LV Thạc sỹ_Current situation of mobilizing activities in BIDV and solutions for improvement

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ACKNOWLEDGEMENT
I wish to express my thankfulness to Associate Pr. … for having instructed
me throughout my research.
I also want to say thanks to the employees of customer relationship
department for sharing me so much information regarding the branch and the whole
organization. Especially, I want to express my thankfulness to Mr…, who have been
directly supervising and helping me during my internship department.

TABLE OF CONTENTS


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ACKNOWLEDGEMENT.........................................................................................1
TABLE OF CONTENTS...........................................................................................2
LIST OF TABLES.....................................................................................................5
LIST OF FIGURES...................................................................................................6
ABBREVIATIONS...................................................................................................7
CHAPTER 1: Introduction.....................................................................................8
1.1: Rationale............................................................................................................. 8
1.2: Research question...............................................................................................9
1.3: Research methodology.......................................................................................9
1.4: Research scope...................................................................................................9
1.5: Research structure..............................................................................................9
CHAPTER 2: Theoretical background of mobilizing funds..............................10
2.1: Overview of commercial bank’s funds.............................................................10
2.1.1: Definition.......................................................................................................10
2.1.2: Classification of capital.................................................................................10
2.1.2.1: Equity.........................................................................................................10

2.1.2.2: Mobilizing capital.......................................................................................10
2.1.2.3: Borrowing...................................................................................................13
2.2: Capital mobilizing activity of commercial bank...............................................15
2.2.1: Definition.......................................................................................................15
2.2.2: General orientations for capital mobilization.................................................15
2.2.2.1: Economic direction.....................................................................................15
2.2.2.2: Technological orientation............................................................................16
2.2.2.3: Psychological orientation............................................................................17
CHAPTER 3: Current situation of capital mobilization in Bank of Investment
and Development of Vietnam, Hanoi branch.......................................................24


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3.1: Overview of Bank of Investment and Development of Vietnam, Hanoi branch
................................................................................................................................. 24
3.1.1: The foundation and development of BIDV, Hanoi branch.............................24
3.1.2: Organizational structure of BIDV, Hanoi branch...........................................25
3.1.3: Major activities of BIDV, Hanoi branch........................................................25
3.1.4: Business performance of BIDV, Hanoi branch from 2008 to 2011................27
3.1.4.1: Mobilizing activity.....................................................................................27
3.1.4.2: Lending activity..........................................................................................30
3.1.4.3: Service........................................................................................................32
3.1.4.4: Operating activity.......................................................................................33
3.2: Current situation of mobilizing funds in BIDV, Hanoi branch..........................35
3.2.1: Fund mobilization performance of BIDV, Hanoi branch from 2008 to 2011. 35
3.2.1.1: Structure of capital mobilization by clients.................................................36
3.2.1.2: Structure of capital mobilization by maturity.............................................38
3.2.1.3: Structure of capital mobilization by currency.............................................40
3.2.1.4: Structure of total working capital by source...............................................42

3.2.2: Evaluations on the current performance........................................................44
3.2.2.1: Achievements of BIDV, Hanoi branch in mobilizing activities from 2008 to
2011......................................................................................................................... 44
3.2.2.3: Limitations of BIDV, Hanoi branch in mobilizing activities from 2008 to
2011......................................................................................................................... 45
* Reasons for limitations.........................................................................................46
CHAPTER 4: Solutions to improve capital mobilization activity in BIDV,
Hanoi branch.........................................................................................................51
4.1: Capital mobilization orientation for BIDV, Hanoi branch................................51
4.2: Solutions to improve capital mobilization activity in BIDV, Hanoi branch......53
4.2.1: Enhance and diversify forms of mobilization................................................53


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4.2.2: Provide appropriate policies in order to encourage opening new account and
use of services at the bank.......................................................................................54
4.2.3: Solutions for marketing.................................................................................56
4.3: Recommendations to improve capital mobilization activity in BIDV, Hanoi
branch......................................................................................................................57
4.3.1: Recommendations to the government, State Bank of Vietnam and other
related entities..........................................................................................................57
4.3.2: Recommendations to BIDV headquarter.......................................................60
CONCLUSION.......................................................................................................63
REFERENCES........................................................................................................64

