Một số giải pháp nâng cao năng lực cạnh tranh của hoạt động tín dụng tại trung tâm giao dịch 2 ngân hàng BIDV

Một số giải pháp nâng cao năng lực cạnh tranh của hoạt động tín dụng tại Trung tâm Giao dịch 2 ngân hàng BIDVSOLUTIONS TO IMPROVE THE COMPETITIVENESS OF CREDIT OPERATIONS AT TRANSACTION CENTER II BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM (BIDV)GENERAL THEORIES OF BANKING OPERATIONS AND COMPETITION IN MARKET ECONOMYSolutions and recommendations on the improvement of BIDV TC IIs competitiveness in credit operations

LUẬN VĂN Một số giải pháp nâng cao lực cạnh tranh hoạt động tín dụng Trung tâm Giao dịch ngân hàng BIDV SOLUTIONS TO IMPROVE THE COMPETITIVENESS OF CREDIT OPERATIONS AT TRANSACTION CENTER II BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM (BIDV) TABLE OF CONTENT A INTRODUCTION Rationale: .3 The study: Objectives and tasks of the dissertation: Methodology 5 The implications of the study 6 The new aspect of the study: .6 The structure of the dissertation: B DEVELOPMENT CHAPTER : GENERAL THEORIES OF BANKING OPERATIONS AND COMPETITION IN MARKET ECONOMY .7 1.1 The role, function and process of credit activities 1.1.1 Definition of commercial banks 1.1.2 Bank credit: 1.1.3 The role of credit: .9 1.1.4 The functions of credit: 10 1.1.5 Credit process 10 1.2 Theories on competition in the market economy: 12 1.2.1 Traditional viewpoint on competition: 12 1.2.2 Modern viewpoints on competition: 13 1.2.3 The shift in theories of competition in globalization context: 14 1.3 Experience in bank credit activities 19 CONCLUSION OF CHAPTER 20 2.1 Current activities of banks operating in HCM city 22 2.1.1 Political – economic situation 22 2.1.2 Current situation of banks operating in HCM city 23 2.1.3 Evaluation of banking operations development trends in the coming time 28 2.2 The current situation of credit activities at the BIDV Transaction Center II .30 2.2.1 Introduction of the BIDV Transaction Center II 30 2.2.2 Operations of Transaction Center II of BIDV in recent years 32 2.2.3 Operation outcomes in recent years: 34 2.2.4 Analysis on credit operations at BIDV Transaction Center II 36 CONCLUSION OF CHAPTER 52 3.1 Orientations and objectives in the credit operations at BIDV TC II 53 3.1.1 The general orientation of credit policies: .53 3.1.2 Credit policy orientation in the 2011-2015 period 54 3.1.3 Goals of credit operations at BIDV TC II: 55 3.2 Solutions and recommendations on the improvement of BIDV TC II's competitiveness in credit operations .57 3.2.1 Capital mobilization Solutions: 57 3.2.2 Credit Solutions: .60 3.2.3 Other solution groups: 62 3.2.4 Recommendations 70 CONCLUSION FOR CHAPTER 73 C CONCLUSION .73 D REFERENCE ……………………………………………………………….………78 LIST OF TABLES Operations Capital mobilization Operations Lending activities Matrix of assessment on internal factors of BIDV TC II Matrix of assessment on BIDV TC II external factors Matrix of competition between BIDV TC II and some other banks SWOT matrix and strategies by SWOT matrix 34 35 41 44 47 48 A INTRODUCTION R AT IONAL E : After several decades of economic reform since 1986, the competitiveness of Vietnamese economy has been significantly improved From a closed economy with outdated agriculture and industry, Vietnam has opened up its economy and integrated in the global economy Until now Vietnam has established commercial relationships with over 150 nations and territories, meanwhile Vietnam has participated in regional economic organizations such as ASEAN, APEC and has successfully become a member of WTO Improving the overall competitiveness of the economy in general and that of the banking sector in particular is crucial to develop a market oriented economy In the market economy, competition is an effective instrument to promote economic development, enhance effectiveness and quality, and sustain the success and competitiveness of enterprises in domestic and international market To play an active role in the integration process, Vietnam needs to develop a banking system which is diverse in banking operations, prestigious, effective, safe, and competitive to fully mobilize capital from the society while expanding investment to respond to the modernization and industrialization process The topic: “Measures to enhance the competitiveness of credit operations at Transaction Center II of BIDV” was selected as research topic for this dissertation with the hope that it will enable the author to apply theories acquired through the course and propose recommendations to address the problems encountered during regional and international economic integration T HE ST UDY : Improving the competitiveness of the economy in general and the banking sector in particular is an issue of concern for the Government Since the shift to market economy, the banking sector has made considerable achievements and contributions to the national economic development However, Vietnam banking sector still lags behind compared to those of developed countries In this context, the study and application of successful models to Vietnam is necessary Until now, there has been numerous research on the