INTERNATIONAL PAYMENT BY LETTER OF CREDIT AT SAIGON THUONG TIN COMMERCIAL JOINT STOCK BANK

Ministry of education and training
Hanoi University of Business & TECHNOLOGY

Faculty of English
* * * * *

GRADUATION ASSIGNMENT
INTERNATIONAL PAYMENT BY LETTER OF
CREDIT AT SAIGON THUONG TIN COMMERCIAL
JOINT STOCK BANK

Student: Le Thi Phuong
Group: TA14-02
Course: 2009-2013
Supervisor: Tran Thi Tuyet, MA.

1


Acknowledgements
This graduation assignment could not have been completed without the
help, encouragement and support from a number of people who all deserve
my sincerest gratitude and appreciation.
First of all, I am heartily thankful to Mr. Tran Anh Tho for his
encouragement and support . He is like a guide, who helps the students in each
and every sphere of life, by giving the right advice.
I am also deeply indebted to my supervisor, Mrs Tran Thi Tuyet, whose
encouragement, guidance and support from the initial to the final level helped
me to finish this graduation assignment.
I would like to express my gratitude to the leaders of Sacombank branch
in Dong Da district for offering me an opportunity to do internship there.

Additionally, I am greatly indebted all the staff members in the International
Payment sector of Sacombank- Dong Da for providing me with valuable
reference documents to complete this report.
Finally, I would love to express my sincere thanks to my family and my
friends who have helped and encouraged me to complete this graduation
assignment.

2


CONTENTS
ACKNOWLEDGEMENTS…………………………………………………...2
CONTENTS…………………………………………………………………...3
ABBREVIATIONS…………………………………………………………...5
LIST OF TABLES…………………………………………………………….6
INTRODUCTION…………………………………………………………….7
1 Background of the study…………………………………………………….7
2 The scope of the study………………………………………………………7
3 The methods of the study……………………………………………………7
4 Organization of the study……………………………………………………8

CHAPTER 1: THEORETICAL FRAMEWORK…………………………….9
1.1 DocumentaryCredits…………………………………………………………9
1.1.1 Definitions of documentary credit……………………………………...9
1.1.2 Parties to Letters of Credit…………………………………………….10
1.1.3 Process of L/C ………………………………………………………..11
1.1.4 Types of Letter of Credit………………………………………………12
1.2 Norms to reflect the efficiency of international payment by documentary credit ….…14
1.2.1 Financial norms…………………………………………………………14
1.2.2 Non- financial norms…………………………………………………...15

1.3 Factors to impact the efficiency of international payment by documentary credit…..15
1.3.1 The commercial bank factor……………………………………………..15
1.3.2 The customer factor……………………………………………………...16
1.3.3 The business environment factor………………………………………..16

CHAPTER 2 : ANALYSIST AND FINDINGS ………………………….17
2.1 An overview of Saigon Thuong Tin Commercial Joint Stock Bank………..17
2.2 Saigon Thuong Tin Commercial Joint Stock Bank - branch in Dong Da
district………………………………………………………………………………18
3


2.2.1.The establishment and development of Sacombank- Dong Da Branch…..19
2.2.2 The organizational structure of Sacombank- Dong Da…………………...19
2.2.3 An overview of international payment operations at SacombankDong Da Branch…………………………………………………………………...20
2.3 Performance of international payment in Sacombank- Dong Da…………….21
2.4 The efficiency of international payment by documentary credit at SacombankDong Da Branch……………………………………………………………………....23
2.4.1

Financial norms ………………………………………………………...23

2.4.2 Non- financial norms……………………………………………………..26
2.5 An evaluation of international payment by L/C at Sacombank- Dong Da…….27
2.6 Causes of limitations in international payment by L/C at SacombankDong Da Branch………………………………………………………………..…..28
2.6.1 Subjective causes………………………………………………………...28
2.6.2 Objective causes………………………………………………………….30

CHAPTER 3: RECOMMENDATIONS…………………………………….31
3.1 The orientation for the development of international payments at
Sacombank-Dong Da from 2013 to2015…………………………………………..31

