Improve effectiveness of capital raising in my dinh trading room thang long branch, GP bank

ACKNOWLEDGEMENT In the first place, I would like to express my sincere to Mrs Nga, for her supervision and guidance Also I would like thank AOF teachers and fellow friends in helping me to broaden my view and knowledge Especially, my deepest appreciation to Mr Bui Anh Duc,the head of My Dinh Trading-room, Thang Long branch in helping me collecting necessary information for my thesis Lastly, I offer my heartiest gratitude to my parents and all of those who supported me in any respect during the completion of this thesis Ngo Duc Tiep TABLE OF CONTENT ACKNOWLEDGEMENT INTRODUCTION Rationale of the Research Problem statement Objectives of the research Methodology and the Research design Scope and limitation Chapter 1: Overview of capital raising and its effective at commercial banks 1.1 Some introductions about commercial banks 1.1.1 The concept of commercial banks 1.1.2 Functions of commercial banks in the economy 1.1.2.1 Accepting deposits function 1.1.2.2 Grant of loans and advances 1.1.2.3 Providing advice for investors 1.1.3 Roles of commercial banks in the economy 1.1.2.1.Financing for businesses 1.1.2.2.Providing between linkage between Vietnamese economy and global economy 1.1.2.3.Help to enhance efficiency of capital use, further supporting economic development 1.2 Some introductions about capital and capital raising process in business transactions of commercial bank 1.2.1 The definition of bank capital 1.2.2 Factors affecting effectiveness of capital raising 1.2.2.1 Quality of information resources 1.2.2.2 Level of modernization of banking technology 1.2.2.3 Capacity and ability of dealing officers 1.2.2.4 Changes in structure, procedures and policies Chapter 2: Real situation of capital raising and its effectiveness in My Dinh trading room-Thang Long branch-PG bank 2.1 The general overview of GP bank 2.1.1 History and development 2.1.2 GP bank’s organization structure and its branches 2.2 Overview of business operations of My Dinh trading room-Thang long branch 2.2.1 Types of of business product 2.2.2 Capital mobilization 2.2.3 Credit operations 2.2.4 Other products and services 2.2.5 Operating performance 2.2.6 Evaluation of capital raising operations at My Dinh trading room , Thang Long branch 2.2.6.1 Achievements 2.2.6.2 Limitations Chapter 3: Solutions to enhance effectiveness capital raising in My Dinh trading room-Thang Long branch-PG bank 3.1 Orientations to improve capital raising 3.2 Solutions to enhance effectiveness of capital raising 3.2.1 Improving the quality of human resources 3.2.2 Building customer strategies 3.2.3 Deposit scoring and rating clients in an active way CONCLUSION REFERENCES INTRODUCTION Rationale Raising capital is one of the activities of commercial banks, which produce the majority of business income primarily to banks, especially the commercial banks in Vietnam generally, and GP bank particularly The consequence of raising capital often causes many adverse effects for banks: increasing costs, reducing revenue, worsening financial situation, and eroding reputation of the bank Vietnam is in the process of industrialization, modernization and aggressively integration into the world economy Over the past 10 years, the Country witnessed a relatively higher level of economic growth rate to almost the rest of the world, 7.3%/year on average To be able to achieve the goals of Vietnam economy’s entities in the coming years, there exists the demand for a huge capital Moreover, the global financial depression 2009-2010 is hurting the world economy most seriously since the World War II The Financial sector is now facing much changes and challenges, especially the merger and acquisition of financial institutions in the world The crisis in real estate leads to the bankrupt of many giant banks in the world, such as: Lehman Brothers, Washington Mutual’s, and Fannie Mae, Freddie Mac, Chiffon Bank, Colonial Bank… The failure of the US financial bailout package has had effects not only on American, European financial market but also in Asia and the whole world While Financial Institutions have faced difficulties over the recent period for a dozen of reasons, the major cause of serious banking problems continues to be directly related to lax credit standard for borrowers and counterparties, poor portfolio risk management… The global financial depression and the merger and acquisition trend have put Vietnam’s economy and financial market under pressure, which require new changes to overcome such difficulties, for examples: the modernization of bank system’s infrastructure, credit risk management, and human resource training… For My dinh trading room, GP bank – Thang Long Branch, raising capital represent the heart of the banking industry, capital are the dominant asset which generate the largest share of operating income and represent the Bank’s greatest risk exposure Departments joining in the credit/lending procedure as well as the whole bank have paid such a properly giant attention and effort to improve the loan quality and strengthening the capital management activities of GP bank To ensure that the using of capital is safe, effective and sustainable, and gradually integrated with the internationally standard process of supervision and management, GP bank has developed and applied the internal capital grading and rating system, which is particularly the system of rating borrowers