A survey on the international payment activitives of saigon hanoi commercial joint stock bank in the period 2014 2016,graduation thesis

STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY FACULTY OF FOREIGN LANGUAGE - GRADUATION THESIS A SURVEY ON THE INTERNATIONAL PAYMENT ACTIVITIES OF SAIGON – HANOI COMMERCIAL JOINT STOCL BANK IN THE PERIOD 2014 – 2016 Student: Trinh Linh Dan DECLARATION Student ID: 16A7510199 Class: K16 ATCD Supervisor: M.A Tran Thi Thu Thuy I hereby declare that the thesis is my original work and effort Where other sources of information have been used, they have been acknowledged Hanoi, 2017 Signature Trinh Linh Dan Banking Academy Graduation Thesis DECLARATION I hereby declare that the thesis is my original work and effort Where other sources of information have been used, they have been acknowledged Signature Trinh Linh Dan Trinh Linh Dan – K16 ATCD i Banking Academy Graduation Thesis ACKNOWLEGEMENT This graduation thesis could not been done without the support of some people and I really appreciate their valuable assistance First of all, I would like to convey my special thanks to my supervisor, Ms Tran Thi Thu Thuy (M.A) for her great guidance and advices Without her help, I could have not completed this thesis within the limited time Next, I would like to express my sincere appreciations to my tutors, Ms Nguyen Thi Sen and Ms Dang Hong Ngoc, staffs of the International Banking Centre at the Head Office of Saigon – Hanoi Commercial Joint stock Bank In spite of their busy schedules at the bank, they always spared the time to teach me a lot about the profession of International Payment Last but not least, I am also grateful to my family and friends, who have been by my side the entire time Their love and support are my greatest encouragement to finish the thesis Trinh Linh Dan – K16 ATCD ii Banking Academy Graduation Thesis ABSTRACT This thesis provides an overview of International Payment activities of the Head Office of Saigon – Hanoi Commercial Joint stock Bank (SHB) from 2014 to 2016 In part one, the research gives a basic knowledge of commercial banks and their roles in the International Payment operation The next part includes an overview of Saigon – Hanoi Commercial Joint stock Bank development history and a detail analysis of the current situation of International Payment activities at SHB’s Head quarter Part three is the most important with the findings after part two’s analysis The research points out the achievements that International Payment activities of SHB gained in the period 2014 – 2016, some limitations that still contain in the bank’s system and the causes of the limitations In the final part, the thesis gives some suggestions to improve the limitations of International payment activities at SHB and proposes several recommendations to the Government and the State Bank of Vietnam to help enhance operation’s efficiency of SHB’ International Payment activities Trinh Linh Dan – K16 ATCD iii Banking Academy Graduation Thesis TABLE OF CONTENTS ACKNKOWLEDGEMENT ii ABSTRACT iii LIST OF ABBREVIATION vi LIST OF TABLES AND DIAGRAMS vii INTRODUCTION 1 Importance of the topic Research Aims Scope and focus Research Questions Research Methodology Research Design Chapter 1: Theoretical Framework of International payment in commercial banks 1.1 Basic knowledge of commercial banks 1.1.1 Definition of commercial banks 1.1.2 Activities of the commercial banks 1.2 Definition and roles of International Payment in commercial banks 1.2.1 Definition of International Payment 1.2.2 Roles of International Payment in commercial banks 1.2.3 Conditions to make International Payment 1.3 Main methods of payment for International transactions 10 1.3.1 Remittance 10 1.3.2 Collection of payment 10 1.3.3 Documentary credit 12 1.3.4 Advantages and disadvantages of the three main methods of payment 16 1.4 Criteria to evaluate International payment operation towards commercial banks 18 1.4.1 Direct indicators 18 1.4.2 Indirect indicators 18 Trinh Linh Dan – K16 ATCD iv Banking Academy Graduation Thesis Chapter 2: International payment activities in SHB in the period 2014 – 2016 21 2.1 Research methodology 21 2.1.1 Data collection methods 21 2.1.2 Data analysis methods 21 2.2 General information of SHB and International payment activities in SHB in the period 2014 – 2016 22 2.2.1 General information of SHB 22 2.2.2 Real situation of International Payment activities in the period 2014 -2016 25 2.2.2.1 International payment regulations in SHB 25 2.2.2.2 Processes in implementing some main methods of payment in SHB 27 2.2.2.3 International payment’s performance results in SHB in the period 2014 – 2016 30 Chapter 3: Evaluating operation efficiency of International banking centre at SHB in the period 2014 – 2016 42 3.1 Evaluation based on the data collected 42 3.1.1 Achievements 42 3.1.2 Limitations 45 3.2 Factors affect operation efficiency 46 3.2.1 Inner factors 46 3.2.2 Outer factors 48 Chapter 4: Recommendations 50 4.1 Development orientation of International Banking Centre in SHB 50 4.2 Suggestions to improve operation efficiency 50 4.3 Proposals to the Government and the State Bank of Vietnam 53 Conclusion 55 Trinh Linh Dan – K16 ATCD v Banking Academy Graduation Thesis LIST OF ABBREVIATION Abbreviation IP Explanation International payment IBC International banking centre SHB Saigon – Hanoi commercial joint