Solution to complete international payment activities by documentary credit method at Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vung Tau branch

Vietcombank Vung Tau plays a leading role with nearly 40% market share (2009-2011) in payment of import L/C in the area, further affirming Vietcombank Vung Tau's advantage in import-export payment, especially L/C payments. C NK has great value to serve the needs of local production and business development .

Payment for imported goods by L/C focuses mainly on key enterprises such as Vietsovpetro Vietsovpetro Joint Venture, Gas Products Trading Company, Vung Tau Petroleum Tourism Service Company (OSC Vung Tau). ), Petroleum Technical Services Company (PTSC)… Their import payment revenue has increased steadily over the years, making a positive contribution to the local economic development. The downside is, SMEs have not yet accessed many of these payment methods, while the number of these businesses is constantly increasing.

Sales of export L/Cs increased sharply, in 2011 increased by 154.64% compared to 2009 and increased by 110.21% compared to 2010. Sales of imported L/Cs also increased, in 2010 increased by 22% compared to 2009 and in 2011 by 7.87 % compared to 2010. Compared to other branches in the same system, Vietcombank Vung Tau is in the top 3 in terms of sales of L/C payments.

The analysis of sales and L/C market share of the branch from 2009 to 2011 shows that: Vietcombank Vung Tau has a strong tendency to develop in documentary credit payment following the world's trend, which is reflected in the business of Vietcombank Vung Tau. number increased steadily over the years and maintained a stable increase in market share compared to other commercial banks in the area.

2.4.3 Basic criteria to evaluate the effectiveness of L/C payment activities at Vietcombank Vung Tau.

Each bank has criteria to evaluate the effectiveness of international payment activities in general and documentary credit payment activities in particular, and based on that, it proposes appropriate solutions to improve and develop its operations. Documentary credit payment at Vietcombank Vung Tau.

- Growth rate of documentary credit payment sales: shows an increase in documentary credit payment sales.

- Proportion of sales / number of documentary credit payments to sales / number of international payments: shows which payment method is used the most.

- Income from L/C payment: When providing documentary credit payment services, the bank collects related fees. The higher the fee collected, the greater the operational efficiency of L/C payment, increasing income and improving business performance of the bank.

With a relatively high volume of L/C payment in the total import-export payment turnover at the branch, the revenue from L/C payment activities is relatively large thanks to many related fees such as L/C opening fee, confirmation fee. L/C, L/C amendment fee, L/C notification fee, L/C payment fee, electricity fee, document discount interest…

Table 2.12: Income from import and export L/C payment activities of Vietcombank and other commercial banks in the province in 2009-2011

(Unit: billion VND)

BANK	2009	2010	2011
Joint Stock Commercial Bank for Foreign Trade	5.5	5.6	5.8
Joint Stock Commercial Bank for Industry and Trade	3.5	3.7	4.0
Investment Bank and PT	2.1	2.5	2.6
Agricultural Bank	0.3	0.5	0.6
Ocean NH	1.5	1.9	2.0
Military Bank	0.9	1.1	1.2
Maritime Commercial Joint Stock Bank	3.2	3.8	3.7
Asia Commercial Joint Stock Bank	1.9	2.0	2.2
Bank Sacombank	1.7	1.8	1.9

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(Source: General report of the State Bank of Ba Ria-Vung Tau Province 2009-2011 )

As the most profitable bank in the area, the income from international payment activities of Vietcombank Vung Tau has increased steadily over the years, from 5.5 billion dong in 2009 to 5.8 billion dong in 2011. Compared to state-owned commercial banks In other areas, Vietcombank Vung Tau leads, followed by Bank of Industry and Trade, Bank for Investment and Development, all with incomes from 2 to 4 billion dong. Maritime Commercial Joint Stock Bank thanks to attracting many seafood exporters in the area along with the application of high fees, so the income from L/C operations is quite high. Ocean Bank was born later, but thanks to the Vietnam-Russia Joint Venture - Vietsovpetro and the companies under the Oil and Gas Group focusing on this bank, their income is also quite high compared to other joint stock commercial banks.

