Solutions to develop international payment operations at military commercial joint stock bank west hanoi branch,graduation thesis

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty - - GRADUATION THESIS SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENT OPERATIONS AT MILITARY COMMERCIAL JOINT STOCK BANK WEST HANOI BRANCH Lecturer : Nguyen Thi Hien Hanh (M.A) Student : Phung Thi Ngoc Class : K15- ATCA Student Code : 15A7510170 Ha Noi, June, 2016 Banking Academy of Vietnam Graduation thesis STUDENT DECLARATION I declare that this graduation thesis titled Solutions to develop international payment operations at Military Commercial Joint Stock Bank- West Hanoi Branch is my own product except for quotations and citations which have been duly acknowledge I also declare that the material in this thesis has not been submitted previously or simultaneously at Banking Academy and other institutions Signature Phung Thi Ngoc Banking Academy of Vietnam Graduation thesis ACKNOWLEDGEMENTS First and foremost, I would like to express my deepest gratitude to my honorable supervisor- M.A Nguyen Thi Hien Hanh of the Foreign Language Faculty- Banking Academy for valuable advices and enthusiastic guidance from the beginning to the perfection of this thesis Without her feedback and encouragement during I prepared this thesis, it would have never accomplished within such a limited time Another special thanks to Banking Academy in general and the Foreign Language Faculty in particular for giving me a chance to study in a professional academic environment I am also extremely grateful to all lecturers in the Faculty for sharing about English and Banking knowledge, skills and for their untiring efforts in my growth throughout years of university Last but not least, my particular thanks to my family and all my friends who always inspire and encourage me in any ways through the duration of my thesis Banking Academy of Vietnam Graduation thesis ABSTRACT Nowadays, in the globalization, there are many ways for payments help organizations or individuals international business but some ones might never be heard and make user's require to understand deeply international laws or customs Therefore, this thesis will draw a picture of new concerns about the most common international payment methods that importers and exporters tend to favor in the latest years in Vietnam, taking Military Bank- West Hanoi Branch into the case Current survey shows that businessmen prefer selecting Letter of Credit and Remittance taking a large percentage of all and where banks play important roles to help reduce transaction costs by up-to-date banking technology and enrich competitive preferences This thesis provides an analysis and evaluation of the recent international payment activities in Military Bank as well as help the bank to choose a satisfactory method so as to serve their customer the most Of all parts in the thesis, the first one, "introduction", gives some main reasons the topic selected, major subjects, objects and the reviews of some chapters including in the topic The second element is theory of international payment system that consists of basic knowledge, the roles of banks in each method and factors impacting on these payments The predominant sections in this thesis are the third and the forth ones In detail, part three indicates the reality, achievements and shortcomings of International payment at Military Bank and West Hanoi branch by analyzing all the data collection and findings Finally, the thesis discusses about orientations, suggestions and several petitions for bank to improve international payment operations' efficiency in the next years Banking Academy of Vietnam Graduation thesis TABLE OF CONTENTS STUDENT DECLARATION ACKNOWLEDGEMENTS ABSTRACT LIST OF ABBREVIATIONS LIST OF FIGURES AND TABLES CHAPTER INTRODUCTION 1 SIGNIFICANCE OF THE TOPIC .1 OBJECTIVES SUBJECT AND SCOPE OF THE STUDY RESEARCH METHODOLOGY STRUCTURE OF THE GRADUATION THESIS CHAPTER OVERVIEW OF INTERNATIONAL PAYMENTS AT COMMERCIAL BANKS .4 2.1 SOME BASIC ISSUES OF INTERNATIONAL PAYMENT AT COMMERCIAL BANKS 2.1.1 Definition of international payment 2.1.2 Main International Payment methods and roles of Bank .4 2.2 FACTORS AFFECTING TO THE EXPANSION OF INTERNATIONAL PAYMENT OPERATIONS OF COMMERCIAL BANKS.13 2.2.1 Group of external elements 13 2.2.2 Group of Internal elements 14 CHAPTER 16 THE REALITY OF INTERNATIONAL PAYMENTS AT MILITARY BANK- WEST HA NOI BRANCH .16 3.1 FOUNDATION AND DEVELOPMENT OF MB & MB WEST HANOI BRANCH .16 3.1.1 History and development of MB and MB West Hanoi branch 16 3.1.2 Organizational structure of MB 18 3.1.3 Outcome of business activities of MB - West Hanoi ( 2012- 2015) 18 3.2 THE REALITY OF INTERNATIONAL PAYMENT METHODS AT MB WEST HANOI BRANCH 20 Banking Academy of Vietnam