What Is Mitigation Banking?

Banking business refers to the business handled by the bank. According to the degree of business complexity and dependence on outlets, banking can be divided into traditional businesses and complex businesses. According to the composition of its balance sheet, banking business is mainly divided into three categories: liability business, asset business, and intermediate business.

Bank business

According to the complexity of the business and the degree of dependence on outlets, banking can be divided into two parts: one is traditional business, including general loans, simple

Liability business is an activity in which a commercial bank raises funds for daily work through external debt. It is a commercial bank

Asset business

Intermediate business refers to the business in which commercial banks act on behalf of customers in handling collections, payments, and other entrusted matters, and collect fees. Banks do not need to use their own funds and rely on the advantages of business, technology, institutions, reputation and talents to act as an intermediary for customers to undertake collection and payment and other entrusted matters, provide various financial services, and charge fees. Banks do not need to occupy their own funds to operate intermediate business. They are generated on the basis of the bank's asset-liability credit business and can promote the development and expansion of bank credit business. ^[2]

Banking Payment Settlement Business

The payment and settlement business refers to the commercial bank's handling of toll services related to currency payments and fund transfers due to the debtor's rights and debts.

(1) Settlement tools. The main settlement tools used by the settlement business include bank drafts, commercial drafts, cashier's checks and checks.

1. A bank draft is a bill issued by the issuing bank and paid unconditionally to the payee or bearer according to the actual settlement amount when the bill is seen.

2. A commercial money order is a bill issued by the drawer and entrusting the payer to pay the determined amount unconditionally to the payee or holder on a specified date. Commercial bills are divided into bank acceptance bills and commercial acceptance bills.

3. Cashier's check is a note issued by a bank that promises to pay a certain amount to the payee or bearer unconditionally when he or she sees it.

4. A check is a bill issued by the drawer and entrusted by the bank that handles the check deposit business to pay the confirmed amount to the payee or bearer unconditionally when the ticket is seen.

(2) Settlement methods, including intra-city settlement methods and off-site settlement methods.

1. Remittance business is a settlement business in which a payer entrusts a bank to remit money to a certain payee in a foreign country. Remittance settlement is divided into three forms: wire transfer, letter transfer and bill of exchange.

2. Collection business refers to a settlement method in which creditors or sellers issue drafts to foreign debtors or purchasers and entrust banks to collect them on their behalf.

3. Letter of credit business is a written guarantee document issued by the bank to the beneficiary according to the requirements and instructions of the applicant, containing a certain amount of money, and paying the prescribed documents at a specified place within a certain period.

(3) Other payment and settlement services, including funds transfer and settlement using modern payment systems, and transfers using banks' internal and external networks. ^[6]

Bank business bank card business

Bank cards are credit payment tools issued by authorized financial institutions (mainly commercial banks) to the society with all or part of functions such as consumer credit, transfer settlement, and cash deposit and withdrawal. The classification of bank card business generally includes the following categories:

(1) According to the settlement method, bank card business can be divided into credit card business, quasi-credit card business and debit card business. Debit cards can be further divided into debit cards, dedicated cards and stored-value cards.

(2) Depending on the currency of the settlement, bank cards can be divided into RMB card business and foreign currency card business.

(3) According to different users, bank cards can be divided into unit cards and personal cards.

(4) According to different carrier materials, bank cards can be divided into magnetic cards and smart cards (IC cards).

(5) Bank cards can be divided into gold cards and ordinary cards according to the credit level of the users.

(6) According to the scope of circulation, bank cards can be divided into international cards and regional cards.

(7) Other classification methods, including the joint issuance of co-branded cards / identification cards by commercial banks and for-profit institutions / non-profit institutions. ^[6]

Banking Agency

Agency intermediary business refers to the business of commercial banks accepting customers' entrustment, handling economic affairs designated by customers, providing financial services, and charging certain fees, including agency policy banking, agency of the People's Bank of China, agency of commercial banking, agency collection and agency Payment business, agency securities business, agency insurance business, agency bank card acquisition business, etc.

(1) Agency policy banking business refers to the business that commercial banks accept on behalf of policy banks to handle on behalf of policy banks that cannot be handled due to restrictions on service functions and outlets, including agency loan project management.

(2) Agency of the People's Bank of China refers to the business that should be undertaken by the central bank in accordance with policies and regulations, but due to the establishment of institutions, professional advantages, etc., the business designated or commissioned by the central bank to undertake business, mainly including financial deposit agency Business, treasury agency business, distribution treasury agency business, gold and silver agency business.

(3) Commercial bank agency business refers to the business of mutual agency between commercial banks, for example, check collection for entrusted banks.

(4) The collection and payment business is a business in which a commercial bank uses its own settlement facilities to accept the commission of customers to handle the collection and payment of designated funds, such as agency fees for various public utilities, agency administrative fees, and financial fees. , Pay wages, withholding mortgage loan repayments, etc.

(5) Agency securities business refers to the business of issuance, redemption, and trading of various types of securities that are entrusted by banks, and also includes the business of accepting entrusted agents to repay principals and interests, issuing stock dividends, and clearing securities funds. The securities here mainly include government bonds, corporate bonds, financial bonds, and stocks.

