LV Thạc sỹ_The international payment development at the Agribank Bac Ninh branch

ACKNOWLEDGEMENT I would like to express my gratitude to all those who gave me the possibility to complete this thesis I want to thank all lecturers from Faculty of International Education – … who have given me a lot of useful and interesting knowledge of various subjects … Especially, I would like to give my special thanks to all of my classmates and wish them a lot of success in the future CHAPTER I EXECUTIVE SUMMARY The axle of this study is to have a clearer picture of how banks (of which Agribank - BacNinh) manage their international payment In this light, the study in its first section gives a background to the study and the second part is the current situation of development international payment in Agribank- Bacninh The third part of this study is the suggestions to improve the development international payment in Agribank- Bacninh This leads us to conclude in the last section for banks to have good development international payment This thesis starts with the current Vietnam banking industry Banking in Vietnam has a long history Having experienced a quite long development period, the banking industry has grown strongly with a lot of big, medium and small banks Therefore, competition for survival and development becomes an extremely high pressure for banks, especially for small and medium size banks Such competition pressures come from other existing banks in Vietnam, new coming financial institutions; suppliers including fund supplier and other suppliers, customers, partners… As a result, all banks try to improve their service quality, diversify their product to attract more and more customers Under such circumstance, development international payment is drawing larger attention because banking is relating to international payment The more banking activities expand International payment including four methods: letter of credit, remittance, collection and opening account This thesis applies methods of systematization, statistics, comparison and analysis to process information, data collected on the status of international payment to see clearly specific problem in international payment development at the Agribank- Bacninh:  Small scale  Limited objects  Monotonous international payment methods, without many various and affluent payment methods  Human resource quality is also a challenge and should be given more attention The International Payment development at the Agribank – Bac Ninh Branch To deals with such problems, suggestions have been made in the third section Those suggestions aims at not only Agribank – Bacninh but also SVB ‘s all branches and head office They are:  Perform appropriate customers policy  Push up information technologies, modernization of bank operations  Focus on training, reinforcing the qualification of a team of officers working international payment  To promote the mobilization of capital in foreign currencies for the internatinal payment activity Such suggestions will be presented in details in chapter III of this thesis TABLE OF CONTENTS ACKNOWLEDGEMENT EXECUTIVE SUMMARY LIST OF ABBREVIATIONS INTRODUCTION .1 CHAPTER I: BASIC THEORETICAL ISSUES ON INTERNATIONAL PAYMENT I.1 Overview on international payment I.1.1 Definition of international payment I.1.2 Roles of international payment I.1.3 Forms of international payment I.1.3.1 Letter of credit .7 I.1.3.2 Remittance 10 I.1.3.3 Collection 12 I.1.3.4 Open-account 15 I.2 Development of international payment of commercial banks 17 I.2.1 Concept on the development of international payment of commercial banks 17 I.2.2 Measuring of the development of international payment 18 I.2.2.1 Measuring of the Qualitative .18 I.2.2.2 Measuring of the Quantitative .21 I.3 Factors affecting the development of international payment 25 I.3.1 Subjective factors 25 I.3.2 Objective factors 27 I.3.2.1 Economic environment .27 I.3.2.2 Politic environment .28 I.3.2.3 Legal environment 28 CHAPTER II: CURRENT STATUS OF INTERNATIONAL PAYMENT DEVELOPMENT AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT – BAC NINH BRANCH 29 II.1 Background on Vietnam Bank for Agriculture and Rural Development – Bac Ninh Branch 29 II.1.1 Establishment and development .29 II.1.2 Bussiness performance .32 II.1.2.1 Capital mobilization 32 II.1.2.2 Lending and investment .34 II.1.2.3 Provision of services 36 II.1.2.4 Business results 37 II.2 Current status of the International Payment development at Agribank - Bac Ninh branch 39 II.2.1 Legal basis of international payment 39 II.2.2 Legal basis of application for international payment at Agribank - Bac Ninh branch .41 II.2.3 Current status in the development of international payment at Agribank - Bac Ninh branch 43 II.2.3.1 Satisfaction of customers to International Payment activity: .43 II.2.3.2 Prestige and trademark of the bank increase: .46 II.2.3.3 The increase in scale of International Payment activity .47 II.2.3.4 The increase in the quality of International Payment activity: 54 II.3 General assessment 58 II.3.1 Results attained 58 II.3.1.1 The International Payment activity has been improved and developed more and more 58 II.3.1.2 International Payment contributes to increase income for the bank 58 II.3.1.3 International Payment activity has contributed to heighten the prestige of Agribank - Bac Ninh branch 59 II.3.2 Limitations and reasons 59 II.3.2.1 Limitations 59 II.3.2.2 Reasons 61 CHAPTER III: SOLUTIONS FOR INTERNATIONAL PAYMENT DEVELOPMENT AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT – BAC NINH BRANCH 64 III.1 Orientation of international payment development at Agribank - Bac Ninh branch 64 III.1.1 General orientation 64 III.1.2 Orientation for International Payment professions 66 III.2 Solutions for international payment development at Agribank - Bac Ninh branch 66 III.2.1 Perform appropriate customer policy 66 III.2.2 Push up information