Graduation thesis 3.2.1 The Performance of IP in general at MB Hanoi Branch 20 3.2.2 The Reality of Remittance method .24 3.2.3 The Reality for Collection payment method 25 3.2.4 The Reality of L/C method 26 3.3 OVERALL ASSESSMENTS OF INTERNATIONAL PAYMENT AT MB WEST HANOI BRANCH 28 3.3.1 Achievements .28 3.3.2 Drawbacks 30 CHAPTER 32 SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENT ACTIVITIES AT MILITARY COMMERCIAL JOINT STOCK BANK- MB WEST HA NOI BRANCH .32 4.1 SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENTS FOR MB WEST HANOI BRANCH 32 4.1.1 Group of direct solutions .32 4.1.2 Group of supplementary solutions .33 4.2 PETITIONS 35 4.2.1 Petitions to State bank of Viet Nam (SBV) 35 4.2.2 Petitions to importing and exporting enterprises 36 4.2.3 Petitions to Military Bank as well as to Military Bank West Hanoi branch 36 CONCLUSION REFERENCES Banking Academy of Vietnam LIST OF ABBREVIATIONS IP International Payment USA United States of America USD United States of Dollars CBs Commercial Banks D/C Documentary Credit L/C Letter of Credit MB Military Commercial Joint Stock Bank M/T Mail Transfer T/T Telegraphic Transfer RB Remitting bank CB Collecting bank PB Presenting Bank IB Issuing Bank AB Advising Bank B/E Bill of Exchange SBV State Bank of Vietnam Graduation thesis Banking Academy of Vietnam Graduation thesis LIST OF FIGURES AND TABLES Diagram of payment process implementing remittance method Diagram of LC transaction Diagram of Documentary collection process Diagram of Clean Collection method Diagram 3.1 The amount of transactions per method in MB West Hanoi branch Diagram 3.2 The proportion of Remittance, collection and L/C in total turnover of IP at MB West Hanoi through last years Diagram 3.3 Revenue of Remittance method at MB West Hanoi Branch in the stage from 2012 to 2015 Diagram 3.4.The number of Collection at MB West Hanoi branch Diagram 3.5 Revenue of IP with L/C method in MB West Hanoi branch Diagram 3.6 The amount of L/C transaction in MB West Hanoi branch Diagram 3.7 The number of banks and countries having correspondent relations with MB Table 3.1 The main financial indicators of MB West Hanoi Table 3.2 outcomes of business operations of MB West Hanoi Branch Table 3.3 General results of IP methods at MB West Hanoi branch in the period from 2012 to 2015 Table 3.4 The volume of IP activities by MB West Hanoi contrasting the whole MB system Banking Academy of Vietnam Graduation thesis CHAPTER INTRODUCTION Significance of the topic In the context of international economic integration and globalization of the world economy, countries have been making a concerted effort to perfect the market economy, openness, cooperation and integration with other countries In particular, foreign economic activities of the countries are at the forefront as well as the inevitable path of economic development strategy of the country Vietnam, following the policy of developing an open economy, accelerating the process of integration with other economies, has been already set up a strategic partnership with 13 countries in the region and in the world and 11 comprehensive partnerships (including USA ) This allows us to be able to develop commercial activities, penetrate foreign markets and vice versa In recent years, international trade in general and international payment activities in our country, in particular, has experienced a considerable period of moving up and down, but it is becoming more and more complete Contributing significantly to the foreign trades is international payment (IP) operations They seem like a trading bridge between buyer and seller from different countries all over the world, which helps promote greatly export and import activities If the international payment operations are carried out quickly, safely and accurately, it will make relation of monetary circulation between buyers and sellers in different countries go smoothly and efficiently For these reasons, ways to improve IP services are what the government as well as commercial banks (CBs) constantly seek for, especially the first concern is choosing suitable IP methods Meanwhile, in the diversity of IP method system like Documentary credit ( D/C) or L/C, collection and remittance method, selecting the most effective one depends on a variety of factors In reality, exporters and importers tend to predominate in the safe and cost- effective methods where banks play an important role Military Commercial Joint Stock Bank (MB), with its long establishment, has always maintained its position as one of the leading bank providing a wide Banking Academy of Vietnam Graduation thesis assortment of financial services in International trade of Vietnam, especially international payments which the bank has been considered as one of the major business activities