banking sector such as: “Lê Hữu Bình (2009), Identifying and processing risks to improve the competitiveness of Vietnam commercial banks in the integration process, HCM city Economic University”, “Phạm Văn Hoàng Phong (2009), Some measures to expand bank credit activities to meet the demand of socio-economic development in Soc Trang province, HCM city Economic University”, “Chu Thị Hoàng (1999), Some measures to improve the performance of Transaction Center II of Industrial Commercial Bank of Vietnam, HCM city Economic University”, “Nguyễn Văn Phúc (1998), Some measures to control credit risks of Vietnam commercial banks, HCM city Economic University” These research works have provided an overall scenario of Vietnam banking sector and contributed to the general theory and practice Improving the competitiveness of the economy is an issue of much concern Until now there has been neither systematic, comprehensive study on the competitiveness of the banking sector, nor a universal sets of standard to be applied to banking practice Some issues addressed in this study have already been studied However, with systematic and scientific approach, analysis and assessment, this study hopefully can be used as reference document or applied to real situation in the context of harsh competition O B JE CT IVE S AND TASKS OF T HE DI SSE RT AT IO N : Through this study, the author has the opportunity to systematically review the theories acquired through the course and to apply them to a specific business environment This study also enables the author to be familiar with solving actual management cases By analyzing the strengths, weaknesses, opportunities and threats of the business and comparing with competitors, the author can define objectives and strategic orientations which are suitable to real situation of the business Based on theory, practice and evaluation of current situation of the business, the study proposes feasible solutions to improve the competitiveness of the business and proposes policy options for the government M ET HODOL OGY As a scientific research which can be applied to practice, the author uses the following research methods: a Systemization b Statistics c Comparative and summary d Inductive and deductive 5 T HE IMPL ICAT IO NS OF T HE ST UDY The assessment of the competitiveness of Vietnam commercial banks plays a crucial role in defining development orientation of these banks in integration Understanding their competitive position, Vietnam commercial banks will adopt suitable marketing policies to improve their positions, fully penetrate into the market, and meet the demands of customers in the market To survive and develop in the current harsh competition context, banks need to adopt suitable policies and strategies based on assessment of actual situation T HE NE W ASP E CT OF THE ST UDY : The study is new in combining issues studied in previous research with some new theories which are systematically and scientifically acquired Among new elements of the study is the analysis of internal and external environment and SWOT (strengths, weaknesses, opportunities and threats) analysis, which lay the foundation for proposing recommendations to achieve the defined objectives With suitable, scientific approach, analysis and assessment, hopefully this study will have significant implications to both theory and practice T HE ST RUCT URE OF THE DISSE RT AT ION : Besides the introduction, conclusion and the list of references, the dissertation is divided into chapters as below: A INTRODUCTION B DEVELOPMENT CHAPTER 1: General theory of banking operations and competition in market economy 1.1 Role, function and process of credit 1.2 Competition theory in market economy 1.3 Experience in the field of bank credit Conclusion of chapter CHAPTER : The situation of credit operations at BIDV Transaction Center II 2.1 Situation of banks operating in Ho Chi Minh City 2.2 Current situation of credit activities at BIDV Transaction Center II Conclusion of Chapter CHAPTER : Measures to enhance the competitiveness of credit operations at BIDV Transaction Center II 3.1 Orientation and objectives of credit activities at BIDV Transaction Center II 3.2 Solutions and recommendations to enhance the competitiveness of credit operations at BIDV Transaction Center II Conclusion of Chapter C CONCLUSION D REFERENCE B DEVELOPMENT CHAPTER : GENERAL THEORIES OF BANKING OPERATIONS AND COMPETITION IN MARKET ECONOMY 1.1 T HE ROL E , FUNCT IO N AND PROCE SS OF CRE DIT ACT IVIT IE S 1.1.1 D EFINIT ION OF COMM ERC IAL BANKS Commercial banks have come into operation for hundreds of years, in line with the development of the commodity economy The development of the commercial bank system has significant impacts on the development of the commodity economy In return, when the commodity economy develops to its peak – market economy, commercial banks serve as indispensable financial institutions Commercial banks are banks which have direct business transactions with companies, factories, economic organizations, mass organizations and individuals etc in mobilizing savings, lending and providing banking