3.2 Recommendations to improve the efficiency of international payment
by

documentary

credit

at

Sacombank-

Dong

Da……………………………………...31
3.2.1 Diversifying types of L/C………………………………………………....31
3.2.2 Expanding the operation of export- import credits and support forms……32
3.2.3 Developing the service of customer consultancy…………………………33
3.2.4 Improving the professional skills of staff………………………………...33
3.2.5 Managing risks in international payments………………………………..35
3.2.6 Strengthening technology infrastructure………………………………………...36

CONCLUSION………………………………………………………………37
REFERENCES................................................................................................38

ABBREVIATIONS
4


Sacombank- Dong Da Saigon Thuong Tin Commercial Joint Stock
Bank branch in Dong Da district

L/C
SWIFT
IFC
FMO
ADB
Proparco

Letter of Credit
Society for Worldwide Interbank Financial
Telecommunications
International Finance Corporation
Entrepreneurial Development Bank Of The
Netherlands
Asian Development Bank
Investment and Promotions Company for Economic
Cooperation.

LIST OF TABLES
Acknowledgements...........................................................................................................2
1. Background of the study...........................................................................................6
2.The scope of the study...............................................................................................6
4. Organization of the study..........................................................................................7

5


INTRODUCTION
1.

Background of the study

International payment activity is more and more important to banks. It

can be said that the development of international trade depends a lot on the
quality of international payment. However, this activity is very complicated.
As one of the best options, documentary credit is the most commonly used in
the international payment activity. Expanding international payment operation
by L/C is getting some trouble for banks, especially, Saigon Thuong Tin
Commercial Joint Stock Bank branch Dong Da. Derived from that practice
along with the process of internship in the International Payment Sector of the
Sacombank, Dong Da branch, recognizing the importance of this method of
payment for international trade, the author would like to carry out the research
“International Payment by Letter of Credit at Saigon Thuong Tin
Commercial Joint Stock Bank (Sacombank) Dong Da Branch -Overview
and Recommendations”.
2.

The scope of the study.
It is impossible for this report to deal with every aspect of international

payment operations in depth. The author chooses to focus on researching and
6


analyzing problems Sacombank- Dong Da met within its international
payment method by L/C in order to make some recommendations to improve
the effiency of Sacombank- Dong Da’s international payment operations.
3.

The methods of the study
To carry out this study, the author of the report has chosen a quantitative

method. By examining Sacombank- Dong Da’s reports on the general
performance and international payment of the bank, the author collected data
which were then analyzed and presented in the forms of tables and charts.
4. Organization of the study.
The Graduation Assignment is in 3 chapters:
Chapter 1: Theoretical framework
This chapter gives basic knowledge about documentary credits as the
definitions, parties to L/C, process of L/C and types of L/C.
After that, this chapter also points out norms to reflect the efficiency of
international payment by documentary credit as well as some factors to impact
the efficiency of international payment by documentary credit.
Chapter 2: : Analysist and Findings
This chapter will provide a brief presentation on the establishment and
development of Saigon Thuong Tin Commercial Joint Stock Bank, Saigon
Thuong Tin Commercial Joint Stock Bank in Dong Da district and introduce
about international payment operations of the bank and its documentary credit
method. Also, some information about International Payment sector of
Sacombank- Dong Da is presented.

7


Then by researching of financial norms and non-financial norms of
international payment operation by L/C of Sacombank Dong Da, the
researcher focuses on giving analysis and findings of its problems.
Chapter 3: Recommendations
The researcher makes some recommendations to expand the
international payment activity by L/C.

CHAPTER 1: THEORETICAL FRAMEWORK
1.1 Documentary Credits
1.1.1 Definitions of documentary credit
International payment is one of the banking performances transacting
the payment of the value of the shipment between the buyer and the seller in
the field of foreign trade. And Documentary Credit is the most popular and
effective measure in international payment beside measures such as Advance
Payment, Open Account, Remittance, Collection.
A documentary credit is a separate contract from an export contract.
The parties to a documentary credit deal with documents, not the goods that
the documents relate to. Documentary credits are a common method of
payment in the international trade of goods as they offer some protection to
both you and your buyer. There are different classification of letter of credit,
including revocable or irrevocable letter of credit, at sight or deferred payment
or transferable letter of credit, etc.
A documentary credit—also called a letter of credit—is a conditional
guarantee of payment in which an overseas bank takes responsibility for
paying you after you ship your goods, provided you present all the required
8


documents (such as documents of title, insurance policies, commercial
invoices and regulatory documents).
The name “letter of credit” derives from the French word
“accréditation”, a power to do something, which in turn derives from the Latin
“accreditivus,” meaning trust. This applies to any defense relating to the
underlying contract of sale. This is as long as the seller performs their duties
to an extent that meets the requirements contained in the letter of credit
(source : )
1.1.2 Parties to Letters of Credit