technologies, modernization of bank operations 68 III.2.3 Focus on training, reinforcing the qualification of a team of officers working in international payment 69 III.2.4 To promote the mobilization of capital in foreign currencies for the International Payment activity 70 III.3 Some proposal .71 III.3.2 Proposals to Agribank Vietnam .72 III.3.2.1 Agribank Vietnam should promptly adjust and supplement documents and regimes in accordance with the laws and international common practices 73 III.3.2.2 Agribank Vietnam should build up and develop the trade mark named Agribank Vietnam to the international level 73 CONCLUSION 77 REFERENCES 78 LIST OF ABBREVIATIONS IT : Information Technology L/C : Letter of credit D/P: : Collected from Document against payment T/T: : Collected telegraphic Transfer SBV : State Bank of Vietnam Agribank : Viet Nam Bank for Agriculture and Rural Development JSCB : Joint Stock Commercial Bank SWIFT : Society of World Interbank Financial Telecommunications TGD : General Director UCP : Uniform Customs and Practice for Documentary Credits IPCAS: : Intra- Bank payment and customer accounting system LIST OF FIGURES, TABLES AND CHARTS Chart 1.2: Professional procedure for remittance 11 Chart 1.3: Professional procedure for clean collection 13 Chart 1.4: Professional procedure for documentary collection 14 Chart 1.5: Professional procedure for documentary collection 16 Chart 2.1: Organization mechanism of officers in Agribank – Bac Ninh Branch 31 Chart 2.1: Business growth rate in the period of 2007-2009 .39 Chart 2.2: International Payment revenues at Agribank - Bac Ninh branch 51 Chart 2.3: The increase of customers in Agribank - Bac Ninh branch .52 Chart 2.5: Structure of Income from International Payment 56 Table 2.1: Summary of capital resources mobilized 32 Table 2.2: Account outstanding in economic sectors 34 Table 2.3: Business Result 38 Table 2.4: Revenue of International Payment 47 Table 2.5: Number of International Payment items in Agribank - Bac Ninh branch 54 Table 2.5: Income of International Payment 55 The International Payment development at the Agribank – Bac Ninh Branch INTRODUCTION The necessity of the research Under the conditions of globalization, internationalization, the international economy is operating more and more strongly, each nation should positively and actively join to obtain a favorable position in the international labor allocation and commercial exchange That means each nation needs to develop strongly the external economic field For our nation, the external economic development is an objectively obvious matter aiming at serving the cause of economic development and construction of the nation under the orientation of Socialism Particularly, in the current period, we are still in the process of performing the nation industrialization and modernization Only through the activities external economic activities may we create a necessary source of foreign currencies for importing modern techniques, technologies, equipment, and simultaneously promoting the nation potentials, utilizing foreign capital and technologies to speed up the nation industrialization and modernization, shortening the gap of backward, and make our economy step by step integrate with the regional and international economies As an indispensable change link in the external economic activities, the International Payment activity of each Bank has been getting more and more important position and role It’s considered as an instrument, a bridge in the external economic relationship, economic and commercial relationship among nations in the world International Payment is one of the important activities of the Bank, as it is related to many other activities of the Bank such as credit activity for foreign currencies, mobilization of capital in foreign currencies… Though Agribank- Bac Ninh branch has just entered into performing International Payment, it has attained some certain achievements Nevertheless, International Payment activity of the branch with a small scale and many difficulties, the International Payment development is very necessary and imperative It not only create conditions for activities of export and import, external economic activities, contribute to the performance of the renovation The International Payment development at the Agribank – Bac Ninh Branch policies by the Party and the State, but also is an important and obvious matter decisive to the survival and development of the Bank in the market mechanism, helping Agribank – Bac Ninh branch to soon integrate with the system of domestic and international banks International Payment is really complicated and remains many inadequacies in regimes, profession, as well as in the organization and implementation Thus, we need to research and work out remedies Basing on the said issues and as an official working in the Bank, I have chosen the thesis “The International Payment development at the Agribank – Bac Ninh branch” for my research Objectives of research - To research basic theoretical issues on International Payment of Commercial Bank - To analyze and assess the International Payment development at the Agribank– Bac Ninh branch - To propose solutions to the International Payment development at the Agribank– Bac Ninh branch in time to come Object for and scope of research - The object for research of this thesis is the International payment Bank at the Agribank – Bac Ninh branch - Scope of research: the current status of the International Payment at the Agribank – Bac Ninh branch in the period of 2006-2009 Methods of research This thesis applies methods of systematization, statistics, comparison and analysis to process information, data collected on the status of International Payment to see clearly the resuls as well as the limitations of the Agribank – Bac Ninh branch in this activity; at the same time, to research on the orientations, strategies for the