services It can be defined that “Commercial banks are organizations doing business in money trading The common activities of commercial banks are mobilizing savings with responsibility to return debts, lending and discounting Individuals Individuals Economic organizations Mobilize Commercial Banks Lend Economic organization Provide service It can be said that commercial banks are the most important financial intermediaries in the market economy Thanks to these financial intermediaries, savings are mobilized and then lent to individuals and organizations when needed 1.1.2 B ANK CREDIT : The clear definition of credit can hardly be found In reality, there are different meanings for credit subject to our area of study The word “credit” stems from the Latin word “credo”, which means trust and confidence In real life, the word “credit” has different meanings; even in financial sector, this word can be interpreted differently in different contexts In financial relationship, credit can have the following meanings: - With regards to transferring funds from entity with capital surplus to entities with capital deficit, credit is considered a method of transferring funds from lenders to borrowers Most notable are the transactions between banks and other financial institutions or enterprises and individuals through lending This means banks provide credit to borrowers within specific period, after which the borrowers are obliged to return both the principal and the interest - Credit also refers to a loan provided by financial institutions to customers Prior to 1960, banks only lend money to borrowers From 1970 until now, lending for operation and financial leasing has been provided to customers These are products of the banks, in which banks lease real assets (housing, office, equipment etc.) 1.1.3 T HE ROL E OF CREDIT : - Credit promotes the mobilization of capital as well as timely provision of capital for production process, thus contributing to economic development - Credit is an instrument of funding and investment in key sectors of the economy, supporting the development of poor performing sectors - Credit helps to strengthen economic bookings mechanism in businesses and corporations - Bank credit is a decisive factor for businesses in taking business opportunity as well as an important activity ensuring business performance of banks - Bank credit plays important role in eliminating social circulation expenses, improving capital effectiveness and promoting capital flow 1.1.4 T HE FUNCT IONS OF CREDIT : - Credit has the function to mobilize and reallocate savings based on the principle of returning both the principal and interest Credit is the movement of capital from entities with temporary redundancy of capital to entities with temporary lack of capital to serve consumption and production This movement enables entities to obtain capital, a proportion of social resources in material and monetary forms In particular, with the function to mobilize and reallocate capital, credit has close link with GDP as well as gross social products - Credit has the function to facilitate capital flow, to save cash and to decrease social circulation expenses Through credit, the State bank of each nation can either inject money for circulation or withdraw money from circulation When this transaction is implemented through account transfer or promissory note, credit enables banks to save cash and to replace cash while purchasing or selling commodities on credit - Credit has the function to control the capital flow of every activities of the economy Through lending capital, banks can control the operation capacity of enterprises, support enterprises to effectively utilize capital and support the Government to identify the lending demand and the development status of the economy 1.1.5 C REDIT P ROCESS - Establishing and implementing credit process is a fundamental activity in bank management Once performing this task well, banks can control risks and improve banking performance - Each bank, each type of loan has specific credit processes However, a suitable credit process has the following basic stages: Preparing application for credit; analyzing credit; making credit decision; disbursing credit; monitoring and o Group 4: indexes indicating the conformity level: violated loans/total loans per year (according to assessments of banking investigators and internal auditors) Apart from increased training and updated information about the lending experiences and operations for related staff, it is necessary to research and try out several measures widely taken in many developed countries like: Establishing centrally and updating regularly the data bank of economic-technology information (possibly in kind of a website) This bank can include development forecasts of industries, fields, exchange rates, prices, investment rates, average profit rates of an industry, major products, refused customers, and potential customers so as to ensure the credit and appraisal activities of the whole system Sound decentralized planning and professional operations of the credit appraisal committee/board should