stock bank SBV State Bank of Vietnam FED Federal Reserve System of the United State ADB Asian Development Bank CBs Commercial banks L/C Letter of Credit M/T Mail transfer T/T Telegraphic transfer RCA Revolving Loan Agreement TFP Global Trade Financing Program VND Vietnam Dong USD US Dollar Trinh Linh Dan – K16 ATCD vi Banking Academy Graduation Thesis LIST OF TABLES AND DIAGRAMS Table 1.1 Advantages and Disadvantages of different methods of payment 16 Table 2.1 International Payment volume of SHB 2014 – 2016 31 Table 2.2 Sales of international payment actitivities at SHB 2014 – 2016 33 Table 2.3 Revenue, cost and profit of International payment at SHB from 2014 to 2016 36 Table 2.4 Proportion of International payment’s revenue in total banking services’ revenue of SHB in the period 2014 – 2016 38 Table 2.5 Proportion of each method of payment’s revenue in total international payment’ revenue of SHB in the period 2014 – 2016 39 Table 2.6 Identifying proportion of International payment’s profit in total profit of SHB in the period 2014 – 2016 40 Figure 1.1 Procedure of Documentary Collection 11 Figure 1.2 Issuance of Letter of Credit 14 Figure 1.3 Payment under a Letter of Credit 15 Figure 2.1 Structure of SHB’s organization 25 Figure 2.2 Proportion of different methods of payment in total international payment 32 Figure 2.3 Revenue of each methods of payment, cost and profit of International payment at SHB from 2014 to 2016 36 Trinh Linh Dan – K16 ATCD vii Banking Academy Graduation Thesis INTRODUCTION Importance of the topic In the background of economic globalization, a closed door policy of a country will not help its economy to grow because it is the time when all countries tend to open up and interact with others Therefore, International Payment plays an important role in the country’s economic development International Payment is an inevitable cog of the trading wheel, a significant part in every products and service trading between individuals and organizations of different nations Thanks to International Payment, the economic exchange relationships between countries is now much easier to establish As the intermediary, banks will protect their customers’ rights, consult and instruct them about the payment technique, which will help to reduce risks in the transaction as well as create customers’ trust Also, if customers could not meet the payment requirements, banks would finance them by negotiating credit documents International Payment service is a strong revenue source for banks, which means that banks can expand their scale and intensely raise their competitiveness A good IP system will actively support credit flow in import and export activities as well as improve foreign currency trading, underwrite in trade, commercial finance and other international banking activities Banks’ liquidity will also be raised because the bank can use the temporary idle capital from business’s trading on margin while processing International Payment transaction As the world today is filled with information technology, there is no more commercial bank with slow speed and lack of information working systems Day by day, managers try their best to improve and upgrade their institutions in order to attract more customer and make higher profit This has led to an underground competition between commercial banks in the fight to win customers According to the Vietnam Report, Saigon – Hanoi Commercial Joint stock Bank (SHB) is among the top ten which are the most prestigious banks in Vietnam in 2016 Trinh Linh Dan – K16 ATCD Banking Academy Graduation Thesis Moreover, International Payment department, which is called International Banking Centre (IBC) in the head quarter of SHB, is one of the parts which bring the most profit to the bank This reason has made it crucial to bring out a research about the assessment to the current status of International payment activities at SHB and give out some suggestions to enhance operation efficiency Research aims The research is brought out to give an overview about the IP activities at the International Banking Centre of SHB It describes the main methods of IP that SHB provides their clients and the current situation of SHB from 2014 to 2016 After conducting the survey, the thesis gives a detail analysis on the number collected and proposes some suggestions to improve the issue that contains in the bank in order to enhance the operation efficiency and promote the bank’s prestige Scope and focus The survey takes place in the International banking centre in SHB’s Head office The study mainly focuses on the implementation of the bank’s processing system supported by statistics in the last three years (2014 – 2016) Research questions The thesis focuses on answering the following questions:  What are the procedures of main methods of international payment at SHB?  How did the international payment activities at SHB perform in the period 2014 – 2016?  