At the same time, through the integration process through participation in regional economic organizations (ASEAN) and global (IMF), Vietnam can receive support in training financial specialists, organizing financial markets, electronic information systems for foreign exchange trading, cooperation against money laundering and security measures for the financial system.
The opening of the market will welcome foreign investors with strong financial potential, high management skills and a team of good specialists, helping Vietnamese financial institutions and enterprises to approach professional business levels and absorb achievements in banking and finance activities to gradually narrow the gap in the level of Vietnamese finance with modern finance. This is the basis for creating favorable conditions for foreign exchange trading activities as well as for the development of Vietnam's banking sector.
The financial market is increasingly open according to the roadmap agreed upon when joining the WTO, foreign banks have more and more opportunities to penetrate the Vietnamese market and with their capital potential, management capacity, and experience in currency trading activities, it has caused increasing competitive pressure, requiring Vietnamese commercial banks to have a strategy to improve management skills, risk management, develop banking operations and build and improve more modern information processing and forecasting systems.
2.2.6. Facing the uncertainties caused by the opening of financial markets
Opening the market not only brings advantages for the process of economic development and modernization of the financial system, but also has to accept the instability of the world economy, with weak management capacity, risk management level and the ability to prevent and detect risks of the Vietnamese financial system is still limited. Even for countries with modern management level, there is a risk management system and detection of potential risks.
Even the most developed economies have been attacked by currency speculators, causing their banks to collapse, as the world economy has witnessed, such as the Barings Bank in Singapore (a subsidiary of the Barings Securities Company headquartered in London) in 1995. The cause of the banking crisis is believed to be the excessive abuse of financial derivatives trading and the failure to manage the open position of these transactions.
The 1997 Asian financial crisis caused heavy damage to the financial systems of Thailand, Malaysia, and Indonesia, which are lessons for Vietnam in the process of opening up the financial market.
Most recently, the global economic crisis in 2008 caused a significant decline in global economic growth, and developed economies fell into recession. The main cause was excessive investment in the real estate market and the support of financial derivatives transactions, which caused real estate prices to skyrocket, and substandard loans from US banks triggered the collapse of several major US banks. Vietnam's economic situation was significantly affected. In the first 6 months of the year, the trade deficit increased sharply due to price fluctuations, while exports decreased due to the global economic recession, threatening a serious deficit in the balance of payments and putting pressure on the exchange rate.
In the context of the economy increasingly integrating into the world economy, the level of liberalization of capital transactions is relatively high, fluctuations in investment capital flows, especially indirect capital flows, have strongly affected the supply and demand of foreign currency and exchange rates. Evidence of this influence is the situation of Vietnam's financial market in 2008, after 1 year of joining the WTO and implementing the liberalization of current account transactions and partial opening to capital transactions, indirect investment capital flows have continuously fluctuated, causing an imbalance in the supply and demand of foreign currency. Capital flows
This increased significantly in the first three months of the year, causing pressure to increase the VND price, then showed signs of reversing, increasing the demand for foreign currency when the world economic situation continued to be difficult, the domestic economy faced inflation, and a high trade deficit. After the capital inflow showed signs of a slight increase due to positive developments in Vietnam's macro economy in the last months of the year, the international financial market crisis caused investors to tend to withdraw capital to ensure the liquidity of organizations in the home country.
According to the World Bank (BIS, 2007), financial crisis is a danger for middle-income countries, because when capital market conditions change, lenders may stop disbursing, long-term projects may not be completed, newly registered projects cannot be implemented, the domestic currency may depreciate and instability will spread rapidly in the economy. Unpredictable fluctuations in the world economy and financial markets as well as in the country will negatively affect the balance of foreign currency supply and demand in the country, affecting the TTNH quickly once the opening process is greater.
2.2.7. More intense competition with rivals that are superior in terms of potential and experience
In recent years, although Vietnam's banking system has undergone many innovations, Vietnam's commercial banks are still very modest in terms of capital capacity compared to commercial banks in some countries in the region.
Through the data in Table 2.6, it can be seen that the capital scale of the largest commercial banks in Vietnam is only Agribank, which is more than 1 billion USD, the rest are all less than about 800 million USD such as Vietcombank, BIDV, lower than the smallest capital level of commercial banks in Singapore and Malaysia. With such capital capacity, commercial banks in Vietnam will face many difficulties in developing foreign exchange business activities in the regional and global banking market.