be carried out It is also important to review and adjust decisions in the system so as to have a suitable decentralization Concerning big and complex projects, it is preferable to take a central consideration of the appraisal board with sufficient experts of many hands-on experiences in order to ensure an accurate evaluation on different contents of a project instead of current representative assessments 3.2.3 O T HER SO LUT IO N GR OUPS : The introduction and development of modern technology in the business practices are a common knowledge However, given the fast growth rate of IT, it is required to take sensible steps, choose breakthrough technologies suitable with the banking conditions, and development level If this measure is effectively taken, the investment will be efficient On the other hand, synchronization and consistency should be taken into account in order to make the best use of the electronic inter-banking payment system of the whole banking one At the same time, it is important to pay attention to set up data security methods to ensure the absolute safety in business practices or payments, and the benefits of customers, national economy and the bank itself Good selections and successful introduction of modern banking technology for a long term, at present and in the future serve as decisive factors for the competitiveness and performance of the bank as follows: - Advanced banking technology can lay a foundation for new banking services with high quality and conveniences like instant payment, money withdrawals in different sites, etc In reality, some banks have taken the lead in the introduction of modern banking technology For example, the bank for foreign trade of Vietnam, the jointstock commercial bank of East-Euroupe, and so on have launched new services based on the modern technology like E-Banking, epayment, etc - The modern banking technology not only includes technical means, and modern IT but also attaches to modern organization structures and professional procedures Therefore, the introduction of this type tends to require certain changes in professional procedures, management methods, organizations, and renewed training methods, and effective exploitations of human resources - Solutions to training and exploitation of human resources: According to general evaluations, there are some existing problems and weaknesses in the human resources of Vietnamese banks On the one hand, knowledge and practical professional skills are found among many staff that have not met the requirements of the banks in the context of fierce competitions and global integration, especially in case of developing new services suitable with a modern bank On the other hand, several banking employees who are well-trained and professionally qualified have not been suitably appointed, leading to a limited staff exploitation and even a waste! Given this situation, it is necessary to increase HR training and make the most of HRs In order to promote HR training and exploitation, it is important to take the following measures in the time to come: - First, it is essential to make great changes in the knowledge and organization of HR training and exploitation in line with the state policies This should be based on the requirements of each position, competitiveness, and general perfomances of the bank so as to establish and evaluate results of HR training and exploitation - Second, it is important to make clear that the staff use for immediate demands goes hand in hand with retraining and training in order to ensure the successive development periods Besides selecting some talent youths for both domestic and over-seas intensive training, they should be offered on the spot training through specific tasks, concrete guidelines and serious assessments of the management board so that the staff can make great efforts to self-study and gain success - Third, it is preferable to appoint young talents of good qualities to subsitute a part of managers legging behind the fast changes in technology, organizations and management - Enhanced management skills: Management capability is one of the determinants to the capacity and o performance of a bank This depends on the ability to give predictions, have the initiatives in having timely solutions to rising situations, make the most of opportunities and overcome challenges Hence, managers or leader should have a strategic vision and be skillful, and flexible about policies and concrete measures In the renovation of Vietnam, the management capacity of the banking staff o has been significant enhanced However, given the demand for an effective competition and global integration, it is necessary to address some limitations or weaknesses as follows:  Identify and maintain strategic goals of the bank Try not to rush for immediate achievements that may have a negative impact on the future For example, capital mobilization with a high interest rate in order to satisfy the demand for excessive credit growth rates will lead to a reduction on credit quality, profit rates or etc  Establish a sound, transparent, and democratic working environment