Bank of China Reforms NPA Disposal Process to Intensify Risk Control

On December 5, BOC spokesman Wang Zhaowen briefed the press on the reform of NPAs disposal process and risk prevention measures during the NPA disposal. He said that since the joint-stock reform, Bank of China had undertaken the measures to solve the problems of excessive procedures and inefficiency in the approval of assets disposal and therefore established the goal of examination at once , evaluation at once, and approval at once on the basis of optimizing process, improving efficiency, strengthening internal control and preventing risks.

The examination and approval of assets disposal items are centralized in tier-1 branches and the Head Office. At present, the NPA disposal process reform begins to produce fruitful results in some experimental branches.

Wang Zhaowen said that the disposal of NPAs was an important procedure in the management of credit risk assets, and a final barrier for effective assets protection and bank loss prevention. To prevent and control risks, in human resources reform, Bank of China set up full-time positions of due diligence for assets disposal at the newly established Credit Administration Department, whose responsibility was to analyze the NPAs disposal plans that go beyond the authorization of the branches at home and abroad.

From the perspectives of feasibility, necessity, optimality, controllability, risk points and other foreseeable factors that affect the disposal plans, they would put forward advices on examination as reference for the decision-making of the Assets Disposal Committee.

The spokesman pointed out that as BOC s joint-stock reform were moving forward, new requirements for the establishment of internal control system, the strengthening of risk management and the pursuit of efficiency and benefit were to be met. A scientific internal control mechanism is the unification of the principles validity, prudence, universe, timeliness and independence.

Besides the drastic reform on the disposal process of NPAs, BOC also made great efforts on the establishment of rules and regulations on assets disposal. The process, contents, standards and application requirements of NPA disposal were regulated. In the next stage, Bank of China would select a group of full-time assets disposal judges with high professionalism, capability and rich experience.

The operational manual would be prepared and be released to all due diligence reviewers for assets disposal,in the bank, thus provided business reference and guidance for them. Through the above measures, BOC had primarily established an effective control system of NPAs disposal, which would help improve the assets quality of Bank of China and meet the requirements for external regulation and listing of the bank.