According to Nguyen Van Tien (International Payment Book-2007, page
291-321), some key terms can be definite below:
Commercial bank: Commercial bank shall mean an enterprise, established in
accordance with the Law On Financial Institutions and other applicable laws,
conducting monetary business and providing banking services in the form of
receiving deposits and using the same to extend credits, provide payment
services.
Applicant: is the buyer/ importer and also the person requesting to issue the
letter of credit.
Beneficiary: is the seller/ exporter or the other third party for those benefits
the letter of credit is opened.
Issuing bank: is the bank responsible for issuing the letter of credit at the
request of the applicant as well as making the payment for the perfect
commercial document.
Advising bank: is the bank to notify the credit at the request from the issuing
bank.

9


Confirming bank: is the bank who commits to coordinate with the issuing
bank to pay for the beneficiary at their presence of perfect commercial
document.
Accepting Bank:

By accepting the draft, the Drawee Bank signifies its

commitment to pay the face amount at maturity to anyone who presents it at
maturity. After accepting the draft, the Drawee Bank becomes the Accepting
Bank.

Exporter/Beneficiary/Seller: The party that has contracted to sell goods.
Importer/Applicant/Buyer: The party that has contracted to buy goods.
1.1.3 Process of L/C
According to Export Finance Navigator- a guide to finance for SME
exporters, the diagram below shows the main steps in a typical documentary
credit transaction:

Importer/ Applicant

Goods shipper

Exporter/
Beneficiary

(5)
(1)
Contract of sale

(2)

application
for L/C

(8)
(8)
Documents

Payment
Application

Advise (4)

(5) (6)
Documents

Payment
(7)

Issuing Bank

(7)
Documents
(3)
Advise

Note to diagram:

10

Negotiating and
Advising Bank

Payment


(1) The buyer and the seller set out the terms and conditions of the
transaction in a contract of sale. The issuance of a documentary credit will be
one of the requirements.
(2) The importer requests his/her bank to establish the documentary credit
and must ensure that:

• The bank has granted sufficient facilities to cover it. If the bank feels that the
financial risk is too high, it may require additional security in the form of surety.
• The transaction complies with the relevant exchange control rulings or has a
Reserve Bank approval reference number.
(3) The bank issues the documentary credit in conformity with the
applicant’s instructions and sends it to its overseas correspondent (the advising
bank).
(4) The advising bank hands the documentary credit to the beneficiary.
(5) The beneficiary of the credit ships goods and prepares the
documentation. Payment under documentary credits is called for when the
beneficiary submits the documents, which conform to the terms and
conditions of the credit, to the negotiating bank.
(6) On receipt of a drawing that meets the requirements of the
documentary credit, the negotiating bank pays the beneficiary.
(7) The negotiating bank submits the documents to the issuing bank and
claims reimbursement. The issuing bank will check and confirm the
compliance of the documents against the documentary credit.
(8) Once the buyer's issuing bank receives and reviews the documents, it
either pays if there are no discrepancies; or forwards the documents to the
buyer if there are discrepancies for its review and approval.
1.1.4

Types of Letter of Credit

11


According to many factors such as date of payment, business
relationship, common nature or some special situation, Letter of Credit is
classified into some following types:

