Solutions for developing international payment activities at Techcombank, period 2007 - 2010 - 12

3.2. Recommendations for the State Bank

3.2.1. Perfecting and developing the interbank foreign exchange market

The interbank foreign exchange market is a market for exchanging and supplying foreign currency to meet foreign currency needs between banks.

The State Bank participates as the final buyer and seller and only intervenes when necessary. The development of the interbank foreign exchange market helps commercial banks expand their foreign exchange business activities, creating conditions for the development of international payment activities. To expand and develop the interbank foreign exchange market, the State Bank must expand the subjects participating in the activities of the interbank foreign exchange market, diversify the types of foreign currencies, the forms of transactions on the market and must regularly monitor the market activities, manage the buying and selling process of banks on the market.

3.2.2. Perfecting the legal framework to support international trade activities

The State Bank needs to continue to improve the legal framework for managing international payment activities; actively and flexibly manage the foreign exchange market and exchange rates, in accordance with the foreign currency supply and demand situation, ensuring increased market liquidity, encouraging exports, reducing trade deficit, improving the international balance of payments and contributing to increasing foreign exchange reserves; research, amend and supplement regulations on managing the international balance of payments.

3.2.3. Building a flexible exchange rate management mechanism suitable for the market

Exchange rates are highly sensitive and have a wide impact on all activities of economic and social life, especially in the fields of import and export and international payments.

Exchange rate is a factor that strongly affects international payment activities. Therefore, to improve the efficiency of international payment activities, it is necessary to build a mechanism.

Flexible exchange rate management, suitable to the market. Exchange rate policy management must be carried out in stages. It is necessary to orient the State not to directly determine the exchange rate but only intervene at the macro level in the foreign exchange market so that exchange rate fluctuations are beneficial to the economy.

3.2.4. Strengthen inspection and supervision work

The State Bank should conduct regular inspection and supervision in various forms to prevent negative violations in international payment activities.

It is necessary to build a team of inspectors and supervisors with standard knowledge of banking operations, good moral qualities, and constantly updated on the system of policies and laws to ensure the implementation of control activities with the highest efficiency and safety.

CONCLUDE

Vietnam began to implement economic reforms in the late 80s of the last century. We are in the process of transforming the economy from centralized bureaucratic administrative command management to a socialist-oriented market economy. In the international economic field, from a closed monopoly foreign trade with socialist countries, to opening up to regional and global economic integration, Vietnamese traders have the opportunity to try their hand in a large market.

Over the past 30 years, the opening of the economy has brought about positive changes to the entire economy, to the activities of commercial banks as well as enterprises in the import-export sector. Import-export turnover has increased sharply over the years. To achieve such results, it is necessary to mention the significant contribution of commercial banks as payment intermediaries for import-export activities. Through international payment, commercial banks help international payment activities take place quickly, continuously and effectively, stabilizing the psychology of enterprises. However, in the face of the strong and diverse development of international trade, the international payment operations of commercial banks have at times and increasingly shown many shortcomings, failing to meet the increasingly high demands of international trade and directly affecting national economic interests.

The thesis “ Solutions for developing international payment activities at Techcombank, period 2007-2010” focused on analyzing the development of international payment activities at Techcombank in the period 2007-2010, thereby drawing out the positive aspects as well as the existing, limitations and causes. From there, propose solutions to develop international payment activities at Techcombank.

LIST OF REFERENCES

I/ Documents from books

1. Dinh Xuan Trinh (editor-in-chief) (2006), Foreign trade professional textbook , Foreign Trade University, Education Publishing House, Hanoi.

2. Dinh Xuan Trinh (editor) (2006), International payment textbook , Labor - Social Publishing House.

3. Nguyen Minh Kieu (editor) (2007), Modern banking operations, Statistical Publishing House, Hanoi.

4. Nguyen Van Tien (editor) (2009), Commercial Banking Textbook, Statistical Publishing House, Hanoi.

5. International Chamber of Commerce (1998), International Rules for Standby Letters of Credit, Publication No. 590.

6. International Chamber of Commerce (2007), International customs on L/C , National Economics University Publishing House, Hanoi.

7. International Chamber of Commerce (2008), Uniform Rules for Collections No. 725 , 2008 Revision.

8. International Chamber of Commerce, Uniform Rules for Demand Guarantees, No. 458.

9. Bank guarantee regulations issued together with Decision No. 26/2006/QD-NHNN dated June 26, 2006 of the Governor of the State Bank.

II/ Bank documents

10. Report on business performance in 2007 and direction and tasks in 2008 of Vietnam Technological and Commercial Joint Stock Bank Techcombank.

11. Summary report on business activities in 2008 and orientation and tasks in 2009 of Vietnam Technological and Commercial Joint Stock Bank Techcombank

12. Report on business performance in 2009 and direction and tasks in 2010 of Vietnam Technological and Commercial Joint Stock Bank Techcombank

13. Report on business performance in 2010 and direction and tasks in 2011 of Vietnam Technological and Commercial Joint Stock Bank Techcombank

14. Summary report on business activities of the International Trade Department in 2007, 2008, 2009, 2010.

15. Technical guidance document on International Payment & Foreign Exchange Trading of Techcombank Vietnam.

III/ Documents from the Internet

16. http://www.Techcombank.com.vn

LIST OF TABLES AND DIAGRAM

Diagram 1.1 : Money transfer business process 12

Diagram 1.2 : Smooth collection process 15

Diagram 1.3 : Business process of collection with documents 16

Diagram 1.4 : Documentary letter of credit business process 18

Figure 2.1: Techcombank's mobilized capital, 2007 - 2010 31

Table 2.2: Total outstanding loans and overdue debts of Techcombank, 2007 – 2010 32

Table 2.3: Total guarantee balance of Techcombank 2007 – 2010 34

Table 2.4: Techcombank's investment activities, 2007 - 2010 35

Table 2.5: Techcombank's international payment operations turnover, 2007 - 2010 38

Table 2.6: Sales and revenue from TTXK fees of Techcombank, 2007-2010 42

Table 2.7: Sales and TTNK fee revenue of Techcombank, 2007-2010 48

Table 2.8: Techcombank's international transaction turnover and revenue, 2007 – 2010 53

Table 2.9: Number of Techcombank's corporate customers, 2007-2010 53

Table 2.10: Credit limits granted by correspondent banks to Techcombank 54

Table 2.11: Evaluation of STP index of a commercial bank 56

Table 2.12: Evaluation of correctly formatted money transfer orders 56

Table 2.13: Evaluation of the standard electricity rate of a commercial bank 57

LIST OF ABBREVIATIONS

Acronym

Interpretation
International	International Payment
Commercial Bank	Commercial bank
TMCP	Joint stock trading
NH	Bank
TCB	Techcombank
Export	Export
NK	Import
Import and Export	Import and export
Board of Directors	Board of Directors
L/C	Documentary letter of credit

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• 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). div.maincontent .content_head3 { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: bold; text-decoration: none; font-size: 14pt; } div.maincontent .p { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; margin:0pt; } div.maincontent p { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; margin:0pt; } div.maincontent .s1 { color: black; font-family:"Courier New", monospace; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; } div.maincontent .s2 { color: black; font-family:"Times New Roman", serif; font-style: italic; font-weight: normal; 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