International Payment development at the branch in the coming time; from then on, to work out some solutions, proposals for the International Payment development at the branch 65 The International Payment development at the Agribank – Bac Ninh Branch - Focus on training, retrain officers, encourage officers to self-learn in specialties, professions and incentive subjects Increase productivity applying modern information technologies - Perform the business management by plans, on the basis of creating all conditions for the branches to be active in business, increasing self-control and self-responsibility through the instrument of management by plans, assign planned targets for years, quarters; the relationship with capital resources and using of capital resources; manage progress of plan implementation through ceiling of account outstanding, balance in account, switching internally capital in the same system - Perform assigning of financial targets to the class-3 branches; and the class-3 branches shall set financial targets to employees, perform salary payment according to financial results of each affiliates, thus, stimulating ground units and employees to increase their working performance, complete targets assigned from business plans - The experience of the branch in management and operation is: to use economic method to encourage groups and employees, combine with educating on the consciousness of responsibility, profession virtue of each bank officer; to frequently rise up movements of competition, to reward promptly groups and employees having fulfilled excellently set targets - Plan for the year 2010: + Capital resources: Capital resources in domestic currency shall grow from 15% to 18% compared with 31/12/2009, in which, the capital resources mobilized from the population shall account for 80% Capital resources in foreign currencies shall grow by 20% compared with 31/12/2009, in which, the capital resources mobilized from the population shall account for 95% + Account outstanding: Account outstanding in domestic currency shall grow from 8% to 10% compared with the end of the previous year, in which the proportion of medium and long term loans shall account for 21% of the total account outstanding Account outstanding in foreign currency shall grow by 20% compared with 31/12/2009 + Rate of bad debts: below 5% of the total account outstanding + Collection from services: the rate of collection out of credits shall reach from 20% to 25% of the net total income + The difference between income and expenses without salary shall attain in accordance with the plan assigned by Agribank Vietnam 66 The International Payment development at the Agribank – Bac Ninh Branch + Provide reserve for credit risks under Decision No 493/2005/QDNHNN dated 22 April 2005 by Agribank Vietnam and Decision No 636/QDHDQT-XLRR dated 22 June 2007 by Agribank Vietnam III.1.2 Orientation for International Payment professions The results attained over the pastime is due to the strive and efforts of the management as well as the team of officers in Agribank - Bac Ninh branch But, in order to develop International Payment in the direction of diversifying products and services and heightening the operating efficiency, it’s required to set out directions for the coming time Therefore, the branch should: - Equip for and disseminate to officers in general, officers working in International Payment in particular chances and challenges for Agribank Vietnam in the context that Vietnam is the official member of the World Trade Organization (WTO) - Research, amend, supplement and adjust International Payment procedures in accordance with international common practices and the Ordinance on management of foreign exchange by the Government, guiding documents by SBV, simultaneously, in accordance with the modern banking transaction system IPCAS - Systematize and amend documents and regulations on the professional procedures for border payment - Concentrate on training and retraining officers; form a team of leading specialists in the field of International Payment; Collect, gather and translate international documents, publications relating to International Payment professions; Summarize and draw situations, circumstances, and cases met by other branches in the system, thereby, draw lessons and experience, warning on forms of fraudulence for active precaution - Expand professions, research and propose new products and services in accordance with current level of technologies III.2 Solutions for international payment development at Agribank - Bac Ninh branch III.2.1 Perform appropriate customer policy Performing appropriate customer policy is considered as the solution to create the attractiveness to customers, attracting them to the bank, creating long term and sustainable relationship In order to perform this policy, the bank many give out forms of customer care as follows: 67 The International Payment development at the Agribank – Bac Ninh Branch + Priorities in quantity, low service fees and good buying prices for foreign exchanges when importers need to buy For customers first transacting, or customers with credit relationship, give priority to sell fully the quantity of foreign currencies required by them, charge with low service fees or free of charge, apply such an exchange rate enough to set off for the costs (without charging profits from foreign currency trading) + Priorities on deposit interest rates for long term deposits Under the current regulations, deposits shall not be paid with interest by the bank; but for long term deposits (over months), the bank may consider to pay a profit equivalent to the deposit interest rate with relative terms, to set off partly the expense paid by customers + Priorities in rate of deposit for customers with good financial capacity and tradition customers For customers with strong financial capacity, or traditional customers, the bank