The characteristics of BBVA Bank risk management in Spain

Features of disorientated Management in Bbva,spain/Churong Spain BBVA Bank has a hundred years of business history, the bank market capitalisation ranked seventh in the world, even through the financial crisis, there is no need for government capital injections, and still maintain good asset quality, low loan non-performing loans, A record of low rates of bad.　　At present, Morgan Stanley's rating of the bank from the previous AA to AA, more from a side reflects its good risk management mechanism and mature risk management culture.　　In May 2009, the Credit Management department of CITIC Bank organized the Overseas Credit Management Training group to BBVA Bank in Spain, and I was fortunate to feel the mainstream European Commercial Bank and its risk management characteristics. BBVA Bank Risk management Framework BBVA Bank is the second largest bank in Spain, business-wide, business scope of globalization, renowned for adhering to the conservative principle, stable operation, excellent asset quality known in Europe and the United States banking.　　BBVA Bank in the Spanish-speaking countries to expand its banking business, its credit risk management structure and the mainstream banks in Europe and the United States have similarities, but also in the details of the characteristics, as detailed in Figure 1, Figure 2, Figure 3.　　Second, BBVA bank credit risk management according to the Bank of BBVA, they are the most unique risk management, is to establish a suitable local culture of the risk management concept, reflected in the implementation of risk management policies, through the accurate measurement of credit risk. (i) centralized and decentralized management mechanisms: empowerment is accompanied by accountability, and responsibility is always equal to 1. The risk management model of medium and medium-sized Taiwan. BBVA Bank Risk Management embodies the concept of "big risk" management, the object of risk management is credit risk, market risk and operational risk, and non-bank risk. In addition, the bank based on the reality of transnational banks, especially the prevention of national risk, this is the domestic banking industry, the "big middle" risk management framework.　　One of the biggest advantages of this "big middle and middle" risk management framework is to facilitate the implementation of a unified risk management policy, and to avoid weakening its risk management responsibilities because the main line of business is driven by its own interests. 2. The Board is also one of the "big middle and middle" levels. The bank's board of directors is the top risk-vetting committee of BBVA. The Board of BBVA Bank is not only the management center of the bank strategic risk, but also the final examination and approval organization of the credit risk, and is responsible for approving the high risk, large credit, special business and related credit service. Convening the Board of Trustees to consider the credit project is also one of the day-to-day management of the board of Directors, Express, large, can be at any time "Extra" convened by the Board of Trustees for consideration.　　From this perspective, BBVA's board of directors is not detached from day-to-day management, but a deep involvement in credit risk management practices of the operational agencies. 3. Smoothen may authorize the individual. Under the framework of a large concentration of risk management, the Bank of BBVA carries out individual responsibility system for granting credit admittance permission. The result of this has not only increased the right to smoothen people's sense of responsibility, but also avoided consideration "Collective decision ", the situation that the responsibility is prevarication when bad credit is given. BBVA Bank to the risk approval officer to carry out the level of authorization system, the approving officer at all levels to enjoy different amounts of approval and signing authority, the higher the level, the right to smoothen people can smoothen the amount of credit is greater.　　However, once the credit risk is smoothen, the personal responsibility of the smoothen person will be traced. 4. Promote development and risk-prevention assessment criteria. BBVA's risk management takes on a "double goal" to promote business growth and prevent credit risk. The bank's daily work evaluation index is also linked to market share and risk management. The aim is to require the risk management line to take into account both in the process of promoting development and risk prevention, and to achieve a dynamic development balance.　　