However, this ranking system still contains many shortcomings, which need to be modified adequately to meet the requirements of credit risk management in the current conditions as well as ones in the future Stemming from the above requirements, thesis research has gone into the project “ Improve effectiveness of capital raising in My dinh trading- room Thang Long branch, GP bank ” Objective The research focuses on the following objectives: - To gain a full view on capital raising or using capital rasing activities: the features, importance, operation… - To analyze the specific situation and shortcomings capital raising or using capital rasing activities activities in My Dinh trading room, Thang long branchGP bank - Proposing some solutions to improve the effectiveness of capital raising management in My Dinh trading room Thang Long branch Methodology The thesis is implemented on the basis of quantitative and qualitative analysis methods, in which the qualitative methods to study problems of theoretical and practical activities of capital, capital management through a system of internal ratings are primarily applied Since then, the consistent solutions, recommendations and conditions to reduce risk at GP bank are proposed and implemented Scope and limitation - Objects of the project: the current situation of raising capital in My Dinh Trading room - Scope of the project: the whole range of system of Trading on the basis of reported data from 2008 to December 2010 Structure The thesis is flown through following structure: - Introduction - Chapter 1: Overview of capital raising and its effective at commercial banks - Chapter Real situation of capital raising and its effectiveness in My Dinh trading room-Thang Long branch-PG bank - Chapter 3: Solutions to enhance effectiveness capital raising in My Dinh trading room-Thang Long branch-PG bank - Conclusion Chapter Overview of capital raising and its effective at commercial banks 1.1 Some introductions about commercial banks 1.1.1 The concept of commercial banks A bank is an institution that provides financial services to consumers, businesses, and governments One major type of bank is the commercial bank, which has fewer restrictions on its services than other types of banks A commercial bank is a financial intermediary which collects credit from lenders in the form of deposits and lends in the form of loans Commercial banks get profit by taking deposits from customers, for which they typically pay a relatively low rate of interest, and lending the deposits to borrowers at a higher rate of interest Commercial banks hold deposits for individuals and businesses in the form of checkings and savings accounts and certificates of deposit of varying maturities while a commercial bank issues loans in the form of personal and business loans as well as mortgages From the above concepts we can draw characteristics of commercial banks : Commercial banks run for profits Indeed, Commercial banks are operated with the objective of making a profit Their fee structure and interest rate is designed with the intention of making money for owners and shareholders This characteristic of commercial banks contrasts with the primary function of credit unions, which are nonprofit community institutions that help individuals and businesses manage their money Commercial banks make money by charging clients who use their services and borrow their funds Credit unions charge for bank accounts and loans as well, but they charge less because their fee structure is designed to cover their costs, rather than also making a profit Secondly, commercial banks are privately owned Commercial banks are owned by private individuals or collections of private individuals acting as shareholders They are regulated by government institutions and must follow all applicable laws, but they are not owned by the government Except under unusual circumstances such as the 2008 financial bailout, the private individuals who run commercial banks are responsible for major policy decisions Unlike credit unions, where depositors automatically become members and stakeholders by joining and making deposits, shareholders in commercial banks must invest money specially in ownership by purchasing stock Lastly, commercial banks are primarily interested in working busineses Commercial banks sometimes offer products and services to individuals, but their primary interest is in working with businesses; in fact, commercial banks are also sometimes known as "business banks." Banking services offered to individuals are sometimes referred to as "retail banking," because they are often small scale transactions Business accounts tend to involve larger sums of money, and the fees and profits that commercial banks reap from them tend to be greater 1.1.2 Functions of commercial banks in the economy Commercial banks are responsible for adding customer deposits in a safe and lending the proceeds to worthy commercial, industrial, governmental and nonprofit institutions Commercial banks also provide market making activities in municipal, government and corporate bonds Banks provide consulting and advisory services to customers as well as safekeeping and trust services 1.1.2.1 Accepting deposits function Commercial banks provide important services as financial intermediaries Commercial banks mobilise deposits from customers seeking safe, liquid, secure investment opportunities and they find it convenient to deposit the amounts with banks Depending