Concerning business management, responsibilities and rights are clearly defined and closely attached to specific positions or tasks, which is consistent among all management levels and professional staff  Adopt modern methods and advanced IT to help the administrative activities, firstly toward the data collection and process for managers or directors  Continue to enhance the banking management knowledge: Pay attention to set up a good IT system with an efficient organization of internal and external information Besides in-house information, it is important to take the most of information from the market, economy, and customers in order to make assessments or predictions of development trends, and keep informed of favourable conditions for business practices The quality of internal auditing should be increased as well The analysis of financial situations and administrative accounting should be paid due attention to so that the managers or directors can catch up with the fast, accurate, specific or overall information and accordingly work out timely guidelines - Solutions to brand positioning and business philosophy: In a modern market economy, the brand of an enterprise is a great asset In some cases, the corporate brand value can even surpass the total tangible assets of the company In order to develop their own brands, banks should formulate concrete strategies, invest necessary resources in carrying out market/customer research and make regular brand advertisements In doing so, it is important to pay attention to the following requirements: - To promulgate, and educate the whole banking staff about the meaning and importance of brand advertising so that they can have participation and realistic contribution to this activity - To identify and state business phylosophies of the bank to customers in order to create its image through many concrete methods - Continuously improve the service quality, conveniences and security for customers which should be regarded as a determinant to the value and success of the bank's brandname - During the advertisement campaign, it is notable to provide information and pinpoint strengths of the bank in terms of quality and service styles for customers so that they can be able to make sefl-evaluations in comparison with other banks and draw their own conclusions - Solutions to increasing chartered capital and expanding networks: The increased equity capital and banking system development always pose great concern to commercial banks of Vietnam in the renewal and development process The size of the equity capital of a bank serves as one of the criteria about the commercial bank's financial standing and ability to ensure safety rates The small-sized capital is one of the great weaknesses, as a current hindrance on the development of the commercial banks of Vietnam However, in order to address such weaknesses, it is necessary to accelerate the implementation progress of the banking restructuring scheme approved by the Government so as to receive more chartered capital, increase credit quality, effective investment activities and increase the value and quality of the available assets etc Continuous expansion of branches is also a great problem Currently, many banks are opening more branches and this trend is likely to continue - Solutions to Non-performing loans: Many large state enterprises with a great amount of loans who get into the trouble and even on the edge of bankruptcy will have a great impact on the banking operations Therefore, it is important to take timely and sensible measures No big enterprise or corporation was added to the list of VND 22,299 billion of Nonperforming loans up to 31 Dec, 2007 As facing this situation, the state commercial banks were put into great trouble Therefore, it is necessary to take prevention measures to minimize possible risks Some solutions to Non-performing loans as follows: - The first one is prevention Prevention of Non-performing loans is one of the measures that should be regulary taken by leaders, managers, employees and especially credit staff One of the successes in the promotion of credit quality is to carry out preventions of Non-performing loans right after new loans rises until capital and interest loans are collected This can be done through the serious implementation of credit procedures, and regulations on loans together with increased credit staff of high quality Loan appraisals should be based on the liabilities, financial standing, business environment, performances and credit worthiness of the customers Concerning corporate clients, it is important to appraise the feasibility of their business plans or productions The quality of examinations and supervisions on credit operations should be improved; insurance types for assets and relevant subjects in the credit businesses introduced as well - Second: Solutions o To carry out regular analysis of Non-performing loans: The analysis of Nonperforming loans is of great importance, helping the bank to keep informed of the general status quo of Non-performing loans, each loan, each customer target or each customer Accordingly, the bank can solve the debts in an effective and suitable way Through debts analysis, solutions and measures should be worked out for each bank, customer groups, and each loan o To use provisions to compensate for credit risks is one of the important measures to concretize the financial standing In order to have a right target, and gain effectiveness, the bank should pay due attention to several matters: seriously carrying out the classification of current assets, and provisioning in line with state regulations; making a scrutiny into bad debts in order to identify correctly loans that need compensations; strictly implement "collect to the full" solutions; documentating solutions which are on schedule, sufficient, accurate, legitimate, suitable with the authority of each level - Third: debt collection Set up and maintain the activities of the debt collection board: The settlement and collection of Non-performing loans are complicated tasks, related to many areas, levels, and industries Therefore, the establishment of a debt collection unit (board) is a must at the banking levels The members and organization of these units should be qualified enough to have the authority to solve the debts; their rights and responsibilities should be specifically stated; The board members are to regularly analyze, settle, collect all Nonperforming loans Exploit loan-guaranteed assets: the collaterals serve as the second source of debt collection when the business plans of customers fail or prove ineffective and they are unable to pay debts Thus, if after debt settlements, the customers cannot pay their debts, the bank is to collect debts through their assets This is considered an important measure in solving Non-performing loans It is also necessary to review the whole profiles, or loan insurance procedures, take gradual steps to settle assets suitable with real situations and in line with the current law The settlement should be promptly, fast, and strict, making use of help from relevant parties Restrictions and settlements on Non-performing loans are not brand-new issues But they are always hotly debated in the business practices of the commercial banks Thus, there is a must to find out solutions to Non-performing loans However, in order to have an absolutely effective settlement on this kind of debts, great efforts should be made not only by the banks themselves but also by the local authorities and related agencies In this way, the limitation and settlement of Non-performing loans can be effective for the sake of the locality and the whole national economy - Solution to the development of non-state enterprises: Barriers on capital access: State owned enterprises (SOEs) tend to receive capital preferentials; for example, they can be first granted initial capital by the state budget, then land for building business offices or production sites Meanwhile, non-state or foreign enterprises have to base on their equity capital SOEs can get access to many capital sources: banking credit, state funds, state treasury, state bonds, or stocks Besides, they can also be granted more preferentials in interest rates or Non-performing loans schemes In contrast, the non-state ones only have a limited access to such sources Regarding loan capital, they usually have to mortgage assets or land which can be under-estimated It is ,therefore, hard to have loan capital According to the survey by the Vietnam Chamber of Commerce and Industry, 80% of non-state businesses had the demand for medium and long term capital in order to enhance their production capacity in 2007, which was not satisfied It is necessary to impose strict management measures on credits Businesses of all economic sectors should be facilitated to get access to capital at banks SMEs should also be paid attentions to so that they can approach and use effectively the credit source from banks to invest in the production and business activities, and renew machinery equipments, or production technology There is a must to perform regular monitoring and examination of loans It is important to ensure that all investment loans are correctly used, and payable It is essential to have a sound distribution of banking credit sources Accordingly, the credit market share of the private sector should be increased as the economic performance in this area is very high and dynamic Currently, this sector contributes over 40% of GDP to the whole economy But the credit balance ratio of the state commercial banks for the private area only stands at 18%, not corresponding to the contribution of this sector to the whole economy; whereas for the state one 55% and its economic effectiveness is not so high (Non-performing loans of the commercial banks focus on SOEs of industries heavily based on natural resources such as cement, iron, steel, paper, sugar cane, or fertilizers while these enterprises draw a lot of capital from the commercial banks) Thus, the private one needs only one third of that proportion Thus, it is important to note a strong belief of commercial banks of Vietnam, especially their great concern on the safety of their capital (paying more