LIST OF TABLES


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Table

Contents

Page

1

Total fund mobilization of Hanoi branch from 2008 to 2011

27

2

Total outstanding loan of Hanoi branch from 2008 to 2011

30

3

Service performance of BIDV Hanoi branch, from 2008 to 2011

32

4

Operating performance of BIDV, Hanoi branch from 2008 to 2011

34

5

Structure of capital mobilization of Hanoi branch by clients

36

6

Structure of capital mobilization of Hanoi branch by maturity

38

7

Structure of capital mobilization of Hanoi branch by currency

41

8

Structure of total working capital of Hanoi branch by source

43

LIST OF FIGURES


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Figur

Contents

Pag

e
1

Hanoi branch’s fund proportion comparing to the whole system from 2008

e
29

2

to 2011
Hanoi branch’s credit proportion to the whole system from 2008 to 2011

31

3

Hanoi branch’s profit before tax proportion to the whole system from 2008

34

4

to 2011

Movements in the structure by clients of Hanoi branch from 2008 to 2011

38

5

Movements in the structure by maturity of Hanoi branch from 2008 to

40

2011
6

Movements in the structure by currency of Hanoi branch from 2008 to

42

2011
7

Movements in structure of total working capital of Hanoi branch from
2008 to 2011

ABBREVIATIONS

44


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SBV: State Bank of Vietnam
BIDV: Bank of Investment and Development of Vietnam
NPL: Non performing loan

CHAPTER 1
INTRODUCTION


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1.1: Rationale
One of the most important roles of commercial bank is to gather capital of
the economy. In economies, there are surplus money holders (for example: they
hide in the house and the money has not been brought into circulation). However,
they are willing to give away money to earn some profitability from people who
need money more than them at the moment. In some cases, the lender and borrower
do not know each other, thus, cannot trust each other so the transaction fails to take
place. In those situations, banks as their intermediary, receiving money from people
who want to borrow, paying interest to them and bring money to the person who
wants to borrow loans. This means bank serves as a borrower and lender with
interest differences and use the amount to maintain its operation. This action also
promotes the well being of the society because the resource is allocated to people
whenever they need it.
Apparently, from the above indication, we can realize the importance of
capital for a bank’s operation. If bank fails to get the money from surplus money
holders, they cannot give the money to lenders, thus, cannot get profit from the
interest differences.
Understanding this, bank should always add capital to fulfill its duty as an
intermediary as well as making profit. However, in order to raise capital in a
competitive environment like these days is not easy. Because of the fact that there

are many banks and institutions being established in 2011, it is very difficult for any
bank alone to get the money from potential surplus money holders.
From March to May 2012, I had a chance to do internship in Bank of
Investment and Development of Vietnam, Hanoi branch, in which I can work and
learn with employees of customer relationship department. After studying the
performance of the branch over the past few years, I have noticed several problems
in the mobilizing capital field. Thus, I decided to choose the topic “ Current
situation of mobilizing activities in BIDV, Hanoi branch and solutions for
improvement”


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1.2: Research questions
 How is the mobilizing capital performance of BIDV, Hanoi branch from
2008 to 2011?
 What are the limitations exist in mobilizing activities of BIDV, Hanoi
branch?
 What are the solutions to improve mobilizing activities of BIDV, Hanoi
branch?
1.3: Research methodology
This thesis uses the following methodology: statistics, analysis, synthesis,
logical thinking, etc., to interpret the problems mentioned in the thesis content.
1.4: Research scope
This thesis applies the theory of capital mobilization to evaluate the
performance of capital mobilization of BIDV, Hanoi branch, from 2008 to 2011.
Moreover, it also suggests several solutions to improve the mobilizing activity for
the branch in the future.
1.5: Research structure
This thesis is divided into 3 main parts:

 Theoretical background of capital mobilization
 Current situation of capital mobilization in BIDV, Hanoi branch, from 2008
to 2011
 Solutions to improve capital mobilization in BIDV, Hanoi branch