Table 2.13: Proportion of income from L/C payment activities in total profit of Vietcombank Vung Tau in 2009-2011

Unit: billion

Targets	2009	2010	2011
Profit deducted DPRR	180.50	185.20	210.51
Total service revenue	20.50	21.20	22.60
In which: Income from L/C payment activities	5.50	5.60	5.80
Proportion of income from L/C payment activities/total service revenue.	26.83%	26.42%	25.66%
Proportion of service revenue/deducted profit DPRR	11.39%	11.16%	10.76%
Proportion of income from LC payment / Profit deducted from DPRR.	3.05%	3.02%	2.76%

(Source: Report on business results of Vietcombank Vung Tau in 2009-2011)

The proportion of income from L/C payment to total service revenue is quite high with more than 25%. Compared to the profit already deducted from the DPRR, the income from L/C payment accounts for a low proportion, only 3.05% in 2009, 3.02% in 2010 and 2.76% in 2011.

The above analysis shows:

In the annual profit structure of the branch, service revenue accounts for a low percentage, less than 30%, showing that service revenue is still not commensurate with potential, especially L/C payment service accounts for a large proportion. too low in total service revenue and unstable.

2.4.4 Comparative correlation between Vietcombank Vung Tau and competitors in terms of payment by documentary credit method.

2.4.4.1 Assess the current situation of competitiveness of Vietcombank Vung Tau in the locality.

(1) Geographical location of branches and PGDs relative to competitors.

- Geographical location of branches and transaction offices.

Vietcombank Vung Tau currently has 01 head office, 01 savings fund and 02 transaction offices located in the center of Vung Tau city (area 140km 2 with a population of about 300,000 people), 01 transaction office in Ba Ria city and 01 transaction office in Ba Ria city. 01 transaction office in Phu My town - Tan Thanh district.

The branch's head office (27 Tran Hung Dao, Ward 1, Vung Tau City) is located right on the main road of Vung Tau City, around the branch is the head office and transaction offices of other commercial banks. The branch's headquarters was built in 1982, so it was dilapidated, cramped and overloaded, while the headquarters of the competitors were newly built or remodeled, making it more spacious and spacious.

- Transaction office No. 1 is located at 30 Pham Hong Thai, Ward 07, Vung Tau City: has the advantage of being located near the Vietsovpetro Vietsovpetro Joint Venture, about 200-300m away. However, the area of the transaction room is small and the location is hidden from the street frontage, so it is difficult to see.

- Le Loi Transaction Office: put into operation in August 2010, spacious area, new, spacious, easy to see facility, located on the main road of Vung Tau City so convenient for customers to the transaction.

- Transaction office No. 2: located at 01 Ly Thuong Kiet - Ba Ria city. This is the central location of Ba Ria City, in the future, all administrative units of the province will be gathered.

- Transaction office No. 3 is located at Tan Thanh trade center, Phu My town: The room is located in a beautiful location, near markets, industrial parks, committees, and commercial centers. Most of the province's Industrial Park is concentrated in this area, which is an advantage. However, the transaction office level has not fully met the needs of customers while other banks have opened branches in this area.

- Compare with competitors

As of December 31, 2011, across Ba Ria Vung Tau Province, there were more than 40 commercial banks with more than 100 transaction points, most of the headquarters and offices are in very nice locations, with surface facilities. Modern, spacious. The network of 01 branches and 04 transaction offices of Vietcombank Vung Tau is too thin, most of the working facilities are cramped, narrow, old, not commensurate with the brand name and unsatisfactory to serve current customers. to attract new customers. This is not only the unique situation of Vietcombank Vung Tau, but also the common situation of most Vietcombank branches compared to other commercial banks.

(2) Product distribution channels

Currently, Vietcombank Vung Tau still uses the traditional product distribution channel of direct sales as well as other commercial banks in the area. Sales have not actively approached customers.

Marketing, promotion and product introduction activities are not professional and systematic, mainly just introducing old and familiar customers, not actively looking for new customers. Leaflets advertising the branch's products and services are only placed at the counter but not delivered to customers, while other banks distribute flyers to households and send messages to each customer. row. Branches have the advantage of centralizing a large number of accounts of economic units and individuals with a fairly thick ATM network, evenly distributed in the area, convenient for customers to use. However, the room network

The branch's transactions are few and sparse, only operating during office hours. The branch only collects and pays cash at a few large units, not for individual customers.