What are the achievements and limitations in International Banking Centre of SHB in the period 2014 – 2016? Research methodology Field study is absolutely essential for every descendant research After learning from old studies, the thesis was a practical result of the author’s three months internship at the IBC – Head office of SHB The problems showed through the collected data and Trinh Linh Dan – K16 ATCD Banking Academy Graduation Thesis 3.1.1.2 Helping to improve other related operation Each bank’s profession relates to others and the development of one profession can have important effects and support others IP activities provide foreign currencies for credit professions which have foreign factors The development of IP has increased the bank's demand for borrowing and facilitated the increase in foreign currency loans These foreign currency loans traded through IP activities can reduce risks of currency trading to banks 3.1.1.3 Creating trust with many prestigious correspondent banks in the world Some of the banks are, for example, JPMorgan, Wells Fargo, Western Union, etc SHB has well - exploited the foreign currency remittances, increased the revenue of buying foreign currency and transferring money Foreign currency trading, international card issuance and other services related to customer service that attract foreign customers to participate in IP activities have also facilitated International Banking Centre’s expansion Recently, SHB has signed a contract with a reputable bank – the Asian Development Bank (ADB) It was the Revolving Loan Agreement (RCA) from the Global Trade Finance Program (TFP) Under this Agreement, ADB is committed to provide SHB direct loans to make trade finance transactions This has raised the total value of transactions that SHB may use under the IBA and RCA Contracts for import – export transactions to 150 million USD at a time 3.1.1.4 Expanding and diversifying services to better meet the needs of customers for payment SHB has diversified its forms of services by applying modern technology to IP and enhancing professional qualifications of IP staffs In addition to traditional business activities such as border crossing transfer, opening L/C, advising L/C, overseas money transfer, etc., the bank also responded to the additional needs of customers with other services related to foreign currency trading Trinh Linh Dan – K16 ATCD 43 Banking Academy Graduation Thesis Recently, SHB officially became a member of the International Factoring Association (FCI), one of the few banks in Vietnam joined the prestigious and long – lasting association Upcoming, the bank is training their staffs to open one more method of payment for the customers – Import and Export Factoring, promises to attract more and more customers to SHB 3.1.1.5 Well – consulting clients about methods of payment options, risks insurance, and processing complicated set of documents Improving customer policy, SHB has attracted more import-export businesses to use the bank’s services For enterprise customers, SHB provides payment and related services to the business at a reasonable price compared to other banks For individual customers, the bank regularly organizes programs to appreciate customers, give them incentives and awards many attractive gifts In a payment procedure, if there is any problem related to the documents or the payment, IP staffs will immediately call the customers to check the errors, offer lending or willing to help with any other things they could to help the customers make their payment With the above efforts, the bank has always maintained a number of traditional customers and gradually attracted many new and potential customers 3.1.1.6 Containing young, highly qualified, responsible and knowledgeable international payment staffs IP is a complex operation, requiring staff to not only be good at banking profession, but also have a wide knowledge of foreign trade, proficient in foreign languages, firmly understand the current regulations on national export and import management IP staffs are also the ones who directly contact customers, advice and instruct them to implement payment, which are the decisive factors in the smooth and successful operation of IP at the bank A large number of IP staffs at SHB are experienced employees from other banks invited to work in SHB In order to improve their expertise and experience, SHB always creates conditions for them to participate in courses offered by the State Bank of Vietnam or by International Banks to learn how to prevent risks, as well as to take Trinh Linh Dan – K16 ATCD 44 Banking Academy Graduation Thesis part in other professional courses to master the functions and activities related to banking 3.1.1.7 Expanding the banking network to make payment become easier After opening its branches in Laos and Cambodia in 2012, the bank has decided to promote Laos’ branches in 2014 and Cambodia’s branches in 2016 into the subsidiary bank with 100% capital from SHB This is an initial step to enlarge IP network of SHB 3.1.1.8 Leading the top in innovative banking technology SHB always update the latest banking technology to best serve their customers For example, in 2015, SHB is the first bank in Vietnam to deploy mobile payment on QRCode technology This method of payment allows customers to pay the money to friends, relatives at stores or supermarkets quickly and conveniently Combined with the expansion of foreign branches, this software can be developed to be a new interesting method of international payment In 2014, it was honoured as the “Most Innovative Bank in Vietnam” by the International Finance Magazine and became the first commercial bank in Vietnam to be awarded with this award so far 3.1.2 Limitations After more than 10 years of operation, although IP activities of SHB has achieved many honourable awards, it still