VIETINBANK MTO II’S BUSINESS STRATEGY FOR FOREIGN CURRENCY BANKNOTES

gh the banking system, by post, through the account (deposits and foreign currency savings) of the individual beneficiaries or organizations or individuals are allowed to do service to receive and pay foreign currencies, the active transactions presence of foreign currencies System Commercial Bank in Ho Chi Minh development is quite strong. It is significant money transfers overseas remittance and purchase foreign currencies face for the needs tourism, treatment, study, work, etc. Foreign currency has transactions of goods by the fastest-growing customer personal talents deposit and foreign currency savings in the bank, when it should be entitled to withdraw money by foreign currency cash. Individuals have foreign currency cash also added to your account deposit foreign currency savings in commercial banks. The practice shows that when exchange rates stable, interest rates deposit foreign currency and local currency difference is not much different, the amount of foreign currency customer personally sent to commercial banks increased and vice versa when the exchange rate variable the deposit interest rate foreign currency lower than deposit interest rates of currencies, the amount of foreign currency-side customers to withdraw or to sell the bank also increased strongly. It can be concluded one of the factors directly as the need to use foreign currency is the increasing presence of overseas remittance money. Throughout nearly 10 years, overseas remittance money transfer system through commercial banks in the province of Ho Chi Minh City has increased continuously, from 829 million USD in 2001 has reached 3.6 billion U.S. dollars in 2007 (equal to 35% total export turnover of goods from crude oil city of Ho Chi Minh in 2007). Money transfer overseas remittance is concentrated especially on the year and the end of the year. This is also a time of active air-conditioned foreign currency cash in commercial banks in the province of Ho Chi Minh City in which Vietinbank MTOII often faced with a lack of foreign currency while in the remaining months in the year to admit foreign currency cash. Although Vietinbank MTOII have been business strategy overall to develop them in 2010 to become a banking business operations of currency with high efficiency, the position has strong financial, banking technology advanced products, services - diversity and makes up market share to compete in the province of Ho Chi Minh City now but I still do not have a business strategy to face foreign currency restrictions overcome the current status or lack of surplus foreign currency such as the above aspects in order to further improve the efficiency of business in foreign currencies solutions, appropriate measures are economical, high in attracting, exploitation and adjust management foreign currencies cash. Therefore, we have made this thesis to the official presentation of theory and practical meaning of business strategy foreign currency face. analyze the reality of business operations in foreign currencies face Vietinbank MTOII from 2004 to present, competitive position, market share of import-export foreign currency Vietinbank MTOII aspects of the total value of import-export foreign currency aspects of the bank trade in the province of Ho Chi Minh City to on the basis of that proposed solutions, measures in strategic business aspects of foreign currencies Vietinbank MTOII by 2010 in order to contribute to the harmonious operation more foreign currency revenue side, improving the efficiency of business operations, foreign currency to meet present needs foreign currency to customers face consistent with trends integration of the commercial banks in Vietnam. The purpose of this thesis to give the solution, measures to: + Attract foreign currency from the face of commercial banks in the province of Ho Chi Minh City, branches in the south of the banking system Vietinbank, the tables and cleaning agents and foreign currency exchange, the anonymous customer, the customer needs to send money to save foreign currency, foreign currency, etc. and submit the cash to Vietinbank MTOII. + To supply the foreign currency cash demands for withdrawal or bring foreign currency to face valid of all customers through banking services such as pay deposit savings, paying money overseas remittance, foreign currency withdrawn read surface of the water from outside the deposit accounts opened in their Vietinbank MTOII, selling foreign currency for international students, customers traveling, business, healing go abroad, etc. + Consolidate and further expand banking network - customers dealing with Vietinbank MTOII + Efficient processing status of foreign currencies or face excessive lack of business activities, provision of services for bank customers. + Improving the quality of banking services related to income - more foreign currency cash + Increased revenue for Vietinbank MTOII. Requirements of the thesis: + Specify actual work trang incomes and expenses in foreign currencies cash Vietinbank MTOII during the past + If the advantages and disadvantages in the business operations foreign currencies cash of