provide rate of deposit lower than for other customers For traditional customers, the bank may apply the rates of deposit of from 0% to 5% of L/C value; on the contrary, for customers of new relationship, customers with not high trust level, weak financial capacity, the bank applies high rate of deposit from 90% to 100% of L/C value + Priorities in collaterals for borrowing loans: Normally, enterprises applying for loans of the bank mush have collaterals as land, houses, real estates of theirs or third parties However, for customers with good trust, prestige, regular relationship with the bank, the bank may consider about conditions on collaterls for borrowing loans at the bank such as: acceptance collaterals forming in the future, assets forming from loans, materials and supplies, even loans without any collaterals - It’s necessary to have measures to attract export enterprises, in order to create collection sources of foreign currencies Agribank - Bac Ninh over the past time has just served mainly import enterprises, but very few export enterprises, resulting in small revenue compared with its potentials unexploited Currently, in the area of Bac Ninh, there are many FDI enterprises operating, especially great international groups such as Canon, Hong Hai, Vietnam Japan Floating Glass Company… with goods mainly for export; however, these enterprises have their head office located in Hanoi, and having facilities in Bac Ninh of production and assembling mainly for export, so they not establish relationship with domestic banks in general, Agribank - Bac Ninh branch in particular, but only establish relationship with foreign banks In order to attract these groups, it’s necessary to 68 The International Payment development at the Agribank – Bac Ninh Branch have several solutions performed synchronously from Agribank Vietnam to the branches: + Create, elevate the size in capital, assets, prestige, trademark of Agribank Vietnam up to the regional and international level + Build up a team of officers understanding both in specialties, professions and foreign languages + Build up, develop many kinds of products and services in accordance with international common practices and meeting various demands of customers + Obtain the efficient supports in capital resources, technologies, and human power from Agribank Vietnam to Agribank - Bac Ninh branch to be able to attract these customers - To have enthusiastic attitude, detailed guidance, consultation, provision of information on financial market situation, developmental trends of the market, changing trend of exchange rates, in order to help customers to operate efficiently, avoid risks, create good image in customers - To organize customer conferences to introduce new services, collect contribution ideas from customers When there are changes, supplements for issues relating to International Payment, or deployment of new products and services (option, future, factoring…), the bank should organize training, detailed introduction, explanation of issues concerned by customers, try to make customers satisfied at the highest level In executing customer policies, the bank should frequently make assessment to give out policies in accordance with each period aiming at attracting many customers coming to participate in transactions with the customer, shall contribute to the development of International Payment both in depth and width III.2.2 Push up information technologies, modernization of bank operations Information technologies may be regarded as the key of success of bank operations The work of modernizing bank technologies can not be separated from information technologies Before February/2008, Agribank – Bac Ninh branch still applied an old software, useful only in accounting debts – having entries, monitoring deposit, loans, while the International Payment segment was still separated, SWIFT program still ran independently without relating to the other running programs 69 The International Payment development at the Agribank – Bac Ninh Branch This created many disadvantages as: the management of credit lines, L/C balances, deposits, off balance sheet transactions, statistic reports… could not be updated in the same program In the implementation of the bank modernization project, since Feb /2008, the bank has deployed a new program (the program of Customer Oriented Payment System, abbreviated as IPCAS), integrating all the professions, products, and services into only one software with online data for the whole system The new program has remedied the weaknesses of the old software, helping the bank to speed up work processing, minimizing steps done by hand, shortening transaction time, and receiving high consideration from customers At the same time, the application of new software allows the bank to implement many new services and products, meeting increasing demands of customers, as well as in accordance with the general trend of the world: consign money in one place, draw money in other places, Home Banking, Phone Banking, Internet Banking… III.2.3 Focus on training, reinforcing the qualification of a team of officers working in international payment Human is always the factor deciding success in all fields In order to attain this it’s required for the bank to build up a team of bank officers with enough qualification, capacity, good conduct and competence in foreign languages to meet working demands in the era of integration Currently, the foreign exchange trading department of Agribank - Bac Ninh branch has 07 officers all graduated from universities, in which there are 04 officers graduated from universities in the specialty of international relationship, officer graduated from the national economic university in the specialty of investment, 01 officer graduated from the university of foreign languages in Chinese, and 01 officer graduated from the banking academy in the specialty of accounting All