CHAPTER 2
THEORETICAL BACKGROUND OF CAPITAL MOBILIZATION

2.1: Overview of commercial bank’s capital


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2.1.1: Definition
Capital of commercial banks is defined as all assets in the balance sheet of
Bank Accounting. It includes equity and borrowings, in which borrowings play an
important role as it actually creates profit for the banks.
2.1.2: Classification of capital
2.1.2.1: Equity
Any bank that begins operation must have a certain amount of capital, known
as equity. This type of capital banks can be used in long term, forming equipment
and fixed assets for the bank. Even though it has a small fraction, however, it is
considered the buffer against risks to ensure the soundness operation of a bank. It
also shows the financial potential of the bank to the eyes of investors.
It includes: charter capital, additional capital during operation, borrowings
that can be transferred into equity and other funds.
2.1.2.2: Mobilizing capital
This is the first and most important sources of capital raised from outsiders.
It normally contributes the most to the total capital and it has impact on every
activities of a bank. Banks do not own this capital, thus, they have the

responsibilities to pay the principal and interest whenever the owner wants to
withdraw the capital. This source of capital always fluctuates depending on several
factors of the economy. As a result, banks should keep a small fraction of the capital
to ensure the solvency instead of using the whole amount.
Demand deposit
This is a deposit that the customer can withdraw at any time and the bank
must satisfy these requirements of customers. In fact, it is deposited as the payment
guarantee.
Normally, customers deposit their money in the bank in the forms of demand
deposit to make payments conveniently and economically. Unlike saving deposits,
these funds are only temporarily idle. As a result, customers only temporarily


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transfer the money to the banks to preserve and perform several services for them.
In this way, they do not lose the ownership of the money, but have the rights to use
the money anytime they need. They even can remove or transfer the money to
anyone at anytime. Customers can use their own money by means of payment such
as checks, authorized payment or letters of payment.
For banks, this is a debt, which the bank is obliged to execute the settlement
and payment to the beneficiary of the depositor. Thus, the cost to maintain this type
of deposit is quite significant comparing to the other types. However, in returns, the
interest rate is usually lower than the interest paid for other types of deposits. The
associated cost is also offset by the fact that the number of deposits into and
withdrawals are not at the same time and the account holders often do not use all
your money on the account. Therefore there is always a sum on account of the
balance for a long time it was used for banks to invest in some businesses and
individuals for profit. Likewise, for the payment deposit account balance on trading
account not only cover costs but also can bring profit to the bank.

Nowadays due to technological development, new technologies are applied
in banking activities. Therefore, there have been many businesses and individuals to
open accounts at the bank transactions, making the amount of demand deposits
increasing. It is being used widely for lending purpose and its contribution to the
total assets of the whole bank is becoming more and more important.
Term deposit from enterprises and social entities
Term deposits are temporarily idle funds of the business, unused in a given
period, which period shall be determined in advance. Therefore, individual
enterprise often deposits in banks in the forms of term deposits. Most of these
deposits derived from the profit accumulation of the businesses that they have. In
principle, customers can withdraw money at maturity and are entitled to interest on
the amount of such deposit. However, in the pressure of raising capital now,
commercial banks often allow customers to withdraw money ahead of time in order
to attract capital. In this case, customers are not entitled to agreed upon interests, but


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normally receive only the demand deposit interests.
Due to the nature of this relatively stable type of capital, banks can use most
of this fund balance for medium and long term lending purpose. Large contribution
of this fund creates favorable conditions and activeness in the operation of banking
business. Banks often offer a variety of terms to meet customer demands and apply
different interest rates along with different terms. Usually, the longer terms, the
higher the interest rates. The banks often encourage customers to send money for
the long term, because it is relatively stable for banks to do actively in business. To
attract more long-term capital growth, the economy must be stable, value for money
is guaranteed, inflation at medium level (usually 1 digit a year) and business
performances of most banks are efficient.
Saving deposit from citizens

Saving deposits are saving money sent to the banks to earn the interest rate
prescribed. It is a special kind of money accumulated in personal consumption.
When sending money to the banks, depositors are given a passbook as a certificate
of deposit in banks. By the maturity, the customer receives cash amount of the total
interest plus the principal amount.
There are two types of savings are:
- Savings of non-term.
For this type of deposit, the depositor can withdraw part or all of their
deposits at any time. However, unlike demand deposits, depositors may not
use the payment instrument to pay for others, the savings deposit interest
rates are higher and most of the depositors do not have the specific spending
needs in the future.
- Savings deposits with a term.
Money is deposited into banks on the basis of agree upon interest
rates matching with the terms. Traditionally, customers cannot withdraw their
money before the maturity date. Yet, in reality, banks nowadays offer the
prior withdrawal chances in returns for lower interest rates.