on the nature deposits, funds deposited with bank also earn interest Thus, deposits with the bank grow along with the interest earned If the rate of interest is higher, public are motivated to deposit more funds with the bank There is also safety of funds deposited with the bank 1.1.2.2 Grant of loans and advances The second important function of a commercial bank is to grant loans and advances Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts The rate of interest charged on loans and advanced varies depending upon the purpose, period and the mode of repayment The difference between the rate of interest allowed on deposits and the rate charged on the loans is the main source of a bank ’ s income a ) Loans A loan is granted for a specific time period Generally, commercial banks often grant short-term loans But term loans, loans for more than a year, may also be granted The borrower may withdraw the entire amount in lumpsum or in instalments However, interest is charged on the full amount of loan Loans are generally granted against the security of certain assets A loan may be repaid either in lumpsum or in instalments b) Advances An advance is a credit facility provided by the bank to its customers It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time Further the purpose of granting advances is to meet the day to day requirements of business The rate of interest charged on advances varies from bank to bank Interest is charged only on the amount withdrawn and not on the sanctioned amount 1.1.2.3 Providing advice for investors Commercial banks provide investment advice for investors Investors can be guided to mutual funds or direct investment by bank professionals Banking specialists can invest in stocks, bonds, preferred stocks and futures The bank can hold all investment securities as custodian as well as offer safety deposit boxes, provide letters of credit for investment opportunities, and act as trustee for wills and investment fund 1.1.3 Roles of commercial banks in the economy Market economy has always contained competitive factors, if businesses want to dominate the market to improve their competitive position, they must constantly improve quality and scale of their businesses To so, the most efficient way is taking advantages of loans from banks Thus, a commercial bank plays important roles in the economy 1.1.2.1.Financing for businesses Bank is a tool for business to satisfy capital requirements for operation and production Especially when the internal accumulation of capital of these enterprises is limited It is very difficult to attract capital from capital markets for small-scale enterprises, in those cases, capital from banks is even more important for the survival and development of these enterprises Therefore, banks are one of the channels to satisfy the financing needs of enterprises to ensure business operations are frequent, continuous, or meet the requirements of innovating equipment; expanding scale production 1.1.2.2.Providing between linkage between Vietnamese economy and global economy In transactions in International Trade, actual money does not usually change hands Nowadays, thanks to commercial banks, merchants don’t have to carry a large amount of money to buy goods in other country and instead of that, they only consign money on a domestic commercial bank, then using international non-cash payment instruments of commercial banks such as letter of credit ( L\C ), bill of exchange, promisorry note,…to facilitate the payment in International Trade Their partners will get money quickly and secured 1.1.2.3.Help to enhance efficiency of capital use, further supporting economic development 10 2.2.5 Operating performance: This table shows the financial results of the My Dinh Trading- room, which have constantly improved Table 2.8 planned income and achieved income of Trading-room Order Trading-room planned income achieved income (million) (million) Hoàng Quốc Việt 358575.38 256002.84 Trần Duy Hưng 167132.43 90533.016 Mỹ Đình 139588 94084.99 Nguyễn Trãi 83338.65 78582.33 Nguyễn Thạch Cơ 70127.77 76211.63 Văn Quán 53295.9 23856.13 Hà Đông 46136.57 75874.90 Thăng Long 111118.86 1117749.1 2.2.6 Evaluation of capital raising operations at My Dinh trading room , Thang Long branch 2.2.6.1 Achievements Through many times of construction and implementation, the current capital raising operations of My Dinh trading room, Thang Long branch has developed quite completely, the steps taken to evaluate and rate clients are fully implemented through a common procedure, the criteria cover a fairly broad number of activities of the business Thus, the capital raising operations of the branch has brought some successes Firstly, the implementation of the operations has helped the Thang Long branch approach the modern method of banking operations, gradually eliminate 23 the sentimental assessment of clients as before, create new thinking, viewpoints and styles in performing capital raising activities Secondly, the internal capital raising operation system has helped the branch develop a basis for acquiring systematic evaluation throughout the process of customer analyzing and assessing; loan making decisions and loan pricing Lastly, capital raising operation rating results help dealing officers make appropriate decisions in line with each type of clients, such as approving or not approving loans; offering a consistent clients policy as well as determining interest rates and measures to secure