VCB i-banking electronic payment channel is favored and appreciated by many customers. However, payment connection partners are few and need to be expanded.

(3) Evaluate the comparative correlation between Vietcombank Vung Tau and its competitors

Development advantage:

According to the evaluation of many institutional and individual customers in the area, Vietcombank brand has the following advantages:

- Being evaluated as a strong, reputable and safe brand trusted by customers, especially individual customers.

- Professional handling staff compared to other banks.

- Vietcombank technology is widely recognized as modern, providing many utilities for customers, especially in the field of domestic and foreign payment, card field, SMS banking, i-banking, VCB money...

- ATM network is quite thick and evenly distributed in the province, concentrated in residential areas, industrial parks, shopping,.... facilitate the withdrawal and transfer of money, so it attracts many transaction customers.

- Many traditional large enterprises should be able to provide many banking services to develop both corporate and individual customers (cards, deposits, international payments, credit, ...)

Abundant capital, low cost, high commitment: To meet customers' demand for credit and foreign currency for international payment, especially during the period when the banking system faced difficulties in capital and foreign currency. . Interest rate for

loans are quite competitive (businesses: 13.5-15.5%, individuals: 10-15%), especially now when the interest rates of joint stock banks are very high, averaging 15-20%.

Although most businesses and individuals acknowledge Vietcombank's modern technology, professionalism and brand, the branch's market share is still quite shared with other commercial banks due to problems with the mechanism that makes Vietcombank Vung Tau. difficult to handle such as interest rates exceeding the ceiling, exchange rates, foreign currency trading beyond the band... Market share of corporate customers dropped sharply, individual customers still grew well, the number of customers transacting at branches still exceeded outperforming other banks, but in the long run, if they don't improve their form and face interest rate problems, there will be a risk of losing individual customers.

+ Professional aspects:

- Regarding capital mobilization:

- Support from the Vietnam Oil and Gas Group has moved a large amount of capital from oil and gas enterprises to Ocean Bank. The market share of capital mobilization in VND at branches decreased continuously. In 2009 it decreased by 45.24%, in 2010 it decreased by 19.48% and in 2011 it decreased by 11.64%. As of December 31, 2011, the total mobilized capital in VND of Vietcombank Vung Tau accounted for 24.30% market share in the whole area and accounted for 33% of the total 04 State-owned commercial banks.

- In addition to the decrease in corporate capital, the capital mobilized from residents at the Branch was quite stable and increased steadily over the years. Compared with other commercial banks in the same area, the market share of capital mobilization from the population increased from 6.5% in 2009 to 8.4% in 2010.

- About credit:

Ba Ria Vung Tau province is one of the centers of heavy industry development with many key industries such as oil and gas processing industry,

seaports, steelmaking, electricity.... Lending to projects with a lot of capital is Vietcombank Vung Tau's strength, accounting for 76% of the total outstanding loans to large enterprises in oil and gas, steel, electricity, and material production. construction materials, infrastructure, electricity and water.... Loans to small and medium enterprises and to natural persons account for only 24% of total outstanding loans. Although personal credit and credit for small and medium-sized enterprises have been promoted by the branch in recent years, the number of customers and loan applications processed monthly is always very large, but the proportion of outstanding loans has not increased significantly. compared with large projects of heavy industry.

- About payment:

- Domestic payment

Currently, the branch is managing 99,718 individual accounts with balances of VND 862 billion in demand and VND 1,298 billion with term and savings; 1,500 accounts of economic organizations with a balance of VND5,185 billion (data as of December 31, 2011), including 185 state-owned enterprises, 165 foreign-invested enterprises, 960 limited liability companies For example, 130 private enterprises,...

Payment turnover of economic organizations accounts for 80% of total payment turnover. Vietcombank's domestic payment service is generally highly appreciated by customers thanks to its modern technology, quickness and convenience...

- International payment

- Every month, the Branch performs about 350 transactions of transferring money abroad of individual customers, of which mainly Russian experts transfer to relatives (about 15 million USD in 2011) and transfer money to study abroad. born (reached 1 million USD in 2011)

- Currently, there are about 70 economic units that regularly make import and export payments through branches, mainly petroleum and seafood enterprises.

