Analysis of corporate governance issues case studies at asia commercial joint stock bank as of 2018

NATIONAL ECONOMICS UNIVERSITY CORPORATE GOVERNANCE Analysis of corporate governance issues Case studies at Asia Commercial Joint Stock Bank as of 2018 Members of group Nguyễn Ngọc Long – 11172881 Ng[.]

NATIONAL ECONOMICS UNIVERSITY CORPORATE GOVERNANCE Analysis of corporate governance issues - Case studies at Asia Commercial Joint Stock Bank as of 2018 Members of group: Nguyễn Ngọc Long – 11172881 Nguyễn Việt Hoàng - 11171823 Nguyễn Trung Hiếu - 11171679 Đào Huy Anh - 11170060 Đào Quốc Huy - 11172081 Nguyễn Phương Chi - 11170650 Class: Quản Trị Doanh Nghiệp CLC K59 Faculty: AEP Lecturer: TS Đào Thanh Tùng Contents CHAPTER I: INTRODUCTION 1.1 General information, formation and development process 1.1.1 General information 1.1.2 The process of formation and development 1.1.3 Growth charts 1.2 Business scope and network 1.2.1 Business scope 1.2.2 Network 1.3 Development strategy .8 1.4 The situation of implementing strategic projects in recent years .8 CHAPTERII: OWNERSHIP STRUCTURE OF THECOMPANY 2.1 The General Meeting of Shareholders .9 2.2 The Board of Directors 10 2.3 Supervisory Board .10 2.4 General manager 11 2.5 Current situation of Asia Commercial Joint Stock Bank 12 2.6 Comparing with the theory of corporate governance and giving evaluation 15 CHAPTER III THE ROLE OF THE SHAREHOLDERS 17 3.1 Specific shareholder rights 17 3.2 The Protection of shareholder rights .19 3.3 Responsibilities of shareholders 19 3.4 Current and evaluate situation .20 CHAPTER IV: INFORMATION DISCLOSURE AND TRANSPARENCY 22 4.1 ACB's regulations on information disclosure and transparency 22 4.2Actual situation of information disclosure and transparency 22 4.3 Evaluation of information disclosure and transparency 25 CHAPTER V: BOARD STRUCTURE AND ROLE OF THE BOARD OF DIRECTORS 26 5.1 ACB's regulations on the Board of Directors .26 5.2 Practical information about the Board of Directors 27 5.3 Evaluate issues related to BoD 31 CHAPTER VI: ROLE OF STAKEHOLDERS 32 6.1 Interal stakeholders .32 6.2 External Stakeholders 33 6.3 Assessing the situation 35 CHAPTER VII: CONCLUSION 36 Table lists and charts Chart 1.1: Total assets over the years Chart 1.2: Total deposits over the years Chart 1.3: Total outstanding loans Chart 1.4: Total pre-tax profit Table 2.1: Shareholding structure major and minor shareholders Table 2.2: Major foreign shareholders Table 2.3: Some lists of other shareholders Table 5.1: The list of Board of Directors ABSTRACT This exercise is developed based on the process of learning and analyzing corporate governance issues - Case studies at Asia Commercial Joint Stock Bank as of 2018 Based on the "CG manual for Vietnam-second edition "and "OECD Principles of Corporate Governance", and at the same time as the situation of ACB such as annual reports, financial statements, and regulations of the bank in 2016, 2017, 2018.The team members gained better understanding of ownership structure of the company, the role of the shareholders, actual situation of information disclosure and transparency, board structure and role of the board of directors, role of stakeholders This exercise may have many shortcomings, we are looking forward to your comment! CHAPTER I: INTRODUCTION 1.1 General information, formation and development process 1.1.1 General information • The bank’s name: - Full name in Vietnamese: Ngân hàng thương mại cổ phần Á Châu - Abbreviated name in Vietnamese: Ngân hàng Á Châu - Full name in English: Asia Commercial Joint Stock Bank - Abbreviated name in English: ACB • Business Registration Certificate No.: 0301452948 - Date of first registration: 19 May 1993 - The thirty-three registration: 30 November 2018 • Chartered capital: 12,885,877,380,000 VND (by words: Twelve trillion eight hundred and eighty-five billion eight hundred and seventy-seven million three hundred and eighty thousand Vietnam Dong) • Address: 442 Nguyen Thi Minh Khai Street, Ward 5, District 3, Ho Chi Minh City, Vietnam • Phone number: (+84) (283) 929 0999 • Fax: (+84) (283) 839 9885 • Website: www.acb.com.vn • Stock code: ACB 1.1.2 The process of formation and development - Asia Commercial Joint-Stock Bank (ACB) was established under the Business License No 0032/NH-GP dated on 24 April 1993 by the State Bank of Vietnam (SBV) and Establishment Permit No 533/GP-UB dated on 13 May 1993 by the People’s Committee of Ho Chi Minh City ACB started the operations on 04 June 1993 - ACB was listed on Hanoi Securities Trading Center (now re-named as Hanoi Stock Exchange – HNX) pursuant to Decision No 21/QĐ-TTGDHN on 31 October 2006 The first transaction date was 21 November 2006 - Development milestones:  1993 – 1995: + Embryonic stage of development +Targeted segments included households and private SMEs  1996 – 2000: + Became the first private Vietnamese bank to issue the international credit cards (Master