In this way, it is helpful to prevent the two extreme phenomena of risk management, one is, in order to protect the safety of assets, excessive avoidance of risk and responsibility, at the expense of the development and efficiency of the Bank; 5. The risk tolerance is determined by the annual risk budget. Banks run the risk, there is always the risk of loss, but the credit products to the "defective rate" to the minimum. We feel that BBVA is paying special attention to risk budgeting and is arranging annual risk budgets. Risk budgeting is the upper limit of risk tolerance, and the risk tolerance assigned to branches is regarded as a "defective rate" that can occur in a loan. As long as within the risk budget, as long as the implementation of risk management policies and risk management procedures, the head office generally does not have to the new non-performing loans to the door by side, and will not be on the branch approval project unnecessary intervention. At the end of each year, the bank carries out budget arrangements for the following years through an evaluation of the risk budget. (ii) adhere to the rational business philosophy: "Others hot, I am not hot, others cold, I am not cold" 1. be rational and refrain from impulse. In the face of market temptation, they demand to adhere to rational, calm and restrained attitude, do not relax the credit standards.　　The bank pursues the policy orientation of "Shun City", when the economy from boom to bust, in the economic downturn, BBVA's board often downward adjustment of business objectives, the risk committee issued a tightening of credit policy, will not "move against the trend", insist on a temporary contraction of market share, but also to ensure the concept of asset quality. 2, maintain the independence of the audit loan. In the case of BBVA, it is natural for the banks to be rational in their economic expansion and calm in keeping credit standards.　　Even for government-sponsored projects and government projects, BBVA would require the government to provide an effective mortgage guarantee without receiving a "comforting" letter of guarantee, apparently refusing to reduce approval conditions for government-funded projects. 3. Be cautious about innovation business. One of the ideas of the Bank of BBVA is, "better to do the traditional business of understanding, do not understand the innovative business", for innovative business, they are cautious, not to see or understand derivative products prefer not to do, this is the bank to avoid the suffering of the financial crisis of the main reason;The bank's focus on portfolio management, from top to bottom, including the board of Management, are very focused on the maintenance and development of traditional credit markets, which also provides the bank with a number of sustainable expansion of the customer community benefits. (iii) Accurate quantification of credit risk: credit risk management is not "art", is a digital management of the "scientific" risk management concept as genetic cell DNA rooted in the bank credit business process, and quantify credit risk, using "digital" to explain the degree of credit risk,　　Also rooted in the bank before the credit analyst's idea, this is its maintenance risk judgment consistency important foundation. 1. Avoid the inconsistency caused by the subjective judgment of the loan. BBVA is very focused on the execution and consistency of risk management, and they believe that the process of measuring risk and quantifying risk is the process by which marketers and risk managers work together to seek consistency standards.　　In the view of the Bank of BBVA, in a subjective judgment environment, if there is no quantitative analysis of the procedures and systems, risk managers can not persuade marketers and branch managers do not take too much risk, and the difference in subjective judgment of different approving personnel, also makes the risk problem can not be effectively solved. 2. Focus on the use of tools to manage risk and spread risk. Advanced credit risk management requires banks to formalize and systematically analyze credit risk exposure, determine the risk exposure of the default rate of PD and the expected loss rate LGD. Although the "digital" credit risk management makes the letter process appear to be lack of "elasticity", but these technologies are especially important for measuring, dissolving and managing credit risk, which accords with the essence of modern bank risk management. BBVA Bank has advanced risk measurement system, attaches great importance to the application of quantitative evaluation results in credit approval, and requires the combination of internal rating to determine the limit of credit exposure. At the end of 2008, the bank's non-performing loan rate was 2.1%, with a provision coverage of 91% per cent (at the end of 2007), with a ratio of 223% to the European banks, which ranked number one in its size and the non-performing rate ranked third (from low to high).　　Such a good asset quality, to a certain extent, should be attributed to its use of advanced risk management technology, the implementation of rigorous quantitative analysis of the ability. 3. Loan pricing should pay attention to "mathematics", but also to the "art". Of course, the digital management of BBVA is not absolute, and the bank has explored a set of "art" in the "science" of loan pricing in many years of operation.　　In the view of BBVA, this "art" is based on the consistent pricing discipline of lending, and is a deliberate decision made after comprehensive consideration of risk pricing, bank-Enterprise Partnership and market factors (such as interbank competitors). (The author unit is Citic Bank's headquarters Credit management department)