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Savings deposits of residents are the second largest amount of all
deposits in banks and it depends greatly on the average income per capita,
savings rate on total income integration of residential, service quality of
banks, currency stability and the economy was growing steadily.
2.1.2.3: Borrowing
Borrowing is the source of capital that bank borrows from outsiders to meet
some payment requirement when the amount of deposit is not enough. It is the
primary source to combat liquidity risk of a bank.
Borrowing from State Bank

Borrowing from State Bank is to address the urgent needs for payment
requirement. The loan is often in forms of refinancing capital; in which State Bank
rediscount the commercial papers of commercial banks to become its own property.
In case of not having commercial paper to rediscount, State Bank lends their
money to commercial bank with the refinancing rates that depends heavily on
several economic indicators. If the central bank seeks for monetary contraction, the
rates would be higher to limit the demands of commercial banks. Meanwhile, the
rates would be low if the central bank applies monetary expansion.
State Bank loans are aimed to ensure safety of the whole banking system and
provide the basis to govern the monetary policy.
Borrowing from other credit institutions
In this type of borrowing, banks borrow from other banks or credit
institutions in the interbank market.
Banks that have excess reserve resulting from unexpected increase in capital
or decrease in credit contracts would like to lend some of the excess capital to earn
interest. Meanwhile, bank with shortage reserves needs immediate loans to ensure
their liquidity position.
The types of borrowing from other credit institutions are given in the
followings:
- Overnight loan contract is unwritten agreement between the two banks


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primarily through telephone, offering credit with a term not exceeding one
day
- Term loan is borrowed into written contracts with specific durations
(weeks, months, or years). Generally, the borrowers must have valuable
papers as collaterals in order to be approved.
These funds are mainly short-term, relatively large proportion especially for

wholesale banks and the interest rates depend mostly for the demand in the
interbank market.
Borrowing from the capital market
Borrowing on capital markets: Banks borrow by issuing bills (promissory
notes, bills and bonds) in the capital market. The medium and long-term loans are
used to match with long and medium-term loan when capital is not sufficient.
Usually these loans are not secured.
Reputable bank or willing to pay higher interest rates will be easier to
borrow.
The smaller banks are often difficult to borrow in the capital market, as they
need to be guaranteed by agent or other investment banks.
Borrowing capacity also depends on the level of development of financial
markets, making it possible for tools to convert long-term bank debt.
Trust funds
This is the fund that a bank gets from customers by performing well due to
good lending and payment services. It normally has low cost and its contribution
depends on the service quality and goodwill to the customers.
In some cases, it is the amount of capital that a bank gets from State Bank to
finance several governmental projects.
2.2: Capital mobilizing activity of commercial bank
2.2.1: Definition
Mobilizing capital is an action of receiving temporary funds from individuals
or organizations to form the operating capital of a bank


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2.2.2: General orientations for capital mobilization
2.2.2.1: Economic direction
In the economic direction, a bank uses economic leverage, reflecting in the

interest rates and service charge policy to attract customers. Noting that this policy
is not good for the bank, yet, it must be used in several circumstances like in
competitive or new market.
The bank can use the following types of interest and service charge policy to boost
the mobilizing activity:
Reasonable interest rate
Reasonable here does not mean that banks charge the highest possible
interest rates to maximize their profit. In stead, it also infers that bank cares about
the other factors such as: brand name of the bank, intensiveness of the market,
behavior of the target customers, etc.
Specific interest rate
From the establishment and development process of each bank, the interest
rate policy should be differed in each period.
For example: when a bank is newly opened and wishes to enter the banking
industry, it should consider a cost called “ penetrating cost”. This means, the
mobilizing rates the new bank offered can be higher than the ones offered from the
other banks, given the same term. This action is to gain the attention from potential
investors. To be more specific, considering bank as a manufacturing company, it is
using the low cost strategy to attract customers.
Customer-oriented interest rate
The bank applies various sophisticated program and attractive interest rates
to attract people with high position in the society. For customers with low and
unstable balance, bank charges higher price to limit. This strategy is frequently
associated with the program called personal banking (personal banker), under which
each major customer has a bank official to perform all the services bank provided
for their account.