loans since then, contributing to its reputation with clients After the above successes, the results of businesses classification can be shown as follows Item Total income Total costs earnings before tax earnings after tax Total assets Capital fund Growth Year 2008 Year 2009 (billion) (billion) 799.198 929.968 833.140 806.957 19.779 167.575 54.455 128.300 8.259.167 17.319,049 1.005.122 2.129 950 residual 130.77 -26.183 147.796 73.845 9059882 1.124.828 As you can see total income in 2008 is 799.198 billions and in 2009 is 929.968 , increases 130.77 billions Total costs in 2008 is 833.140 billions and in 2009 is 806.957 billions, decreases 26.183 billions, this makes earnings after tax increase 128.300 billions 2.2.6.2 Limitations The capital raising operations for My Dinh Trading room has achieved a certain number of successful results and contributed to prevent, limit credit risk, and meet the borrowing requirements of clients However, in the process of 24 implementation, there also exist some problems, which affect the quality of the capital raising for business clients Firstly, information sources used are poor and unreliable Currently, the branch is using information collected by the Trading-room itself, from customer records such as financial statements, but lack of information collected from outside the enterprise and the branch, such as tax authorities, suppliers of raw materials, the purchasers of the business, mass media, and other banks This leads to the difficulties in assessing the actual reliability of information In fact, the phenomena in which financial statements of the business not reflect the actual financial situation, the implementation of the accounting regime does not follow regulations, or one business may have many different financial reports on the status of activities to provide information-used agencies (tax, banking ) are not rare Another drawback is that many businesses cannot perform and prepare financial statements, thus the information provided by these enterprises often are not systematic Moreover, the branch has not had the information management department; this should cause difficulties for Credit officers in the process of collecting and processing information Secondly, the system of non-financial index are quantifiable, but yet so many targets have to be built to cross compare data such as industry prospects, the number of competitors This should make Dealing officers confuse during the analysis process, leading to the problem that capital raising rating quality may be heavily influenced by subjective thinking of the persons who conduct The standards for comparison are inadequate Thirdly, among financial indicators relating to the performance of the enterprises, there does not exist any indicator, which figures out the distinction between the corporate with low profit and the ones with losses If calculated in this credit rating system, a business with low profit and a business with loss are both rated at the minimum grade 25 Fourthly, the indicators have not been determined by time series Currently, the indicators of the business are calculated based on the financial statements of the preceding year, then compared with the indicators given by the bank This comparison is not appropriate because there is no comparison period by period to see the progress or retrogression of the business through the years Fifthly, among financial indicators relating to the performance of the enterprises, there does not exist any indicator, which figures out the distinction between the corporate with low profit and the ones with losses If calculated in this credit rating system, a business with low profit and a business with loss are both rated at the minimum grade Lastly, it does not combine the assessment of collateral assets with credit rating to give the final result The consideration of collateral assets will create conditions for enterprises to be more highly assessed if they have good collateral properties, from which the credit rating results may be higher an ad they can get the more appropriate policies 2.2.6.3 Key reasons Firstly, legality environment to lending and borrowing activities are complex and short of comprehension which reduces capitalt quality - Some legal documents related to collateral problems are not fully synchronized Most of loans are secured by customers’ house and land However, 70% of local customers don’t have the certificate of land use rights - The disposal of collateral assets still meet lots of difficulties, complexion In some cases, the branch cannot put these assets in compulsory sale Coordination between the bank and authority agencies is limited - Accounting and statistics ordinance is not effectiveness enough to enforce enterprises to implement accounting regime accurately and timely, especially SMEs, private companies, limited companies, joint-stock companies Therefore, the branch can not have base to evaluate financial performance of companies accurately 26 - Effect of the authorities’ decision is not high enough to solve the dispute of collateral assets In the present, there hasn’t had any official documents yet which clearly defines functions, rights and duties of authorities in solving collateral assets Secondly, unstable economic environment has affected capital raising quality Management policies of the Government have been in the process of adjustment to complete The adaptation of each economic element is sometimes too slow to catch up