of them are fairly good in foreign languages and competent in specialties and professions However, most of them are student of newly graduating from universities with not much actual experience, need to be trained and retrained To have a team of officers meeting the demand for International Payment development, Agribank- Bac Ninh branch in time to come and in the following years should have strategies to develop human resources and perform the following solutions: - Focus on training a team of officers from management officers to operating ones, because human plays the decisive role for the success of any activity International Payment is also not out of such rule This is a profession 70 The International Payment development at the Agribank – Bac Ninh Branch with new aspects requiring the team of offices working in International Payment to have firm profession qualification and to be competent in foreign languages - The bank needs to make plans to reinforce its human resources, open classes training in specialties, off hour classes for foreign languages, hold meetings for exchanging and learning experience with friendly banks rich in experience in International Payment The training of officers also need to combine in-place training with appointment to go abroad for experience learning and survey in order to catch up with the continuous changes of the international economy - It’s essential to select young officers with high professional qualification, informatics qualification, good conduct, and understanding the field of foreign trade Additionally, the bank should have a regime of reward and punishment clear for each segment of professions, so that it may encourage the employees, improve the quality and efficiency of work, competitive position in the area, and step by step integrate into the international economy III.2.4 To promote the mobilization of capital in foreign currencies for the International Payment activity Men of old used to say “way may leans on reality only”, therefore, in order to develop International Payment, there is a factor of the same importance to be the sources of capital in foreign currencies Currently, at the branch, the sources of capital in foreign currencies obtained are from such channel as: mobilization from population through savings, subscription from overseas national currency remittance services, and finally loans from Agribank Vietnam Of which, the two former forms have brought to the bank the activeness in business, without waiting for the Central Agribank- Bac Ninh branch finances import activities of customers on the basis of credit contracts according to facilities signed with the bank and each customer; each credit contract provides clearly that Agribank Vietnam shall finance to open L/C to import goods with total value not exceeding the value of the signed contract, the related customer shall participate with its self capital equivalent to 5% of L/C value; the rest shall be financed by the bank by loans to the enterprise to make payment to the foreign partner When the documents arrive at the bank, the bank shall deliver the documents to such customer to go to take the goods and simultaneously perform procedure of debt acknowledgement for the rest portion (except for deposit) and make payment to the beneficiary To expand activity of import financing, it’s required to mobilize capital resources to meet demands for capital of export-import units Therefore, the bank 71 The International Payment development at the Agribank – Bac Ninh Branch should set up a proper strategy for mobilizing capital It’s required to focus on the work of foreign currency mobilization to have capital resources to meet demands for loans of customers and development of foreign currency trading profession in the area Besides the terms and conditions of saving being mobilized, it’s necessary to have a variety of capital mobilization such as saving for bonus participation; saving accumulating to balances… at the same time to offer attractive interest rate for money consignors In International Payment, importers not always have enough finance to be ready for payment and importers not always wait till payment time to get money Due to such feature, the bank is always a reliable friend for enterprise in providing services to meet demands for operations of the enterprises The bank may finance import goods by lending for payment, lending for advance payments to foreign partners, finance export goods by lending for production of export goods or discounting set of documents III.3 Some proposal In order to perform successfully and efficiently the said solutions, it’s essential to obtain supports and synchronous coordination of competent authorities, specifically here the management banks of all levels After analyzing the current status of commercial bank in general and Agrbank – Bac Ninh branch in particular, the author of this thesis would like to submit some proposals to the Government, SBV, Agribank Vietnam for the perfection and expansion of International Payment at Agribank - Bac Ninh branch III.3.1 Proposals to the Government and SBV * On the legal environment for International Payment and trading of foreign currencies The legal environment has a very important role in the process of facilitating business activities in general and International Payment, trading of foreign currencies in particular A stable and proper legal environment shall promote International Payment Now, our State has issued some legal documents to facilitate commercial activities, foreign investment, and ordinance on foreign exchange… However, these documents are still in general and difficult for application In order to create conditions on the legal environment for International Payment, in addition to bank laws, it’s necessary to research and issue laws on foreign exchange, and legal documents relating to specific forms of International 72 The International