Investigation of Qualifications of Import-Export Credit Officers and International Payments at Military Bank Branches in 2007

Results; interest rate policy has not kept up with the market or is often behind other banks, causing a temporary capital outflow from the Bank.

In addition, the development of the country leads to the increasing level of education of the people, this is the key, the open market for banks to deploy convenient payment services, reducing the amount of cash in circulation. However, the payment work of the Military Bank has not been professionalized, and is still being processed in the accounting department. Modern products and services such as credit cards, international payment cards, etc. have not been fully implemented, while some other banks such as ACB Bank, Dong A Bank, etc. have developed these products and services quite effectively. This is an important and convenient capital mobilization channel, so the Military Bank needs to pay attention and boldly invest in a timely manner to increase competitiveness.

The quality of appraisal and assessment of business plans is not yet unified and consistent.

Although there is a credit process, the appraisal quality of some departments in the Bank is not high and not unified. The quality of information and professional capacity of some credit officers is not high and not deep. Credit officers are also not equipped with practical knowledge about international payments, so they have to regularly receive information such as the process of opening L/C, the process of circulating import and export documents, bills of exchange and information about import and export goods... from the international payment department and also do not have a good grasp of the regulations in international payments, especially the content of international documents such as UCP 600.

Unsecured lending remains high

Although the current policy of the Military Bank is to increase secured loans, most of the Bank's customers in the past were mostly military enterprises and state-owned enterprises, so

Banks often lend on credit. Therefore, with the change in the State Bank's view on "debt", the ratio of debt that banks must set aside for provisions is increasing, because many loans must be extended to state-owned enterprises without collateral, affecting the income in particular as well as the general operations of the Bank.

Marketing policy is not effective

Interest rate policies, service fees, investment policies, and promotion of new products and services have not been promoted in the mass media. In addition, participation in organizing seminars, sponsorships, etc. to enhance the dissemination of the Military Bank's image to investors and businesses has not been done regularly.

With the orientation of expansion and lending, Military Bank has established a Marketing Department under the Head Office with the function of building the image, promoting the Bank's brand and some other tasks. However, the Marketing Department's activities are only in the form of helping departments standardize signs, announcements... without a specific long-term plan such as market research (including customer needs research, competitor research...), evaluating banking services, thereby providing solutions to improve the quality of banking services and products as well as expanding the operations of Military Bank.

The capacity of some credit officers is still limited.

Over 90% of the credit officers of the Military Bank have university and post-graduate degrees. However, the number is still insufficient, and they are also responsible for both corporate and retail lending activities. Most of them are young and do not have much professional experience, so they cannot operate independently and cannot keep up with the intensity of the work. The customer service mindset as the service motto of some officers is not yet fully understood. Staff planning has not been focused on arrangement and placement. Lessons for the industry

The selection of credit officers is: If there is no talent, it is impossible to expand and improve the quality of lending; if there is no virtue, the quality of lending will be poor.

Table 2.14. Survey on the qualifications of import-export credit officers and international payments at branches of the Military Bank in 2007

Unit: person

Target

Total	In there
	University and post-university level		Foreign language proficiency						Trained in import and export operations
	Quantity	Proportion	Level A		Level B		Level C		Quantity	Proportion
			SL	TL	SL	TL	SL	TL

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Export credit officer

import

International payment officer

134

147

122

128

15%

38%

20%

28%

63%

126

31%

85%

Total

281

250

10%

32%

130

46%

168

60%

(Source: 2007 Administrative Personnel Department Investigation Report)

Internal control, inspection and statistics work has not been fully implemented.

Internal control, inspection and statistics have not been strictly implemented. In 2003, the Military Bank established an internal control and inspection department, but its operations have not been really effective. In addition, the work of statistics and classification of causes of overdue debts of customers has not been carried out regularly and fully; at the same time, there is still a situation of chasing quantity, not paying attention to accurately reflecting the debts of business departments while the internal control department does not have enough people to be able to make timely assessments.

Facilities and networks serving import-export credit activities are still limited.

The Military Bank system has been completed but has not developed a network in major cities and economic centers of the country such as Can Tho, Ba Ria - Vung Tau... so it cannot provide banking services.

for customers in these economic centers. Currently, Military Bank mainly provides the banking services it has, not providing all the services that customers need (such as overdraft loans, Options...). That affects the expansion and improvement of credit quality.

The effectiveness of cooperation between the Military Bank and the correspondent banks is still limited, as shown by the fact that many export L/C notifications are not notified through the Military Bank. The regulations on standards for establishing correspondent relationships of the Military Bank are not really clear. On the other hand, most foreign customers do not know about the Military Bank or do not trust the presentation of export payment procedures through the Military Bank.

