Collateral management at vietnam public joint stock commercial bank, pvcombank,graduation thesis

STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGES - - GRADUATION THESIS COLLATERAL MANAGEMENT AT VIETNAM PUBLIC JOINT STOCK COMMERCIAL BANK, PVCOMBANK SUPERVISOR : Mrs PHAM THI HOANG ANH, Ph.D STUDENT : VUONG THI THANH MAI CLASS : K16ATCC COURSE : 2013-2017 Hanoi, May 2017 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” DECLARATION I hereby declare that this thesis is an independent research with my own effort The information of the studyis indicated and acknowledged through complete references The resultsused in the thesis have not been applied to any studies or degrees Hanoi, May 18th2017 VươngThịThanh Mai VuongThiThanh Mai – K16ATCC Pageii Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” ACKNOWLEGDEMENTS I would like to express my heartfelt gratitude to those who helped me during the period of studying and researching to complete this thesis First of all, I would like to send my deepest thanks to my supervisor, Mrs Pham Thi Hoang Anh, Assoc Prof., PhD, Director of Banking Research Institute, who has enthusiastically guided, advised, and supported me from the beginning of selecting the topic to completing the study Thanks to her patience, useful comments and valuable encouragement throughout the instructional process, I was able to improve my thesis Secondly, I am indebted to all the teachers of the Faculty of Foreign Language at Banking Academy for the professional teaching and helpful knowledge Furthermore, I would like to acknowledge my debt to the staff of Vietnam Public Bank, PVcombank for their support and assistance during the training Finally, I want to give my sincere thanks to my family and my friends who have advocated and encouraged me over this time Despite efforts to understand and research, this thesis has some certainly inevitable mistakes due to many limitations on knowledge as well as practical experiences Therefore, I look forward to receiving contributions as well as instructions of teachers VuongThiThanh Mai – K16ATCC Pageiii Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” ABSTRACT Currently, along with the development of market economy, the banking system is increasingly becoming widespread as an indispensable element The bank's credit activities contribute to a wide range of sectors such as national and private economies, especially collateral lending activity.For commercial banks, it is a profit seeking activity by means of making loan with secured assets that brings not onlyplenty of profits but also hidden risks In order to guarantee the safety, which means minimizing the risks, banks make an official request for borrowers to mortgage or pledge guaranteed assets For the society, lending activities createopportunities for various organizations, enterprises as well as individuals to invest and expand their business In the mortgage factors, receiving, handling and managing collateral are the most crucial and basic assignments Relying on these tasks, CBs will be able to determine reasonable lending levels to meet the needs of customers and ensure the capacity of debt recovery when customers cannot repay to force the bank to release assets Nowadays, due to many inappropriate elements such as the inadequate legal environment, incomplete valuation and process of collateral, the lending activities in Vietnam are incapable The research topic is collateral management at Vietnam Public Bank, which brings out the tables, figures, statistics about secured assets management with the comparison, analysis, and assessment based on information as well as data Therefore, to enhance the understanding of the theory of collateral and collateral management, the causes, recent situation as well as the solutionsare the goals toward VuongThiThanh Mai – K16ATCC Pageiv Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” TABLE OF CONTENTS LIST OF TABLES AND FIGURES vii LIST OF ABBREVIATIONS viii CHAPTER INTRODUCTION 1 The rationale of study Objective & research questions Scope of the study Methodology of the study Structure of the study CHAPTER THE THEORY OF COLLATERAL AND COLLATERAL MANAGEMENT AT COMMERCIAL BANK 2.1 COLLATERAL 2.1.1.Definition 2.1.2.Characteristic of collateral 2.1.3.Classification 2.2 COLLATERAL MANAGEMENT 2.2.1 Definition 2.2.2.The importance of collateral management 2.2.3 Collateral management regulations 2.2.4 Method of collateral management CHAPTER COLLATERAL MANAGEMENT AT VIETNAM PUBLIC BANK 3.1 OVERVIEW OF VIETNAM PUBLIC BANK, PVCOMBANK 10 3.1.1 Brief History, Foundation and Development 10 3.1.2 Organizational structure 11 3.2 STATUS FOR