Payment development at the Agribank – Bac Ninh Branch Payment providing the bases to Commercial bank performing and operating their participation in International Payment * On the policies on export and import The Government should introduce measures to encourage and support activities in export and import such as widen foreign relationship, joining international economic organizations, preferences and promotion for export and import in order to collect foreign currencies and decrease the International Trade balance deficit, and decrease pressure in the domestic market for foreign currencies and methods such as tax reduction, free of export tax, decrease in revenue tax for some items of agriculture, forestry, develop export processing zones…, decrease the excess of import * On the issuance of regime documents Trading of foreign currencies and International Payment are the very new fields so statutory documents on these fields have been regularly adjusted and changed At present, the foreign exchange ordinance has come into effect The Government has also issued Decree No 160 guiding on the performance of the foreign exchange ordinance, however, the SBV has not issued any circular guiding in details During implementation, commercial bank still apply Circular No 01/1999 on the management of foreign exchange Thus, it’s suggested that the SBV should quickly issue circulars guiding in details on the performance of the ordinance on foreign exchange, avoiding banks from violations during their operations * On the policy on the management of foreign currencies In case the SBV needs to change the provisions on the management of foreign currencies, it’s necessary to make gradual changes with certain preparation steps for enterprises as well as banks, avoiding shocks on exchange rates The management of foreign currencies should be performed strictly to avoid the phenomenon of dollarization to the economy and should also make Vietnamese Dong flexibly and properly into a convertible currency, and promote measures of attracting foreign investment capital into Vietnam under both forms of foreign direct and indirect investment III.3.2 Proposals to Agribank Vietnam In order to perform well targets and solutions given Agribank Vietnam needs to be supported with the following points: 73 The International Payment development at the Agribank – Bac Ninh Branch III.3.2.1 Agribank Vietnam should promptly adjust and supplement documents and regimes in accordance with the laws and international common practices Over the past years, with the growth and development of the whole system, Agrbank has researched and worked out a system of regimes, policies, document directing on the management of external business operations such as: Decision No 388/HDQT-QHQT dated 05 September 2005 “Re.: regulations on the management and operation of foreign exchange activities in the system of Agribank”, Decision No 1998/QD-NHNo-QHQT dated 15 December 2005 by the General Director of Agribank Vietnam on the professional procedure of International Payment in the system of Agribank; Decision No 2008/QD-QHQT dated 16 December 2006 by the General Director of Agribannk Vietnam on the professional procedure of selling and purchasing foreign currencies in the system of Agribank Vietnam These documents have really created motivation to push up the development of operations on foreign currencies, creating a centralized force of the whole system on the aspects of foreign currency mobilization management, International Payment, foreign currency purchasing, decentralize branches with more flexible management regimes However, there are many very quick changes in reality; as stipulated, in issuing L/C, the branches are not allowed to choose agent banks, or in payment for L/C, the branches are not permitted to choose banks in charge of keeping Nostro account, this delay L/C payment Additionally, the issuance of confirmed L/C, permission of automatic debiting … need to obtain opinions from Agribank Vietnam, the waiting for reply shall deprive customers of their business chances Thus, mechanism and policies as well as documents and regimes should be updated and supplemented in a timely manner, toward the direction of widening authority for the branches (for example, opening of L/C under 1,000,000 USD needs to obtain the confirmation or authorization of debit entry without reporting to Agribank Vietnam) III.3.2.2 Agribank Vietnam should build up and develop the trade mark named Agribank Vietnam to the international level It’s necessary to have long-term and proper strategies in building up the trademark named Agribank Vietnam both domestically and internationally In the past years, when talking about Agribank Vietnam, it used to think that to be a bank specialized in serving rural agriculture with weak financial capacity, untrained human resources, bulky mechanism… Over a not-long time, Agribank 74 The International Payment development at the Agribank – Bac Ninh Branch Vietnam has gradually build up a trademark named Agribank VietNam; not only still promoting its strength to be a leading commercial bank in the investment in the field of rural agriculture but has also gradually become a multifunctional bank, with many advanced products and services Up to now, we have really confirmed our position to our customers, and been known to everyone as one of the largest enterprises in the Top 200 of Vietnamese leading enterprises In addition to build up its trademark in the country, Agribank Vietnam should be positive to have specific and proper measures to elevate its position with international banks This may be done by many ways: signing comprehensive cooperative agreements with prestigious financial institutions in the world: Citi bank, Visa card, Master card… which expand more and more the network of agent banks - Agribank Vietnam should have regulations to supplement and perfect the external business