Therefore, in recent years, IP operations of MB in general and West Hanoi branch in particular have been developing dramatically According to recent counting number, MB's IP activities has gotten lots of achievements but it has still existed some limitations that need tackling Along with the fierce competition of the other domestic banks such as Vietcombank, Vietinbank, BIDV and foreign banks such as HSBC and ANZ, how to improve and expand the IP activities has always been the sole question of leadership of the Bank Knowing that concern , with the desire to contribute a small part to evolve the activities of MB better, I decided to choose topic "Solutions to develop IP operations at MB West Hanoi branch in period 2012- 2015 " for this thesis Objectives Recognizing the significance of IP in international trade and basing on facts and figures of MB's IP in the aforementioned period , this thesis proposes to seek successful solutions to IP development for MB, which could help MB maintain its achievements and limit its drawbacks Therefore, the thesis sets targets at: First, systematizing theoretical issues relating to international payments and some issues concerning about the expansion of IP at commercial banks Second, assessing the real situation of international payments in MB and West Hanoi branch Third, putting forward a number of solutions and proposals which are feasible to expand the IP operations in West Hanoi branch Subject and scope of the study The study concentrates on the theoretical issues of IP and the expansion of international payment operations in CBs by implementing the current data in reality of international payment activities in MB, West Hanoi branch in the years from 2012 to 2015 Research Methodology The thesis uses the information collected and makes analysis mainly from Annual report, Balance Sheet or Income Statement released by MB In detail, the Banking Academy of Vietnam 3.2.3 Graduation thesis The Reality for Collection payment method Diagram 3.4.The number of Collection at MB West Hanoi branch (Unit: Thousand USD) (Source: Summary Report of MB West Hanoi Branch in these years 2012, 2013, 2014, 2015) In CBs in general and in MB West Hanoi in particular, collection have not been used desirably throughout this stage The proportions of this operation were small rate, just less than 15% in overall However, in four years, there was a rapid growth of sales of collection in the first three years except for downward trend in the last year Starting 2.271 thousand USD Import in 2012, the number reached the highest peak at 5.547 thousand USD then decreasing slightly to 3.709 thousand USD in the last year On the other side, the Export collection increase by 5.41 % and 11.54 % in 2013 and 2014 respectively, after that it went down approximately 14 % in the end In the Export collection, customers mostly use method from the documentary collection rather than Clean collection method because it is understandable that Clean collection has a high risk for customers while the fees of two methods are the same It can be seen that collection method have not yet applied moderately in IP activities of MB West Hanoi but improving quickly in the recent four years, which may be the positive signal for the development of this method in the future 25 Banking Academy of Vietnam 3.2.4 Graduation thesis The Reality of L/C method As mentioned above, Documentary credit is an IP method accounted for the highest ratio in all IP methods so it is undeniable that it also took the largest scale and became the most important IP activity in MB West Hanoi This method brings not only appreciative prestige with customers in the field of IP, also lots of profit for bank in the past years Diagram 3.5 Revenue of IP with L/C method in MB West Hanoi branch (Unit: Thousand USD) Diagram 3.6 The amount of L/C transaction in MB West Hanoi branch (unit: transactions) (Source: Summary Report of MB West Hanoi Branch from 2012 to 2015) 26 Banking Academy of Vietnam Graduation thesis The graph once again reassures the increasing trend of L/C from 2012 to 2015 and sees a considerable jump just under 19 thousand USD, equivalent to a 26.45- per- cent increase in 2014 In terms of structure of the L/C method, Import L/C always has a large percentage in both revenue and amount, as follows: Import L/C: Table shows the good performance when outcomes and volume of Import L/C method witnessed a gradual growth over four consecutive years From 2012, Import L/C was 139 transactions, corresponding to 13.135 thousand USD in turnover and showed a non- stop increase in the next years, with the boom of number in 2014 (279 transactions analogous to 17.454 thousand USD) and slight growth at the end of stage Export L/C: In general, the revenue from export L/C seemed to be quite small in comparison with