+ Relationship with VIP customers:

Criteria to identify VIP customers in each bank are very different, so it is difficult to evaluate. Most of the joint stock commercial banks in the area have very few customers, so most customers are taken care of more fully when coming to Vietcombank. Customers only need to have a deposit balance of 1-2 billion VND / unit, which has been picked up by joint-stock commercial banks to collect and spend money at home, gifts... but with Vietcombank Vung Tau, it is not possible to do the same when There are many customers who meet this criteria.

2.4.4.2 Limitations.

(1) Current status of customer care of the branch:

- Customer care work at the branch currently has the following shortcomings:

- Be spontaneous, inconsistent, professional and systematic.

- Funds to take care of large customers, VIP customers are limited, the value is insignificant compared to joint stock commercial banks and branches of foreign banks.

outside.

- Gifts for individual customers according to the programs of the Head Office are of poor quality, the program is sometimes deployed too close to the holidays and Tet, so the gifts are often slow to reach customers, losing their meaning.

- The branch office and transaction offices are very old and degraded, the customer reception area is very narrow, so they are not qualified to take care of customers, especially VIP customers.

- Customer care policy is not outstanding compared to competitors in the area.

- Attitude, customer service style of branch staff:

- Branch staff are currently young (average 32 years old), most of them have better professional qualifications than joint stock banks, fast processing operations. However, the number of customers transacting is too large

Employees who are overloaded must focus on processing documents to avoid errors, and communication with customers is limited.

- The staff's customer communication skills are still limited and unprepared

unique. Employee morale is not uniform. Some employees are enthusiastic about customers, others still show a cold attitude in communication, not enthusiastic about consulting products that are suitable for customers' needs.

(2) Problems in payment by documentary credit method at Vietcombank Vung Tau:

Firstly , the document guiding the implementation of international payment operations is not systematic, Vietcombank Vung Tau prepares its own professional processes in international payments as well as in the documentary credit method on the basis of Due to the professional operations of Vietcombank Headquarters and reality at the branch, there are some problems when implementing it, such as:

- With L/C for import of petroleum, payment terms are usually 30 days after the date of B/L, it is not clear whether this is L/C at sight or deferred payment to collect fees. Currently, the Branch still considers this as L/C at sight because the procedure for opening L/C is still under the provisions of L/C at sight.

- At Vietcombank Vung Tau, most of the L/Cs of large customers are Vietsovpetro Vietsovpetro Joint Ventures with the terms 90% payment at sight, 10% payment after 60 days or 90 days from the date of B/L. The post-paid part is a temporary guarantee for installation and testing, so the branch is still considered as immediate payment.

Secondly , Vietcombank Vung Tau operates in a relatively narrow area, the number of effective state-owned enterprises is not much and is being equitised, so export L/C payments mainly focus on private enterprises. individuals, limited liability companies... still have limited understanding of international payment, skills in document preparation are not high, it is difficult to avoid errors when making documents.

Some enterprises do import and export business but have not yet equipped themselves with knowledge of laws, international practices, and specific laws of the partner country. Due to lack of experience in import and export business, in international payments, they accept unfavorable conditions in the sales contract as well as in the content of the L/C, leading to failure to comply with the L/C or not. Create the perfect set of documents.

The consulting service and supporting exporters in preparing documents deployed by Vietcombank Vung Tau have not yet developed strongly and achieved the desired effect and can only be implemented when errors are detected.

No commercial bank has been able to comprehensively support export customers from the very beginning of the deal and help prepare perfect documents right from the start.

Thirdly , for the discount of export documents, the requirements of Vietcombank Vung Tau are:

+ Submit financial statements for the last three years

+ Appropriate set of documents, reputable L/C opening bank (if you have an agency relationship with Vietcombank, the better).

+ If they are traditional customers, the better, if not, those customers must be reputable businesses or companies in the area (customer's position).

The above regulations show that if it is a new business, it is not possible to submit three-year financial statements, and it is difficult for businesses that first or infrequently transact with Vietcombank Vung Tau to determine their healthy financial situation. strong or not based on financial statements alone.