COLLATERAL AT VIETNAM PUBLIC BANK 11 3.2.1 Status for bad debts at PVcombank 11 3.2.2 Status for collateral at PVcombank 13 3.3 REALITY OF COLLATERAL MANAGEMENT AT PVCOMBANK 15 3.3.1 Receiving collateral and management procedures at PVcombank 15 VuongThiThanh Mai – K16ATCC Pagev Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” 3.3.2 Reality of collateral management at PVcombank 21 3.4 GENERAL ASSESSMENT 25 3.4.1 The results of collateral management 25 3.4.2 The difficulties and shortcomings 27 3.4.3 The reasons for the difficulties and shortcomings 28 CHAPTER SOLUTIONS AND RECOMMENDATIONS TO ENHANCE THE COLLATERAL MANAGEMENT 31 4.1 SOLUTIONS TO IMPROVE THE COLLATERAL MANAGEMENT AT VIETNAM PUBLIC BANK, PVCOMBANK 31 4.1.1 Solutions to the Vietnam Public Bank 31 4.1.2 Solutions to the relationship between Vietnam Public Bank and customers 33 4.2 RECOMMENDATIONS TO STATE BANK 33 4.3 RECOMMENDATIONS TO LEGAL FRAMEWORK OF VIETNAM 34 CONCLUSION 36 REFERENCES a REFERENCES b VuongThiThanh Mai – K16ATCC Pagevi Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” LIST OF TABLES AND FIGURES LIST OF TABLES Table 3.1 Non-performing loan ratio at Vietnam Public Bank 12 Table 3.2 The outstanding loans classified in types of collateral 14 Table 3.3 Regulations of receiving collateral’s period from the production date to the mortgage date 18 Table 3.4 The situation of debt recovery at Vietnam Public Bank 23 Table 3.5 The situation of selling bad debts to VAMC in 2014 24 LIST OF FIGURES Figure 3.1.Organizational structure at PVcombank 11 Figure 3.2.Non-performing loan ratio of PVcombank over 2013-2016 period 13 Figure 3.3.The outstanding loans classified in types of collateral (2013 – 2015) 15 Figure 3.4.The situation of debt collection at PVcombank over 2014-2015 period 25 VuongThiThanh Mai – K16ATCC Pagevii Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” LIST OF ABBREVIATIONS Abbreviations CIs Meaning Credit institutions NPLs Non-performing loans WTO World Trade Organization ASEAN Association of Southeast Asian Nations APEC Asia-Pacific Economic Cooperation MTM Mark to Market VAMC Vietnam Assets Management Corporation CIC Credit Information Center CBs Commercial Banks SBV State Bank of Vietnam SMES IT VuongThiThanh Mai – K16ATCC Small and Medium Enterprises Information technology Pageviii Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” CHAPTER 1.INTRODUCTION The rationale of study In the transition economy as Vietnam, the capital is becoming more demanding over the years Being a member of important international organizations such as the WTO, APEC, and ASEAN, Vietnam will face more difficulties, especially in the enterprises sector Therefore, the banking system,one of the backbones of national finances, will not only gain new opportunity but also have to face with various challenges Vietnamesebusinesses must incessantly improve the capacity of integration In credit system ofVietnam currently,supplying capital, which plays a monumental role, is leading to several issues Collateral is considered to be the lifeline of banks which is a crucial instrument to help banks to recover bad debts in the background of the NPLs The performance of this credit activity is operated constantly and frequently in order to enhance reputation and the business operation of the CIs Credit activity is a potential risk operation However, the commercial bank goes through several stages of collection, processing, analysis and evaluation before lending Besides, they have various subjective and objective issues from the bank, Government, and the authority regulations Therefore, using collateral is one of the substantial parts of providing credit, which is a possible way to increase the capacity to recover debt and reduce risk What is the security property? What is the situation of collateral in Vietnamese commercial bank nowadays? In order to answer all those questions, I have decided to choose the topic "Collateral management at Vietnam Public Joint Stock Bank, PVcombank" for my thesis Objective & research questions The research is aimed to discuss the current situation about collateral management in Vietnam Public Bank First of all, the thesis focuses on clarifying the theoretical issues of property management Secondly, the thesis pays attention to study the causes and the current situation of handling collateral are the second part Finally, the research mentions the solutions and recommendations for Vietnam Public Bank, PVcombank VuongThiThanh Mai – K16ATCC Page1 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” Scope of the study The study has mainly concentrated on the real situation of collateral management