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Original title: Trust industry should increase investment in low-risk standard products
bank of ChinaFan Rongjie, Insurance News reporter
Recently, Puyi Standards and Everbright Trust jointly published the first “China Trust Corporation’s Global Competitiveness Index Research Report (2020)” (hereinafter referred to as the “Report”) in the Chinese trust sector. The “Report” shows that over the past few years the trust activity has gradually focused on leading institutions in the sector. The “Report” suggests that each trust company should clarify its development positioning.
The “Report” builds a system of competitiveness indices to provide trust companies and the public with a set of reference standards with professional theoretical support and verification of industry development practices, so that all parties can have a more complete understanding trust companies and help trust companies Based on their own development experience and resource allocation, adapt and build their own unique core competitiveness.
Business concentration of trust in the head
The “Report” divides the global competitiveness index of trust companies into three sub-indices, including the “Company’s Business Strength Index” which focuses on the overall business level of the company, the “Business Strength Index of Trust” which focuses on the business level of trust of each trust company and The “Collective Fund Product Issue Index” which reflects the ability of trust companies to issue collective fund products.
The “Report” pointed out that from the changes in the overall competitiveness of 68 trust companies over the past eight years, it can be seen that there are obvious differences in the competitiveness growth rate of different trust companies.
Comprehensive Competitiveness of Trust Companies Index results in the “Report” show that CITIC Trust ranked # 1 in the industry for three consecutive years from 2017 to 2019. Also companies such as AVIC Trust, Ping An Trust, China Resources Trust and Foreign Trade Trusts have ranked in the top ten in the industry for the past three years.
While some trust companies have secured their leadership positions in the industry, there have also been some large gaps within the trust industry. The “Report” shows that in 2019 the index scores of the top ten trust companies in the company’s commercial strength index showed a large gap. Among them, first place CITIC Trust and 10th place Huaneng Trust have a distinct gap, which has not appeared in many other competitiveness indices, reflecting the gradual concentration of trust activities towards industry leaders.
The “Report” believes that under the pressure of transformation, major trust companies can better address corporate compliance issues, but relatively small trust companies can survive the painful transformation period only by reducing the size of certain businesses. This has led to an increase in the concentration of managed assets of the major trust companies, resulting in changes in indicators such as the size of trust funds, asset growth and proportion of different types of trust funds and increasing the index score.
At the same time, the “Report” analyzes the changing trend of the trust company’s commercial strength index and points out that some trust companies with larger scale, higher profitability and faster growth have relatively excellent index performance. In recent years, many trust companies have improved their competitiveness through constant and constant efforts.
Trust companies should clarify their development positioning
According to the “Report”, from the results of global competitiveness, the main trust companies in the Comprehensive Competitiveness Index in 2019 are mostly trust companies rated A in the regulatory rating and most of the trust companies in the center of the Comprehensive Competitiveness index are also rated Company regulatory rating B. Trust companies with different levels of competitiveness and different regulatory ratings have formed some differences in the approval of qualifications, business development difficulties and levels of risk control for conducting business.
Therefore, the “Report” believes that trust companies with strong competitiveness can be positioned to seek innovation and development, in the case of relatively balanced business development, starting from the perspective of the types of activities, expanding company boundaries, intensifying the innovation and seeking new financing rules on trust. The excellent solution.
Competitive midstream trust companies are positioned to seek a balance between innovation and transformation. Midstream fiduciary companies have relatively strong business scales and types. Relatively competitive trust companies have a certain gap and face greater transformation pressure, but still have the ability to innovate.Therefore, the midstream trust company has to find an appropriate balance between business transformation, updating and innovation.
Trust companies with relatively low competitiveness must be positioned to solve the pressure of transformation: this part of the trust companies usually have partial assets, such as too focused on the trust activities of industrial and commercial enterprises, and rely too much on the use of funds loan. According to regulatory requirements, the pressure of transformation is greater, so midstream and downstream trust companies need to focus on the present and find a breakthrough in business trust development under regulatory requirements.
Increase investments in low-risk standard products
Affected by new asset management regulations, new fund trust regulations, standardized credit identification rules and other regulatory documents and guidance, non-standard trust industry products are subject to increased restrictions, represented by “bonds. “,” shares “and ABS. The “standard products” have received more and more attention from the trust companies.
The “Report” suggests that trust companies can increase investments in low-risk standardized assets and issuance of related products, such as trust products for liquidity management, and use this as an opportunity to enter the business. standardized.
The “Report” suggests that trust companies can take full advantage of their past experience in non-standard business areas, improve their ability to manage credit risk and enhance investments in standard products. Furthermore, high-quality client assets can also guide their investment direction from non-standard debt products to standard trust products based on their risk preference characteristics.
Building risk control and compliance management capabilities
The trust industry has been developing for more than 40 years and has formed a number of risk management models with trust features, but there are also many problems that cannot be ignored. This can also be seen from the changes in the competitiveness index of trust companies that some trust companies may be in for a period of time. The rapid internal development and the rapid improvement in the level of competitiveness, but after a few quarters the risk has gradually been exposed and a series of disputes have also arisen for the reimbursement of the products, which will eventually incur losses, or will suffer regulatory sanctions, or will be taken over by the regulatory authorities.
The “Report” stressed that in the current complex economic situation and regulatory environment, the past risk management model may no longer be able to adapt to the pace of business transformation of trust companies. Trust companies need to strengthen risk management skills and improve their anti-risk capabilities. The adjustment began to strictly control risk, and risk control was performed throughout the entire fundraising, investing, management and payment process.
As rigid payments are stopped and the transformation of the standardized trust business is intensified, trust companies need to pay more attention to due diligence and investment management and shift risk responsibilities from past solvency risks to management risks and risks from maintaining corporate branding and sustainable development. Define, accelerate building a risk control compliance system and forge risk control compliance management capabilities.
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Responsible editor: Tang Jing
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