the growth of import L/C for the reason of this might be the unpopularity of export L/C in IP system and the high trade deficit in our country Nevertheless, the figure of export L/C return experienced a surge in the last two years (2014 and 2015), reached the highest point at 56 transactions and increased to 1.167 thousand USD ( equivalent to 315.30%, a great proportion) and 1.146 thousand USD respectively Because the characteristic of Vietnam's economy is an economy having excess of import over export, in foreign trade activities, import accounts for a large percentage; resulting in import IP activities in general and import L/C payment method in particular at branch always has a large proportion compared to the total payment turnover In macro terms in the area, the enterprises in Ha Dong District import mainly components and spare parts for machines, and export mostly handmade products with low export turnover Therefore, MB West Hanoi branch should enhance strategic solutions to equal two types of L/C method 27 Banking Academy of Vietnam Graduation thesis 3.3 OVERALL ASSESSMENTS OF INTERNATIONAL PAYMENT AT MB WEST HANOI BRANCH 3.3.1 Achievements Firstly, the quantitative indicators such as sales, revenue from IP operations from 2012 to 2015 demonstrate an excessive growth and stability, contributing significantly to the overall profit of the bank Besides the positive outcomes of some traditional activities as raising capital and credit, IP activity has experienced great increase in both scale and quality of services Despite in the context of the local and overseas economic situations facing with high inflation, labor debt, the number of sales of IP operations at MB West Hanoi has reached 40.444 thousand USD in 2015, an increase of 2.08% compared to 2014 Having such a large rise proves that MB West Hanoi has been concentrating on developing IP in both quantity and quality with the goal of reducing the dependence on interest income, orienting sustainable income structure where IP is a critical activity IP services of MB West Hanoi have gradually appreciated and been reliable to use by customers Secondly, since MB West Hanoi has been a system of rules and regulations especially the centralized professional payment process which creates foundation for IP activity in the whole system safe, accurate and effective, all transactions are strictly controlled At the same time, NOSTRO accounts are managed and monitored regularly, transferring of foreign currency in the system has been centralized to be suitable with management qualification, which allow to guarantee foreign currency fund in IP transactions On the other hand, with the process of payment, MB West Hanoi takes economic advantages of the model (the larger scale the lower cost) labor and cost savings Thirdly, the prestige of MB West Hanoi is powerfully enhanced with expanding of customers using IP transactions Businesses, organizations or individuals will be met sufficiently all payment requirements and other relevant services in a convenient process as well as low cost by MB West Hanoi This has helped MB West Hanoi not only maintain closed relationships with traditional customers but also reach and attract new customers 28 Banking Academy of Vietnam Graduation thesis Correspondent relationship network is constantly enlarged, foreign banks actively contact MB to create correspondent relations, enhancing credit limit as well as making the process of MB's IP implement significantly faster Diagram 3.7 The number of banks and countries having correspondent relations with MB (Source: Annual reports of MB through years 2012, 2013, 2014 and 2015) Fourthly, the staff' qualification and competence working in international payments are improved professionally a little bit Because of the complexity of this job so from recruitment, MB has taken high criteria for personnel selection MB has always focused on the training and development of human resource, regularly organized many short training courses aimed at enhancing knowledge and professional IP for staff and created chances for them to share experience to each other Most of bank staff are very young with the average age ranking from 25 to 30 Having not only the capacity, they are also appropriated with good communication skills and good attitude to customers With the motto "Listening to our customers", the IP staff not only ensures to meet customer requirements, but also to be as advisor, to guide customers with right transaction, to help them choose the most convenient and suitable payment method 29 Banking Academy of Vietnam Graduation thesis Fifthly, high technology and sophisticated facility, especially the wire transfer system- SWIFT have been always improved modernly Both are making good use of frequently maintained and upgraded equipments as