operations in the direction of: promoting the best of potentials of the system in investment for export goods, controlling foreign currencies, creating close sources of currencies for the bank in payment for imported goods, simplify administrative procedures, improve methods of management to exploit the best of potentials in ground bank branches - Agribank VIetnam should have a regime to regulate export and import of foreign currencies more flexibly so that the branches can promote the collection and payment of cash in foreign currencies, then expand and develop activities of collection of and exchange for foreign currencies, overseas national currency payment, receipt of saving deposit… to increase the collection sources for the bank - Under the model of major banks in the world, they usually build centers for processing documents relating to International Payment, especially L/C This division is in charge of receiving and processing documents of all the branches in a country or region, where gather many good specialists specializing in reviewing, processing documents requesting payment…, thus, branches are only in charge of gathering documents from customers then forward to the center for processing the next professions Agribank Vietnam may build up a board (department) at the head office, gathering a team of competent and qualified officers to be responsible for processing and settling disputes (if any) with foreign banks relating to International Payment, ensuring of quick, accurate processing to keep and heighten the prestige of Agribank Vietnam for international banks 75 The International Payment development at the Agribank – Bac Ninh Branch - Establish widely branches and agent banks: International Payment is very complicated and diversified, requiring the participation of many banks, agent banks, branches For example, in L/C payment, there are participations of banks such as: Issuing bank, Advising Bank, moreover, there may be confirming bank as required by the sellers So, the communication costs shall be fairly much and uncomfortable if it is not performed in the same system Additionally, the quality of L/C payment may be affected if the partners are banks of new cooperation or of the first cooperation For this reason, it’s necessary to have a world wide network of agent banks However, if a bank has branches and agent banks in other countries, it means that the operation size of such bank is widened, and its prestige shall be heightened This work is rather difficult, requiring many different solutions to be performed, aiming at the driving target is to heighten the prestige and establish the position of Agribank Vietnam for domestic, regional, and international bank partners - Open much more Nostro accounts in many hard foreign currencies at agent banks: Now, Agribank Vietnam has only 47 Nostro accounts in foreign countries Before the demand for commercial development of Vietnam recently, and especially in time to come, when Vietnam shall really integrate deeply into the world economy, it’s required to have much more Nostro accounts at foreign banks to serve the demands of customers - Increase the staff enough for the demands of labor employment of the branch, as apart from the current employees including 07 officers, the branch need to recruit some more officers with high professional qualification, experience in the field of International Payment, fluently using foreign languages for International Payment professions At present, the demand for human resources of financial and banking industries is increasing strongly; series JSCB has been established, personnel with high experience, qualification is more and more scarce; there has been phenomena that part of qualified officers, especially in International Payment professions from state-owned commercial bank move to work for JSCB as the treatments in salaries, bonus, training… in those banks are much better than state-owned commercial banks Accordingly, in order to keep qualified officers, attract good students for working, it’s suggested that Agribank Vietnam should provide adequate treating policies to officers working in International Payment, 76 The International Payment development at the Agribank – Bac Ninh Branch for example, providing attractive salary regime, individual bonus, and training policies - Strengthen works of training and retraining to the team of officers being within plans At the same time, Agribank Vietnam should train a team of leading specialists in the field of International Payment by many measures: recruiting specialists in other banks, dispatch officers with good professional qualifications to go abroad for training and practice - It’s necessary to have practical to attract customers and develop external business These policies are necessary to be suitable with each period, each kind of customers, and should not be rigid, The bank is advised to decentralized branches in attracting customers more and more: cost reduction, interest preference… - Current documents by Agribank Vietnam just guide on professions such as L/C, collections, remittance; there have not any specific documents guiding on the implementation of new professions and products relating to International Payment professions, commercial financing as: standby L/C, international factoring… while in fact these professions have incurred without guiding documents; this prevent the branch from performing such professions Therefore, it’s suggested that Agribank Vietnam shall issue guiding documents soon relating to new products and professions - International Payment is related to foreign currencies, exchange rates between VND and foreign currencies In performing International Payment professions, enterprises wish to minimize risks may incur, of which there are risks in exchange rates; they wish to hedge the risks in exchange rates through derivative instruments: call option, put option, term