G1 00139 improving the competitiveness of sacombank in the context of internatio

PDF CC Free Version GRIGGS 2. CAPSTONE PROJECT REPORT IMPROVING THE COMPETITIVENESS OF SACOMBANK IN THE CONTEXT OF INTERNATIONALIZATION AND INTEGRATION Group No. 2 Nguyen Van Quyen Nguyen Le Ngoc Nguyen Manh Ha Nguyen Thi Tuyet Mai Class : GEMBA0O1.E01 HA NOI 2010 PDF Compressor Free Version COMMITTMENT The whole content of this subject has been studied and performed by our group. We ourselves collected information and data issued by Sacombank and selected the most necessary information to finish this subject.

We guarantee that: Subject "IMPROVING THE COMPETITIVENESS OF SACOMBANK IN THE CONTEXT OF INTERNATIONALIZATION AND INTEGRATION" was not copied from any research papers. We are absolutely responsible for our compliance to the law and Griggs University Hà Nội, November 21” 2009 Group 2 GEMBA0I1.F01 Members of Group 2 1. Nguyễn Văn Quyên — Group leader 2. Nguyễn Lê Ngọc 3.

Nguyễn Mạnh Hà 4. Nguyễn Thị Tuyết Mai TABLE OF CONTENTS PDF Compressor Free Version Page COMMITTMENT TABLE OF CONTENTS LIST OF ABBREVIATIONS IND+ LIST OF TABLES LIST OF FIGURE INTRODUCTION CHAPTER I: COMPETITION IN BANKING INDUSTRY IN THE CO CONTEXT OF INTERNATIONALIZATION AND INTEGRATION 1.1 International integration in Banking œ 1.2 Competition in Banking *+C 1.1 Products and product strategy of the Bank `© 1.2 Defining the competitors in banking II 1.3 Strategic planning model of a bank to reach the goal in business 1.3 Competition in banking industry 14 1.1 Contents of banking product competition 14 1.1 Products and Services quality 14 1.3 Competition by the distribution system 15 1.2 Competitiveness of the Commercial Bank 15 1.4 Information technology capacity 17 1.4 Vietnam’s commitments on international integration in Banking 17 1.1 Commitments on foreign exchange and payment 17 1.2 Commitments on policies of trade and services relating to the 18 banking 1.5 Opportunities and challenges in international integration in Banking 19 1.1 Opportunities on international integration 21 1.2 Difficulties and challenges facing the banking system 23 1.6 Some lessons learned from developing countries in international 24 integration in Banking 1.1 Common real situation of developing countries prior to 24 international integration 1.2 Lessons learned from China 25 1.1 China’s commitments in Banking to enter WTO 25 1.2 The competition lesson in banking in China after 26 entering WTO 1.3 Experience in reforming the banking system of China on 28 international integration 1.7 Lessons for Vietnam during the Banking integration process 29 1.1 Real situation of Vietnamese commercial banks before WTO 29 accession 1.1 Financial capacity of Vietnamese banks 29 1.2 Operational capacity of Vietnamese banks 30 1.4 Technological capacity 32 PID1XTenspnsesoœolipeeiartAolte process of international 33 integration for Vietnamese Commercial Banks 1.3 Achievements after joining WTO 24 CHAPTER II: THE REAL SITUATION OF BUSINESS OPERATIONS OF SACOMBANK ON VIETNAM’S ACCESSION 38 TO WTO 2.1 General introduction on Sacombank 38 2.2 Strategic management of Sacombank 40 2.1 Environment and conditions to do Banking business in Vietnam (PEST analysis) 44 2.2 Sacombank and its internal factors (SWOT analysis) 45 2.3 Overview of the business situation in Sacombank 5Ï 2.1 Organizational structure and management engine 51 2.2 Management structure of Sacombank 52 2.3 Operation structure of Sacombank 52 2.2 Business results of Sacombank over the past years 53 2.4 Real situation of Sacombank business operation 54 2.1 General evaluation of Sacombank business operation 54 2.2 Competitiveness of Sacombank 58 CHAPTER III: SOLUTIONS FOR IMPROVING 81 COMPETITIVENESS OF SACOMBANK 3.1 Solutions for improving financial capability 81 3.1 Increasing capital scale 81 3.2 Improving the profitability indicators 81 3.3 Intensifying risk prevention 82 3.2 Solutions for strengthening operation capacity 85 3.1 Solutions of capital mobilization 85 3.2 Improving the credit quality 86 3.3 Solutions