Table 2.6: Charter capital size of some commercial banks of countries in the region
Unit: Million USD
Nation
Capital | Nation | Capital | |
INDONESIA | MALAYSIA | ||
Bank Mandiri | 2,122 | MayBank | 4,102 |
Bank BNI | 1,499 | Public Bank(PBB) | 2,382 |
Bank Central Asia | 1,304 | Commerce Asset- Holding | 1,695 |
Bank Rakyat Indonesia | 1,070 | AMMB Holding | 1,476 |
Bank Dabamon Indonesia | 807 | RHB Bank Berhad | 1,179 |
Panin Bank | 363 | Hong Leong Bank | 1,128 |
VIETNAM | THAILAND | ||
Agribank | 1062 | Bangkok Bank | 3,178 |
BIDV | 724 | Siam Commercial Bank | 2,189 |
Vietcombank | 621 | Kasikorn Bank | 1,996 |
Vietin Bank | 577 | Krung Thai Bank | 1,837 |
ACB | 401 | Siam City Bank | 853 |
Techcombank | 355 | Thai Military Bank | 802 |
Sacombank | 344 | Bank of Ayudhya | 771 |
PHILIPPINES | SINGAPORE | ||
Bank of Philippines | 975 | DBS Bank | 9,623 |
Metropolitan Bank and Treasury Company | 704 | United Overseas Bank | 6,297 |
Equitable PCI Bank | 464 | Oversea-Chinese Banking Corporation | 5,589 |
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Foreign Exchange Services and Investment Operations of Credit Institutions in the Financial Market -
![Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branchs income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giangs profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project Restructuring the system of credit institutions in the period 2011-2015 approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services.
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giangs products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Ministers Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giangs treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giangs income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giangs corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giangs card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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div.maincontent .s40 { color: black; font-family:Times New Roman, serif; font-style: normal; fo](https://tailieuthamkhao.com/uploads/2022/06/06/dich-vu-phi-tin-dung-tai-ngan-hang-thuong-mai-co-phan-dau-tu-va-phat-8-1-120x90.png)
Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branch's income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giang's profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project "Restructuring the system of credit institutions in the period 2011-2015" approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services".
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giang's products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Minister's Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers' cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giang's treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giang's income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giang's corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giang's card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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Using Cross Currency Contracts to Speculate on the Foreign Exchange Market: -
Strengthening Control, Restriction and Gradually Eliminating Activities of the Unofficial Foreign Exchange Market -
Balancing Supply and Demand of a Country's Currency in the Foreign Exchange Market
Source: www.thebanker.com/top 1000[74] In addition, in terms of foreign trade financing and international payments, foreign banks have a clear advantage over Vietnamese banks in terms of professional qualifications and experience. They also receive support from parent banks abroad in customer assessment and evaluation stages and other banks. They boldly finance with attractive conditions for customers, so this is the strength of foreign banks.
Foreign banks. Domestic banks are considered to have more strength in the retail service sector. However, in preparation for the complete opening of the banking industry in 2011, foreign banks have rapidly expanded their operations in Vietnam, especially in the retail service sector. With strong financial capacity and global reputation, high service quality from foreign banks will be a big challenge for Vietnamese commercial banks.
In the short term, Vietnamese commercial banks have an advantage due to their extensive branch network, traditional relationships with customers, a thorough understanding of cultural practices, and a thorough understanding of the market as well as the behavior and thinking of Vietnamese customers that foreign banks cannot have. However, this advantage is gradually disappearing as foreign banks are recruiting a large number of Vietnamese employees. Vietnamese commercial banks have implemented many measures such as strategic cooperation but still cannot compete with advanced technology and global products of foreign banks. With the current management level and infrastructure of Vietnamese commercial banks, accessing modern banking technology is not simple. If domestic commercial banks do not improve their services and operate effectively, in the near future they will have to share market share with giant enterprises such as HSBC, ANZ, Standard Charter Bank, etc.
Thus, the process of international economic integration will create conditions for the development of Vietnam's financial market, but will also face many uncertainties. The current issue is to correctly assess the current situation of Vietnam's financial market in order to prepare for opportunities and deal with challenges in order to take advantage of opportunities to develop the financial market in particular and the financial market in general safely and effectively.
2.3. Current status of Vietnam's foreign exchange market
2.3.1. Legal documents regulating foreign exchange trading activities
Currently, the document with the highest legal status on foreign exchange management is Foreign Exchange Ordinance No. 28/2005/PL-UBTVQH11 issued on January 13, 2005.
12/2005/ND-CP of the National Assembly Standing Committee. The Ordinance on Foreign Exchange was issued to unify the principles of foreign exchange management into a specialized legal document, which is the basis for governing all issues related to foreign exchange and foreign exchange business activities. The Ordinance affirms that Vietnam's foreign exchange management policy is to create favorable conditions and ensure the legitimate interests of individuals and organizations participating in foreign exchange activities, contributing to promoting economic development; implementing the objectives of the national monetary policy, improving the convertibility of Vietnamese Dong; implementing the objective of using only Vietnamese Dong in Vietnam's territory; implementing the commitments of the Socialist Republic of Vietnam in the roadmap for international economic integration, strengthening the effectiveness of state management of foreign exchange and perfecting Vietnam's foreign exchange management system.