Card and Visa) + Launched an IT modernization program: the LAN was replaced by the WAN, with a core banking platform named The Complete Banking Solution (TCBS), which was put into operation in 2001 + Rearranged the organizational structure of Headquarters in order to facilitate business and support activities + Established ACB Securities Company (ACBS)  2001- 2005: +Adopted the ISO 9001:2000 quality management system and registered for recognition of (i) deposit taking, (ii) short- and long-term lending, (iii) trade services, and (iv) human resource processes at the Headquarters + Carried out the second phase of the IT modernization program, including (i) server upgrading, (ii) replacement of the bankcard transaction processing software with one compatible with the core banking platform, and (iii) continued ATM installation  2006- 2010: + took part in the Hanoi Stock Exchange + Rapid expansion of the branch network: 223 oces were put into operation, a leap from 58 oces in 2005 to 281 oces in 2010 + Established ACB Leasing (ACBL) + Issued 10 million shares with par value of 100 billion VND, with the proceeds of more than 1,800 billion VND (2007); and increased its chartered capital to 6,355 billion VND (2008)  2011- 2015: + The “Strategic Directions for 2011 to 2015 and the Vision to 2020” was issued One focus was the transformation of the bank’s corporate governance practices, in compliance with Vietnamese rules and regulations, and the application of international best practices + The August incident in 2012 brought a serious impact on various bank activities, especially on gold deposit taking and gold trading activities The bank took quick action in response to the spike in withdrawals that too place in the last week of August and was able to recover all of the cash deposits relatively quickly The bank then took drastic measusres to cut costs in the second half of the year + In 2013, although the business results did not meet expectation, ACB achieved positivegrowth rates in terms of deposit taking (18%) and lending (15%) Bad debt was kept under 3% ACB managed to better arrange its personnel and cut headcounts ACB began implementing the restructuring roadmap (2013 – 2015), as stipulated by the SBV + 2014, ACB upgraded the old core banking platform, which had been in use for 14 years, to a new version called DNA ACB completed the first phase of its corporate identity transformation, introducing new branding and renovating the facades of branches, sub-branches, and ATMs A soft launch was conducted on January 05, 2015 ACB developed a risk management framework to fully comply with new regulations regarding to prudential ratios ACB’s branches grew in size and performance improved  2016 – 2018: + In 2016, ACB completed as per schedule multiple items of technology projects, including the changing of ACBS’s core system; improvement in IT applications such as CLMS, CRM, ACMS, ELM, PASS to support the streamlining of business processes; upgrading ATM system and ACB website to increase utility and customer payment service, etc Furthermore, ACB continued to complete strategic plan including (i) transaction banking, (ii) privilege banking, (iii) business process reengineering - ACMS (phase 1), etc in order to improve competitiveness And particularly, during the year ACB successfully restructured the organization and operational model, with increased performance of its branches/ sub-branches and more streamlined organization of its Headquarters units + In 2018, ACB ensured the sustainability of consumer banking and SME controlled the credit quality and safe operation effectively The credit growth of these two areas was outstanding in conjunction with the ALCO’s direction The deposit was improved, that leaded to the increase of CASA from 15.8% to 16.7% the released cards were saled more than the previous year The Bank issued 4.400 billion VND of AAA bonds with 3-year and 10-year term Debt was settled and collected, therefore the income from debt settlement was fourfold higher than 2017 ACB has gradually built the platforms, continued to enhance its operation capability for the transformation and development in the period of 2019 – 2024 1.1.3 Growth charts  Here is a summary of the achievements over the years: Chart 1.1: Total assets over the years Chart 1.2: Total deposits over the years ... This exercise is developed based on the process of learning and analyzing corporate governance issues - Case studies at Asia Commercial Joint Stock Bank as of 2018 Based on the "CG manual for... "OECD Principles of Corporate Governance" , and at the same time as the situation of ACB such as annual reports, financial statements, and regulations of the bank in 2016, 2017, 2018. The team members... situation of Asia Commercial Joint Stock Bank  Organizational structure: THE GENERAL MEETING OF SHAREHOLDERS SUPERVISORY BOARD BOARD OF DIRECTORS BOARD COMMITTEES BOARD OF MANAGEMENT OFFICE OF