at Vietnam Public Joint Stock Bank, PVcombankin the period of 2013-2016 and several solutions to improve the management of guaranteed assets Methodology of the study In this research, I have chosen the methods of collecting, analyzing, summarizing information, synthesis, and comparison based on actual data Furthermore, I have used my knowledge gained in university and many experiences through my internship period Structure of the study The thesis is divided into four parts:  Chapter 1: The introduction which includes the rationale, objectives and research questions, scope and methods of study  Chapter 2: Literature review, this chapter gives a general overview of the collateral and collateral management at commercial banks  Chapter 3: This chapter refers to current situations of collateral management activities at Vietnam Public Joint Stock Commercial Bank  Chapter 4: This one concentrates on solutions and recommendations for guaranteed assets VuongThiThanh Mai – K16ATCC Page2 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” to Vietnam Assets Management Corporation is obtained of 1,975 billionVND, with 38 debt items, as follow: Table 3.5 The situation of selling bad debts to VAMC in 2014 (Unit: billion VND) Types Quantity Outstanding loans Issuing special bonds Individuals 13 94,3 80,4 Organizations 25 1,880.9 1,544.3 In total 38 1,975.2 1,634.7 (Source: Shareholder’s Meeting Report of Vietnam Public Bank PVcombank) Further, regarding debt restructuring, PV has executed the debt structuring and extension for clients under the Decision No 780/2012 and Circular No 09/2014 of State Bank, collect revenue to repay debts is up to VND 8,284 billion In 2015, 231.9 billion VND is the amount that PVcombank has processed the collateral and collected bad debts by themselves.This bank has revoked more than 231 billionVND of debt, including Western Bank’ old customer group is 199,4 billion VND, Vinashin, Vinalines group is 400 million VND, PVC group of 300 million, and customer from group to nearly 31,8 billionVND Furthermore, the total debt which is sold to VAMC in 2015 reached to 1.409 billionVND, showing that PVB has aggressively implemented However, in comparison with the fiscal year 2014, the debt collection has decreased significantly by more than 1,040 billion VND Besides, debt restructuring is promoted by banks for customers who have feasible options, financial ability to restore their business production The restructured debt in 2015 is 1,809 billion VND which is lower than the last year of 6,475 billion VND VuongThiThanh Mai – K16ATCC Page24 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” Debt collection 12,000 10,000 8,284 8,000 Debt restructuring 6,000 Debt recovery 4,000 1,809 2,000 2,145 1,281 2014 2015 Figure 3.4 The situation of debt collection at PVcombank over 2014-2015 period (Source: Shareholder’s Meeting Report of Vietnam Public Bank PVcombank) On the other hand, PVcombank only keep the original papers of secured assets In special cases, PVB will either direct or hire a third party to manage properties and ensure the ability to recover the debts, as well as bring the disputes to the court Therefore, the court will judge how much money does bank collect 3.4 GENERAL ASSESSMENT 3.4.1 The results of collateral management 3.4.1.1 Completing the management model On the background of new model and business orientation, PVcombank has made changes to improve its administrative structure and reassign the functional tasks to each department Nowadays, the bank has developed and built KPIs’ norm throughout the system to promote business operations, established relationships with customers, and upgraded management of collateral Moreover, setting up a Prioritize Customer Department at branches is one of the achievements of the past few years Concurrently, it is necessary to ensure that the staffcomply with the bank’s policies and regulations, as well as their professional knowledge is VuongThiThanh Mai – K16ATCC developed, Page25 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” acquired, and expanded actively to increase the advantages for commercial banks, especiallyPVcombank The managers create favorable conditions for employees to fulfill all tasks by applying regular policies on staff training, encouragement and reward Therefore, the manage activity adjusts the behaviors of specialist apartments including financial function control, administration, and organization structure 3.4.1.2 Enhancing the system operation and management Building and amending the internal documents in line with the collateral management activity as well as the actual economic situation has helped