To guide the implementation of the Foreign Exchange Ordinance, the Government issued Decree No. 160/2006/ND-CP on December 28, 2006.
Regarding foreign exchange business activities, on April 11, 2008, the State Bank of Vietnam issued Circular No. 03/2008/TT-NHNN (Circular 03) providing detailed guidance on foreign exchange service provision activities of Banks and Non-Bank Credit Institutions as stipulated in Decree 160/2006/ND-CP of the Government issued on December 28, 2006. Referring to the conditions and procedures for applying for a license to provide foreign exchange services of Banks.
According to Circular 03, banks can provide foreign exchange services in the domestic market if they meet the following conditions: service provision plan approved by the Board of Directors; have adequate equipment and facilities to meet service requirements; have personnel knowledgeable about foreign exchange activities, trained in foreign exchange operations and foreign exchange business risk management.
In addition, to be able to provide foreign exchange services in the international market, the Bank must meet additional requirements, such as: having an internal inspection, control and audit system; complying with the State Bank's regulations on safety ratios in operations and in debt classification, provisioning and use.
use credit risk reserves, not violate current regulations on foreign exchange management within one year and must have profitable business in the year immediately preceding the year of registration for foreign exchange service provision activities in the international market.
Registration for foreign exchange service provision in the international market must not be carried out before registration for foreign exchange service provision in the domestic market. For credit institutions that are joint venture banks or 100% foreign-owned banks, they are allowed to provide foreign exchange services according to the provisions of the establishment and operation license. Foreign bank branches are allowed to provide foreign exchange services according to the provisions of the license to open a foreign bank branch.
After being granted an operating license, credit institutions must maintain the conditions for providing foreign exchange services. In case, after being granted an operating license, the credit institution fails to continue to maintain the prescribed conditions, it must temporarily suspend the permitted foreign exchange service provision and report to the State Bank within 30 working days from the date of no longer meeting the conditions. Specifically, the State Bank will suspend, revoke or cancel certain contents of the operating license in the following cases: being placed under special control by the State Bank; there is evidence that the application for an operating license contains false information; the establishment and operating license is revoked or expires; division, merger, consolidation, bankruptcy; automatic termination of foreign exchange service provision activities...
Thus, according to the decree, in order to be allowed to conduct foreign exchange business, commercial banks must meet the requirements on capital, technical facilities, management level and profitable business, in order to ensure the safety of the financial system. At the same time, to limit risks in foreign exchange business activities of credit institutions. The State Bank regulates the foreign exchange status limit, this limit is implemented based on the decision issued since 2002, which is Decision No. 1082/2002/QD-NHNN dated October 7, 2002 regulating the foreign exchange status of credit institutions permitted to conduct foreign exchange activities in Vietnam , except for joint venture banks and
Foreign bank branches, according to which commercial banks are allowed to maintain a foreign currency surplus or deficit of 30% compared to their equity.
To unify the method of calculating foreign currency status, Decision 1082 stipulates that the exchange rate for converting the status of a foreign currency is the spot selling rate for transfer between that foreign currency and Vietnamese Dong of the credit institution at the end of the working day and the principle for calculating the status of a foreign currency is as follows:
- The end-of-day foreign currency position is calculated based on the previous day's foreign currency position and the difference between the purchase and sale volume of that foreign currency that occurred during the day, including spot and forward transactions.
- The month-end foreign currency status is calculated based on the balance at the end of the last working day of the month of the foreign currency trading account, foreign currency accounts sold from other sources, accounts committed to buying foreign currency for immediate delivery, accounts committed to selling foreign currency for immediate delivery, accounts committed to buying foreign currency for a term and accounts committed to selling foreign currency for a term.
The month-end foreign currency status is the basis for reconciliation to ensure the accuracy of the day-end foreign currency status.
Principle of calculating total foreign currency status
- Convert the original currency status of each foreign currency to Vietnamese Dong according to the status conversion rate.
- Add the positive foreign currency positions together to calculate the total surplus foreign currency position. Add the negative foreign currency positions together to calculate the total surplus or deficit foreign currency position.
To guide the implementation of derivative transactions , the State Bank has also issued decisions and guidance documents. Currently, for foreign exchange forward transactions , it is implemented according to Decision No. 648/2004/QD-NHNN dated May 28, 2004 [30] . According to this decision, the calculation of forward rates has fundamentally changed, no longer based on fixed forward points as the announced range for each prescribed term, but based on the VND base interest rate and the interest rate announced by the FED. Specifically, forward rates are determined according to the following principles: