An overview about Vietnam joint stock commercial bank for industry and trade

HANOI, 2014
PREFACE
The purpose of the report is to describe my valuable experience during the
internship in Import –Export Office of VietinBank’s Main Operation Center. This
report is also to fulfill the requirement for my Finance and Banking course in
Foreign Trade University. For the whole internship, I had opportunity to learn
general operation process in that Bank and to observe how banking officers
perform their duties day by day. Besides that, I was able to put my theoretical
knowledge into the real cases and gain a lot experience.
In the report, I intend to concentrate on analyzing the business performance of
the whole VietinBank and suggesting some recommendations to improve the
effectiveness in its operation. Therefore, I would like to divide my report into
3main parts, including:
Chapter 1: An overview of VietinBank’s Main Operation Center.
Chapter 2: Internship journal.
Chapter 3: Recommendations to improve the effectiveness in VietinBank’s
performance.
Over the period of internship, I would like to give my special thanks to my
internship guide Mr. Nguyen Thanh Hai and other banking officers in Import Export Office for their supports and suggestions. And the person I most wish to
thank is my supervisor Professor. Tran Thi Thu Huong for her dedicated
instructions to help me accomplish my internship report.


Chapter 1: An overview about Main Operation Center of Vietnam joint stock commercial
bank for industry and trade.................................................................................................................3
1.

Profile of Vietinbank.................................................................................................................3
1.1.

1.2.

Formation and development............................................................................................3
Organization structure and function of Main Operational Center...............................4

1.3. Current performance of Vietinbank’s Main Operation Center...................................................7
Chap 2: Internship Journal..................................................................................................................9
Chapter 3: Nghiệp vụ thanh toán L/C xuất nhập khẩu tại SGD...............................................................12


Chapter 1: An overview about Main Operation Center of Vietnam joint stock
commercial bank for industry and trade
1. Formation and development
Vietinbank was established on 26 March 1988 after its separation from the State
Bank of Vietnam in accordance with Decree No.53/HDBT by the Ministers
Council. Its register name in English is “VIETNAM JOINT STOCK COMERCIAL
BANK FOR INDUSTRY AND TRADE” and its trade name is “VietinBank”. The head
quarter is located in 108 Tran Hung Dao Street, Hoan Kiem District, Hanoi,
Vietnam with the network of 147 branches across 63 provinces and cities
nationwide and 3 foreign branches: 1 branch in Frankfurt, Germany, 1 branch in
Berlin, Germany and 1 branch in Vientiane, Lao PD.
In terms of scope of business, VietinBank offers a wide range of retail and
wholesale banking products and services both at home and abroad. VietinBank
also operates in the following areas: lending, investment, trade finance,
guarantee, re - guarantee, forex trading, deposit, payment, money transfer, card
services, local and international credit card, traveler’s cheque, securities trading,
insurance, financial leasing, and many others.
Since 16 July 2009, Vietinbank stock has been official traded on HCM City Stock
Exchange (HOSE). The diagram below illustrates its formation and development
over a twenty five years period.

Figure 1: Twenty five years of construction and development

2001- 2008
and
conducted
athe
complete
innovation
towards
modernization
andinto
standardization
in all
aspects&ofmechanisms
banking act ivies;
converti
ully
aontwo-tier
implemented
bank, officially
organized
putsystem
Vietnam
restructuring
JSC Bank
project
for Industry
in
terms

and
of Trade
debts
handling,
operation
general
policies
and busines

Source: Vietinbank annual report 2013
Before, period of foundation, VietinBank was a bank in small size and had only 01
transaction center. However, over the time, up to now, VietinBank has developed
an operation network comprising of 01 Transaction Centers, 150 branches, over
1000 transaction offices/ savings offices. It also established correspondent
relationship with 900 banks, financial institutions of 90 countries and territories
all over the world.
Over the period of building and development, until now, VietinBank has been
achieving many outstanding results in fund allocation and its credit activities. In
2004, it successfully mobilized VND 64,160 billion and lent to a large number of
companies about VND 121 billion. And after that, these figures increased to VND
422,995 billion and nearly VND 468 billion. Over the recession period, this bank
still maintained nonperforming loan (NPL) ratios under 3 %. Up to present, in
implementing the State’s reform guidelines, the bank has been active to mobilize
medium and long term capital besides the State budget fund for important
projects and works.
1.1.

