Overview of the History of Formation and Development of Vietnam Joint Stock Commercial Bank for Foreign Trade

CHAPTER 2

CREDIT QUALITY AT JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM

2.1. OVERVIEW OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM

2.1.1. Overview of the history of formation and development of Joint Stock Commercial Bank for Foreign Trade of Vietnam

On April 1, 1963, the Foreign Trade Bank was officially established under Decision No. 115/CP issued by the Government Council on October 30, 1962 on the basis of separation from the Foreign Exchange Management Department under the Central Bank (now the State Bank). According to the above Decision, the Foreign Trade Bank acted as the first and only specialized bank in Vietnam at that time operating in the field of foreign economic relations including lending to finance import and export and other foreign economic services (transportation, insurance, etc.), international payment, foreign exchange trading, management of foreign currency capital deposited at foreign banks, acting as an agent for the Government in payment relations, borrowing, and aid with (former) socialist countries, etc. In addition, the Foreign Trade Bank also advised the Board of Directors of the State Bank on policies on foreign currency management, gold and silver, management of the State's foreign currency fund and on relations with the Central Banks of other countries and international monetary and financial organizations.

On September 21, 1996, authorized by the Prime Minister, the Governor of the State Bank signed Decision No. 286/QD-NH5 on re-establishing the Foreign Trade Bank according to the model of Corporations 90 and 91 as stipulated in Decision No. 90/QD-TTg dated March 7, 1994 of the Prime Minister. The Foreign Trade Bank was the first state-owned commercial bank selected by the Government to pilot equitization. The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank-VCB) officially began operating on June 2, 2008, after successfully implementing the equitization plan through the initial public offering of shares on December 26, 2007. In December 2007, VCB successfully conducted its initial public offering (IPO) in accordance with the law, with a total number of shares offered for initial public offering (IPO) of 6.5% of charter capital (equivalent to 97,500,000 shares) through the Ho Chi Minh City Stock Exchange, officially converting the mechanism from a state-owned enterprise to a joint stock company named Vietnam Joint Stock Commercial Bank for Foreign Trade.

Over 47 years of establishment and development, Joint Stock Commercial Bank for Foreign Trade of Vietnam has made important contributions to the stability and development of the country's economy, promoting the role of a key foreign bank, effectively serving the development of the domestic economy, and creating important influences on the regional and global financial community. With extensive experience in foreign banking operations, VCB has maintained a key role in the Vietnamese commercial banking system and is the leading commercial bank in Vietnam in the fields of trade finance, international payments, foreign exchange trading and application of advanced technology in banking operations. The VCB brand is known by the domestic and international communities as a symbol of the Vietnamese commercial banking system. Up to now, VCB has had correspondent banking relationships with about 1,200 banks and financial institutions in 85 countries and territories around the world, ensuring good service to customer requirements globally.

With extensive experience and a team of highly skilled staff, with 11,415 employees, well-trained in the fields of finance and banking, with knowledge of market economy, foreign language proficiency, the ability to adapt quickly to the modern and highly integrated business environment..., VCB is always the first choice for large corporations, domestic and foreign enterprises as well as 5.2 million individual customers.

With its technological strength, VCB is a pioneer in applying modern technology to automatically process banking services and constantly launching electronic products and services to "bring banking closer to customers" such as: Internet banking, VCB-Money (Home banking), SMS Banking, Phone banking... From a specialized bank serving foreign economic affairs, VCB has now developed nationwide with a network including Headquarters in Hanoi, 1 Transaction Office, nearly 400 branches and transaction offices nationwide, 3 subsidiaries in Vietnam, 2 subsidiaries abroad, 1 representative office in Singapore, 4 joint ventures, 2 associates. In addition, VCB has also developed an Autobank system with nearly 16,300 ATMs and card payment acceptance points (POS) nationwide. The Bank's operations are also supported by a network of more than 1,300 correspondent banks in 100 countries and territories.

2010 marked the success of VCB in changing its business strategy from a wholesale bank to a multi-purpose bank, maintaining its position as a wholesale bank while promoting retail activities to diversify operations and maximize profits. VCB gradually affirmed its target position as one of the top 5 banks in retail banking services. Total assets: as of December 31, 2010 reached

307,496 billion VND, an increase of 20.4% compared to 2009. Total charter capital in 2010 reached: 13,224 billion VND and increased by 33% in February 2011 with total charter capital at 17,588 billion VND. In 2010, along with the high appreciation of international organizations voting VCB as "Best Bank in Vietnam" in many fields of operation, Vietnam Report in coordination with Tax Magazine (General Department of Taxation) also announced and voted VCB as the largest income tax paying bank in Vietnam, the 4th largest income tax paying enterprise in the country. VCB also continues to gradually develop the bank in a modern, professional and effective direction, with the strategic goal of making VCB a multi-functional financial group in the Top 70 largest financial institutions in Asia and maintaining the leading position in Vietnam.

Chart 2.1: Representing total assets and equity of VCB from 2006 - 2010

Source: Financial reports of Vietnam Joint Stock Commercial Bank for Industry and Trade from 2006 - 2010

Table 2.1: Summary of VCB's performance indicators

Unit: Billion VND

2006	2007	2008	2009	2010
TOTAL ASSETS	167,128	197,363	222,090	255,496	307,496
Equity	11,228	13,528	13,946	16,710	20,669
Total liabilities	155,825	183,751	208,041	238,676	286,707
Minimum shareholder benefits	75	84	103	109	120
Capital raising	102,695	144,810	159,989	169,457	208,320
Credit balance	67,743	97,631	112,793	141,621	176,814
Number of branches	59	59	63	70	72
Total number of employees	7,277	9,190	9,212	10,401	11,415
Common stock (million shares)	-	-	1,210	1,210	1,322

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Source: Financial reports of Vietnam Joint Stock Commercial Bank for Industry and Trade from 2006 - 2010

2.1.2. VCB organizational model

General Meeting of Shareholders Board of Directors

Board of Control

Activity monitoring

Internal Audit

Risk Management Committee General Director

Secretary of ALCO Board of Directors Central Credit Council

Deputy General Manager