Vietinbank MTOII + Outline orientation and business solutions, appropriate measures to bring the actual effect of foreign currency business presence and customer service + Propose recommendations withVietinbank MTOII, Vietinbank HO and local governments to improve feasible strategy for the foreign currency cash in business Objectives of the this study: + Improving competitive positions of Vietinbank MTOII to serve the best needs more income foreign currency cash of customers, especially for individual customers. + Through the ability to timely meet all needs more income Foreign currency present a reasonable customer's personal effects will create psychological well in customer on the increase the conversion of money in comparison with Vietnam foreign currency because every individual customer who can use the domestic currency to buy foreign currency now is when there is a reasonable demand in the transaction is allowed in Vietinbank MTOII. + Withdrawn from the lessons of experience in operating effectively manage foreign currency present at transactions II of Vietnam Commercial Bank (defined survival rate of foreign currency funds present a reasonable choice and options for revenue foreign currencies surface optimization). Chapter I REVIEW OF THE LITERATURE I/. DEFINITION OF TERMS The terminology used in this research has the following meaning: 1) Foreign currency: means the currency of a foreign State or a common currency of many States. 2) Foreign currency banknotes: Lawful currencies of foreign countries being circulated in the forms of bank-notes. 3) Foreign exchange rate means the value of a foreign monetary unit calculated in Vietnam's monetary unit. 4) Licensed credit institutions are banks and non-bank credit institutions in Vietnam which is allowed by the State Bank to provide and carry out foreign exchange transactions. 5) Foreign exchange Desk is an organization allowed by the State Bank to collect and exchange foreign currencies in cash. Conditions for being allowed to carry out foreign exchange transactions for foreign exchange desks, are: (a) Having convenient locations for transactions or places where foreign exchange demand exits; (b) Having enough equipment and material bases to meet the requirements of the exchange of foreign currencies in cash; (c) Having personnel with good knowledge about cash-related transactions and capability to carry out currency exchange operations. 6) Foreign exchange agent is an organization acting as the authorized agent of the credit organizations and allowed to operate after has register certification foreign exchange agents by the State Bank branch province, city directly under the center government on area only. The foreign exchange agents only operation under form used Vietnam dong to buy foreign currency cash of individual and not sell foreign currency cash for individual to take Vietnam dong (except foreign exchange agents put on isolate zones in national border gates). The foreign exchange agents must sell all foreign currency bought for credit organizations on end of the working day except of foreign currency able to leaving by agreement with credit organizations (maximum is not over 2,000 USD or other kind foreign currency has the same value) . 7) Residents are the following organizations and individuals: a) Credit institutions are established and doing business in Vietnam (hereafter called credit institutions); b) Economic organizations set up and doing business in Vietnam except above credit institutions (hereafter called economic organizations); c) State agencies, armed forces units, political organizations, social-political organizations, social-political professional organizations, social organizations, social-professional organizations, social funds and charity funds, which are operating in Vietnam; d) Vietnamese diplomatic missions, consulates operating overseas; e) Representative offices of all above-said institutions, organizations operating overseas; f) Vietnamese citizens residing in Vietnam; Vietnamese citizens residing abroad for less than 12 months; Vietnamese citizens working in organizations (which stipulated in above-said items “d” and “e”) and their dependents; g) Vietnamese citizens going abroad for tourism, study, medical treatment or visits; h) Foreigners residing in Vietnam for 12 months or more except in cases foreigners entering Vietnam for study, medical treatment , tourism or working in foreign representative diplomatic agents, consulates offices and organizations in Vietnam . 8) Non-residents being organizations or individuals have not yet been stipulated as above residents. 9) SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. II/. REVIEW OF THE LITERATURE This research describes “Vietinbank MTOII’s business strategy for foreign currency banknotes to the year 2010”, so the concepts of strategy and strategic management should be defined and frameworks in strategic planning process such as SWOT analysis which will be used in analyzing the status-quo of Vietinbank MTOII’s business activities for foreign currency banknotes. II.1) WHAT IS STRATEGY? Strategies are plans for achieving organizational goals. A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. When choosing a strategy, firms make choices among competing alternatives. In this sense, the chosen strategy indicates what the firm intends to do, as well as what it does not intend to do. Strategies provide focus for decision making and tactics are the methods and actions used to accomplish strategies. II.2) STRATEGY AT DIFFERENT LEVELS OF A BUSINESS Business-level strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. Every firm must form and use a business-level strategy. However, every firm may not use all the strategies – corporate-level, acquisition and restructuring, international, and cooperative – A firm competing in a single-product market area in a single geographic location does not need a corporate-level strategy to deal with product diversity or an international strategy to deal with geographic diversity. In contrast, a diversified firm will use one of the corporate-level strategies as well as choose a separate business-level strategy for each product market area in which it competes. Business-level strategy is the core strategy – the strategy that the firm forms to describe how it intends to compete in a product markets. Because customers are the foundation of successful business-level strategies, therefore, when selecting a business-level strategy the firm determines (1) who will be served, (2) what needs those target customers have that it will satisfy, and (3) how those needs will be satisfied . II.3) STRATEGIC MANAGEMENT The strategic management process is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns. The firm’s first step in the process is to analyze its external and internal environments to determine its resources, capabilities, and core competencies – the sources of its “strategic inputs.” With this information, the firm develops its vision and mission and formulates its strategy. To implement this strategy, the firm takes actions toward achieving strategic competitiveness and above-average returns. Effective strategic actions that take place in the context of carefully integrated strategy formulation and implementation actions result in desired strategic outcomes. It is a dynamic process, as ever-changing markets and competitive structures are coordinated with a firm’s continuously evolving strategic inputs.” Vision is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve. It is the foundation for the firm’s mission. Mission is the reason for the existence of an organization. A mission specifies the business or businesses in which the firm intends to compete and the customers it intends to serve. II.4) EXTERNAL FACTORS TO AFFECT BUSINESS STRATERGY FOR FOREIGN CURENCY BANKNOTES II.4.1. DOLLARIZATION Concepts of dollars: Dollar's is to use foreign currencies instead of the currency to perform some or all of the functions of the currency in a country. Therefore, when it comes to the economy is dollar and means the residents of the country that use foreign currencies instead of the currency reserves in the value of, or payment calculations, the price of goods. For the economy is in the process of transition like Vietnam, departing point still low, the currency did not have the ability to convert the status of dollars status of dollars in the market and financial Viet Nam is unavoidable. The process of dollars in Vietnam at present affected by the following ten factors: a) Source of overseas remittance increased rapidly, each year an average increase of 52% (See the sub-I attached), private Ho Chi Minh City in the past 4 years the average increase is 47% per year b) The number of tourists and international increasing, in 2006, has 3.600.000 turns’ people, in 2007 with 4.171.564 people turn to Vietnam. Only Ho Chi Minh City in 2006 received 2.350.000 turns’ people. c) The wages paid in foreign currency for the Vietnamese to work in foreign d) Foreigners come to Vietnam (who do not reside) is increased e) Money financing from foreign country f) Foreign investment in Vietnam's steady growth through the year, on average each year increased 30% g) Export turnover of Vietnam is increasing rapidly (see the sub-2 attached). In 2007, export turnover reached 48 billion USD (an increase of 8,2 billion compared to 2006) in which its own in Ho Chi Minh City reached 10,3 billion USD (not including export turnover of crude oil) h) Tend to increase the number of absolute mobilization of capital and loans in foreign currency of commercial banks in the province of Ho Chi Minh City (see the sub-3 attached) k) Source of foreign currency circulation on the free market through economic activities and other underground, such as purchase and sale of any estate, jewelry, vehicles and other assets valued other, etc. l) Foreign currency from the smuggling operation (black market) This reality has created the environment for work early every time the exchange rates fluctuation. Statistics of the state bank in the province of Ho Chi Minh City showed that: - Dollars of assets in debt banking system through reduced year. The rate of deposit U.S. dollars in total deposits at commercial banks from 32,5% at the end of 2004 was reduced to 20,74% at the end of 2007. However, the absolute number of 101.020 billion of the