PVcombank to get benefits and avoid risks Furthermore, a comprehensive warning system is developed, non-performing loans restructuring is built in past several years, and handling collateral procedure is completed basically At present, the combination of Vietnam Public Bank and Consulting Firm Ernts and Young (E&Y) is implemented to analyze the administrative situation and upgrade the internal credit scoring system as well Further, the innovation and enhancement of the credit’s quality, the efficiency of credit appraisal and approval, the reduction in the time of collateral record process are created by the PVcombank’s changes By contrast, the bank has also hired experienced foreign experts to help them improve the management system followinginternational rules and ensure safety for PVcombank 3.4.1.3.Developing Information Technology In 2014, PVcombank co-ordinated with E&Y to build the information technology (IT) strategies including completing the policies of information technology management, unifying the infrastructure for network, security system, and IT application; as well as themodernization of the core system, electronic banking transaction system Therefore, providing high quality, modern and diverse products to customers are based on IT foundation In addition, the bank promoted the deployment of Core Banking T24, prepared Master Card’s issuing, simultaneously, optimized ATM network 3.4.2 The difficulties and shortcomings a The difficulties from valuation of collateral when handling and managing VuongThiThanh Mai – K16ATCC Page26 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” At Vietnam Public Bank, making valuation of collateral is a process that affects the quality of assessment When using the valuation methodology, bankers need to understand the advantages and disadvantages of the method as well as how to implement independently Customers borrow funds with different purposes, different types of collateral, so staff must be objective in valuation In several cases,the risks occurred by the difficulty in guaranteeing asset’s liquidity and reducing the value of properties whichhas lower market price than original cost due to unbiased and subjective reasons b The difficulties from receiving and dealing the information of collateral This partly reflects shortcomings in existing data collection process such as the incorrect quality of information collection and handling In some cases, surveys and sources of information are based on the Internet andfinancial reports of enterprises, therefore the verification and accuracy of assessment results are inaccurate, which has led to the reduced reliability c The difficulties from seizing collateral to handle and manage When the guaranteed asset is seized, especially transportation in circulation, PVcombank facestough attitude, non-cooperation of guarantor In fact, some customers show their obstructive attitude in handing over the assets, therefore making PVB struggle to recover the property d The difficulties from collateral receive and management Vietnam Public Bank builds a complete procedure of guaranteed asset receiving and management from Head Office to Branches However, significant problemsremain The credit managers operate with passive and expectant roles such as approval the files exceeding their authorities, rigging in receipt and management of properties, or having difficulties in distinguishing between valuation and appraisal of guaranteed assets Moreover, the process of receipt and administration is inflexible and rigid for all types of business, assets as well as production procedures e The difficulties from legal system According Clause of Article 296 of the Civil Law 2015, an asset is allowed to fulfill multiple guaranteed obligations Individuals and organizations have the VuongThiThanh Mai – K16ATCC Page27 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” rights to use an asset to mortgage at various credit institutions However, in the past few years, some enterprises have created a number of virtual properties that give a flashy financial report to borrow money from banks and cheat on the managerial staff It leads to serious results such as leaking in property, loss of capital and bad debts in one or several CIs which will have unimaginable consequences for national economy 3.4.3.Reasons for the difficulties and shortcomings 3.4.3.1.Subjective reasons First of all, when receiving and handling the collateral, the qualifications and experiences of PVcombankstaff lead to causes of credit risks The quality of staff in collateral management is still out of ignorance for law’s regulations which related to secured property