for develop services 87 3.3 Solutions for strengthening management and administration capacity 91 3.1 Continuing to restructure the engine 91 3.2 Policies of salary and talent attraction 91 3.4 Solutions to improve information technology capacity 93 3.5 Solutions for enhancing the prestige and trademark of Sacombank 94 CONCLUSION 95 LIST OF REFERENCES 96 APPENDIX 98 QF ABBREVIATIONS PDF Compressor Fred48, ASEAN Association of Southeast Asian Nations AFTA ASEAN Free Trade Association ADB Asian Development Bank APEC Asian - Pacific Economic Cooperation ATM Automatic Teller Machine CAR Capital Adequacy Ratio EU European Union GATS General Agreement on Trade in Services FBs Foreign Banks IMF International Monetary Fund JBs Join venture Banks JSBs Joint - Stock Banks NAFTA Northern Atlantic Free Trade Area NPLs None-Performing Loans ROE Return on Equity ROA Return on Asset SBV State Bank of Vietnam SOCBs State-Owned Commercial Banks WTO World Trade Organization WB World Bank LIST OF TABLES Page PDF Compressor Free Version Table 1.1 Scale of chartered capital of some Commercial Banks in Asia 29 Table 1.2 ROE of Vietnamese Commercial Banks in the period 1998-2005 Table 1.3 Credit growth rate in Vietnam in the period 2000-2006 31 Table 1.4 Market share of the Group of Banks in Vietnam from 2004-2007 36 Table 1.5 Schedule for increasing chartered capital in 10 Vietnam biggest JSBs Table 2.1 Result of some activities of Sacombank in the recent years 53 Table 2.2 Result of the survey program “Listen to our customers” 54 Table 2.3 Sacombank’s mobilization activities 56 Table 2.4 Sacombank’s credit activities 57 Table 2.5 Comparing the chartered capital with some Southeast Asia Banks 59 Table 2.6 Result of debt management of Sacombank in the recent years 62 Table 2.7 Comparing the debt management with other rivals in 2008 62 Table 2.8 Sacombank’s profit structure 65 Table 2.9 Sacombank’s cost structure 65 Table 2.10 Sacombank’s mobilization structure in the recent years 67 Table 2.11 Sacombank’s credit state in the recent years 68 Table 2.12 Sacombank’s credit growth rate in the recent years 69 Table 2.13 Geographical market distribution of Sacombank 71 Table 2.14 Geographical market distribution of ACB 72 Table 2.15 Development of correspondent banks in the recent years 74 Table 2.16 Sacombank’s investment activities in the recent years 74 Table 2.17 Return from securities investment activities in the recent years 75 Table 2.18 Return from capital contribution activities in the recent years 76 Table 2.19 Structure of labor in the recent years 78 Table 2.20 Comparing the educational staff with other Rivals in 2008 79 LIST OF FIGURES PDF Compressor Free Version Figure 2.1 Growth in owner equity of Sacombank in the recent years 58 Figure 2.2 ROE from 2002 to 2008 of Sacombank 63 Figure 2.3 ROE compares with other Rivals of Sacombank 64 Figure 2.4 ROA from 2002 to 2008 of Sacombank 64 Figure 2.5 ROA compares with other Rivals of Sacombank 65 Figure 2.6 Loans in terms 69 Figure 2.7 Loans in industries 70 Figure 2.8 Loans in economic sectors 71 Figure 2.9 Credit market shares of the Vietnamese Banks in 2008 72 INTRODUCTION PD fr Habbhat CEdnbHtic HSM Aion has become a trend of our age and is taking place vigorously in many fields, reflecting the objective indispensable tendency of an economy. To catch up with the trend, Vietnam has actively taken part in the international integration process by entering ASEAN, joining ASEAN Free Trade Area (AFTA), signing Vietnam - America trade agreement, entering World Trade Organization (WTO), and participating in various international economic organizations as well as other agreements on bilateral trade relation promotion. In the general context of the whole economy, how Vietnamese commercial banks (NHTM) will face challenges, take full advantage of opportunities and turn challenges into opportunities to avoid failures on their “home field” require the system of commercial banks to actively be aware of and prepared to take part in this integration and competition process.