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The application of this policy can reduce costs thanks to sufficient accounts
with high balances and stability. Still, there might be some disadvantages applying
this strategy if the bank and its branch cannot get access to the wealthy part of the
society.
Relationship-oriented interest rate
Normally, bank will charge the lower prices for services and even higher
income for customer with long-term relationship with banks. The relationship is
determined by the lending contract history of customers, or the number of services
that customers use at the bank. The basis of this policy is the notion that customers
using more services will be more loyal and later will generate greater income for
banks.
2.2.2.2: Technical orientation
Products
Bank should offer a wide range of products that are helpful and convenient
for customers.
The variety can be shown from maturity and the deposit form to the other
criteria. In Vietnam, the diversity is represented by short term only, while the
medium and long term are still limited. Moreover, the deposit form is poor as the
banks only focus primarily on term deposits and demand deposits. These types of
deposits such as savings accrued by annuity (a form of post contribution) is only
beginning to develop. The purpose of saving like develop countries such as saving
for children to go to college, saving for vacation travel, etc., has not occurred in
Vietnam yet. The use of too much cash in Vietnam also limit the mobilizing services
offered by bank. Services such as salary payments to employees of the company's
bank account are also developing rapidly. However, in Vietnam, most of this salary
payment only applied to the employees of banks.
Another consideration for products is to create the most favorable conditions
for customers. The foreign banks implement this direction by introducing two
services. The first one is universal deposit account, which the customer can enjoy

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different services from one deposit account. The other is electronic account, which
offer the ability to withdraw money from variable sources.
Distribution
For individual clients, convenient location is one of the most important
issues. Today, in order to reach a bank, going to the branches or transaction units is
not the only solution. In fact, they can reach the bank indirectly through home
banking systems, EFTPOS, automatic teller machines. If a bank delivers every
system that produce easy access for customers, they can have high possibility of
attracting deposits. Still, we cannot deny the importance of existence of branches
and transaction offices. The spacious room with modern machinery system or
within the buildings always creates a sense of security to customers. Today,
Vietnamese banks are paying more attention to this problem.
2.2.2.3: Psychological orientation
Human resources
Recently, the serving styles of employees are becoming more and more
important. Style here is understood as attitude as well as qualification.
Employees must be taught how to approach new customers effectively,
especially with regular customers. Qualification issues as well as mastering the
ability to handle business processes are equally important. Employees also must be
instructed how to handle everyday situations
Not only serve as a intermediary between borrowers and lenders, bank also
can be a consultant for customer in making decision. For instance, there would be
times when mobilizing rate of foreign currency increases as the FED wants to
attract foreign currency deposits. Thus, a wise banking official would suggest their
clients to deposit their money in short term to earn the higher interest rate whenever
reinvesting their money. On the other hand, when the mobilizing rate for foreign
currency decreases, the bank should suggest their clients to invest in long term to

make sure that their profit are locked during this hard time. Getting the right advice


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will make the impression on customers, thus, they will likely return to the banks for
more services.
Marketing and promotion
The promotion of a bank ranges from sophisticated advertising program or
bonuses in deposits to gifts for special and big customers.
Branch network expansion and modernization of special technology to
diversify distribution channels are crucial to get customers’ attention. Besides,
commercial banks should also stress on diversification of products and services
portfolio savings while improving quality of payment services. Process
improvement must be fast, accurate, consistent with the ability of staff while
ensuring convenience for customers.
For most customers to send money, time is always very important. A rapid
procedure will make customers feel comfortable whenever in contact with the bank.
Currently, sending process is prompted to be a one-stop process. This is actually
quite common for foreign banks. The process is simple, in which customer evolves
with only one bank employee to fulfill the transaction process. Specifically, instead
of two-stop, in which: an accountant, a cashier both perform the transaction, only
one person will do all the tasks. However, this can be achieved only if the person is
capable enough. Or else, it will bring out the opposite result, as one person will
slow down the transaction process. This one-stop process is now widely offered by
most commercial banks.
2.3: Factors influence on mobilizing activity of commercial bank
2.3.1: Subjective factors
Government and State Bank policy
This is one of the most important external factors that effect mobilizing

activities of banks. Some policy will have the direct impact on the performance of
bank, which are: the cap mobilizing rates, the proportion of mobilizing capital
comparing to total equity or regulations on issuing stocks or bonds.


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The intervention of the central bank to achieve the objective of monetary
policy also affects the mobilization of capital, because loosen monetary policy will
bring advantages for banks in raising loans from banks. At the same time, it also
works to reduce interest rates on money markets. In contrast, the implementation of
monetary policy tightening will be more difficult to mobilize loans from banks.
Investment policy of the State also affects funding policies of the Bank. To
encourage production and investment of several industries, the state launches
several techniques such as subsidies; tax, quotas, etc. These techniques are to
facilitate business development and profitability. It has the indirect impact on banks,
as enterprises have more profits and reserves, they can have more money to deposit
in banks.
Economic index
In the period of economic growth, corporate and high-income individuals
often accumulated more and more money to their account to satisfy further
economic transactions. Banks have to find measures that mobilize effectively,
which means facilitating business development along with bringing profitable to the
banks.
Conversely, in the economy downturn, production was delayed, the
investment environment of the Bank will be reduced, thus, reducing the profitability
of banks and capital raising process will encounter many difficulties. Moreover,
inflation makes currency devaluation, causing people to not send money to the
bank, which used the money to buy goods for the storage of value, also affects the
funding of the Bank. In stead, they will try to seek for higher risk investment to

combat inflation.
Technology
Changes in technology have a strong impact on the economy and society.
Banking activities are one of the industries that bare the most influence from
technology, banking activity is inseparable from the development of technology,
especially information technology.


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Technology has great influence on the development of the bank, it gives
banks more opportunities but also provide a series of new challenges. New
technology allows banks to renew business processes, redistribute their products,
develop new products, etc. Thanks to technology that works to mobilize capital
improvement, development, shorten transaction time and accuracy performance of,
banks can help attract more capital, more customers and increase revenue and
reputation of the bank.
Distribution of population
Environmental elements of the population is important because it constitutes
not only the needs and structure of residential demand for banking products but also
a basis to form a distribution system of the bank. At the same time the environment
is the basis of population to build and adjust the operation of banks raising capital.
Environmental impact is so important to the operation of bank capital that banks
have to scrutinize the economic environment before making a strategy to raise
capital in accordance with needs the bank's quality, quantity and duration, etc.
Geographical environment defined by international regulations to establish
national regulations of each country in the formation of provinces, districts, towns
and rural areas, etc. Depending on geographic area that the bank decided to put
more or less point and decided to raise capital mobilization strategies in each region
because each region has a population and the different conditions.

Customers’ behaviors
The bank's customers include those who have capital at banks and others
who use that capital. On the social environment of developed countries, customers
always have individual accounts and the income is transferred into their accounts.
But in the less developed countries, cash is normally more favorable. This can
creates some difficulties in introducing new services for banks, as the
acknowledgement of customers about non-cash services is quite limited.
The amount of saving deposit depends largely on two important factors,
which are income and the psychology of depositors. Income affects a potential


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source of capital that banks can mobilize in the future. On the other hand,
psychological factors affect the volatility out of the money. Psychology of
confidence in the future has the effect of stable and substantial deposit. Vice versa if
the customer's confidence in the future currency depreciation causes a series of
capital withdrawals, it can be a major concern of all banks.
Another important feature of the target audience is the frequency of the use
of banking services. Normally, the higher use of service, the higher capital raising.
2.3.2: Objective factors
Interest rate policy
As an important factor, interest rate policy has strong impact on the
mobilization of commercial banks, particularly with regard to capital account,
which the citizen sends to the banks for purpose of interest. Banks compete not only
on interest rates with other banks but also with the money market. Therefore, only a
small difference in interest rates could push the idle capital in the social investment
in different directions. That was the reason for depositor funds to move from this
bank to another.
Therefore, determining a reasonable interest rate, taking into account

important issues as mentioned above, must be considered, calculated in detail and
comprehensively. Moreover, banks must calculate interest rates not only to maintain
competitive in the market, but also to ensure the lowest input costs and having
profit.
Business strategy
Business strategy also affected directly and indirectly to the work of raising
capital. The bank, which has a system of proper business strategy, will achieve the
objectives of cost as well as benefits. That is the strategy of products and services.
Pricing strategy, interest rates, distribution strategy, accounting for human resource
development strategy, communication strategy and other promote programs have
strong impact on the mobilization of capital. System of business strategy of the


22

bank practice is dynamic and it is the standard to assess the level of business
management of the bank, building trust with customers.
Reputation
Typically, customers choose banks with prestigious position in the market for
trading, loans, and guarantees payment. Reputation and position of the Bank have
important implications in the selection of customers, which can be shown in the
financial capability, business situation, history, quality of marketing, etc. As a result,
the bank through its operations, service quality, technology modern, civilized style
of working and satisfaction of customer requirements, to raise the prestige and
position in the market.
Forms of mobilizations and services
In the current competitive conditions, diversification of products and services
to meet the banks’ customers demand affect business operations of the Bank. With
diversified products, customers can choose a product suitable to their conditions.
Moreover, along with products, the bank must also provide various services to

increase competitive advantage. With these features included, banks can attract
more capital from all economic and social population. Thereby, they can create
more relationships with other banks and customers.
Business network
Organizing wide network operation, reasonable people in the area will create
more opportunities for banks to attract more capital and also help clients save time
and cost to perform the transaction. However, opening branches must match with
the capability of the Bank. Location factors also affect the psychology of customers.
To be more specific, a bank located in convenient locations such as central areas,
populated areas, transportation convenient will help banks attract more clients.
Infrastructures and employees
It is safe to say that all customers want to trade in places with a beautiful
bank, modern facilities, staff of dedicated service and courtesy. A bank is equipped
with modern technology will certainly be very much shorter processing time of


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work, ensure high precision in economic transactions. Moreover, facilities, level of
modern technology, team staff with high professional qualifications are necessary
conditions for them to quickly and logically resolve work.

CHAPTER 3


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CURRENT SITUATION OF CAPITAL MOBILIZATION IN BANK OF
INVESTMENT AND DEVELOPMENT OF VIETNAM, HANOI
BRANCH

3.1: Overview of Bank of Investment and Development of Vietnam, Hanoi
branch
3.1.1: The foundation and development of BIDV, Hanoi branch
On April 26th 1957, Bank of investment and development of Vietnam, BIDV
was founded regarding the name “ Bank for Construction of Vietnam”. After
operating for 48 years with 2 times renamed and reorganization, it has been able to
achieve a strong position in the banking system in general. Nowadays, BIDV not
also receives many awards from the State Bank of Vietnam but it is also perceived
well by its clients and foreign institutions. To mention the foundation and
development process of BIDV, we must look through several periods:
From 1957 to 1980
BIDV is considered one the oldest banks of Vietnam as on April 26th 1957
the banking scale of Vietnam was quite small. BIDV, which was so-called: “ Bank
for Construction of Vietnam” at that time, served as an agency for the Ministry of
Finance. Its duty, as the name suggested, is to provide funds for construction
purpose to economic and public sectors.
From 1981 to 1989
After exactly 24 years, Bank for Construction of Vietnam changed the name
into “ Bank for Development and Construction of Vietnam” and no longer served
for the Ministry of Finance. Instead, it was governed by State Bank of Vietnam and
keeping the same duty as the previous period.
From 1990 to 1994
It changed the name into “ Bank of Investment and Development of
Vietnam” and stood by it until nowadays. This period marked the transition of the


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centralized, State-subsidized mechanism toward market mechanism under State

management in implementation of the State’s reform policy. The bank still operated
mostly within the construction areas but the services it offered has become more
various. There are 3 main services offered at that time, which was: receiving funds
from state to lend to state policy projects, mobilizing capital to make development
loans and operating in the money and capital market.
From 1995 to now
The bank has stroked for continuous improvement and transformation and
contributed sufficiently to the country’s industrialization and modernization process.
It is now operating in much wider areas and becoming a more diversified and
comprehensive banks.
3.1.2: Organizational structure of BIDV, Hanoi branch
“BIDV Hanoi” branch, where the writer worked for internship, belongs to
more than 10 branches in Hanoi. In this branch, after 1-branch managers, there are
about 6 vise branch managers. 2 vise-managers work for corporate customers
relationship department, 2 govern the transaction department and the 2 left are in
charge of the credit management department. There are about more than 20 small
departments in this branch and the writer belongs to the corporate customers
relationship department, which mainly deals with import-export and manufacturing
companies.
3.1.3: Major activities of BIDV, Hanoi branch
BIDV offers a wide range of products and services targeted at 3 main groups
of customers, which are: financial institutions services, corporate and individual
customers.
Financial institution
i. Deposit products
ii. Depository bank supervision
iii. Collection at the counter and clients’ places