Optimizing Policies & Business Process and Strengthening Product & Service Innovation

CCB takes measures to improve the financial services for small and medium-sized enterprises

 “To extend greater support and improve the financial services for the development of small and medium-sized enterprises (SMEs), CCB has made expanding the SMEs business as a strategic choice and added it to its strategic development blueprint,” Chang Zhenming, President of CCB told the reporter on January 26. As a listed company, CCB actively advocates and carefully implements the “customer-centric” business philosophy and takes supporting the growth of SMEs as its unshirkable duty. Recently the bank launched a series of new measures to enhance its financial services for SMEs, including making policy and mechanism innovations in terms of business model, credit policy, business process, product & services, risk control, credit risk pricing, risk compensation, incentive and discipline. It has especially orchestrated a differentiated operational model and business mechanism for SMEs financial services.

It is said that recently CCB developed and issued the Implementation Opinions on the Development of Small Enterprises Credit Business of China Construction Bank and proposed the following service measures: implementing the “customer-centric” business philosophy to build a specialized small enterprise operational system; building two special credit service brands; formulating three categories of differentiated customer service measures; innovating four safeguard mechanisms. To put it specifically, eight measures will be taken:

First, establishing an operational and management department especially providing services for small enterprises and staffing the department with qualified professionals. A Small Enterprise Center will be set up at the headquarters and the first-level branches and a Small Enterprise Operational Center established at the secondary city branches and some sub-branches. A flat management mechanism will be adopted with the operational priority on the secondary branches and lower levels to reach out to the market and small enterprise clients. Small enterprise customer managers will be appointed and trained to raise service efficiency.

Second, establishing a special credit rating system in response to the characteristics of small enterprises. Since the financial information and credit record of small enterprises are generally inadequate, CCB develops for small enterprises an independent credit rating system and a special credit scoring method different from those for large and medium-sized enterprises. While paying attention to the financial information of small enterprises, greater focus will be put on the analysis and appraisal of soft information. The scoring system helps the bank understand the risks of small enterprises more accurately.

Third, optimizing credit process, simplifying operational procedure, raising approval efficiency and adopting differentiated management for three categories of small enterprise clients. In response to the flexibility of financial services to small enterprises, the business process will be optimized and the examination and approval authority will be decentralized moderately to simplify the approval procedure and downsize the decision making chain. Credit should be examined and approved simultaneously by the head of the Small Enterprise Operational Center and the authorized staff. As to the small enterprises with adequate information and sound credit record, credit support will be granted according to their credit rating and credit line. For those small enterprises with insufficient information, no credit rating and credit line will be highlighted and credit support will be granted on the basis of adequate pledge and existing links with the credit of the enterprise owner or its major shareholders. For those micro enterprises, counter services will be provided as in the retail business and the credit procedures will be further simplified.

Fourth, launching the two customer-tailored “Speed Lending” and “Path of Growth” credit service products to meet the financing demands of small enterprises at different growth stage. To address the problem that it is difficult for small enterprises to meet the credit rating and credit line requirements of banks due to insufficient financial information, CCB launched the “Speed Lending” service which under the precondition of effective guarantee sets no threshold for clients to get credit support from the bank. The bank also provides the “Path of Growth” service for those small enterprises which have strong growth momentum, clearly defined ownership, standard management, promising prospects, sufficient information and sound credit record. According to their credit rating, such small enterprises can get credit support from CCB immediately after finishing their credit rating and determining the limit of credit.

Fifth, increasing the provision for small enterprise clients and establishing the small enterprise credit risk compensation mechanism. Differentiated policies will be adopted for the credit write-off of small enterprises. On the basis of making provision for small enterprise credit the system of expected small enterprise credit losses write-off will be set up and the interest rate will be used as a lever to cut credit risks. 

Sixth, establishing the small enterprise credit risk pricing mechanism according to the principle of incoming covering risks. To ensure the healthy and sustainable development of small enterprise credit services, the differentiated risk pricing mechanism will be adopted according to different industries, guarantees and borrowers with the purpose of making the credit interest rate for small enterprises more flexible, encouraging the enthusiasm of the small enterprise credit department through the interest rate leverage and risk compensation system, granting credit to a bigger number of small enterprises and realizing a win-win outcome for both the bank and the enterprises.

Seventh, establishing the incentive and discipline mechanism in line with the credit culture of small enterprises. Independent accounting and evaluations will be made for the credit business to small enterprises and a special risk control and business evaluation system will be developed to highlight incentives for credit staffs and institutions, encouraging them to take the initiative under the precondition of effectively control of risks. An accountability system suitable for small enterprises will be set up to investigate and affix the credit responsibility by identifying whether the credit staffs faithfully fulfill their duty and what are the causes of credit risks.

Eighth, establishing special statistics indexes and accounting system to evaluate the business performance of the financial services to small enterprises. Special accounting classification for small enterprise services will be set under the existing accounting system. The statistics and information management system targeted at the business needs of small enterprises will be built to make independent accounting for the existing and newly developed small enterprise clients and make real-time monitoring and evaluation of the business performance of the financial services to small enterprises.

The reporter was told that to accelerate the development of the SMEs business and extend greater support to SMEs CCB has formulated the SMEs business expansion guidance and launched the system project in 2005, which greatly facilitates the growth of the SMEs services. The latest policies and measures of the bank will be implemented in 30 major cities. In the process experiences will be accumulated to improve the financial services to SMEs, enrich product portfolio and innovative capacity and meet the demand of SME clients.