handling and managing to recover loan Moreover, the bank does not have strict management of policies and controlled tools through the system of procedures, regulations, as well as without employee’s training resulting in receiving the collateral which is not explicitly appraised on sources of ownership Another reason is delaying in collateral receipt and management, which does not meet the needs of clients Many loan secured documents are incomplete papers according to the law at the time of receiving mortgages,for example lacking in Certificate of Land Use Rights, or without mortgage contract notary Therefore, when customers can no longer able to pay, the bank cannot receive and handle it,resulting in a large number of capitalswhich is existed over few years Thirdly, collateral assessment in Vietnam Public Bank is revealed to have many constraints Specially, legal assessment of collateral is made subjective and light of work that leads to the status of collateral in the bank as short of legal documents, making drawbacks in dealing with the property to recovery 3.4.3.2.Objective reasons a From the competition in banking system Nowadays, many commercial banks operate under the competitive directions of bringing benefitsfor their business The marketshare will be lost easily to other competitors when a bank has excessive requirement in collateral, procedures, and strict valuation process Therefore, some CBs change unhesitatingly their credit VuongThiThanh Mai – K16ATCC Page28 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” policies to attract borrowers in order to maintain and expand the business operations as well as market share as valuing collateral is at far below the market value or increasing the lending rate to total value of assets which compared with other banks b From the regulatory environment In fact, various legal documents has regulated, guided and adjusted the secured relationship and collateral management such as Decree No 83/2010 / NDCP, Decree No.163/2006 / ND-CP, Civil Law, Law on Credit Institutions, Housing Law, and Enterprise Law, however, lacking of unity has led toconfusing as well as losing time of PVB to research and apply for For example, the Decree No.163(Consolidated Document No.8020) on secured transactions allows the sale of assets, but the Civil Law 2015 clearly regulated the purchase or sale contract must be the property owner who agrees Therefore, the collateral is notarized however the notary is unable to transfer ownership for bank if the owners not agree On the other hand, receiving, handling and managing in PVcombank still faced to complex difficulties because a broad legal framework is not established c From the perspective of customers The collateral of customers shows its different diversity and safety, with a diversity of sources, characteristics and values which can easilycauseseveraldrawbacks and time-consuming for arrangement as well as management In addition, the data reflected and recorded on the value of assets are not consistent, various related documents are difficult to determine, as well as the accuracy depends largely on the reliability of customers.Furthermore, several borrowers have collateral which is incomplete insome right certificates,making it difficult to receive, handle and manage In various cases, the collateral is failed to repay due to the non-cooperation attitude of clients or guarantors,which leads to the disadvantages for PVcombank The bank cannot take legal actions because of some defaulting customers trying to leave d From the information asymmetry The collection of customer’s information as well as collateral of patrons, especially the monitoring and managing the guaranteed assets have not been paid adequate attention Moreover, the information that customer as organizations and enterprise are given through financial reports is not verified The clients’ financial, VuongThiThanh Mai – K16ATCC Page29 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” professional and operational capacities are neither attested nor monitored Clients take full advantages of better understanding about their secured assets Furthermore, other banks can be aware of information of acquaintance from the business Therefore, the risk of information asymmetric is also acquired easily by bank VuongThiThanh Mai – K16ATCC Page30 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” CHAPTER SOLUTIONS AND RECOMMENDATIONSTO ENHANCE THE COLLATERAL MANAGEMENT 4.1 SOLUTIONS TO IMPROVE THE COLLATERAL MANAGEMENT AT VIETNAM PUBLIC BANK 4.1.1 Solutions to improve the collateral management at Vietnam Public Bank Secured management is one ofthe complex