Organization structure and function of Main Operational Center
1.1.1. Organization structure

Figure 2: Organization chart

Board of directors

General directors-CEO

Vietinbank’s headquarter

Branch network

Operational center
(Transaction
center)
Main functional
divisions

Supporting
divisions

Export Documentary
Settlement Department

Accounting Dept

Source:
administration
HRHR
andand
administration

Dept Dept.
Import Documentary
.DEDept
Settlement 1.1.2.
1 Dept.Function of main divisions of Main Operation
Research and service development Dept
Center

Bank guarantee & Import
Export
Settlement
Department
Documentary
Settlement
2
Dept.

SWIFT & test key Dept.
Technical Dept

This is an outstanding
product
of VietinBank, ensuring that the exporter will be
Factoring and
Receivables
Financing Dept.
Cashof
transfer
Dept
paid upon delivery

of goods/services and presentation
the documents

complied with the terms and conditions of the L/C. VietinBank will serve you as
an advising bank, paying bank, confirming bank or negotiating bank.


Exporters will receive consultancy about unfavorable or exceptional
points,... upon receipt of L/C and during preparation of documents to claim for
payment according to L/C.



Exporters will be financed through export financing solutions with
favourable terms and preferential interest rates.


Import Settlement Department (1 &2)
After clients import goods and their partners want to select a secure payment
method, VietinBank will issue L/C for the importers and pay/accept to pay
foreign banks upon receipt of compliant shipping documents within the validity
of the L/C.


Importers will receive free consultancy on international trade rules and
practice and special terms and conditions of the L/C in order to minimize risks
arising from foreign trade payments.



VietinBank will be responsible for checking the compliance of the
documents.



Importers will be financed through import financing solutions.
Factoring and Receivable Financing Dept.

As a leading bank in international payments, Vietinbank always provides the best
services, facilitating the international trade activities. Services at the department
include: export factoring/financial risk guaranty and proflifting. Factoring is a
special form of short-term finance where Vietinbank purchases the seller’s
receivables and assumes the credit rish, either with or without recourse to the
seller. ….Porfaiting
Recently, export factor is a common new practices
Stipulated tolerances in credit amount, quantity, unit price or other variables
have not been met.
SWIFT & test key Dept.
Xác nhận chữ ký của ngân hàng thông báo xem có đúng hay không.
Accounting Dept.


Accounting Division is responsible for the mobilization and administration of
the Bank's financial resources, both the assets and liabilities, and for the
management of the Bank's liquidity, accounting and financial records, and the
relations with financial markets and intermediaries. In addition, it manages the
Bank's accounting system and is responsible for keeping the accounts and
mandatory ledgers (annual accounts and accompanying documents, as well as
the periodic reports).
HR & Administration Dept.

The generic function of this department are: recruitment of new employees;
orientation and placement of the recruited employees; administration of
benefits and compensation programmes; ensuring efficient HR Information
Systems; developing and running with a strategic approach to human resources;
monitoring compliance with legal requirements as well as administering award
and recognition programmes. Under the same division lies the Staff Benefits
Section which is responsible for all employee welfare matters including the
administration of pensions; administration of the medical aid scheme;
administration of group life insurances for members of staff; supervision of the
sports club; employee wellness.
1.3. Current performance of Vietinbank’s Main Operation Center.

As of financial-year-end 2013, Vietinbank’s impressive results were driven by
increasing growth momentum together with secure and efficient operations.
More specifically, Vietinbank’s revenue rose significantly throughout the five-year
period from 3373 billion in 2009 to 7751 billion in 2013, a growth of 56%. Such
achievement was brought about by the diversification of services and other
activities which attracts more customers and increases the income from payment
fee, money transfer charge, L/C issuance, etc. In the year 2011, Vietinbank’s
revenue reached a peak of nearly double that in the previous year, which signals
the result of a fruitful cooperation between Vietinbank and other international


commercial banks. However, likewise the upward trend in profit, its costs tripled
from 2400 billion at the beginning to over 6000 billion in 2011. The high total
cost was attributed by a rise in surcharges, advertising, promotion and
investment on new technology. Vietinbank continuously expands its branches,
clearing houses and transaction offices.
9000
8000