with these changes in macroeconomic policies Thirdly, there are many credit organizations operating in the same area It creates a situation that a customer takes a loan from a bank to pay off the debts in the other The result is low credit quality happens In summary,the raising of capital of My Dinh trading room in the recent years has affirmed its role in credit activities with the process of economic transformation, got important contributions to the process of industrialization and modernization, especially in the develop of agriculture and rural in the local and Vietnam as well Despite many obstacles and drawbacks, My Dinh trading room still has profitable performance, affirmed its position when competition is harsher and harsher However, the drawback side needs considering careful to have right solutions to deal with these drawbacks and continue improving and strengthening credit quality Chapter III Solutions to enhance effectiveness capital raising in My Dinh trading room-Thang Long branch-PG bank 3.1 Orientations to improve capital raising The orientation of My Dinh Trading-room, Thang Long branch is to continue active growth control, improve business efficiency and contribute to national economic growth The orientation of capital raising operations as follows: 27 - Extend the system of capital raising, open new training courses to improve skill of Dealing officers - Frequently study changes of market and business environment to adjust the scoring indicators to better fit with the practical conditions in each period - The average growth rate is about 20% per year in 2011 – 2013 3.2 Solutions to enhance effectiveness of capital raising 3.2.1 Improving the quality of human resources Dealing officers play a crucial part to the quality of capital raising, so training program must be built to create a proficient team of professionals for this system Dealing officers not only own highly qualified professionals, but also good moral and spiritual responsibility, honesty and ability to work under more working pressure They must be equipped with analytical skills, a thorough understanding of various aspects of the economy, law and practice, and the actual operations of enterprises, thereby making the accurate assessment of enterprises, making accurate credit decisions to maximize profits and minimize risks for banks In recent years, the branch has an innovation in building human resources, creating its own staff, especially focusing on young Dealing officers Advantages of these young workers are very active, enthusiastic, creative and easy to train They have desire to learn, capability to capture their work fast However, they may have little working experience, and knowledge of all social and economic aspects requiring banks to take time and training Dealing officers Therefore, to develop the advantages and overcome the shortcomings above, the branch needs to implement the following measures Firstly, banks need to good recruitment and build a fair recruitment policy, to set out the conditions and minimum requirements for qualification and experience to recruit candidates with qualified, ethical qualities to undertake the 28 job assigned The recruitment necessarily requires a serious quality assurance to greatly reduce the Dealing officers of training time Secondly, the branch should have plans for training and retraining Dealing officers: guiding and training, knowledge enriching, sending working staff to the professional classes at the prestigious training centers to help Dealing officers further grasp the basic knowledge and knowledge of financial analysis fully and firmly Analysis focuses on corporate finance, cash flows, liquidity and financial ratios, and also knowledge of business and industry Also, the branch creates conditions for them to improve their own capability as well as work experience In working process, the branch must regularly evaluate the ability of employees and sift out unqualified staff to meet job requirements Besides the measures mentioned above, the branch must also hold regular discussions and exchange learning experiences internally, between the branch with transactions or with branches of other banks, and the contest to choose good Dealing officers, thereby Dealing officers will also learn the know-how through working together, then they will figure out their limitations by themselves and try to fix them, and raise their qualifications Thirdly, the branch should perform the assigned tasks according to ability and facilities of each Dealing officers to develop their individual ability to deliver high performance on the job The highly qualified and experience Dealing officers are assigned to undertake the difficult loans with high value, long term and high risk, but the young cadres are in charge of small loans with low value and low risk To make a reasonable assigning of labor, the branch needs to learn about the capabilities and facilities of each Dealing officers, make promotion of good staff Also, the branch also sent skilled and experienced staff to coach the young staff to gradually raise the capabilities of working staff Fourthly, the branch should define the tasks and power of each staff, regularly inspect and monitor their activities to take timely detection of errors and 29 remedial measures The ones who violate regulations or does not complete the assigned work must be firmly punished The payoffs must be distinct This will stimulate working staff strive to complete the