issues, and more than ever before, the question of how to manage assets is an importantissue of banks The favorable collateral management directly relates to the assessment, valuation and prevention of capital loss a Improving human resources and professional skills Collateral management process requires unstoppable development as well as creative, scientific and flexible application in line with the actual financial situation of each enterprise, each type of secured assets, and each production process to provide reasonable solutions to supervise, inspect, and manage collateral In addition, in order to enhance the efficiency of handling and managing property at PVcombank, strengthening the human resources training is an important and long term measure The annual training plans should be prepared; staffs need to be sent to enroll in specialized classes such as legal framework for collateral, credit risk management, collateral handling, and valuation Discussions with experts should be implemented for the employees to gain from their experience Furthermore, the policies of attracting and retaining qualified experienced employees in the context of foreign credit institutions' penetration and expansion in Vietnam must be operated parallel Vietnam Public Bank needs to set up a system of encouragement, reward, and salary for their staff, in accordance with business requirements, competition, as well as profit orientation b Strengthening the role of internal control In order to identify promptly frauds which relate to receiving and managing collateral as well as the credit activities,internal inspection control activities must be VuongThiThanh Mai – K16ATCC Page31 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” carried out both periodically and regularly Monitoring and controlling the risk of collateral should be implemented in two aspects:the control of the collateral portfolio and collateral control for each types of loan on a regular basis In the past,a number of huge economic cases occurred in some commercial banks, as insiders and bank staff tried to counterfeit the loan records with customers.Thus, the behavioral surveillance of credit employees and bank’s leaders is also an effective measure to reduce risks To avoid such an error, powerful sanctions need to be taken within the Vietnam Public Bank c Completing collateral risks management model Secured assets should be identified, supervised, monitored, and managed strictly to protect bank’s legal rights by means of several methods The first way is the implementation of collateral ranking as the foundation for receiving or refusing the properties as well as making decision of lending ratio Secondly, loan procedures of PVcombankshould clearly define responsibilities of credit staff including requesting the information of collateral, considering granting of credit for clients, and confirming the information of the records Another solution is enhancing the quality of property valuation Using security instruments is one of the indispensable measures for the bank When a loan contract with collateral is signed, the bank should require clients to buy insurance fr collateral which are goods, machineries, equipment, transportations, and other projects to mitigate the extent of likely losses Finally, protecting their legitimate rights and interests through the registration of secured transactions at the Registration Center is essential solution for PVB according to Article 47 of Decree No 83/2010 / ND-CP After receiving securities, the collateral transactions are entered competently according to Decree No 83/2010 / ND-CP dated July 23, 2010 of the State Bank It is necessary to recognize the ownership and handle rights of collateral so as to avoid conflicts in legal system It should be considered as bank’s right and mechanism to ensure that the right will be enforced VuongThiThanh Mai – K16ATCC Page32 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” d Measuring of collateral First of all, for the property such as the real estate or land use rights, the valuation and appraisal are momentous factors In order to achieve high efficiency on assets evaluation, PVB has to follow strictly the evaluating process, and more importantly, focus on information collection to ensure that the information is objective and accurately reflect the market situation Secondly, with collateral namely machinery, transportation, and production lines, it is important to understand the layout of production, types of machinery, equipment, and warehouses The documents on layout of production, machinery, equipment or warehouses must be enclosed with the credit files in