total capital raised in foreign currencies into VND to the end of 2007 it has doubled compared with the end of 2004 (as 48.857 billion of VND)! - Dollars of assets in the banking system but reducing the speed is reduced to less than the dollars and assets. The rate of loans in foreign currency debt balance of the total credit at commercial banks from 35,1% at the end of 2004 was reduced to 25,60% at the end of 2007. However, the absolute number of 104.010 billion of VND of total debt balance of loans in foreign currencies into VND to the end of 2007, it has also risen more than doubled last year compared with 2004 (as 47.968 billion of VND). Dollars in economic conditions can be calculated in billions of USD by the percentage of the total means of payment for USD to be transferred to Vietnam through non-official channels such as through the path's personal residence and non-residents (do not move directly through the banking system). However, can also imagine is some level of growth of state dollars and through the number of foreign currencies face of the U.S. dollar, which commercial banks in the province of Ho Chi Minh City has gained and to produce the foreign banks increased continuously from 775.989.069 USD in 2003, up to 1.533.948.150 USD in 2007 and only the first 6 months of the year 2008 this figure had reached 1.084.580.000USD! II.4.2. VIETNAMESE GOVERNMENT DECREE No. 160/2006/ND-CP It is issued on December 28th, 2006 and apply to organizations and individuals being residents and non-residents engaged in foreign exchange activities in Vietnam as well as organizations and individuals being residents related to the management, inspection, and handling of violations . @ Regarding the liberalization of current transactions, Decree stipulates that in Vietnamese territory all payment and money transfer transactions for current transactions of residents and non-residents are freely made in accordance with Decree and relevant legal provisions on the following principles: - Residents and non-residents may purchase, transfer or carry foreign currencies abroad in service of their demands for payment and money transfer for current transactions; - Residents and non-residents shall present documents according to regulations of credit institutions upon purchase, transfer or carrying of foreign currencies abroad and take responsibility before law for the truthfulness of those documents, but they are not required to present documents certifying the fulfillment of their tax obligations towards the Vietnamese State . @ Regarding individuals and organizations’ rights to use foreign currencies) cash, Decree stipulates that: - The residents, who do not reside there is a personal foreign currency cash is entitled to store, carry people, for, gift, inheritance, selling for credit organizations are allowed to, move, bring the foreign service for the purpose of the legal and payment for people who are collecting foreign currency as stipulated by the law on management of foreign exchange. - Residents who are individuals with foreign currency cash added savings in foreign currencies held are allowed to withdraw money origin, interest in foreign currency cash as stipulated by the law on sending foreign currency savings - Who residents, who do not reside is held open and use your deposit in foreign currency credit organizations are allowed to carry out the transaction revenue, more foreign currency cash after : + Collect foreign currency cash from abroad in accordance with regulations of the State Bank of Vietnam + Only withdraw foreign currency cash (or converted into other currencies by their cash) for individuals working for organizations when it is sent overseas work + Only withdraw foreign currency cash (or converted into other currencies by their cash) to pay salary, bonus, allowances for non-residents, the residents are foreigners Who residents, who are not homeless personal residence is open and use your deposit in foreign currency credit organizations are allowed to carry out the transaction revenue, more foreign currency cash follows: + Revenue foreign currency cash from abroad to bring under of the State Bank of Vietnam + Only withdraw foreign currency cash (or converted into other currencies by their cash) II.4.3. DECISION No. 170/1999/QD-TTg DATED AUGUST 19TH, 1999 ON ENCOURAGING VIETNAMESE EXPATRIATES TO TRANSFER MONEY HOME . Decision No. 170/1999/QD-TTg decides that: The Government encourages and creates favorable conditions for Vietnamese expatriates to transfer money home provided their remittance is compliant with the law of Vietnam and the law of country where they reside and have a demand for remitting money to Vietnam. Foreigners who transfer money to Vietnam in order to assist their families, relatives, or to donate to charity shall be got similar treatment as the Vietnamese expatriates as stated hereof. Vietnamese expatriates and foreigners shall be entitled to transfer money to Vietnam under the following forms: (1) Through an authorized Credit Institution; (2) Via International Postal finance services Providers; (3) Cash brought along by individuals. The Vietnamese beneficiaries have right : (1) To receive the proceeds in