7000

billion

6000
5000

Total Revenue
Total Cost
Profit

4000
3000
2000
1000
0

2009

2010

2011

2012

2013

F

igure 3: Vietinbank’s performance

Source: Vietinbank’s annual report, 2013
VietinBank always adheres to policies on provisioning for non-performing loans.
At the end of the third quarter, the bank continued to maintain a provision of
4.051 trillion VND, significantly higher than the value of non-performing loans.
The frequency at which VietinBank makes provisions for credit risk is 1.08 times.
This is a factor that ensures safety of operations, allowing the bank to deal with
non-performing loans at its discretion. In addition, VietinBank achieved ROA,
ROE, and CAR figures that far surpass the targets set by the shareholders’
committee. This achievement is a testament to VietinBank’s effectiveness in
increasing capital and profits.Having achieved such results, at the end of the third
quarter, VietinBank was the leading bank in Vietnam despite difficult conditions
in the economy as well as the banking industry. It is expected that by year end


2014, VietinBank’s financial results will be yet more favorable, owing in large
part to wise managerial decisions and sound business solutions that are being
taken as the year comes to a close.

Chap 2: Internship Journal
Day One: Monday, July 01st, 2014, 12:30 PM – 4:30 PM (Hours: 4)

Today is my first day at the Main Operational Center of Vietinbank. The office was
nicely and tastefully decorated, which made a deep impression on me. A small
bulletin board was hang on the wall and artificial flowers were lying on each
table. Working hour is divided in three shifts: the first shift is from 8:0 a.m to 5:30
p.m, the second shift is from 9 a.m to 8 p.m and the third shift is from 1:30 p.m
until the work finished.
As I walked in my first day, I was greeted with cheerful smiles and positive
attitudes. My supervisor, Nguyen Thanh Hai, introduced me to each person
present and gave me a description of what types of things they work on. After

introductions, he showed me around the office and work center. He described
various departments within the work center, such as Export Documentary Dep.,
Import Documentary Dep. and Factoring and Receivables Bank Financing Dep.
We then went on to some personal details and job expectation. It came to my
surprise to know that my supervisor, as well as many people there, was a
graduate from FTU, K45 and that he had an internship at the headquarter of
Vietinbank before.
Day Two: Tuesday, July 02, 2014, 10:15AM – 4:15PM (Hours: 6)

Today I helped my supervisor, Mr. Hai, with sorting L/C to each group. The Main
Operational Center was responsible to monitor banking branches in provinces, so


each group of four staff working together to deal with documents from six
provinces.
The morning shift has fewer tasks than the afternoon one, so fewer bank officers
came to the workplace. The first thing that they do in the morning is check their
emails, then prioritize their activities for the working day. When observing the
staff doing their tasks, I read the operation guideline and found out how close it
was to what I had studied at my university so far. The first chapter in the
guidebook is steps to open an L/C and the second is about documentary
collection.
Day Three: Wednesday, July 03, 2014, 9 A.M – 4 PM (Hours: 7)
Today I was introduced to the Export Documentary Settlement Department. This
office included four men and six women, which was a common picture in most
banks. Through observing my supervisor I learned that communication and
connection were very essential. Interbank chat was available at all time to help
the staff conduct teamwork more effectively. Though the workload was
sometimes stressful, I could feel a cozy and comfortable atmosphere where there
was always a smile on people’s face. The Main Operation Center seemed to be

their second family and occasionally they told jokes toward each other.
After having background information about L/C and other documents and
categories of service relating L/C that VietinBank supplies, I was guided to check
the accuracy of every single document when VietinBank played a role as advising
bank. First of all, the banker had to read and understood all terms and conditions
of L/C. Subsequently, he/ she continued to check other papers, for example:
packing list, commercial invoices, bill of lading, bill of exchange, or some kinds of
certificates under the rules of Incoterm 2010. If there is no mistake, discrepancy,
then banker would be responsible to pack these entire documents and send them
to issuing bank in foreign country and write a notification to customer, informing
that VietinBank complete its duty. Otherwise, the banker had to notify to his/her


clients and required them to correct the discrepancies until the issuing bank
accepted or agreed to pass.
Day Four: Monday, July 08, 2014, 9 A.M –2 PM (Hours: 5)
Today was the first day of the week so everyone in the office got busier than usual
and the office was far from being quiet. Everyone received more LC application
from the banking branches and customers. Hardly did the printer stop working.
Once it was out of order, the fixer came immediately to fix it.
The discrepancies among several documents were widely discussed, such as the
lack of Certificate of Origin (CO) number, the incorrect measurement of carton,
the lack of an unit for weight. For example, a $30 000 contract with Japan lacked
the CO form VJ…..Common customers of Vietinbank were Viglacera Ceramic Tile
Company (Ceramic), Hoa Sen (steel), Tu Thanh Company Lmt. (gherkin), Cty co
phan may mac QTNĐ, May 10 Company Lmt (Garment)…..
Day 20: Tuesday, July 29, 2014, 9 A.M – 3 PM (Hours: 6)
Today, Mr.Hai gave me a real task: dealing with information using TRADE FINANCE
system and SWIFT program. While giving instruction, he always made sure that I
remember the key words and typical codes. I became interested to know that most

letter of credit was in the SWIFT format, with about 49 terms. A complex term of
L/C was included in article 47 of the SWIFT form. During the period, I realized the
importance of learning international payment, which I had not studied at my
university.
My supervisor encouraged me to ask if there was anything sound ambiguous. He
emphasized that understanding the procedure thoroughly was of great necessity to
conduct a hands-on task.
Day 21: Thursday, July 31, 2014, 9 A.M – 4 PM (Hours: 7)


Today I learned that bank officers need to have flexible attitude and alert mind in
the workplace. They enjoyed a cup of coffee after lunch or when feeling drowsy.
During the tea break, they received a updated list of banned countries for
American companies. Cuba, North Korea and Egypt were examples of the
countries with which American companies were banned from doing business. As
a result, US dollar transaction with these countries was not allowed and other
trade currencies, such as euro, were an optimal choice. For the countries and
products which were suspected to encounter trade restriction or limitation,
officers in Export Documentary Dept. needed to ask the R&D officers to check.
Day 25: Tuesday, August 05, 2014, 9 A.M – 4 PM (Hours: 7)
Today is the last day I am at the office. It is near the mid-autum festival, so the
office was full of moon cake and fruits. Everyone seemed to be cheerful
The reason why I chose to have an internship in the Main Operation Center is
because I have a passion for the banking industry and international finance. I
enjoy the aspects of the office: being organized, checking the documents and
collaborating with other members, The internship period plays a pivotal role and
of great necessity for all undergraduate students. It does not only provide me a
golden chance to check theoretical knowledge but also helps me learn how to put
theories into practices. The tasks, at first, sounded fairly simple for a newcomer
like me. However, I realized that it really requires the staff many qualities such as:

carefulness, patience and proficiency. In addition, I also observed the typical
works of banking officers and their attitudes when dealing with the problems.
Even though, I had only five weeks for my internship in VietinBank’s Main
Operation Center, I would still feel more self – confident than before. And
personally, I think this valuable opportunity would be a stepping – stone and
unforgettable experience for me to prepare the best things for my future career.


Chapter 3: Nghiệp vụ thanh toán L/C xuất nhập khẩu tại
Main Operation Center
Letter of Credit (L/C), as people know, is a payment method in which the issuing
bank, upon request of the applicant (the importer), commits to pay a certain
amount of money to the beneficiary (the exporter) or accept the bill of exchange
drawn by the beneficiary after receiving the documents in conformity with the
terms and conditions of the L/C. More specifically, figure 4 illustrates the process
in which L/C is issued and payment is made.
Seller

Figure 4: Letter of credit

Advising

Contract

Payment
Do
cu
me
nt
paym

ent
Payment

Advising bank

Document
Issue

Buyer

Documentsapp
pa
lica
y
tion
m
en
t

Issuing bank


Source: Viettinbank’s procedure guideline

1. L/C issuance
At the request of the customer (the importer), the Import Documentary Settelemt
1 and 2 of VietinBank issues the L/C, committing to pay to the beneficiary at sight
or at maturity when the beneficiary presents the documents in conformity with
the terms and conditions of the L/C. Depending on your credit history, L/C can be
issued with or without a deposit. Vietinbank acts like an intermediary ensures

safety for both exporter and importer; reduces capital pressure for the importer;
and give advises on the transactions to ensure customers’benefits. This is
particularly important to bear in mind that Vietinbank only deal in documents,
not in goods. In the case L/C amendment, VietinBank amends the L/C upon
request of the customer (the importer). As illustrated in Figure 5, L/C is issued by
the following process.
Figure 5: L/C opening procedure