well as helping the transaction to be done with high accuracy, rapidity and security Finally, IP operations at MB West Hanoi become a powerful tool to support foreign exchange business activities achieve many positive results In addition, the more the banks play the intermediary payment role to exporters and importers, the easier chances of foreign currency trading are 3.3.2 Drawbacks Besides great success that MB West Hanoi Branch has achieved in recent years, there is still some of shortcomings influencing on the development of MB West Hanoi Brach Firstly, the imbalance between volume of export and import payments makes causes the short of foreign currency payment at MB West Hanoi Statistically, the volume import goods has always accounted for over 70% of total turnover over the last years, while the ability to attract foreign currency deposits in the residential area and businesses has a trouble, especially in the difficult economy nowadays In addition, there is also no straightforward equivalence among each of IP methods figures Although the bank supplies all three of IP methods ( Remittance, Collection, and L/C), the number of Collection turnover accounts for actually modest percentage in comparison with the other methods, just under 15 % total of IP revenue through past years Secondly, because MB West Hanoi branch is fledgling enterprise in area, its turnover is still negligible in contrast with other experienced banks for many years The amount of international payments in MB West Hanoi is minor juxtaposed to the total sales of the entire MB's IP system as well as that of MB is still lower than other commercial banks in Vietnam Recently, Vietcombank, BIDV, Agribank and Vietinbank are gaining mostly the IP proportion, under 45% of all in market and the remaining is owe of nearly 40 other commercial banks In the competitive situation not only among domestic banks but foreign banks, MB West Hanoi also need make more effort to raise revenue and affirm its position in the Vietnam Bank system 30 Banking Academy of Vietnam Graduation thesis Thirdly, it is the length of time being enough for making payment transactions It seem to have had a positive change but not being faster than that of some local and foreign banks For the reason, the level of automatic process of transactions is not quite high, the time for abroad payment or from abroad to Vietnam is longer than some banks such as Vietcombank, Eximbank, Agribank since MB's correspondent banks network is not covered extensively by these Banks having traditional international payments Furthermore, the procedure of transferring documents by centralized payment model via excessive controlling steps, which might be in charge of the risks but sometimes it is congested during data transmission from the branch to the payment center and wastes much time Meanwhile, according to regulation, documents circulated after 16h pm daily will have to move to the process of next day Finally, it is undiversified customer categories In reality, most of all customers in IP section are military enterprises from Ministry of Commerce and the numbers of SMEs or individual customers are quite small compared to big clients In the near future, MB in general and MB West Hanoi Branch in particular should pay more attention to expand new types of clients network To sum up, Chapter presents and takes a closer look at the real situation of each IP methods in MB West Hanoi branch Depending on updated data from MB reports, it analyses how each transaction performs, what advantages they bring and which limitations the Bank faces with As chapter mentioned, L/C payment method has won the top position of favorable IP method in MB West Hanoi Branch but in the future with different business features it will have different trends in using other potential IP methods 31 Banking Academy of Vietnam Graduation thesis CHAPTER SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENT ACTIVITIES AT MILITARY COMMERCIAL JOINT STOCK BANKMB WEST HA NOI BRANCH 4.1 SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENTS FOR MB WEST HANOI BRANCH In order to perfect IP system and achieve goals mentioned above, MB in general and MB West Hanoi branch in particular are making strongly effort and here are some main solutions for MB West Hanoi branch 4.1.1 Group of direct solutions 4.1.1.1 Diversification of International Payment Services In general, there are various kinds of IP methods applied in MB but it is not enough MB need to pay more attention to search and bring out the simplest and most effective products so as to reduce errors and meet customers' requirements Comprehensive IP development strategy and the diversity of IP methods, instruments are the key goals of MB to make more profits to the bank In the upcoming years, this could be done by