Credit Guides And Credit Services

Key Areas For Improvement By Chinas Banks Include Financial Reporting and Risk Management, According to BearingPoint

McLean, Va., May 11, 2005BearingPoint, Inc. (NYSE:BE), one of the worlds largest business consulting and systems integration firms, today cited financial reporting and risk management as key areas of improvement for Chinas banks as they emerge on the financial services world stage.
The focus on financial transparency, the installation of enhanced operating controls and risk management are key for the development of Chinas banks. Most important in the short term is a focus on credit risk in order to meet global standards and to allow for the larger banks to complete IPOs in the global markets, said Christopher Hamilton, a Senior Vice President with BearingPoint. In addition, developing processes for resolving the non-performing loans that have accumulated within the banking system will become increasingly important as they raise capital on global exchanges.

Hamilton also noted that Chinas banks are poised to potentially become some of the most influential financial institutions in the world over the next 10 years, but they first need to address these fundamental management issues. Of primary importance for Chinas banks is the need to enhance their ability to manage risk. The issues facing the banks ability to manage risk include:

* Evolving secondary and derivatives markets
* Lack of accurate credit loss history
* Evolving personal credit scoring
* Identifying non-performing assets
* Disparate processes and policies for lending
* Organizational changes to moderate autonomous branch vs. corporate decisions
* The low number of experienced candidates for risk positions in the market and the challenge to train leadership.

It has been impressive to see the banks progress on fundamental risk rating, data warehouse and lending systems in the past year, or so, and to see managements strong resolve to quickly expand these capabilities for China's banking industry, said Hamilton.

The change to a credit decision process driven by objective risk parameters is more than just using the appropriate tools and data, added Dirk Chan-Mller, a Managing Director with BearingPoint. The challenge in this fast changing environment is to roll out these processes in institutions with up to 400,000 employees. This is like a quantum leap for the industry, which the global banking industry has never seen before, since most U.S., or European banks had more time for their own evolution.

"The banks can become more transparent and granular by not only investing in the appropriate technology, but also by investing in the development of their peoples capabilities, especially in such areas as leadership development, governance training and credit and risk management," said David Wu, a Managing Director with BearingPoint.

BearingPoint has cited financial reporting and risk management as one of five key areas of development for Chinas banks. Stephen Cheung, a Managing Director with BearingPoint's Financial Services practice in Hong Kong, also noted digitization, delivery systems, product development, and management development as other areas for the banks to focus on as they emerge in the global industry.

To speak with Hamilton about these issues, please contact John La Place at +1-212-896-6213, or john.laplace@bearingpoint.com, or Vivien Wu at +86.21.52925392, or vivien.wu@bearingpoint.com.

About BearingPoint, Inc.
BearingPoint, Inc. (NYSE:BE) is one of the worlds largest business consulting, systems integration and managed services firms serving government agencies, Global 2000 companies, medium-sized businesses and other organizations. We provide business and technology strategy, systems design, architecture, applications implementation, network infrastructure, systems integration and managed services. Our service offerings are designed to help our clients generate revenue, reduce costs and access the information necessary to operate their business on a timely basis. Based in McLean, Va., BearingPoint has been named by Fortune as one of Americas Most Admired Companies in the computer and data services sector. For more information, visit the Companys website at www.BearingPoint.com.

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