assigned work Lastly, the branch needs to keep and attract talented, qualified experts through good wage policies, bonuses, a comfortable working environment, and good conditions for their advancement Thus, the new employees will feel comfortable when working, at the same time, they feel that their self-worth has been respected by the branch and thereby promote commitment to work 3.2.2 Building customer strategies Besides the above measures, the construction of a customer strategy is extremely important because whether the credit rating for business clients is efficient or not depends very much on the clients If the relationship between banks and clients is good, providing loans to satisfy their needs will be a lot simpler Therefore, the branch should develop strategies to clients with the following contents: For traditional clients These are the clients who have long-term and stable relationships with the branch Establishing and maintaining sustainable relationships with clients will determine the sustainability and long-term development of the branch in the increasingly fierce competition today Through a long-term relationship with business clients, the branch can also consult them in preparing not only loan documentation, business plans but also their production activities business, in considering the financial problems in time to help them grasp the business opportunities In addition, the branch must take measures to maintain long-term clients such as simplifying lending procedures, applying interest rates through various ratings, increasing the banking services, granting credit loans to the business clients who have long-term relationship This will help the branch to gain 30 business information on the fastest, and most precise way, on the other hand, will create business confidence, which leads them to be more faithful to the branch For new clients In addition to measures of maintaining long-term relationships with traditional clients, the branch must have a strategy to continuously expand new clients to reduce the dependence on a limited number of clients, attract more potential clients To implement this, the branch should take the following measures: - Further strengthening the work of promoting the image of the branch, the bank's activities in the mass media to create a good image in clients - Diversifying products and services, implementing flexible mechanisms for interest rates consistent with a variety of products, enhancing network of activities, building spacious and modern facilities - Providing advice to clients to facilitate them in raising capital, because for large enterprises, establishing business plans or investment projects for borrowing capital from banks has no difficulty, but for small clients which have low experience of borrowing, they may have more problems 3.2.3 Deposit scoring and rating clients in an active way There is a fact that at GP bank, dealing officers just the deposit scoring and rating for clients when the clients come and taking deposits and Banks provide their profiles to apply for loans This is such a waste of time and conflicts with the strategy that serves clients the best Therefore dealing officers are highly recommended to actively seek clients, collect necessary documents and materials to proactively deposit scoring and rating clients, even when they not have the demand for capital from banks A reason is that once customers have a need of a deposit, they will come for the bank which already had their deposit,rating results, because at that time the lending process will be shortened greatly This increases 31 the competitiveness of banks in the context that fierce competition in the banking sector is becoming increasingly harsh On the other hand, this practice also utilizes the most effective way of dealing officers’ working time When the volume of work is loose, dealing officers should actively seek customers, collect records and the credit scoring in an active way This will reduce their idle time When the clients come to borrow, credit officers will not have to take long time to complete loan process because at that time, the grading results of the business was available This is really an effective measure to save time, increase the efficiency of credit operations, while also create a good image of an active and creative bank 3.2.4 Diversifying loan and deposit portfolio Loan and deposit portfolio objectives establish specific, measurable goals for the portfolio They are an outgrowth of the credit risk profile The Board of directors must ensure that loans are made with the following three basic objectives in mind to: - Grant loans on a sound and collectible basis - Invest the bank’s fund profitably for the benefit of shareholders and the protection of depositors - Serve the legitimate credit needs of their communities For most banks, meeting these three objectives will require that senior management and the board of director develop medium and long-term strategic plans and objectives for the loan portfolio These strategies should be consistent with the strategic direction and risk tolerance of the branch They should be developed with a clear understanding of their risk/reward consequences They also should be reviewed periodically and modified as appropriate In drawing up strategic objectives, the board of director should consider establishing: - What proportion of the balance sheet the loan portfolio should comprise 32 - Goals for loan quality - Goals