attention to SOEs) rather than the effectiveness of the capital use - Solutions to services: The banking service market in Ho Chi Minh City have increasingly had more fierce competitions Apart from simple services like domestic and international payments, guaranteeing, foreign currency trading, etc the banks have been actively promoting investment, development and diversification of services for customers, typically as follows: VCB on line (VCB online, a LAN network, enables customers to send o deposits at one place and draw their money in different places, removing time and space restrictions in trading) E-Banking (VCB); Phone banking (Sacombank, VCB); Mobile banking o (VCB) o Overdrafting on accounts (VCB) o Real estate supermarket with the payment service for real estate businesses (ACB) o Distant payment service (Techcombank) etc Card services: This is the most developing area All banks are trying to complete and develop the card payment networks, self-equip ATMs like ATM services (BIDV, ANZ, VCB, ICB, etc) "VCB Connect 24" is an ATM system that accepts international payment cards and goods payment card services at different banks (ACB, VCB, East Asia Bank) Therefore: o It is necessary to enhance the role of card centres by research and developing card products o Prompt partnership with banks, especially state ones should be established in order for a common use of the ATM system or payment channels, increasing the minimum size for the conveniences of the customers o It is important to develop promptly the utilities of modernization projects, especially ATM services at the transaction sites o The level of charges, especially in money transfering, or payment should be suitably considered for better competitions with rivals o It is necessary to offer a wide range of consumption credit services, meeting the demand of the majority of customers o Enhancing a modern service style and minimizing inconveniences or time of customers should be taken into account This seems to be simple and usually touched on, but it is not easy to perform it well because it relates much to habits and cultures Therefore, it is important to have a strict and consistent implementation of this measure 3.2.4 R EC O MMEND ATI ONS - Concerning the State: o To put forward specific and timely regulations to solve problems in the banking services and complete policies and legal documents so as to set up a comprehensive implementation framework for the banking law, and the law on credit institutions, ensuring the effective and secure performance of the banking system o Renew methods and procedures of credits by granting more business autonomy or self responsibility for finance, and creating a level playing field for customers of different economic sectors who have feasible business plans It is not good to be too hesitant in lending decisions for fear of more responsibilities, making the banking industry become a penalty place o Establish state policies about competitions and partnership among banks and competition management, laying the foundation for a level playing field for a robust economic growth o Complete the legal environment, of which legitimate documents should be consistent rather than overlapping o Together with the banking restructuring, propose Non-performing loans as a compensation for the bank as the financial capacity of the bank is not high o Create a legal framework for enterprises of all economic sectors and banks so that they can enjoy a healthy and level playing field o Speed up the reform process in SOEs and have plans to settle ones of poor management and low competitiveness o Facilitate credit institutions to collect debts and settle Non performing loans o Take measures and work out policies to accelerate the economic transition process o Develop active competitive strategies through organizing, planning, and restructuring economic sectors o Take timely measures by the state in order to remove restrictions on some industries, or products that have been facing difficulties such as sugar cane, coffee, construction, etc - Concerning the bank: o Develop suitable credit policies, or customer ones as guidelines for credit operations in the new situation o Propose the State Bank to formulate guidelines on bad debts o Increase decentralization in credit approvals, and define clearly individual responsibilities in making decisions or settlement on loans or guarantees o Identify credit limits for each industry, field, or product o Complete the information system of quality credits for the whole banking industry of Vietnam o Regulary carry out the classification and assessment of the status quo of credit balance, or credit quality and work out problematic debts based on the international standards so that the assessment on risks of the whole system can be ensured o Monitor the obedience of regulations or principles on credit operations In case of violations, it is required to take strict measures, even ask for penalties o Increase the training tasks in order to meet the demand for qualified credit and appraisal staff At the same time, carry out incentive policies towards talents; use