Step1:Chckdoumn Step2:IsuL/C Step3:Rciv,hkandrosmbul Step4:Paymndc Step5:ClosdcumnarviL/ Step6:avdocumns
Example:

SALES CONTRACT
Date: 2014-06-26
Contract No: S04688
Seller: CARGILL INTERNATIONAL TRADING PTE LTD
300 Beach Road, #23-01 The Concourse Singapore 199555
Phone: (65)6295-1112
Fax: (65)6393-8880
Co: Reg No.196700442
Buyer: HOA SEN GROUP
No. 9, Thong Nhat Boulevard, Song Than II Industrial Park
Di An Ward, Di An Town, Binh Duong Province, Vietnam
Commodity: Prime Newly Produced Hot Rolled Steel Coils
Specification: HRC grade: SAE1006
Step 1: Receive documents to open L/C
On 20th May, representative from Hoa Sen Group sent L/C application letter and
letter to borrow foreign currency. Bank officer checks the information in the

application form. The commodity traded is steel coils, so it is in conformity with
the business scope of the company. Because the documents related to L/C is sent
through fax, SWIFT & Testkey staff is responsible to check the documents, the
number of documents received and the signature of Hoa Sen Group’s
representative. If the signature is correct, SWIFT & Testkey staff notes the words
“Test Correct” on the documents.
Step 2: Open L/C
Upon received of the verified documents, Vietinbank rechecks to see if the
document fit with international practices, governing rule of Vietnam state bank,
international commercial contract, whether it is risky for the customers and
issuing banks. If there exists any discrepancy, Vietinbank immediately contacts
Hoa Sen Group’s representative to review the documents.
As Vietinbank follows the SWIFT message body of issurance of letter of credit, it
uses MT 700-Issue of a Documentary Credit swift messages when issuing a L/C.

Step 7: Save documents
The documents is then put together in file and after several days is packed then
all the documents was transported to Dong Anh to save. (hn does not have land)
2. L/C advising
VietinBank will serve exporters as an advising bank, paying bank, confirming
bank or negotiating bank.
At present, it is common practice in Vietinbank that L/Cs are issued as SWIFT
messages in a standardized format. This procedure facilitates both the issue of
the L/C and authentication at the advising bank, which will then be able to advice
it immediately to the seller.


Today, most L/C are issued in a standardized SWIFT format, as shown below
The box on page… shows a standard SWIFT format. This example shows a freely
negotiable L/C, available at sight with the issuing bank, and advised to the seller

without the advising bank’s confirmation.
Vietinbank advices L/Cs to the seller through its internet-based advising services,
which means that the seller can expect to receive the L/C almost immediately
after the bank receives it. In this form of the L/C can then easily be distributed in
a standardized electronic format to and within the company, thus increasing its
effectiveness and reducing possible errors in transmission.
The next phase in the chain, the presentation of documents, can also be
completed electronically in some cases, but only if the L/C indicates that it is
subject to the eUCP rules. The main limitation in presenting all documents in this
form seems to be the transport documents, which are not always available in an
electronic format.
Example of an L/C issued through SWIFT

CONCLUSION
After more than 25 years of development, Vietinbank has achieved several
accomplishments and has been one of the leading banks in Vietnam. It is proved
by the continuous efforts of all branch employees on improving service quality as
well as maintaining a sustainable growth in both fund mobilization and credit
activity. Although there are still some certain difficulties existing, from my point


of view, the appropriate strategies and targets of the Bank will guarantee that its
stable position in the eyes of customers.
It will be an unforgettable time of my life when I had the experience in working as
a banking officer. Moreover, working as an internee assists me to comprehend
more about banking system, which is very useful for my future career.
To conclude, I would like to express my gratefulness to everyone, who support me
accomplish the report.

REFERENCE

Anders Grath, The handbook of International Trade and Finance, Nordia
Publishing Ltd for the Institute of Export, 2005, Great Britain


Annual reports of VietinBank from 2009 to 2013, available on VietinBank’s
website: />Analysis of ABC securities in 2013 about VietinBank’s security.
Information

about

VietinBank,

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available

on

website

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StoxPlus,