for portfolio diversification - How much the portfolio should contribute to the bank’s financial objectives - Loan product mix - Loan growth targets by product, market and portfolio segment - Product specialization - What the bank’s geographic markets should be - Targeted industries - Targeted market share - Community needs and services - General financial objectives It is essential for the bank to diversify its loan portfolio to find the minimum risk portfolio It is the combination of assets that reduces the variance of portfolio returns to the lowest feasible level This is an efficient portfolio in that the bank has selected loan proportion to produce a portfolio risk level that is a minimum for that higher expected return level 3.2.5 Promoting the application of information technology Information technology has contributed an important and indispensable role because: The size of the business clients is increasing, the storage of customer information including daily updates on the status of activities and quarterly financial statements is a huge volume of work, that can not be done by hand because it is Dealing officers, wasteful and inefficient In essence, this work is being done by hand partly and has encountered many difficulties in the archiving, searching and updating information of Dealing officers If the application of information technology will help store, maintain, update this giant information 33 system in a scientific, accurate, and quick way, this will raise labor productivity up a great deal and thus help lower information prices 3.2.6 Strengthening relationships with committees, local government The bank with its capital raising and the local government has a close relationship with each other If the local government is strong, well corporate with the bank in credit investment, it means that the bank has a good outstanding balance growth and high credit quality Meanwhile, if the local government is weak, banking business does not get proper attention, it means that the bank has a low outstanding balance and bad credit quality Thus, establishing and strengthening relationship with local government and committees is a meaningful solution to raise credit quality From which, loan management will get more advantages Because loan management relates to the loan release control, principle and interest collection, document storing, bad debt settlement, etc… The relationship with local government can help the bank get more information about its customers, especially in the cases that need legal actions from police or the Procuracy Moreover, the bank should actively consult the local committee and government at all level issuing documents that enhance coordination between local and the bank in credit activities because credit activities are not the unilateral job of the bank Lastly, holding annual conference with the president of district, commune and town to report credit activities during a year, the existences, especially other causes of local government to get the support from them in directing and executing credit activities implementation 3.7 Monitoring borrowers closely to manage risks and use capital effectively + The bank, especially the credit official who manage the loans, need to pay more attention to borrower’s financial performance, their business situation, their collaterals of loans, their revenue circle, etc… to supervise and urge or speed up their repayment for loans These also can help borrowers avoid using revenue 34 return to other improper purposes Moreover, other information relating to prediction of borrower’s repayment capacity need to be well considered to offer solutions timely when borrower has evidences of reducing bank’s debt collection capacity or when he gets defaults + The board of directors and also credit staff need a comprehensive consideration of current regulation compliance of lending approval process, lending procedure, drawbacks in the process of credit activities, bank’s staff ability in professional banking businesses Necessary information is about the value of collateral assets, secure factors in a credit profile, real situation of the bank’s debt through loan classification As such, the bank can realize mistakes and correct them timely, prevent negative activities right in the internal of the bank Through these loan monitoring activities, result of monitoring loans with problem will be informed publicly and timely to the upper managers as board of directors, chief of each department Thus, solutions will be implemented accordance with each department’s function and mission 35 CONCLUSION In the context of fierce competition in banking sector today, the issue of improving effectiveness of capital raising always require urgent attention from the stateowned banks and commercial banks to ensure the safe and efficient operations of banks The construction and completion of credit rating system is an inevitable trend that can satisfy the requirements of improving bank operations and credit risk management However, there still exist some restrictions in the capital raising of GP bank that require appropriate measures to be better improved Based on the general theoretical research methods, objectives and the actual application, the thesis did offer the following major contributions - Firstly, the thesis had systematized theoretical issues on capital at the commercial banks - Secondly, the thesis had analyzed and evaluated the status of capital raising My dinh