Tier 1 capital of commercial banks does not include excess loan loss reserve. Tier 1 capital is also called "core capital". According to the nature and function of bank capital, the division of different components of bank capital is the most important component of bank capital. 198 1 year, three federal regulatory agencies in the United States (the monetary regulator of the Ministry of Finance, the Federal Reserve System and the Federal Deposit Insurance Corporation) initially formulated the standard that Tier 1 capital consists of common stocks, preferred stocks, capital premiums, undistributed profits, bonds convertible into stocks, bad debt reserves and other capital reserves.
How to make provision for bank loan losses?
There are generally three kinds of loan loss reserves drawn by commercial banks: general reserves, special reserves and special reserves.
The method and proportion of drawing loan loss reserve,
According to China's "Guidelines for Provision for Bank Loan Losses", banks should make provision for general reserves on a quarterly basis, and the year-end balance of general reserves should not be less than 65,438+0% of the year-end loan balance; Banks can draw special reserves quarterly with reference to the following proportions: for loans of concern, the drawing ratio is 2%; For subprime loans, the provision ratio is 25%; For doubtful loans, the provision ratio is 50%; For loss loans, the provision rate is 100%. Among them, the loss reserve for subprime and doubtful loans can be floating by 20%. The special reserve is determined by the bank according to the special risk status, risk loss probability and historical experience of different types of loans (such as countries and industries).
The coverage ratio of non-performing loan provision is an important indicator to measure the adequacy of loan loss provision of commercial banks.
Non-performing loan provision coverage ratio = loan loss provision balance/non-performing loan balance.
65438+ 0.5% of the loan amount, which shall be accrued according to the loan balance at the end of the year.
Debit: impairment loss of assets,
Loan: loan loss reserve.
Loan loss reserve includes
Loan loss provision usually includes the following three items: general provision (also known as general provision), special loss provision and special provision. Loan loss provision refers to the impairment provision made by the bank in accordance with relevant regulations when there is objective evidence to prove that the loan is indeed impaired. This project is the difference between the present value of the estimated loan recovery funds and its book value.
Introduction to the types of payment loss reserve
1. General reserve: the loan loss reserve drawn by financial enterprises engaged in deposit and loan business from all loan balances according to a certain proportion to make up for the possible losses that have not been identified. For example, the general reserve provision ratio of China Commercial Bank is 65,438+0% of the loan balance at the end of the year;
2. Special loss reserve: in order to ensure that the lost loans can be fully compensated in time, the loss reserve is set aside according to a certain proportion for the identified or specific loan risks in the loan portfolio. Special reserve is the reserve that commercial banks withdraw only when they encounter special circumstances, such as financial crisis, political turmoil and other major events;
3. Special reserve: according to the inherent loss degree of loans and the classification results of loan risks, the loss reserve of various loans is calculated according to certain risk weights.
What is the subject of loan loss reserve? To do such accounting treatment
Loan loss reserve is an asset class subject. The credit balance at the end of this course reflects the loan loss reserve that the enterprise has accrued but has not written off.
Main accounting treatment of loan loss reserve
(1) On the balance sheet date, the enterprise determines the impairment according to the criteria for the recognition and measurement of financial instruments, and debits the "asset impairment loss" account according to the amount to be written down, and credits this account. If the loan loss provision accrued in this period is greater than its book balance, it shall be accrued according to the difference; The difference between the accrued amount and the book balance is taken as the opposite accounting entry.
(two) loans that are really irrecoverable shall be written off after approval in accordance with the management authority, debited to the subject and credited to "loans" and other subjects.
(3) If the loan value for which loan loss provision has been made is recovered later, it shall be debited to this account according to the original loan loss provision amount recovered and increased, and credited to the "asset impairment loss" account.
(4) When the enterprise recovers the loan, it shall carry forward the loan loss provision accrued by the loan.
What is loan loss reserve?
Loan loss reserve is the loan loss impairment reserve drawn by banks according to regulations. Assets for loan loss provision include discounted assets, borrowed funds, customer loans, syndicated loans, trade financing, agreed overdrafts, credit card overdrafts, refinancing and advances.
The impairment provision accrued by the enterprise insured (insurance) is also accounted for in this account.
The provision for impairment of enterprises (pawns) and mortgage loans is also accounted for in this account.
The provision for impairment of loans from banks or other financial institutions entrusted by enterprises to other units can be changed to the subject of "1304 entrusted loan loss provision".
Asset coverage ratio of internal rating method in commercial banks
The asset coverage ratio of the internal rating method of commercial banks is less than 6%.
After the IRB parallel period, the excess loan loss reserve that can be included in tier 2 capital shall not exceed 0.6% of the corresponding credit risk-weighted assets.
Compared with the standard method provided by Basel Accord, internal credit rating can better describe the actual credit risk of banks and more accurately match the capital requirements corresponding to credit risk.
Extended data
Judging from the development of commercial banks, there are two business models of commercial banks. One is the British model. Commercial banks mainly finance short-term commercial funds, which have the characteristics of short lending period and high liquidity.
That is, borrowing deposits at a lower interest rate and lending them at a higher interest rate. The deposit-loan spread is the main profit of commercial banks. This business model is relatively safe and reliable for banks. The other one is from Germany, and its business is comprehensive. Commercial banks not only finance short-term commercial funds, but also finance long-term fixed capital, that is, engage in investment banking business.