3.2. Objective causes

Firstly, the legal framework for banking activities in general and international payment activities in particular has many shortcomings. Documents regulating import and export procedures such as tariffs, customs, etc. are still unstable and lack consistency. Many policies have been changed recently, which has significantly affected the business activities of enterprises.

Second, the macro-economic environment is still very difficult, unstable and has many potential risks. The economy is still backward, the market is small. More than 80% of Vietnamese enterprises are currently small and medium enterprises, most of which face difficulties in production and business due to outdated technology, low capital, low product quality, and difficulty competing with imported goods... A few foreign enterprises operate healthily and effectively, the rest operate at a loss or find ways to evade taxes and social insurance obligations for employees.

Third, the issue of investment licensing planning is not good. The government does not have a comprehensive strategy or solution to promptly support export enterprises, especially in product consumption.

Fourth, the foreign exchange management policy of the State Bank of Vietnam still has many shortcomings. The determination of exchange rates does not reflect reality, leading to a large difference between the interbank market and the free market, leading to losses for import-export businesses making international payments through banks.

Fifth, the Ordinance on Accounting and Statistics has not been seriously implemented, especially in non-state enterprises. This greatly affects the quality of credit information. Internal audit in enterprises is only a formality while enterprises do not accept independent audits and the costs are high, much financial information is leaked... Therefore, the transparency of financial reports submitted to banks for import-export financing is not guaranteed.

Sixth, the provision of information about the market and business partners has not received due attention from Vietnamese commercial banks and relevant authorities, causing enterprises participating in import-export business to often not fully understand the market, partners, and laws of countries around the world, directly affecting the success of the transaction. In addition, the information system for risk prevention in credit activities has not really been effective, and there is no effective regulation to bring commercial banks and credit institutions in the area into the same machine to cooperate and support each other in ensuring the provision of complete, accurate, and timely information. Currently in Vietnam, apart from the State Bank's Credit Information Center CIC, there is no professional credit rating company that provides services of investigating, analyzing financial information, credit rating and rating businesses according to international standards to support banks in the process of assessing customers before making lending decisions. The lack of diverse and accurate sources of information on the financial situation of businesses has made the use of credit rating services difficult .

Using loans from the Military Bank still faces many difficulties and contains many potential credit risks.

Seventh, the production and business capacity, capital capacity and management capacity of enterprises are still low, reflected in the backward level of production technology, low labor productivity and product quality, and the inability to compete with imported goods.

Eighth, the ability to finance these customers is low due to difficulties in finding effective and feasible solutions and projects, and the ability to meet the credit conditions as prescribed by the enterprise is low.

In addition to the above main causes, customer moral hazard also affects the quality of import-export credit of the bank. In fact, Military Bank has tried to limit this risk by carefully screening and selecting customers, however, moral hazard is still possible even with strict control by the bank.

CHAPTER III

SOLUTIONS TO DEVELOP IMPORT-EXPORT CREDIT ACTIVITIES AT MILITARY COMMERCIAL JOINT STOCK BANK

I. Development orientation of import-export credit activities at Military Commercial Joint Stock Bank

1. General orientation

In the context of the country's economy integrating with the international and regional economy, the competitive environment between domestic and foreign financial institutions is increasingly fierce, the Military Bank determined: "Banking innovation to improve competitiveness, strengthen risk control capacity and operational efficiency plays a decisive role in the existence and sustainable development of the Bank".

Through that, Military Bank has determined its own direction with the goal of becoming one of the leading joint stock commercial banks in the Vietnamese banking system in selected market segments, focusing on "creating a strong position in the consumer market".

Based on the selected strategic goals, Military Bank has developed and focused on directing the implementation of development strategies in the following years in the following aspects:

Strengthening financial capacity: This is an extremely necessary activity contributing to improving competitiveness in the context of international economic integration. According to the Bank's strategy, the Bank will increase its charter capital by an average of 64% annually to reach a scale of VND 7,300 billion by the end of 2010, ensuring a good capital safety ratio according to international standards.

Organizational model innovation: focusing on new customer-oriented business strategies and enhancing risk management capacity. With this organizational model, the Bank's management and business activities are clearly separated according to the world's advanced model. At the same time, risk control will be implemented consistently to minimize risks to the lowest level within the Bank's acceptable limits.

Developing information technology system : focus on investment to build a strong system to meet the Bank's continuous development needs and bring customers products with high information technology content, advanced and good quality. To achieve this goal,

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