perfecting and offering more new products and services especially unpopular services such as IP card Currently, the turnover of document credit method is showing a high rate in the international settlement of the bank especially focused on the irrevocable L/C Therefore, banks can satisfy and expand the other types of L /C with customers' attention For examples, for trading goods via intermediaries, the bank can be applied appropriate IP types such as revocable L/C, transfer L/C; for hand- made or regular- shipment goods, special documentary credit like circulation L/C should be applied and for agricultural products, the bank should use provision L/C to guarantee the performance of the contract by both export parties 4.1.1.2 Constructing measures of risk prevention in international payment activities Apart from the objective and subjective factors of risk in common credit, international settlement and Import -Export financing was heavily influenced by interest rate and currency exchange rate of the transaction If the regular changes of 32 Banking Academy of Vietnam Graduation thesis these two elements create more favorable conditions for banks in the credit business, it will cause damage for customers and vice versa Therefore, to manage interest rate risk and exchange rate, the Bank generally applies measures of exchange trading operations in the currency market 4.1.1.3 Diversification of clients and building good relations with customers in international payment To maximize returns and divert risks in the process of expanding international settlement, MB West Hanoi should diverse customer and scope for Import- export credit Acting absolutely with the motto "The customer's success is the MB's success ", however, in a competitive environment, MB West Hanoi needs to develop effective strategies to attract customer Thereby, instead of limiting to businesses in one area, the bank should expand into the neighboring area and diversify the types of customers in all sectors of the economy MB West Hanoi is necessary to classify clients to evaluate and give suitably preferential policy For instance, to large customers often having export-import operations, the bank needs to have fee incentives, reduce interest rate of borrowing, preferential margin ratio when opening L /C On the other hand, to customers who have little international settlement activities, less experienced in foreign trade activities, the staff can advise the most profitable selection of IP methods, bringing to benefit for customers, reducing risks and build customers belief 4.1.2 Group of supplementary solutions 4.1.2.1 Improving the ability of managers and broadening professional knowledge for international payment officers In any business, human resources plays an important role in the success of company Being the factors who directly implement transactions with customers, IP staff need to have great communication skill and well- prepared experience dealing with unexpected situations In a competitive environment, it is great to create professional and skillful workers, therefore, MB should concentrate on training managers and staff in short term regular training courses or workshop about IP to help them exchange knowledge 33 Banking Academy of Vietnam Graduation thesis Moreover, improving the administration management of the Board of directors is also the top concern A perfect administration leads to accurate development orientations, helping implement IP transactions more smoothly and effectively Despite MB West Hanoi branch with small scale and merely 78 staff members, these young and enthusiastic employees have devoted themselves to the general development of the bank in the upcoming years 4.1.2.2 payment system Modernizing banking technology especially international In the digital world, with the booming of technology, renovating banking technology including equipment, software is the great importance to bank's development, which helps increase the IP quality, to extend payment area and to enhance bank's prestige The existence and development of each bank depends on the ability to provide services to clients In the current conditions, the traditional means of payment has been replaced by the new and modern ones with electronic payment methods based on international standards which serve customers much faster, more convenient and secure Beside SWIFT system, MB should apply more applications on IP management and operations They should computerize the accounting system as well as IP reports and train or recruit more specialists on electronic banking network 4.1.2.3 Expanding the correspondent banks network The establishment and expansion of correspondent relations with foreign banks has strategic significance in the development of international settlement business in any commercial