(6) Agency insurance business refers to the business in which a commercial bank accepts an insurance company's entrustment to handle insurance business on its behalf. Commercial banks acting as insurance agents may be entrusted to insure insurance matters of various types of insurance on behalf of individuals or legal persons, and may also act as representatives of insurance companies and sign agency agreements with insurance companies to undertake related insurance services on behalf of insurance companies. Agency insurance business generally includes agency sales and insurance payment.

(7) Other agency business, including agency financial commission business, agency bank card acquisition business, etc. ^[6]

Banking guarantees and commitments

Guaranteed intermediary business refers to the business in which a commercial bank provides guarantees for customers' debt repayment ability and assumes the risk of customer default. It mainly includes bank acceptance bills, standby letters of credit, and various guarantees.

(1) A banker's acceptance bill is a commercial bill of exchange issued by the payee or payer (or the acceptance applicant), and applied by the acceptance applicant to the bank that opened the account, which has been approved by the bank.

(2) The standby letter of credit is a special letter of credit issued by the issuing bank at the request of the borrower and using the lender as the beneficiary of the letter of credit to ensure that in the event that the borrower becomes bankrupt or fails to perform its obligations in a timely manner, The issuing bank pays the principal and interest in a timely manner to the beneficiary.

(3) Various types of guarantee business, including bid guarantee, contract guarantee, repayment guarantee performance, loan guarantee, etc.

(4) Other guarantee business.

Commitment intermediary business refers to the business in which a commercial bank provides agreed credit to customers on a certain date in the future, and mainly refers to loan commitments, including two types of revocable commitments and irrevocable commitments.

(1) A revocable commitment is accompanied by specific terms that the customer must fulfill before obtaining the loan. If the customer fails to fulfill the terms during the bank's commitment period, the bank may revoke the commitment. Revocable commitments include overdraft limits.

(2) Irrevocable commitments are loan commitments that banks cannot arbitrarily cancel without the customer's permission, and are legally binding, including standby credit lines, repurchase agreements, and the convenience of issuing notes. ^[6]

Banking transactions

Transaction intermediary business refers to the financial transaction activities of commercial banks using various financial instruments to meet the needs of customer value preservation or own risk management, mainly including financial derivative business.

(1) Forward contracts refer to the purchase and sale of assets at agreed prices at a specific time in the future by both parties to the transaction, including interest rate forward contracts and forward foreign exchange contracts.

(2) Financial futures refer to futures contracts with financial instruments or financial indicators as the target.

(3) Swap refers to the exchange of cash flows between the two parties based on their comparative interests, and is generally divided into interest rate swaps and currency swaps.

(4) Option refers to the option buyer pays a premium to the seller to obtain a right to conduct a specified number of specific transactions with the option seller at an agreed price during the duration of the option or on the expiration date. . According to the target of the transaction, options can be divided into stock index options, foreign exchange options, interest rate options, futures options, bond options and so on. ^[6]

Banking investment banking

Investment banking services include securities issuance, underwriting, trading, corporate restructuring, mergers and acquisitions, investment analysis, venture capital, and project financing. ^[6]

Banking Fund Custody Business

Fund custody business refers to a commercial bank that is qualified for custody accepts the entrustment of a fund management company to securely keep all the assets of the funds it entrusts, and handles the transfer of fund fund clearing funds, accounting, fund valuation, and supervision of managerial investments for the funds it entrusts Operation. It includes closed-end securities investment fund custody business, open-ended securities investment fund custody business and other fund custody business. ^[6]

Banking consulting

Consulting services refer to the commercial banks relying on their own advantages in information, talents, reputation, etc. to collect and sort out relevant information, and to record and analyze this information and the movement of bank and customer funds, and form systematic data and plans, Service activities provided to customers to meet the needs of their business operations management or development.

(1) Enterprise information consulting business, including project evaluation, enterprise credit rating evaluation, verification of registered capital of enterprises, credit certification, enterprise management consulting, etc.

(2) Asset management consulting business refers to the provision of comprehensive asset management services for institutional investors or individual investors, including investment portfolio recommendations, investment analysis, tax services, information provision, and risk control.

(3) Financial advisory business, including financial advisory business for large-scale construction projects and corporate M & A advisory business. Large-scale construction project financial advisory business refers to the commercial bank's professional proposal for the financing structure and financing arrangements of large-scale construction projects. Corporate mergers and acquisitions advisory business refers to the financial advisory services provided by commercial banks to corporate mergers and acquisitions. Banks not only participate in the process of corporate mergers and acquisitions, but also serve as corporate sustainable development consultants, participating in corporate structure adjustments, capital enrichment and re-approval, and bankruptcy. And the restructuring of troubled companies and other planning and operational processes.

(4) Cash management business refers to the assistance provided by commercial banks to scientifically and rationally manage cash account positions and balances of demand deposits in order to achieve the purpose of improving the liquidity of funds and the efficiency of use. ^[6]