foreign currency or in Vietnamese Dong upon request; (2) In case of receiving in foreign currency, the beneficiary may : + Sell it to the authorized credit institutions; + Transfer it into his foreign currency Deposit Account and use it in compliance with the prevailing regulations on foreign exchange management; + Deposit it in his foreign currency Savings Account with the authorized credit institutions; or + Use it for other purposes as stated by the law of Vietnam; (3) To enjoy income tax exemption . Chapter 2 reality of business operations in foreign currencies face Vietinbank MTOII I. Situation of business operations in foreign currencies Vietinbank MTOII I.1) Reality surplus, a lack of foreign currency aspects of commercial banks in the province of Ho Chi Minh City 1.1.1) network held commercial bank off the province of Ho Chi Minh City Ho Chi Minh City is an economic center of the country, where there are many types of services and economic activities simmering, and the market is a very dynamic sensitive in the process of integration with other countries in the region and internationally, future have the ability to become a financial markets - currency of the region by the scale of activities and diversity in the area of operations currency - credit - payment Up to 31 July 2008, based on proprietary components and scope of the business operations of the monetary credit organizations can share network to credit institutions in the province of Ho Chi Minh City to 4 banking system commercial needs more income foreign currency as demand: + Banking system commercial state enterprises: 01 of the assembly, 3 of the transaction, 86 branches, 206 rooms transactions, transactions 62 points and 20 savings + System of commercial banks shares: 17 of the Assembly, 08 of the transaction, 607 branches and transaction dependent + Banking system overseas: 30 bank branches overseas + Banking system linked Company: 05 banks Network of organizations such as credit has been dominant on the capital markets in the province of Ho Chi Minh City in many channels to mobilize capital vary, but each system of commercial banks with many branches and units directly under the direct participants or indirect participation of business operations for foreign suppliers have the products and services diversity, creating many utilities for customers should have attracted a good deal of capital from the economy and foreign quite large for investment in economic sectors for all enterprises to expand production scale and development in order to explore thoroughly resources of the banking system and improve their competitive advantage in business and economic foreign relations 1.1.2) Aspects of Vietinbank and Vietinbank MTOII 1.1.2.1) Vietinbank Vietnam Bank for Industry and Trade (VietinBank) was established in 1988 after being separated from State Bank of Vietnam. Being one of the four largest State-owned commercial banks of Vietnam, VietinBank’s total assets account for over 20 percent of the market share of the whole Vietnamese banking system. VietinBank’s capital resources keep on increasing over the years and have been substantially rising since 1996 with the annual average growth of 20 percent, especially up 35 percent a year against that of last year. Up to the end of July 2008, Vietinbank’s equity capital is VND11.310.508 millions equivalent to USD 685.609.989 at exchange rate 16.497 VND/USD. Having an extensive network throughout the country with Vietinbank Head Office, 3 main transaction offices, 142 branches and 575 transaction counters and nearly 1,000 ATMs. Being diversified with 03 independent accounting subsidiaries: VietinBank Leasing Company, VietinBank Securities Company, Ltd., VietinBank Asset Management Company and 02 non-profit making units: VietinBank Information Technology Center and VietinBank Training Center. F Being the founder of the following Financial Credit Institutions: + Saigon Bank for Commerce and Industry + Indovina Bank (the first joint-venture bank in Vietnam) + Vietnam International Leasing Company – VILC (the first financial leasing company in Vietnam) + VietinBank- Asia Insurance Company. F Being the official member of: + Vietnam’s Banker Association + Asian Banker’s Association + Society for Worldwide Interbank Financial Telecommunications (SWIFT) + Visa International Services Association It has signed 8 framework-credit Agreements with foreign countries, including: Belgium, Germany, South Korea, Switzerland and established correspondent relationship with 600 large banks of 50 countries and territories all over the world. It is being the first bank in Vietnam to apply modern technology and e-commerce in its banking operations. After 15 years of construction and development, VietinBank has overcome many difficulties and challenges, becoming the leader in the market mechanism, making contribution to the active implementation of the State and Government’s Policies. The bank has been continuously striving to go ahead in order to consolidate its position as one of the leading commercial banks in Vietnam, procuring fast development, reaching great achievements in all business areas, developing both internally and externally, deploying state of the art banking technologies, all in all to strengthen its image in the mind of domestic as well as foreign clients. VietinBank has to realize the following target to the year 2010: "Building Vietnam Bank for Industry and Trade (VietinBank) to become a mainstay and modern State-owned commercial bank with high efficient business activities, healthy financial position, high banking technology, diversified products and services and big market share". 