O. would reject the application regarding to the risk handbook. F.O. often complains that, how could a researcher sitting in front of a computer in Singapore be more familiar with the risk level of a well-known company as a customer in China? Such centralized risk measurement might be a shackle of sales. I would not blame the research person for his ignorance of localized information. He is not specified at this, at least geographically. I would cast my doubt on the risk rating system. Benefit as centralized rating system has, it is doctrinal confront with emerging opportunities from customers in fast developing markets. The bank itself may be safer, but it would lose the best opportunity of entering a prosperous market. Another consideration is also about this decision making system. As I mentioned above, F.O. employee usually use RAROE as an index of one project. If the RAROE is higher than what stockholders require, the project may be easy to accept. However, RAROE or other indices are heavily dependent on subjective judgments. When two competitors fight for a bid, it is the one who are brave enough that can win this match. To make money or to wait for a safer deal, that is a contradiction.
b) Hierarchy in Enterprises
During my internship at Company A, I found that the hierarchy in bank plays an important role in daily operations. In my department, works done by basic level
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employee are to be endorsed by department manager. After that, they will be sent to regional headquarter to be endorsed by region heads. Same things happen when daily operations need authorization. I regard this hierarchy system as safety device in banks. However, bureaucracy may impair this original intention. A report after two or three are considered to be perfect. In reality, boss may have his own things to deal with, so that a relatively lower emergent report could be seldom checked. This report will soon lie in the file archive and wait for next renewal. Does this system work to prevent underlying risk? Hierarchy might be a solution, but may not always be. Besides, hierarchy system will impair basic level employees ebullience if he has a manager who treats subordinates badly. I believe hierarchy is to be improved, especially in a developing market since bank should tend to take more risk than they originally thought by sending out employees closer to customers.
IV.
Conclusion
To sum up, I found the experience in Company A very useful to myself. I have learnt some basic knowledge of economics and finance. In Company A, I found many things are very different from what books said. For instance, managers tend to use simple method like RAROE, rather than some more accurate and reasonable method to evaluate one project. This phenomenon indicates that people would choose some easy methods rather than complex ones. So, in our study, it is also important to make the theory clear and easy to handle.
V. Acknowledgements
I would express my special thanks to my mentor and all employees and heads at Company A.
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