has several limitations that need to be solved to get better result of performing IP services 3.1.2.1 Imbalance between export and import payments From the chapter 2’s analysis, proportion of import transactions in a number of transactions, sales and turnover of all methods of payment in SHB have always accounted for more than half of the total volume, sales or revenue of IP activities This could limit bank’s foreign currency reserve and thereby affect the performance of the bank Trinh Linh Dan – K16 ATCD 45 Banking Academy Graduation Thesis 3.1.2.2 Manually checking safety in International Payment activities When received payment documents, SHB’s staffs and supervisors at the Head Office will be responsible for ensuring compliance as well as detecting possible risks Currently, the computer system of SHB’s International payment cannot auto – recognize problems related to cheating or faults in Documents To check the countries that are embargoed or goods that are banned, IP staffs will have to it by themselves Therefore, if there is new information, economic fluctuation or threatening political situation that the staffs are not immediately updated, there will be risks for the whole banking system 3.1.2.3 Incomplete exploiting needs of customers The number of customers trading local currency in the bank is growing Even though some make oversea trading transactions, they only use the domestic service of the bank; whereas, the demand for IP services is implemented at other banks, or is used within SHB with limited quantities This proves that SHB has not approached and fully exploited the needs of using IP services of customers 3.1.2.4 Long-time processing transactions Although SHB has tried to cut down processing time, it is still slower compared to other banks This is because of the number of transactions is increasing in SHB every day, while payment process is not flexible that affects the efficiency of the bank's operation Despite of firm source of foreign currencies, money in nostro is not allocated appropriately so IP staffs often have to wait for money to make the payment, which leads to the delay of the whole process 3.2 Factors affecting operation efficiency 3.2.1 Inner factors 3.2.1.1 Incomplete exploiting employees of international payment department The level of automation of IP activities is so poor that besides making the main tasks of implementing payment, IP staffs also have to many other manual works such as Trinh Linh Dan – K16 ATCD 46 Banking Academy Graduation Thesis printing, stamping, carrying and organizing accounting records, which took a lot of their time 3.2.1.2 Regular overwork – load for IP expert team at SHB’s Head Office Because the International payment system at SHB is a centralize system, IP staffs at branch level have poorer professional qualifications than those at the Head Office, and the nature of this activity is working within an international environment with no fixed time zone, employees at the Head Office of SHB often have to work until 9.00 pm on normal days and maybe even 12.00 am on the day which there are too many transactions A work schedule up until the night, every day dealing with hundreds of transactions and frequent phone calls or emails to answer the questions of branches’ staffs are what makes the staffs in Head Office of SHB regular stressed As a result, late transactions are likely to be made with mistakes, which makes the IP activities less effective 3.2.1.3 Female main workforce This situation is not only for SHB, but also for most commercial banks in Vietnam Female workforce will have many disadvantages; for example, women often have to take care for their families, or they will have to take off work sometimes because of pregnancy These reasons will lead to a weak source of labour in both quality and quantity 3.2.1.4 Weaknesses of facilities and equipment Some computers and printers always run with slow speeds that sometimes made it impossible to make transactions in time In some cases, the office has several printers, but only one works The machine must always work over capacity and there is no other to change whenever problems occur IP staffs often have to wait for the machine mender to come and fix them Moreover, the SHB's internal network always gets stuck during peak hours Internal network failure could extend transaction time and delay some urgent payments Trinh Linh Dan – K16 ATCD 47 Banking Academy Graduation Thesis 3.2.1.5 Non – disclosure of details of international payment operations in the bank’s website In comparison with other banks that also provide IP services, customers who use the international payment service at SHB would find it more difficult to access information on SHB’s website The Bank has only provided with a simple description of the service package, given with none of the details about transaction fees or complete set of documents required for the implementation of payment 3.2.2 Outer factors: 3.2.2.1 Ups and downs in the world economy in the period 2014 – 2016 The economic growth of European countries, especially those suffers from public debt, are still very slow Financial crisis and public debt crisis in Europe were not completely over While high-growth economies like China had an average GDP growth rate of 10% per annum previously, it reached only over 7% in 2014 Undeveloped economies pull social lives down, lead to spending cut, increase