(1). Revocable L/C : may be revoked or modified for any reason, at
any time by the issuing bank without notification. It is rarely used in
international trade and not considered satisfactory for the exporters but has an
advantage over that of the importers and the issuing bank.
(2) Irrevocable L/C – It is not possible to revoked or amended a
credit without the agreement of the issuing bank, the confirming bank, and the
beneficiary. Form an exporters point of view it is believed to be more
beneficial. An irrevocable letter of credit from the issuing bank insures the
beneficiary that if the required documents are presented and the terms and
conditions are complied with, payment will be made.
(3) Confirmed L/C- is a special type of L/c in which another bank
apart from the issuing bank has added its guarantee. Although, the cost of
confirming by two banks makes it costlier, this type of L/c is more beneficial
for the beneficiary as it doubles the guarantee.
(4) Revolving L/C: It is suited to importers who purchase goods on a
recurrent basis where delivery of goods takes place in installments. Upon
payment, the issuing bank reinstates the amount of each shipment drawn
under the documentary credit. Revolving credits must be worked carefully to
avoid mistimed shipments and payments.
(5). Transferable L/C- is a type of credit under which the first
beneficiary which is usually a middleman may request the nominated bank to
transfer credit in whole or in part to the second beneficiary. This type of L/C
is used in the companies that acts as a middle man during the transaction but
don’t have large limit. In this transferable L/C is a right to substitute the
invoice and the whole value can be transferred to a second beneficiary.
12


(6) Back-to-back L/C: It is used when an agent can source goods from
a party to fulfill the order of the buyer, but he wants to conceal the identity

of the buyer from the seller and screen his commission earnings. The
procedure adopted involves the buyer issuing a documentary credit in favor
of the agent who, in turn, uses the document as security to obtain an
independent (counter), for example, independent seller, etc
There are different types of documentary credits. The exporter and
importer should consider and agree on suitable type, and on its terms being
conducting a transaction. They would be well advised to seek advice from
their bankers when they draw up sales contract.
(Source: />1.2 Norms to reflect the efficiency of international payment by documentary
credit
1.2.1 Financial norms
According to Nguyen Van Tien (2007), financial norms reflect the
efficiency of international payment by documentary credit include: sales, cost,
risks and revenue.
Sales is an indicator for the possibility of the bank in the field of
international payment. High sales prove that the quantity of L/C paid well.
Moreover, sales also is an indicator on which the bank depends to take
payment charges. Payment charges are usually applied on the value of L/C.
Cost for international payment operations by L/C includes all costs which
the bank must take to serve, and develop international payment operations by
L/C, such as cost for equipment, cost for staff, etc.

13


Revenue earned from international payment by L/C is the remaining sum
of money the bank obtains after deducting the costs for this activity. Revenue
is the most important indicator reflecting the level of surplus value or business
performance by the bank from international payment by L/C.
In international payments, banks may face risks because importers can

not afford the payment, or refuse to pay. When risks occur, the bank's costs
increases, and profits reduce. So when using L/C, deposits is very important.
Banks ought to clearly assess the financial situation, capacity of the importer.
When the bank checks documents and make payments but importers still
detect errors and refuse the payment, the bank must bear full costs.
1.2.2 Non- financial norms
According to Nguyen Van Tien (2007), non- financial norms include :
the quantity of L/C paid, the network of agent banks, the number of disputes
in payment by L/C.
The quantity of L/C paid through banks is the important target of the
bank. It’s proved that the bank has large reputation and financial capacity can
attract many customers, and create trust for the importers. Therefore, to have
packs of L/C with large payment value, the customer ought to be an enterprise
with good financial situation, and strong import and export activities.
To implement international payment by L/C, the bank should develop a
number of agent banks in different countries around the world. With a
network of agent banks, the bank can easily and quickly get accurate
information about the business and financial performance of the clients who
are applying for L/C in order to ensure that goods will be delivered on time
and money will be completely.

14


No one refuses the fact that if risks happen in the process of paying L/C,
disputes among involved parties may appear. This leads to a reduction in the
revenue of the bank and its reputation will be lost in the market.
1.3 Factors to impact the efficiency of international payment by documentary
credit
1.3.1 The commercial bank factor

The bank can attract more big customers if it create a reasonable
marketing policy. Nowadays, the number of import and export enterprises is
very large. So the bank need to implement marketing methods to expand its
market, create its reputation for the customers. The bank which has a power
financial capacity can ensure the security for process of international payment
activity.
The process of L/C payment need to be quick and accurate. This process
must be uniform and flexible to make favorable conditions for customers.
The human is the most important factor in international payment by L/C and
other banking operations. The staff’s ability and working style decide the
efficiency of payment.
1.3.2 The customer factor
To ensure payment requirements, both of the importer and exporter must
be powerfully financial businesses. To be more specific, the importer must
have experience and knowledge in settling the documentary credit pack while
the exporter must quickly complete the documentary credit pack according to
the international rules.
1.3.3 The business environment factor

15


International payments are carried out among different parties from
different countries. So this activity is impacted by the business environment
factor such as international rules, legal system, political regime along with
economics fluctuation in each country.