(3) The policy to attract customers to use documentary credit is not appropriate.

Although international payment is the strength of Vietcombank Vung Tau thanks to its experience and reputation, the policy on exchange rates, foreign currencies and products associated with documentary credit payment methods have not really attracted customers and products. not diversified, especially in the period of scarcity of foreign currency, do not use exchange rate difference like some banks in the area to attract exporters.

While some banks in the area provide L/C mortgage loans, Vietcombank Vung Tau has not yet applied, so the exporter sends the L/C through another bank to get capital financing for export.

In addition, Vietcombank Vung Tau has not dared to discount the set of exemption documents while the Head Office has boldly performed this operation, both recourse discounting and non-recourse discounting.

Once the Trade Finance program has collected the trade finance fee and finished updating, it is not possible to refund the fee to the customer by the Trade Finance program itself, although this program has a refund function, but it cannot be done but must enter the Mosaic program to do it manually, which is both troublesome and time consuming.

The ability to advise and support customers in business is still weak and lacking in depth. Due to the fact that the updating of information of each professional department is not really good, not closely following market developments, sometimes it is too loose, perfunctory like the export L/C announcement, the international staff does not look carefully at the content. content before notifying the customer, leading to the customer not understanding the business, and lack of advice and support from the bank, so it cannot meet the provisions of the L/C, causing unnecessary damage to the customer. , causing them to lose trust.

2.4.4.3 Causes of existence.

(1) Objective reasons:

Due to the characteristics of the socio-economic situation in the area : Ba Ria Vung Tau province has a strongly developed oil and gas industry, so most of the enterprises operating in the central oil and gas sector are located in the area. such as Vietsovpetro - Vietsovpetro, PTSC, PV Gas with abundant and stable foreign currency sources, so when opening and paying L/C usually no deposit is required. However, when the enterprises of the Oil and Gas Group have to focus on transactions on Ocean bank as well as the appearance of a series of branches of Commercial Joint Stock Commercial Bank in the area, sharing makes Vietcombank's import-export L/C market share Vung Tau decreased.

Due to the development of the market economy : Businesses and individuals now strengthen cooperation with many banks to enjoy the highest benefits, so the market share of Vietcombank Vung Tau is also shared.

Due to the strict implementation of regulations on exchange rate of the State Bank, the exchange rate applied for export L/C payment cannot compete with other banks in the area. Some banks in the area, despite the exchange rate regulations of the State Bank, have applied a higher exchange rate, so there is a situation where customers receive L/Cs and then present documents at other banks with high exchange rates. than.

(2) Subjective reasons:

Customer care policy of Vietcombank Vung Tau is not consistent, professional and systematic:

Currently, Vietcombank Vung Tau has not developed a specific customer care policy for each separate customer group, has not paid close attention to the needs and interests of customers, has not performed after-sales services for customers. goods or, if any, very limited, insignificant compared to the

take care of joint stock commercial banks in the area. This is partly due to the large number of customers while the human resources of Vietcombank Vung Tau are limited.

Officials of departments, especially the International Payments Department, have contact with customers, but most of them only perform professional operations, in addition, the service sales department and transaction offices do not have qualified staff. Professional training to perform customer care work.

The service attitude of the staff is not professional : the customer communication skills of the staff are still limited and not professional. The morale of the staff is not uniform. Some employees are enthusiastic about customers, others are still indifferent when transacting, not enthusiastically advising on products that are suitable for customers' needs. In addition, the sense of the importance of the job has not been fully realized by each employee, the retail staff is not professional, and has not actively introduced and provided products and services to customers. , some still have the mentality of waiting when customers need it, then they will contact,…

Marketing policy at Vietcombank Vung Tau has not been focused : Marketing has not been paid attention regularly and properly. Marketing, promotion and product introduction activities have not been carried out professionally and systematically, mainly just introduced to old and familiar customers without actively looking for new customers. can maintain traditional customers but difficult to develop new customers; have not properly and sufficiently understood the needs of customers to advise and guide customers in the most effective way, thereby creating trust in customers and they will stick with the bank for a long time.

The network is thin and the facilities are inadequate : In comparison with competitors in the area, the network of 01 Branch

Date published: 09/04/2022