STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty ---------- GRADUATION THESIS SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENT OPERATIONS AT MILITARY COMMERCIAL JOINT STOCK BANK WEST HANOI BRANCH Lecturer : Nguyen Thi Hien Hanh (M.A) Student : Phung Thi Ngoc Class : K15- ATCA Student Code : 15A7510170 Ha Noi, June, 2016 Banking Academy of Vietnam Graduation thesis STUDENT DECLARATION I declare that this graduation thesis titled Solutions to develop international payment operations at Military Commercial Joint Stock Bank- West Hanoi Branch is my own product except for quotations and citations which have been duly acknowledge. I also declare that the material in this thesis has not been submitted previously or simultaneously at Banking Academy and other institutions. Signature Phung Thi Ngoc Banking Academy of Vietnam Graduation thesis ACKNOWLEDGEMENTS First and foremost, I would like to express my deepest gratitude to my honorable supervisor- M.A Nguyen Thi Hien Hanh of the Foreign Language Faculty- Banking Academy for valuable advices and enthusiastic guidance from the beginning to the perfection of this thesis. Without her feedback and encouragement during I prepared this thesis, it would have never accomplished within such a limited time.
Another special thanks to Banking Academy in general and the Foreign Language Faculty in particular for giving me a chance to study in a professional academic environment. I am also extremely grateful to all lecturers in the Faculty for sharing about English and Banking knowledge, skills and for their untiring efforts in my growth throughout 4 years of university. Last but not least, my particular thanks to my family and all my friends who always inspire and encourage me in any ways through the duration of my thesis. Banking Academy of Vietnam Graduation thesis ABSTRACT Nowadays, in the globalization, there are many ways for payments help organizations or individuals do international business but some ones might never be heard and make user's require to understand deeply international laws or customs.
Therefore, this thesis will draw a picture of new concerns about the most common international payment methods that importers and exporters tend to favor in the latest years in Vietnam, taking Military Bank- West Hanoi Branch into the case. Current survey shows that businessmen prefer selecting Letter of Credit and Remittance taking a large percentage of all and where banks play important roles to help reduce transaction costs by up-to-date banking technology and enrich competitive preferences. This thesis provides an analysis and evaluation of the recent international payment activities in Military Bank as well as help the bank to choose a satisfactory method so as to serve their customer the most. Of all parts in the thesis, the first one, "introduction", gives some main reasons the topic selected, major subjects, objects and the reviews of some chapters including in the topic.
The second element is theory of international payment system that consists of basic knowledge, the roles of banks in each method and factors impacting on these payments. The predominant sections in this thesis are the third and the forth ones. In detail, part three indicates the reality, achievements and shortcomings of International payment at Military Bank and West Hanoi branch by analyzing all the data collection and findings. Finally, the thesis discusses about orientations, suggestions and several petitions for bank to improve international payment operations' efficiency in the next years.
Banking Academy of Vietnam Graduation thesis TABLE OF CONTENTS STUDENT DECLARATION ACKNOWLEDGEMENTS ABSTRACT LIST OF ABBREVIATIONS LIST OF FIGURES AND TABLES CHAPTER 1. SIGNIFICANCE OF THE TOPIC. SUBJECT AND SCOPE OF THE STUDY. STRUCTURE OF THE GRADUATION THESIS .4 OVERVIEW OF INTERNATIONAL PAYMENTS AT COMMERCIAL BANKS.
SOME BASIC ISSUES OF INTERNATIONAL PAYMENT AT COMMERCIAL BANKS. Definition of international payment. Main International Payment methods and roles of Bank. FACTORS AFFECTING TO THE EXPANSION OF INTERNATIONAL PAYMENT OPERATIONS OF COMMERCIAL BANKS.
Group of external elements. Group of Internal elements .16 THE REALITY OF INTERNATIONAL PAYMENTS AT MILITARY BANK- WEST HA NOI BRANCH. FOUNDATION AND DEVELOPMENT OF MB & MB WEST HANOI BRANCH. History and development of MB and MB West Hanoi branch.
Organizational structure of MB. Outcome of business activities of MB - West Hanoi ( 2012- 2015). THE REALITY OF INTERNATIONAL PAYMENT METHODS AT MB WEST HANOI BRANCH .20 Banking Academy of Vietnam Graduation thesis 3. The Performance of IP in general at MB Hanoi Branch.
The Reality of Remittance method. The Reality for Collection payment method. The Reality of L/C method. OVERALL ASSESSMENTS OF INTERNATIONAL PAYMENT AT MB WEST HANOI BRANCH .32 SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENT ACTIVITIES AT MILITARY COMMERCIAL JOINT STOCK BANK- MB WEST HA NOI BRANCH.
SOLUTIONS TO DEVELOP INTERNATIONAL PAYMENTS FOR MB WEST HANOI BRANCH .1 Group of direct solutions. Group of supplementary solutions. Petitions to State bank of Viet Nam (SBV). Petitions to importing and exporting enterprises.