transactions, and forward contracts These are the demands, moreover, the lucrative professions of banks, JSCB have gradually deploy these professions, while SBV has not issued any detailed guiding documents, otherwise only for forward marketing, which are rarely used by enterprises due to their weaknesses - Decentralize the branches so that they may be more active in their external business operations; under current regulations, only class-I branches may perform International Payment professions Nevertheless, with current development trend, with the advantage of a world wide network, Agribank VietNam is advised to approve class-III branches with eligibility in facilities, personnel… to implement International Payment professions; or approve classIII branches to implement simpler International Payment professions such as: international card acceptance, non-trade remittance… 77 The International Payment development at the Agribank – Bac Ninh Branch CONCLUSION International Payment are new professions of Agribank Vietnam in general and especially for Agribank - Bac Ninh branch in particular, these professions bring considerable profits to the bank With series of open policies of many nations, International Payment is focused and widened by the bank more and more, social – economic relationships interlace with one another and become more and more affluent, however, resulting in many complications in circulating capital with goods exchanged exceeding the territory of a nation Over the past time, Agribank - Bac Ninh branch has continuously renovated and perfected more by itself to make International Payment professions go up to confirm its competitive position compared with other commercial banks in the area at the present and in the future On the practical basis of Agribank - Bac Ninh branch, exploiting knowledge collected and research methods learnt, this graduation thesis has been completed with the following basic contents: - The thesis has presented basic theories on International Payment, analyzed factors influencing on International Payment Moreover, the thesis also gives out criteria to measure International Payment development as the tools for analyzing current status of International Payment development at Agribank - Bac Ninh branch - Analyzing current status of International Payment development at Agribank - Bac Ninh branch, and simultaneously working out limitations and reasons - Suggestion of some major measures to develop International Payment at Agribank - Bac Ninh branch, and simultaneously giving out some proposals to the Government, SBV and Agribank Vietnam However, within this topic, the thesis only approaches basic issues and bravely gives out some solutions hoping to contribute part to International Payment development This thesis shall, therefore, not surely avoid limitations and defects The author would highly appreciate if her Teachers and persons with related concerns offer contribution to perfect it in the future 78 The International Payment development at the Agribank – Bac Ninh Branch REFERENCES Agribank- Bac Ninh branch , Report on external business activities in 2007, orientation of operations for 2008, Bac Ninh, 2007 2.Agribank - Bac Ninh branch , Report on external business activities in 2008, orientation of operations for 2009, Bac Ninh, 2008 Agribank - Bac Ninh branch , Report on external business activities in 2009, orientation of operations for 2010, Bac Ninh,2009 Agribank - Bac Ninh branch, Summary report on business operations in 2006, 2007, 2008, 2009, Bac Ninh, 2006,2007,2008,2009 Agribank , Decision No 1998/QD-NHNo-QHQT dated 15 December 2005 by the General Director of Agribank on the professional procedure of international payment in the system of Agribank, Ha Noi, 2005 Agribank, Decision No 2008/QD-QHQT dated 16 December 2006 by the General Director of Agribank Vietnam on the professional procedure of selling and purchasing foreign currencies in the system of Agribank, Ha Noi, 2005 Agribank, Decision No 388/HDQT-QHQT dated 05 September 2005 by the Chairman of the Board of Directors of Agibank Vietnam, promulgating the regulations on the management and operation of foreign exchange activities in the system of Agribank, Ha Noi, 2005 Msc Duong Huu Hanh, “International payment – Principles and Practices”, Finance Publishing House, 1999 Prof Dinh Xuan Trinh, “Textbook on international payment in foreign trade”, Education Publishing House, 2006 10 Associate Prof Dr Hoang Van Chau – Msc To Binh Minh, “International Commercial Terms (2000) – interpretation and use guide”, Science and Technics Publishing House, 2005 11 Associate Prof Dr Nguyen Van Tien , “Manual on international payment by L/C UP 600 – bilingual in English – Vietnamese”, Statistics Publishing House, 2007 12 Nguyen Trong Thuy, “Comprehension of UCP - The Uniform Custom and Practice for Documentary Credits”, Statistics Publishing House, 2003 79 The International Payment development at the Agribank – Bac Ninh Branch 13 Associate Prof Dr Phan Thi Thu Ha - Associate Prof Dr Nguyen Thi Thu Thao “Commercial Bank – Management and Professions”, Statistics Publishing House, 2007 14 The Government , Ordinance on foreign exchange, Decree No 160/2006/ND-CP dated 28 December 2006 stipulating in details the performance of the Ordinance on foreign exchange, 2006 ... Agribank – Bac Ninh branch Chapter III: Solutions for the international payment development at the Agribank – Bac Ninh branch 4 The International Payment development at the Agribank – Bac Ninh Branch. .. phase, thus, the buyer may take the delivery 14 The International Payment development at the Agribank – Bac Ninh Branch without payment or late payment For the buyer, the application of this... international payment at Agribank - Bac Ninh branch Agribank- Bac Ninh branch started performing International Payment at the end of 1998 Over 10 years of mature and development, International Payment activity