CHAPTER 2 : ANALYSIST AND FINDINGS
2.1 An overview of Saigon Thuong Tin Commercial Joint Stock Bank
On 21st December 1991, Saigon Thuong Tin Commercial Joint Stock

Bank (Sacombank ) was founded as a premier bank consolidated by merging
with Go Vap Bank for Economic Development and three credit cooperatives :
Tan Binh, Thanh Cong and Lu Gia Cooperatives, with initial charter capital of
VND 3 billion. Its head office is at 266-268 Nam Ki Khoi Nghia Street,
District 3, Hoc Chi Minh City. Sacombank was established with a mission of
maximizing economic value for customers, staff, investors and uphold its
highest commitment to Corporate Social Responsibility. The bank puts the
target to be the first modern multi-functional retail bank in the region.
Sacombank has become a pioneering bank in many business
performances, such as:
* The first bank to be listed on the Ho Chi Minh Stock Exchange in
Vietnam.
*The first bank in Vietnam to expand its network to Laos and Cambodia.

16


*The leading bank in Vietnam to top into the niche market such as Bank
for Women (8 March Branch) and Chinese Community Bank (Hoa Viet
Branch).
* The first bank in Vietnam to receive funding allocations from
international financial institutions such as IFC, FMO, ADB, etc to support
individuals, small and medium sized enterprises.
In 2011, Sacombank was recognized by the world community through
numerous prestigious awards : Best Foreign Exchange Provider in Vietnam in
2009,2010,1011 ; Best Cash Managing Bank; Best Retail Bank of Vietnam;
Best Corporate Governance and Investor Relation Bank in 2011; Best
International Payment Bank and Bank of the year 2011.
On March 16th 2013 in Ha Noi, Sacombank honorably received The
strongest brands of Vietnam Award 2012 at the 9th prize-granting ceremony

held by Vietnam Economics Times and the Trade Promotion Agency under
the Ministry of Industry and Trade .
After over 20 years of development, Sacombank has been matured in
various aspects, growing from the initial VND 3 billion of charter capital to
VND 12,850 billion in 2012, and from 100 first employees to a strong
workforce of 10,000 successive employees of skills and passions. In 2012,
the total assets of Sacombank gained over VND 143 billion. Sacombank is
currently one of the top commercial banks of Vietnam with a wide network
of 408 transaction offices in all over Indochina, and relationships with 15,121
agencies under 820 banks in 86 countries and territories in the world.
Nowadays, Sacomabank is considered a pioneer among commercial
joint stock banks in Vietnam, being the first to reform its operations, expand
its market and cooperate with international strategic partners. Among the
strongest forces driving Sacombank’s development over the last 20 years to
17


become one among the few strong commercial joint stock banks of Vietnam
are the Bank’s highly motivated staff; the strong support from shareholders;
the love, trust and loyalty of customers; and the leadership and great assistance
from officials of the central and local regulatory agencies, the mass media, etc.
All these have combined to create a great foundation for Sacombank to grow
confidently and sustainable .

2.2 Saigon Thuong Tin Commercial Joint Stock Bank - branch in Dong
Da district
2.2.1.The establishment and development of Sacombank-Dong Da Branch
Sacombank’s branch in Dong Da district was established on July 18th
2006 at 360 Tay Son Street, Dong Da District, Hanoi city, with more than 50
employees. At present, Sacombank- Dong Da has set up 5 transaction offices

in order to better serve its customers in the local area by being available for a
wider range of customers. With the advantages of its location in Dong Da
district, the leaders of the branch define their target customers as companies
and individuals located in the area of Hanoi Capital. Though SacombankDong Da has just been established for over 6 years, it has developed not only
in terms of financial indicators but also in terms of services and products
provided.
Sacombank- Dong Da was set up in the context where all commercial
banks were eager to increase its market shares by expanding its number of
branches in all districts of all cities/provinces nationwide. Sacombank- Dong
Da branch, therefore, had to face with a tough competition among commercial
banks. Being well aware of the challenges, difficulties and its advantages, the
leaders of Sacombank- Dong Da have focused much on the international