Petitions to Military Bank as well as to Military Bank West Hanoi branch 36 CONCLUSION REFERENCES Banking Academy of Vietnam Graduation thesis LIST OF ABBREVIATIONS IP International Payment USA United States of America USD United States of Dollars CBs Commercial Banks D/C Documentary Credit L/C Letter of Credit MB Military Commercial Joint Stock Bank M/T Mail Transfer T/T Telegraphic Transfer RB Remitting bank CB Collecting bank PB Presenting Bank IB Issuing Bank AB Advising Bank B/E Bill of Exchange SBV State Bank of Vietnam Banking Academy of Vietnam Graduation thesis LIST OF FIGURES AND TABLES Diagram of payment process implementing remittance method Diagram of LC transaction Diagram of Documentary collection process Diagram of Clean Collection method Diagram 3. The amount of transactions per method in MB West Hanoi branch Diagram 3. The proportion of Remittance, collection and L/C in total turnover of IP at MB West Hanoi through 4 last years Diagram 3. Revenue of Remittance method at MB West Hanoi Branch in the stage from 2012 to 2015 Diagram 3.The number of Collection at MB West Hanoi branch Diagram 3.
Revenue of IP with L/C method in MB West Hanoi branch Diagram 3. The amount of L/C transaction in MB West Hanoi branch Diagram 3. The number of banks and countries having correspondent relations with MB Table 3. The main financial indicators of MB West Hanoi Table 3.
outcomes of business operations of MB West Hanoi Branch Table 3. General results of IP methods at MB West Hanoi branch in the period from 2012 to 2015 Table 3. The volume of IP activities by MB West Hanoi contrasting the whole MB system Banking Academy of Vietnam Graduation thesis CHAPTER 1 INTRODUCTION 1. Significance of the topic In the context of international economic integration and globalization of the world economy, countries have been making a concerted effort to perfect the market economy, openness, cooperation and integration with other countries.
In particular, foreign economic activities of the countries are at the forefront as well as the inevitable path of economic development strategy of the country. Vietnam, following the policy of developing an open economy, accelerating the process of integration with other economies, has been already set up a strategic partnership with 13 countries in the region and in the world and 11 comprehensive partnerships (including USA ). This allows us to be able to develop commercial activities, penetrate foreign markets and vice versa. In recent years, international trade in general and international payment activities in our country, in particular, has experienced a considerable period of moving up and down, but it is becoming more and more complete.
Contributing significantly to the foreign trades is international payment (IP) operations. They seem like a trading bridge between buyer and seller from different countries all over the world, which helps promote greatly export and import activities. If the international payment operations are carried out quickly, safely and accurately, it will make relation of monetary circulation between buyers and sellers in different countries go smoothly and efficiently. For these reasons, ways to improve IP services are what the government as well as commercial banks (CBs) constantly seek for, especially the first concern is choosing suitable IP methods.
Meanwhile, in the diversity of IP method system like Documentary credit ( D/C) or L/C, collection and remittance method, selecting the most effective one depends on a variety of factors. In reality, exporters and importers tend to predominate in the safe and cost- effective methods where banks play an important role. Military Commercial Joint Stock Bank (MB), with its long establishment, has always maintained its position as one of the leading bank providing a wide 1 Banking Academy of Vietnam Graduation thesis assortment of financial services in International trade of Vietnam, especially international payments which the bank has been considered as one of the major business activities. Therefore, in recent years, IP operations of MB in general and West Hanoi branch in particular have been developing dramatically.
According to recent counting number, MB's IP activities has gotten lots of achievements but it has still existed some limitations that need tackling. Along with the fierce competition of the other domestic banks such as Vietcombank, Vietinbank, BIDV and foreign banks such as HSBC and ANZ, how to improve and expand the IP activities has always been the sole question of leadership of the Bank. Knowing that concern , with the desire to contribute a small part to evolve the activities of MB better, I decided to choose topic "Solutions to develop IP operations at MB - West Hanoi branch in period 2012- 2015 " for this thesis. Objectives Recognizing the significance of IP in international trade and basing on facts and figures of MB's IP in the aforementioned period , this thesis proposes to seek successful solutions to IP development for MB, which could help MB maintain its achievements and limit its drawbacks.
Therefore, the thesis sets targets at: First, systematizing theoretical issues relating to international payments and some issues concerning about the expansion of IP at commercial banks. Second, assessing the real situation of international payments in MB and West Hanoi branch. Third, putting forward a number of solutions and proposals which are feasible to expand the IP operations in West Hanoi branch. Subject and scope of the study The study concentrates on the theoretical issues of IP and the expansion of international payment operations in CBs by implementing the current data in reality of international payment activities in MB, West Hanoi branch in the years from 2012 to 2015.
Research Methodology The thesis uses the information collected and makes analysis mainly from Annual report, Balance Sheet or Income Statement released by MB. In detail, the 2 Banking Academy of Vietnam Graduation thesis thesis applies some different methods such as indicator, statistic, analysis and comparison and illustrating by the table and the number collected over the years. Structure of the graduation thesis The main part of the paper is organized as four chapters follows: Chapter 1 Introduction Chapter 2 Overview of international payments at commercial banks Chapter 3 The reality of International payment at Military bank- West Hanoi branch Chapter 4 Solutions to develop International payment activities at West Hanoi branch. 3 Banking Academy of Vietnam Graduation thesis CHAPTER 2 OVERVIEW OF INTERNATIONAL PAYMENTS AT COMMERCIAL BANKS 2.
SOME BASIC ISSUES OF INTERNATIONAL PAYMENT AT COMMERCIAL BANKS 2. Definition of international payment Many different theories denote and explain the nature of IP and its related matters but we can understand generally the definition of IP: "International payment is a process executing obligations to payment and entitlements to benefits of money which results in economic and non- economic activities between organizations, individuals of different nationalities between a nation and an international organization through banks of related partners." In many ways, IPs are likely to local payments. They involve a payer using the services of one or more intermediaries to transfer value to a payee.