order to abide by the supervision, inspection and management of secured assets It is very substantial for Vietnam Public Bank to manage and keep tract of collateral in reality Thirdly, the bank has to understand and master the business production process of project which is currently mortgage, because of its importance in collateral management If production process is understood, the bank can grasp easily the situation of assets usage 4.1.2 Solutions to the relationship between Vietnam Public Bank and customers The signing of credit contracts must be stringently observed under the regulation for both parties when having guaranteed assets The clients need to submit adequate loan folders to help bank to understand detailed portfolio, origins of properties and loan purposes The parties to a financial cooperation contract are obliged to observe the provisions of Law Moreover, non-compliance and breaking contract can cause the collateral conflict between the parties Therefore, in order to ensure the binding of related parties, the requirements should be amended and completed in written form into the content of agreement The credit contract is not only a legal issue, but also a voluntary agreement that guarantees the feasibility of terms 4.2 RECOMMENDATIONS FOR STATE BANK a Completing the systematization of legal documents Systematization of documents relating to collateral should be improved based on State regulations as well as consideration during the application ofthe legal VuongThiThanh Mai – K16ATCC Page33 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” papers in practice In reality, commercial banks are under direct management from State Bank of Vietnam (SVB), so whenever the Government issues a new legal document, the CBs will have official documents to guide their staff Moreover, due to the amendment to these regulations, business operations of CBs in general and PVcombank in particular are met with difficulties, conflicts, and overlap Therefore, it is proposed that SBV should take a clear, thorough and timely direction in the systematization of documents,which relates to banking credit activities, especially making loans with secured assets, to create favorable conditions for credit officers b Enhancing State Bank’s supervision The credit activities involving guaranteed assets should be monitored by the Centre Bank and reported to the Government to bring out magnificent resolutions If a violation happens, stern and strict punishment should be performed by SBV for all customers including domestic and foreign clients c Improving Credit Information Center Improving and completing the effectiveness of Credit Information Center (CIC) is one of essential solutions for commercial banks to meet the needs of customer information requirements as well as searching Therefore, CIC can truly become an information library for developments of credit operations in Vietnam, the quality enhancement and reliability of information in financial market 4.3 RECOMMENDATIONS FOR LEGAL FRAMEWORK OF VIET NAM It is needed to breach the regulations that are no longer appropriate to the reality so as to avoid overlap in the collateral management At the same time, it is necessary to amend the regulations on ownership rights of collateral between banks and customers In addition, the legal framework should be more specific and obvious in order to recognize the right of handling and managing collateral along with avoid conflicts in the legal system The Ministry of Justice should take the responsibility and coordinate with other ministries in supplementing the Joint Circular No 16/2014 / TTLT- NHNN dated June 6, 2014, guiding the handling of secured assets according to Decree No 163/2006 / ND-CP dated 29/12/2006 and Decree No 11/2012 / ND-CP dated 22/02/2012 of the Government as follows: VuongThiThanh Mai – K16ATCC Page34 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank”  Firstly, handling the collateral of the securer being an individual who is currently serving an imprisoned punishment, or fleeing from their locality  Secondly, dealing with secured assets formed in the future that is yet to be established in practice or unfinished at the time of processing; overseas secured assets  Thirdly, handling the costs that the bank has paid in advance to pay for hiring guards, or additional investments in secured assets to maintain, upgrade,and exploit secured assets VuongThiThanh Mai – K16ATCC Page35 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” CONCLUSION In the background of rapidly growing economy, the capital needs of corporations have been met by means of diversified funding supply channels