taxes and make the number of unemployment raises to 10% in some places After that, protests would happen with thousands of participants, which causes political insecurity Due to the volatility of economic developments in the world, businesses in Vietnam have just been able to have relationship with close – distance partners in Asia; In SHB, the most familiar economic markets are countries in the Middle – East Asia such as the Saudi Arabic or Kuwait 3.2.2.2 Complicated political situation in the period 2014 – 2016 After the end of 2013’s crisis of the Ukraine, which was triggered by the United State and some countries in the West, the United States also fell into depression with the declining prestige of the President and disunited Government Some European countries also have many domestic crises, such as France’s failures in diplomatic policies with African countries; the UK’s standing in front of a referendum about the separation of Ireland and the idea of leaving European Community (EU); the immigration crisis and the series of terrorist attacks by the so – called Islamic Trinh Linh Dan – K16 ATCD 48 Banking Academy Graduation Thesis organization IS In Asia, Vietnam, China and Philippines relations were quite tense because of conflicts in the East Sea Disadvantages in political situations make process of IP become more difficult and also take more time for documents to get into these unstable political areas 3.2.2.3 Unsystematic documents related to import – export activities of the government and related departments Because import and export activities of enterprises directly affect to the banks’ IP activities, if foreign trading activities of the country develop, it will have good impacts on the turnover of IP activities at SHB Recently, Vietnamese government has implemented many policies and laws to promote export activity and restrict import activity These policies and laws, unfortunately, produce some constraints to Vietnamese businesses, as well as discrepancies to the international laws and commitments As a result, the impact of unhealthy legal environment on import and export enterprises has also put negative influences on the IP activities of SHB 3.2.2.4 Customers lacking of knowledge about IP activities The common problem is customers’ lack of law understanding, which creates the loophole when they sign contracts If contracts discrepancy arises, there would be no basis to take legal actions Besides, new businesses sometimes are not familiar with foreign trade techniques and even lack of good understandings about international practices and international payment methods They can easily accept contract terms that are unfavourable to them or create a lot of errors in L/C that may make the payment invalid Trinh Linh Dan – K16 ATCD 49 Banking Academy Graduation Thesis Chapter Recommendations 4.1 Development orientation of International Banking Centre in SHB SHB aims to increase market share of SHB’s International payment activities, strongly develop international banking operations, diversify and improve the quality of products and services and ensure international and regional integration In order to reach the goals, the first tasks that SHB should well implement is developing a comprehensive and integrated strategy for external business development to maximize the competitiveness and profitability The second task is producing new interconnected products and services to create, maintain and expand market share The third is focusing on investing facilities and perfecting the organizational model in order to deploy and best implement the external business strategy The fourth is researching to expand external relationships with selective ways in order to maintain relations with the already – connected correspondent banks and new correspondent banks located at where there are many transactions The next task is conducting surveys to find the way to open representative office abroad The following job is raising trading volume and attracting customers, especially large export cooperates to increase foreign exchange earnings Another important duty is continuing to expand and develop Foreign Currency Trading, increase source foreign currency income and ensure sufficient supply of foreign currency for customers' needs and paying foreign debt Training and supplementing professional staffs and technical staffs in IBC is also one of the noteworthy job The last but not least mission is investing in the right technology to become the key part of creating a breakthrough for the development of products and services, as well as to raise the bank’s competitiveness 4.2 Suggestions to improve operation efficiency Below are several suggestions for the improvement of International Banking Centre at the Headquarter of SHB that this thesis could recommend Trinh Linh Dan – K16 ATCD 50 Banking Academy Graduation Thesis 4.2.1 Continuing to improve IP staff’s knowledge SHB should regularly organize more workshop to exchange experience, improve knowledge in solving problems and difficulties in the process of making payment Besides, the bank can send employees to other domestic or foreign organizations to survey, learn new skills in payment and Foreign Currency Trading, improve foreign languages skills, laws and international practice, as well as to catch up with the changes in international standards of IP activities 4.2.2 Establishing