18


payment practices in order to enhance the progress of market penetration and
expansion in the area.
2.2.2 The organizational structure of Sacombank- Dong Da
Like many commercial banks, Sacombank- Dong Da is organized into
divisions. In Sacombank Dong Da Branch, the leaders are the Director and his
two Deputy Directors. They are responsible for the performance of all staff.
The branch is divided into 6 functional divisions, namely the Administration
Division; Corporate Banking Division; Personal Banking Division; Business
Support Division, Accounting and Treasury Division; and Transaction
Division. Figure 1 below will clearly show the structure of the branch:
Figure 1: The organizational structure of Sacombank- Dong Da

DIRECTOR

DEPUTY
DIRECTOR

DEPUTY
DIRECTOR

CORPORA
TE
BANKING
DIVISION

PERSONAL
BANKING
DIVISION

BUSINESS
SUPPORT
DIVISION

ACCOUNTI
NG AND
TREASURY
DIVISION

19

ADMINIST
RATION
DIVISION

TRANSAC
TION
DIVISION


2.2.3 An overview of international payment operations at SacombankDong Da
The International Payment Sector was established about 2 years after the
opening of the branch with the major function of consulting the leaders with
issues related to business development strategies of the bank. Additionally, the
sector is responsible for monitoring, managing and organizing the branch’s
products and services such as international payment, credit for import/export
enterprises, etc. Now, International Payment is one of sectors of Corporate
Banking Division.
According to the regulations of the branch, the International Payment
Sector conducts the following tasks:
•

Providing payment products and services such as packs of payment,

traveling check, western union payment, etc.
•

Executing trust funds from foreign individuals and organizations,

appraising and preparing documents for customers who would like to open letter
of credit.
•

Implementing sales and marketing activities to expand the service

market, and preparing periodical statistics reports.
2.3 Performance of international payment in Sacombank- Dong Da
Sacombank is the first commercial bank in Vietnam joining SWIFT
(Society for Worldwide Interbank Financial Telecommunication) to strengthen
its ability to support and improve customer service quality in terms of payment.
During the past years, Sacombank- Dong Da has always been appreciated as a
bank with the largest volume of transactions through SWIFT.

20


International payment has always been the leading operation of
Sacombank- Dong Da. During the year of 2012, Sacombank- Dong Da has
managed to supply Western Union money transfer service at 45 transactional
points in the whole system. In 2012, the revenue of the bank from this service
was VND 170 million, equal to 1.24 times against 2011. The number of
Nostro accounts abroad was 8 with various types of foreign currencies such as
USD, EUR, JPY, and SGD. The bank has a trend of opening accounts of other
power foreign currencies such as AUD, HKD, CN, etc.
Of the three main methods of international payment, namely remittance,
collection, and letter of credit, letter of credit is the most frequently used
method because of its advantages such as a high degree of security for both
buyers and sellers, reasonable charge, etc. Also, this method has brought
about the most revenue for the branch. Figure 2 below clearly shows the
revenue earned through each of the three methods used in Sacombank- Dong
Da during the last three years (2010, 2011, and 2012).
Table 1: Revenue according to methods of international payments of
Sacombank- Dong Da
Methods of payment
Time

2010
2011
2012

Remittance and Collection Letter of credit (L/C)
41.41 %
32.28 %
37.1%

58.59 %
67,72 %
72.92 %

( Source: report of Sacombank- Dong Da from 2010 to 2012)
It can be seen from the table that revenue from payment by letter of
credit grew steadily over the years of 2010-2012. In 2010, the total return
from L/C was USD 64,505 thousand, accounting for 58.59% of the total the
revenues from international payments. In 2011, this sum increased to USD
21