trading room, Thang Long branch, pointing out the achievements achieved, and also the limitations needed to overcome - Lastly, on the basis of theoretical and practical work of Capital raising at My dinh trading room, Thang Long branch as well as the vision and orientation for development of ca[ital raising in the future, the thesis had offered solutions and recommendations, for GP bank mainly, and for other banks generally, in order to improve capital raising in the future 36 REFERENCES Vietnamese:  Thang Long branch Summary report of business activities in the period 2008-2010 English:  Peter S Rose and Sylvia C Hudgins (Eighth edition) Bank management & financial services MacGraw-Hill Irwin  “Moody’s rating symbols and definitions”, June 2009 Website:  www.GPbank.com.vn  www.moodys.vn  www.google.com  www.investorpedia.com 37 [...]... improving and strengthening credit quality Chapter III Solutions to enhance effectiveness capital raising in My Dinh trading room- Thang Long branch-PG bank 3.1 Orientations to improve capital raising The orientation of My Dinh Trading- room, Thang Long branch is to continue active growth control, improve business efficiency and contribute to national economic growth The orientation of capital raising. .. of capital, creating the extra capital sent to central bank To effectively attract this 18 source of capital, raising capital activities were organized carefully, from assigning officers, gathering information, maintaining relations, and supporting people to raise capital effectively Table 2.3 Raising capital plan of Thang long branch year 2010 The Table shows the volume of capital of My Dinh trading- ... system of transparent policy mechanisms will help synchronize the work of capital raising to be widely and uniformly applicable Chapter 2 Real situation of capital raising and its effectiveness in My Dinh trading room- Thang Long branch-PG bank 2.1 The general overview of GP bank 2.1.1 History and development Name: Global Petrol Bank (GP bank) - Global Petrol Bank (GP bank) , rooted from Ninh Binh rural... services, lending products c Investment banking: financial consulting service, investment authority In general, My Dinh trading room- Thang long branch has witnessed a significant development in recent years: becoming the trading room gaining revenues greater than expenditures, working staff are paid stably (coefficient of wages in 2010 was 1:52); reducing the delinquency rates of 10% to below 1% (in 2010... outstanding debt of My Dinh Trading- room hang Long branch is subject to the seasonal fluctuations of big enterprises so it often highly fluctuates On the other hand, the high proportion of loans for commerce and services along with the low proportion of medium and long- term loans are the main reasons for the instability of outstanding debt of My Dinh Trading- room This is the result of increasing the... My Dinh trading- room occupies 12% of total capital of Thang Long branch 2.2.3 Credit operations Considering the overall period of 2008-2010, total outstanding debt of My Dinh Trading, Thang Long branch has declined Although credit growth rate in period of 2008-2010 was relatively high but the outstanding loans of Thang Long branch still remain low compared to other banks in Hanoi Capital structure... 76211.63 6 Văn Quán 53295.9 23856.13 7 Hà Đông 46136.57 75874.90 8 Thăng Long 111118.86 1117749.1 2.2.6 Evaluation of capital raising operations at My Dinh trading room , Thang Long branch 2.2.6.1 Achievements Through many times of construction and implementation, the current capital raising operations of My Dinh trading room, Thang Long branch has developed quite completely, the steps taken to evaluate... activites will facilitate dealing officers to collect information easily and more accurately, improving the quality of information sources that utilize efficiency of capital raising work 1.2.2.2 Level of modernization of banking technology Clearly, the level of modernization of technologies and standards decides the quality of capital raising effectiveness The quality of capital raising cannot be effective... Lastly, on the basis of theoretical and practical work of Capital raising at My dinh trading room, Thang Long branch as well as the vision and orientation for development of ca[ital raising in the future, the thesis had offered solutions and recommendations, for GP bank mainly, and for other banks generally, in order to improve capital raising in the future 36 ... value of a bank' s assets and its liabilities The bank capital represents the net worth of the bank or its value to investors The asset portion of a bank s capital includes cash, goverments securities and interstearning loans like mortages letters of credit and inter -bank loans The liabilities section of a bank' s capital includes loan-loss reserves and any debt it Bank capital includes : Equity, Long- term ... raising or using capital rasing activities activities in My Dinh trading room, Thang long branchGP bank - Proposing some solutions to improve the effectiveness of capital raising management in. .. training… For My dinh trading room, GP bank – Thang Long Branch, raising capital represent the heart of the banking industry, capital are the dominant asset which generate the largest share of. .. effectiveness capital raising in My Dinh trading room- Thang Long branch-PG bank 3.1 Orientations to improve capital raising 3.2 Solutions to enhance effectiveness of capital raising 3.2.1 Improving the