and appoint staff suitable with their professional skills and experiences; set forth encouragement policies for credit staff such as a separate scheme of salaries, bonuses, or allowances o Create favourable conditions for credit staff to get access to and make the most of the modern banking technology and the credit information system so that they can be updated, contributing to the supervision of business practices, customer relationships and the increased control of risks in the credit operations o Work out strategies to develop action plans, contributing to the socioeconomic development and predict potential development trends in the time to come CONCLUSION FOR CHAPTER As Vietnam is now in the strong regional and global integration, its reinforcement of enterprises needs a specific guildlines from the state The enterprises itself should enhance their awareness of the progress of integration in order to actively exploit the available resources and be adaptive to the market changes In all cases, competition should be seen as a vital force for the development of an enterprise How to gain a competitive advantage? How to overcome the competitors? How to develop and maintain the development of an enterprise effectively? Those difficult questions are not always answered easily Banking is sensitive sectors which is under direct influences of any regulatory changes and consequently impact the economy as a whole Therefore, the State Bank of Vietnam is now undertaking considerable reforms to improve the whole system financial and management capacity to further facilitate economic development Specifically, SBV is now upgrading the non performing loans management and settlement, increasing registered and equity capital, developing a modern banking system etc Together with the Laws on Credit Institutions and certain reforms, Vietnam banking sector has show positive signs of change, well facilitating the integration progress BIDV TCII is also enjoying the same trend of development with such activities as complying to ISO 9000 and installing ATMs, taking initial steps toward a more modern banking model to deserve the leading status in the investment for development in the Vietnam banking system in general and Hochiminh City in particular Credit operations have been the main source of profits for banks and been paid due attention to by banking leaders Facing the challenges of a globalizational, competitive and intergrational context, we have to gradually overcome our weaknesses, exploit fully our strengths and set out suitable strategies for credit operations in particular and banking services in general to catch up with the international standard Only by so doing that our credit operations can obtain the set targets of growth which is expected to go hand in hand with proper risk management and international integration following the defined roadmap C CONCLUSION The analysis has demonstrated that BIDV’s competitiveness in general and BIDV TC II’s in particular is still limited This will be a problem for BIDV in the coming time when the competition becomes fiercer due to the removal of legal and geographical barriers Therefore, in order to sustain the current growth pace in an increasing competitive environment, BIDV should identify its own competitive advantages and adaptation In the light of economic theories, the paper has dealt with following issues: - Analyzing the competitive environment’s effect on the enterprise’s business activities - Analyzing the business’current situationd to identify the strengths, weaknesses, opportunities and threats - Combining the general analysis with the forcast for development to identify the BIDV TC II’s future strategies and objectives - Recommending solutions for the improvement of the enterprise’s competitiveness and implementation of its set objectives Banking service may involve many different sectors with large scope of application The thesis is by no means a perfect paper on the issues discussed here Due to limited time and knowledge, inappropriateness is unavoidable We would highly appreciate any comments from our professors, colleagues and readers Thank you very much D REFERENCE Vietnamese Hồ Diệu (2009), Banking credits, Stastics Publishing House, Hochiminh city Hồ Diệu (2009), Banking management, Stastics Publishing House, Hochiminh city Nguyễn Đăng Dờn (2001), Currency-Banking, Hochiminh City Publishing House Trần Văn Tùng (2004), Economic competition, World Publishing House, Hanoi English Fred R.David (1995) (translated by Trương Công Minh, Trần Tuấn Thạc, Trần Thị Tường Như), Khái luận quản trị chiến lược(An introduction on strategy management), Stastics Publishing House, Hanoi Laws on State Bank of Vietnam No 01/1997QH10 dated 12/12/1997 Laws on credit institutions No 02/1997QH10 dated 12/12/1997 Other texts – magazines: Some texts issued by the Government, Related Ministry on Finance and Banking and some other documents of banking sector BIDV TC II’s annual report 2008, Hochiminh city Banking magazines Vietnam Economic Reviews State Bank, Hochiminh City, Commercial Banks performance 2009 Some Bullentines from BIDV