However, it can be said that the capital provision of commercial banks plays an important key, especially for SMEs Therefore, maximizing the efficiency of secured assets in lending activities is an essential solution that helps banks to reduce credit risks,motivate customers to operate, and lay the foundation for the economic development In the face of existing drawbacks of collateral management, detail solutions and coordination between banks, clients, the Government and other agencies should be implemented to promote the property’s roles The topic of thesis is “Collateral management at Vietnam Public Bank, PVcombank” has clarified several issues as followed: Firstly, the study shows the overview of basis theoretical knowledge on collateral as well as collateral management such as definitions, classifications, characteristics, and the regulations of law Secondly, the thesis analyzes and assesses the current situation of receiving, handling and managing guaranteed assets at Vietnam Public Bank over the period of 2013-2016, thereby evaluating the achievements, difficulties and shortcomings as well as presenting the subjective and objective causes of such problems Finally, from the above status, some solutions and recommendations are proposed to improve the efficiency of collateral management including three groups such as solutions for Vietnam Public Bank, solutions for State Bank and solutions for legal framework of Vietnam VuongThiThanh Mai – K16ATCC Page36 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” REFERENCES Assoc Prof., PhD, To Ngoc Hung: Banking Credit Syllabus Peter S Rose (2010): Bank Management and Financial Services Vietnam Public Joint Stock Commercial Bank, PVcombank (2013, 2014, 2015) : Shareholder’s Meeting Reports and Annual Operation Reports PVcombank (2014), the Official Document No 7965/2014 dated July 15, 2014 on the receipt and management of collateral which are machinery, transportation, and production lines PVcombank (2014), the Official Document No 3889/ 2014 dated 21/4/2016, guiding the receipt and management of collateral as gold, precious metal PVcombank (2015), the Official Letter No 3584/2015 / HD-PVB dated April 14 2015, guiding the receipt and management of collateral as the right for claiming debts from the obligor in foreign countries PVcombank (2015), the Official Letter No 11450/2015 / HD-PVB dated October 28, 2015 relying on Decree No 547, guiding the receipt and management of real property PVcombank (2016), the Decision No 6973 / QD-PVB dated July 12, 2016 on lending products demand for real estate for individual customers Decree No.163/2006/ND-CP dated 29 December 2006 (Consolidated Document No 8020) by the Government instructing implementation of multiple articles of Civil Law on the establishment and implement of collateral transactions 10 Civil Law 2015 11 Decree No 83/2010/ND-CP (Consolidated Document No 8019) on registration of collateral transaction 12 Land Law No.452013/ QH13 dated 29/11/2013 13 Law on Credit Institutions No 47/2010 / QH12 dated 29/06/2010 14 Enterprise Law No.68/2014/QH13 dated 26/11/2014 15 Housing Law 2013 16 Bankruptcy Law 2014 VuongThiThanh Mai – K16ATCC Page37 Thesis: “Collateral Management at Vietnam Public Bank, PVcombank” 17 Marine Law 2006 18 Inter-Ministerial Circular No 16/2014 dated 22 July 2014 by State Bank providing the guidance on collateral handling 19 Decree No 11/2012 / ND-CP dated 22 February 2012 by the Government stipulating the amendment of some articles of Decree No.163/2006 / ND-CP 20 PVcombank: Introduction about Vietnam Public Bank http://www.pvcombank.com.vn/gioi-thieu-ve-pvcombank.html 21 PVcombank (2016) : PVcombank will become a safe and stable bank’s development in 2020 http://www.pvcombank.com.vn/tin-tuc/tin-pvcombank/pvcombank-se-tro-thanhngan-hang-phat-trien-an-toan-va-on-dinh-vao-nam-2020-507.html 22 PVcombank (2015): The successful Annual Shareholder’s Meeting of PVcombank in 2015 http://www.pvcombank.com.vn/tin-tuc/tin-pvcombank/dai-hoi-co-dong-thuongnien-pvcombank-2015-thanh-cong-tot-dep-343.html 23 Lucas Wyrsch (2014): What is Collateral Management? https://www.linkedin.com/pulse/20141118084603-2088210-what-is-collateralmanagement 24 Donn Saylor (2017): What is the Collateral Management? http://www.wisegeek.com/what-is-collateral-management.htm 25 Pham Thi Hong Dao (2016): Handling collateral at banks http://www.moj.gov.vn/qt/tintuc/Pages/nghien-cuu-trao-doi.aspx?ItemID=2054 26 ThanhHai (2013): Handling collateral: The risks belong to the banks http://cafef.vn/tai-chinh-ngan-hang/xu-ly-tai-san-bao-dam-rui-ro-thuoc-vengan-hang-20120717023337586.chn VuongThiThanh Mai – K16ATCC Page38