banks, helping to speed up and improving the IP quality Without correspondence, IP activities must be more costly and extremely slowed down Additionally, good relations with other correspondent banks help minimize significantly moral hazard problems As a result, MB West Hanoi needs to strengthen relations and develop mutually beneficial with traditional correspondent banks through enhancing more contacts, workshops of exchanging experience to learn technology and experience of each other 34 Banking Academy of Vietnam 4.1.2.4 Graduation thesis Building appropriate marketing strategy Through marketing activities, banks can enhance and create a good image for the other banks and customers, thus helping MB West Hanoi introduce, stimulate customers to use the bank's new products and increase market share and revenue from this activity Additionally, banks can apply many different forms of marketing such as through the mass media as radio, television, Internet to introduce the bank's image , banking services to improve customers' awareness about the bank 4.1.2.5 payment activity Strengthening the inspection and control for international Implementing regularly and specifically the international payment operations helps detect timely, prevent errors arising, avoid corruption and improve efficiency of the banking business in general as well as international settlement activities in particular Furthermore, the bank must select the staff with justice, passionate enthusiastic and high professional experience working in the field of international settlements to participate in inspection 4.2 4.2.1 PETITIONS Petitions to State bank of Viet Nam (SBV) The SBV should improve and complete foreign currency Inter- bank market Foreign currency Inter- bank market is the market exchanging and supplying foreign currency to meet the demand of the bank each other SBV 's part in interbank market will be promoted strictly by establishing a reasonable foreign currency reserve which concludes two kinds gold or cash and hard foreign currencies The percentage of reserve might be determined flexibly to meet demands of the economy in the different stages In some instable situations, the SBV acts as final buyer and seller to intervene timely and help CBs maintain their foreign currency safety as well as avoid exchange arbitrage that leads to speculation fever in recent time Moreover, to improve the inter- bank foreign currency market, the SBV must enlarge the objects and form of transactions in market; it is also necessary to diversify types of foreign currencies in international transaction, putting more hart currencies into foreign exchange inter- bank market to reducing independence on USD 35 Banking Academy of Vietnam Graduation thesis Additionally, The SBV should consider creating legal environment related to current reality of IP in Vietnam By publishing specific documents suitable to economic situation of Vietnam such as UCP 500, UCP 600, ISBP 681, etc, The SBV could improve agreements and decrease disputes in international transaction Finally, exchange rate management should be flexible, careful and compatible to current reality Exchange rate has high sensitivity but it impacts on all activities of the economy, especially in the field of export and import in international payment In fact, to avoid definitely fluctuation in exchange rate and make belief for publish and enterprises, the SBV need to increase the number of transaction in interbank market so that this rate reflects accurately relationship between supply and demand 4.2.2 Petitions to importing and exporting enterprises To have the best operating efficiency in IP, customers also need to coordinate with banks by trying to collect reliable information about partners or making thorough research through Internet, media and especially banks in order to choose the right partners avoid cheating by international companies which causes big losses for themselves Moreover, the clients should be absolutely sincere and honest in the business relationship with partners and banks by providing products quality because it would help to embellish their reputation in international market For the export and import officers of enterprises, they need raising professional skill about foreign trade capacity and legal knowledge by participating in training programs in banks or universities 4.2.3 Petitions to Military Bank as well as to Military Bank West Hanoi branch As mentioned above, the human resources is a key factor in success of any transactions, so MB should improve personnel by regularly designing training programs for IP staff of all levels such as decision- making, management programs, colleague relationship programs for new staff to help them exchange knowledge and experience between staff in MB together Moreover, MB should