and expanding overseas correspondent banking system SHB needs to set up agent bank network and creates relationships with new banks in different countries to facilitate payment, as well as regularly strengthen relationships with long – term relationship foreign banks Besides, making rapid and completing payment will enhance the prestige of the bank in the international market; and simultaneously, business relationships will be increased and tightened 4.2.3 Developing customer policy and marketing system to attract customers Firstly, with product policy, SHB should provide new products with a variety of utilities for customers; quickly and accurately limit the risks that can arise with absolute safety and conform to international standards With price policy, since customers always want to use high quality products but the price must be reasonable and attractive, SHB should invest in technological innovation, offer discounts, reduce service fees and give promotion for large customers, prestige and long-term relationships clients With product distribution policy, in order to provide services to customers in the fastest way, SHB must set up an expansive network with reasonable location that customers can find easily With marketing policy (product promotion), SHB needs to select appropriate, concise and interesting advertisement to impress customers This also requires employees to have good communication skill and well – understanding of their professions, so they Trinh Linh Dan – K16 ATCD 51 Banking Academy Graduation Thesis can explain customers clearly about the IP process Moreover, the good communication skill of staffs creates customers’ trust, safety and comfort when they use services Finally, with consulting services policy, SHB should provide customers with all necessary information about their partners, products, intermediary banks, and correspondent banks participating in international trade contracts, as well as regularly forecast market volatility to help customers prevent risks 4.2.4 Strengthening risk management in International Payment operations SHB must comply with the content of legal documents, regulations of the Government and relevant ministries in the process of building SHB’s own regulations, processes and professional guidance, as well as in real implementation of payment process SHB also needs to regularly update relevant information from outside in order to control and adjust internal documents when changes occur, or to actively build the plan to commit Government’s regulations Teams of specialists in the fields of economics, finance and market must be formed to take timely actions in developing and adjusting appropriate policies and strategic orientation In order to avoid risks in IP, which may affect the prestige of the bank, the management and operation must always closely follow domestic and international markets This action is not only to detect errors, but also to detect potential risks in IP activities in order to improve the quality of International payment system 4.2.5 Continuing to modernize facilities and technology in International Banking Centre This can absolutely implement by well – applying banking modernization program; continuing to upgrade and building new software in customers’ online transactions, such as “Send and Withdraw anywhere” program, “Connecting payment” program, “Money transfer through Internet or SMS” program, etc Trinh Linh Dan – K16 ATCD 52 Banking Academy Graduation Thesis In addition, SHB can apply technology to effectively develop products and services like credit cards, debit cards, Western Union money transfer; or use the benefits of financial switching network (Banknet) to better serve the operation of international payment 4.3 Proposals to the Government and the State Bank of Vietnam 4.3.1 Proposals to the Government The Government actively promotes legal document systems in line with international practices and characteristics of Vietnam as a basis for regulation and creating a legal corridor for IP activities Legal documents should clearly specify the regulations, rights, responsibilities and obligations between the parties, the legal relationship between the seller, the buyer and the bank in the implementation of International payment activities from the stage of signing the contract to the end of the payment process The government should speed up the implementation of trade policy in order to encourage and promote exports, strictly manage imports and ensure the stability of the international payment balance There should be a combination of relevant agencies such as Customs General Department, Ministry of Industry, the People's Court to create consistency in the issuance and implementation of legal documents on international payment in Vietnam Documents must be appropriate to the conditions and economic characteristics of Vietnam In addition, the government needs to improve the efficiency of external economy by expanding external economic relations with multi – lateral and diversified orientation, maintaining Vietnam’s market share in familiar markets and entering potential markets Export subsidy must be used efficiently to help organizations increase their export competitiveness In addition, Government should continue to enhance foreign Trinh Linh Dan – K16 ATCD 53 Banking Academy Graduation Thesis investment, promote services, develop tourism and