81,823 thousand, accounting for 67.72%. In 2012, the total revenues of
payment by L/C reached USD 84,934 thousand, accounting for 72.92% of
the total revenues from international payments.
According to the branch’s reports from 2010-2012, the revenue from L/C
was still used more frequently than the other two methods. In 2010, the revenue of
settlement by documentary credit method reached USD 78,405 thousand,
accounting for 58.59 % of the total revenue. In 2011, this sum increased to USD
81,823 thousand, representing 67.72 % of the total revenue. In 2012, the figure
was USD 84,734 thousand, accounting for 72.92 of the total revenue. This

increase shows that there was an improvement in international payment, especially
in L/C method after the Global Financial Crisis 2008. It was a positive result to
Sacombank- Dong Da because in spite of severe competition in the banking
system and negative consequence of the economy, Sacombank- Dong Da still
gained such a high growth rate.
2.4 The efficiency of international payment by documentary credit at
Sacombank- Dong Da
2.4.1

Financial norms

Table 2 below describes the performance of international payment by L/C in
Sacombank- Dong Da in 2012.

22


Table 2: The performance of international payment by L/C at
Sacombank- Dong Da in 2012

Months

The number of
L/C opened

Cost of L/C (USD) Revenue by L/C
(VND)

FEB
MAR

APRIL
MAY
JUN
JULY
AUG
SEP
OCT
NOV
DEC

9
10
8
9
8
9
9
8
9
12
11

3,800,988
6,500,800
5,102,744
5,034,203
5,500,766
6,086,975
6,102,413
6,806,668

6,500,609
8,560,242
9,458,376

80,745,327
86,532,824
65,434,917
63,097,347
65,786,169
70,251,637
75,577,342
74,235,603
75,918,821
130,288,388
93,705,989

SUM

102

69,454,784

881,574,364

( Source: Sacombank- Dong Da’s report on international payment by L/C in
2012)
It can be seen that the number of L/C opened through months from
February to December in 2012 was quite similar in the space from 8-12 packs.
In accordance with Sacombank- Dong Da’s annual reports from 2010- 2012,
the number of L/C opened from 2010-2012 increased. In 2010, the quantity of

23


L/C opened was 65 packs. This figure went up 90 packs in 2011 and added
102 packs in 2012. Although the number of L/C opened by Sacombank- Dong
Da wasn’t as high as the number of L/C opened by other Sacombank
branches, the increasing number of L/C opened over years has expressed the
never-ending effort of Sacombank- Dong Da in attracting customers and
doing business.
Because the number of L/C opened from 2010-2012 increased, its
payment value also increased. The fact can be found in table 3 below.
Table 3: Sales of international payment by L/C
Years

2010
Norms
Payment value of L/C (USD)
20,591,653

2011

2012

50,735,421

69,454,784

Next year/previous year

2.4

1.3

(Source: Sacombank- Dong Da’s report about sales of international payment
in 2010, 2011 and 2012)
It’s seen that the sales of L/C payment has an increasing trend over years.
The sales in 2012 increased 1.3 times compared to the sum in 2011 which
increased 2.4 times compared to 2010.
In 2011, the bank only transacted some export L/C, and this has stayed
the same since 2010. Customers of Sacombank- Dong Da are mainly in
imports businesses such as Tan Dai Phat company, Kim Duong company,
South Star company,... or export business such as Asia Metal Export Import
company. This situation comes from the fact that Vietnam enterprises must
ensure conditions of money, goods and the security in payment for of foreign
parties while they didn’t understand thoroughly about international payment
rules.

24


According to reports collected from International Payment Sector of
Sacombank- Dong Da over the years of 2010, 2011 and 2012, the revenue of
export and import L/C went up year by year, the revenue from L/C
performance increased. However, the revenue from international payments by
L/C only occupied a very small proportion in the total revenues. At present,
Sacombank- Dong Da has 12 significant partners which carried out payment
by L/C regularly.
2.4.2 Non- financial norms
At first, in the group of non- financial norms, the figure 5 about the
quantity of L/C paid from 2010-2012 expresses the efficiency of international

payment operations by L/C.
Chart 1 : The quantity of L/C paid from 2010-2012

(Source: Sacombank-Dong Da’s report about payments by L/C in 2010-2012)
In accordance with international payment operations’ report in 2012 of
Sacombank- Dong Da, the number of L/C opened 102 packs including 20
packs of export L/C and 82 packs of import L/C. Each pack often had high
payment value because almost customers of Sacombank- Dong Da are import
25