It is possible to say that Banking is one of the extremely sensitive fields and its doors need to be opened nearly completely in accordance with commitments on accession to the World Trade Organization (WTO). Vietnam’s banking system is considered one of the key industries and needs to be restructured to improve its competitiveness. To be active in the integration process, Vietnam needs to build a banking system, which is prestigious, competitive, highly effective, safe, and capable of better mobilization of capital resources in the society and investment expansion. CHAPTER I PDF Comp BANKING°CGMPETITION IN THE CONTEXT OF INTERNATIONALIZATION 1.1 International integration in Banking International integration in Banking is the process in which the local system of commercial banks joins the regional and global Banking system.

This means a Vietnamese commercial bank can do business abroad or foreign banks can completely do business equally in Vietnam in accordance with Vietnamese laws. Hence, along with the integration, banking operation in Vietnam may completely be affected or take full advantage of the trend of the banking system in the world and must follow market rules and international business principles at the same time. The international economic integration process requires the government to remove, step by step, preferences for the local system of commercial banks and at the same time, to remove barriers against foreign banks when they do business in Vietnam in order to approach equal competition between local banks and foreign banks. Thus, the integration level in banking has a tight relation with the level of financial - monetary liberalization.

Financial liberalization means increased competition among financial institutions, together with the termination of legal discrimination among different activities. Financial liberalization consists of liberalization of interest rate and exchange rate, elimination of capital subsidy through credit assignment, liberalization of activities of local and international finance - credit institutions on the basis of liberalization of current accounts and capital accounts. International integration is an indispensable development trend of the world economy in the context that concepts of national border are increasingly unclear and the tendency of economic regionalization such as EU, NAFTA, ASEAN more and more becomes a united entity. International integration brings about such positive effects as easier access to new markets, less tariff and legal barriers and easier access to technologies and funds for enterprises.

However, disadvantages will arise due to limitations in terms of awareness, human resource, technology, capital and prestige of developing countries, including Vietnam. Accordingly, in order to deal with these disadvantages, developing countries often make commitments on their integration P'ƒ‡: Compressor Free Version 1.2 Competition in Banking 1.1 Products and product strategy of the Bank a. Traditional services: Borrowing and lending Banks develop a lot of products and services for the market and they can meet a service scope, which covers almost all operation fields of the commercial bank and relevant financial services. However, commercial banks will have their own ways to launch specific products and services to the market.

Banks specialize specific services in which they will make evident competition against their competitors. However, there are some factors to be noted. - Money can be borrowed with a fixed or changing interest rate. - Loans can be guaranteed for each specific type of asset.

This is a fact usually used in lending in the field of transportation or construction. - Unsecured loans: This is a common fact in case of specialized, preferred loans. - Loans can be guaranteed - usually applied when the borrower is part of a group of companies. Guarantee can be performed in various forms, package guarantee or partial guarantee of a project.

- Loans may consist of one kind of money or various kinds of money. Risks that occur may be compensated or covered by the borrower. - Loans are refunded as required or entrusted to the borrower under a certain term. - Terms promised to refund loans may be: + Short-term or medium and long-term.

+ Debt payment can be made by each term during the time or by lump-sum payment at the end of the borrowing time. + Convenience in refund, the borrower makes a direct repayment at the bank or refunds by transfer. In addition, banks can provide extra specialized lending services. In order to m4kP r€ffoflpl9ssð„PH& YrofttabIlity by focusing on appropriate activities, commercial banks can offer lending in the following main fields: - Fixed asset lending (lending for purchasing fixed asseis, capital construction).

This usually combines many services; some services may make higher profit than other activities.