export labour to import more foreign currency Administrative procedures should be reformed to create favourable conditions for export and import activities This can be done by reducing troublesome procedures, which saves time and money to help export – import businesses in import and export goods 4.3.2 Proposals to the State Bank of Vietnam In the next period, the SBV should have a policy to flexibly manage the foreign exchange market and ensure the stability to help businesses avoid being affected by the unstable exchange rate Keeping a basket of suitable currencies can both solve the two issues of maintaining a certain level of stability of exchange rate and ensuring the flexibility of the policy Currently, USD lending rates are relatively stable In this period, businesses tend to no longer deposit foreign currency at banks Instead, they buy foreign currency directly or through derivative instruments while lending rates are quite high, which makes insufficient sources of foreign currency for international payment Therefore, the SBV needs to set a foreign currency interest rate which can suit the three objectives of controlling inflation, reducing trade deficit and increasing the attractiveness of VND Besides, the SBV should diversify foreign currencies traded in the market and forms of trading such as term, options, swap, as well as develop loan operations on both domestic and international market The SBV needs to build a foreign exchange reserves, which can be able to adjust the foreign currency market when there is exchange rate stress Simultaneously, a plan to manage import and export foreign currency and control exchange rate in the free market also needs to be made The aim of this is to avoid foreign currency speculation and arbitrage, which leads to deficit foreign currency crisis in the market Trinh Linh Dan – K16 ATCD 54 Banking Academy Graduation Thesis CONCLUSION Nowadays, international payment has become a basic and indispensable activity of commercial banks In the process of development, despite having received many noticeable achievements, the international payment operations of SHB also raised some concerns that need to be researched in order to find solutions to overcome the limitations On the basis of knowledge acquired in studying at Banking Academy and practical experience gained during the time of internship in the International Banking Centre at the Head Office of SHB, the thesis provides an analysis of International Payment activities at Saigon – Hanoi Commercial Bank in the period of 2014 – 2016 In general, international payment activities have performed quite well as sales and revenue of international payment activities account for considerable parts of services’ sales and revenue of SHB Despite receiving many honourable awards on International Payment activities, the International Banking Centre of SHB still meets some common problems about workforce, facilities and marketing strategy, as well as deals with economic crises Through the analysis and evaluation of International Payment operations, the thesis has introduced a number of solutions to improve the efficiency of International Payment activities Recognizing the importance of payment activities at SHB, this thesis contributes some opinions with the expectation that business in foreign affairs, including international payment activities at SHB, would achieve further development Along with the limitations of knowledge as well as practical experience, this survey will inevitably make mistakes and insufficient thoughts on the issues mentioned above I really look forward to receiving comments of teachers and students to improve the research Trinh Linh Dan – K16 ATCD 55 Banking Academy Graduation Thesis REFERENCE Books and Rules Nguyen, T V., Prof (2007) International Payment and Trade Financing Hanoi: Statistics Publication Sherlock, J., & Reuvid, J (Eds.) (n.d.) The Handbook of International Trade: A guide to the principles and practice of export (Second ed.) The Institute of Export Bank of England (n.d.).Rulebook Glossary Retrieved June 19, 2014, from http://www.prarulebook.co.uk/rulebook/Glossary/Rulebook/0/03-092015/B Theses and Reports Nguyen, T H (2008) Mở rộng hoạt động toán quốc tế NHTMCP Sài Gòn - Hà Nội (Unpublished master's thesis) Hanoi Trinh, N T (2010) Nâng cao lực cạnh tranh ngân hàng Sài Gòn - Hà Nội (SHB) hoạt động tài trợ thương mại quốc tế Việt Nam (Unpublished master's thesis) Hanoi/Foreign Trade University Saigon - Hanoi Commercial Joint Stock Bank/ Annual financial report (Rep.) (n.d.) Retrieved from https://www.shb.com.vn/category/nha-dau-tu/baocao-tai-chinh/ News and Website Simpson, C S (2017, March 30) The Banking System: Commercial Banking What Banks Do Retrieved May 20, 2017, from http://www.investopedia.com/university/banking-system/bankingsystem1.asp Module 2-3: Trade Payment Methods Participant - World Bank (n.d.) Retrieved May 21, 2017, from Trinh Linh Dan – K16 ATCD Banking Academy Graduation Thesis http://lnweb90.worldbank.org/ECA/Transport.nsf/0/786e3f9f52ad321 485256b7a0051b6be/$FILE/PAYMENTP.pdf Milian, E G (1997, May 8) Banking requirements Retrieved from http://internet.ggu.edu/~emilian/bankreq.html#LC General information (n.d.) Retrieved from https://www.shb.com.vn/category/vechung-toi/gioi-thieu-chung/ News (n.d.) Retrieved from https://www.shb.com.vn/category/tin-tuc/tin-ve-shb/ Trinh Linh Dan – K16 ATCD