build information system for enhancing service quality MB had better set up documents or the databases related on fee, rate, price which international banks offer rather than let IP staff search by their own for that 36 Banking Academy of Vietnam Graduation thesis information so that it helps save time, labor , boost services quality and bring the ultimate satisfaction to customers Last but not least, MB need to widen relationship as well as keep an appropriate policy with potential correspondent banks to grow international image and prestige of the bank At the same time, the bank also need to follow these banks' activities by updating information to make relationship adjustment on time and make suitable business plan with them Since MB West Hanoi branch is newly established branch as well as it still faces with many difficulties, it should be supported by MB in capital and technology to modernize technology, improve facilities and be sufficient for training especially in the international payment operations In brief, the last chapter gives some major solutions to MB West Hanoi branch and recommendations to the government, the SBV, import- export enterprises and MB in the context of new trends of IP operations proposed to the development of IP system in MB Hopefully, in the future, MB in general and MB Hanoi West branch could pay more attention to IP activities and enhance their position in the bankingfinancial market in Vietnam 37 Banking Academy of Vietnam Graduation thesis CONCLUSION In the stage of 2016- 2020, MB has set its targets and visions for the development of IP and made an intensive effort to be the top bank leading international scope of activities in Vietnam; therefore, MB would focus on all capacity and power to enhance IP service quality by perfecting the explicitness of all banking operations and utilizing available extensive correspondent banks and long- standing relationship with customers In the international economic integration, with both opportunities and challenges for any bank, MB 's IP system has many powerful rivals not only the local banks but also a lot of branches of foreign banks in Vietnam, MB has to maintain its position by enhancing competitiveness capacity regarding international payment Through these years of the economic recovery after financial crisis in 2008, the volume of IP turnover in MB has been climbing up considerably, which is the noticeable and complimentary signal for the bank With presenting thoroughly and analyzing models, benefits and shortcomings of each IP methods, the thesis is hoped that it can provide a fair review of the reality and useful suggestions on the development of IP system in MB and MB West Hanoi branch Firstly, the thesis has analyzed theoretical issues about international payment methods systematically, helping the reader imagine overall of IP process In the next part, the reality of IP at MB West Hanoi branch has been introduced carefully over the stage from 2012 to 2015 By the same time, the thesis summarized the significant successes of IP activities that the bank achieved as well as some limitations the bank had Based on this, in the end, the thesis brought about some solutions and recommendations to the parties taking part in IP transactions to confront the new trends of IP process In this thesis, I have tried my best to research and achieve my objectives, however, due to the limitations of knowledge and conditions, experience and time, my thesis still has a lot of insufficiencies and may not cover all aspects of the IP systems of MB Nevertheless, hopefully that my study can make a small contribution to improve international payment at MB West Hanoi branch much better in the upcoming years Finally, it is my pleasure to be obtained strong contributions from all lecturers and students in order to make it better Banking Academy of Vietnam Graduation thesis REFERENCES BIBLIOGRAPHY The Uniform Customs and Practice for Documentary Credit S.A Paris (UCP 600): ICC Publishing International Standard Banking Practice for the Examination of Documents under Documentary Credits ( ISDP) (2007) International Chamber of Commerce Ph.D Hong Hai, N T., & Prof Nguyen, V T (2013) International payment and Trading financing Hanoi: Statistics Publications Sending money home (không ngày tháng) International Fund for Agricultural Development (2012) Annual report Military Commercial Joint Stock Bank (2013) Annual Report Military Commercial Joint Stock Bank (2014) Annual report Military Commercial Joint Stock Bank (2015) Annual report Military Commercial Joint Stock Bank http://www.paymentstalk.com/trends-in-international-payments http://www.commercial.hsbc.com.hk/ www.militarybank.com.vn/en http://importerexporter.about.com/od/Financing/a/Factors-To-Consiser-WhenChoosing-An-Export-Payment-Method.htm