1.1.2.2) Vietinbank MTOII Being the member of Vietnam Bank for Industry and Trade system, one of the biggest state-owned commercial Banks in Viet Nam . Located at 79A Ham Nghi Blvd., District 1, Ho Chi Minh City - the economic, financial and credit  - is the  most convenient and ideal bank for you to deal with . Providing  a variety of banking products and services for individuals and enterprises. In order to participate actively in fulfilment of above-said target of Vietinbank to 2010, we – Vietinbank MTOII – has had a corporate strategy and outlined our strategic vision  and mission for its business operation from now to the year of 2010  and subsequent years, as follows : To make Vietinbank MTOII become a multi-function bank, which is strongly reformed its business structure. To combine wholesale and retail banking operations, in which we strongly develop our retail banking with high competitiveness. Firmly maintain our credit market share in line with investment, credit portfolio restructure for customers and industries with well developing prospect. To expand our  non-credit market share : becoming one of the top commercial banks in developing card service, overseas study remittance, overseas Vietnamese remittance, safe deposit locker rental … with diversified products, outstanding added value, second to none quality of service, making us as a bank with a separate competitiveness, brand name and image. To become a bank with modern technology science, exploring efficiently new technologies in our business and management; applying and providing our customers with modern electric banking products/services. To form a network of banks and customers in order to serve our customers in a most convenient and effective way. + A network includes over 10.000 customers who are dealing with Vietinbank MTOII. + Be able to attract many customers of all economic sectors. +  Cooperate with over 70 overseas study assistance centers. +  Deal with over 40 foreign exchange agents +  Cooperate with service suppliers such as post office, electricity, water supply, etc in the field of non-cash payment. +  Cooperate with Auditing organizations, Assets valuation, Insurance, Transport logistics services companies for providing services to customers. However, Vietinbank MTOII has not had a separate business strategy for foreign currency banknotes. 1.1.3) on a number of professional activities of commercial banks in the province of Ho Chi Minh City and Vietinbank MTOII affect the construction business strategy in the face of foreign currencies Vietinbank MTOII ._.1.1.3.1) on mobilizing capital, loans, purchase and sale of foreign currency, foreign currency exchange and transfer money overseas remittance of commercial banks in the province of Ho Chi Minh City To mobilize capital and loans Interpreting prizes 31/12/2004 31/12/2005 31/12/2006 31/12/2007 Balance Density Balance Density Balance Density Balance Density 1/. Total capital raised (the bill) 150,337 100 188,876 100 285,503 100 487,028 100 + VNÑ 98,206 65.3 123,575 65.4 197,554 69.20 365,080 74.96 + Foreign currency VND provisions 48,857 32.5 59,915 31.7 75,458 26.43 101,020 20.74 + Provisions VND gold 3,274 2.2 5,386 2.9 12,491 4.37 20,928 4.30 2/. Total credit debt balance (billion) 123,624 100 175,759 100 229,747 100 406,353 100 + VNÑ 86,834 63.6 120,281 62.8 159,254 69.32 292,001 71.86 + Foreign currency VND provisions 47,968 35.1 62,388 35.5 68,204 29.69 104,010 25.60 + Provisions VND gold 1,822 1.3 3,090 1.76 2,289 0.99 10,342 2.54 Interpreting on buying and selling foreign currencies, transfer money overseas remittance and money exchange: Year 2004 2005 2006 2007 1/. Sales of foreign currencies to buy into U.S. dollars (USD million) 13.924 20.407 21.410 40.288 2/. Sales of foreign currencies into U.S. dollars (USD million) 13.048 19.628 21.449 39.075 3/.The company moved overseas remittance of money into U.S. dollars (million USD) 1.891 2.200 2.600 3.600 4/.Total (buying) foreign currency exchange aspects of the U.S. dollar (USD million) 1.537 2.108 1.544 1.693 + The table's change directly 1.015 1.497 1.087 1.112 + The agent's change of credit 522 611 457 581 5/. The percentage of foreign currency bought on the total value of foreign currencies was attributed USD 10.04% 7.34% 7.21% 2.76% 1.1.3.2) Interpreting mobilization of capital, loans, purchase and sale of foreign currency, foreign currency exchange, remittance and overseas remittance income and expenses in foreign currencies cash Vietinbank MTOII: To mobilize capital and loans Interpreting 31/12/2004 31/12/2005 31/12/2006 31/12/2007 Balance Density Balance Density Balance Density Balance Density 1/. Total capital raised (billion) 5.786 100 7.386 100 8.317 100 10.658 100 + VNÑ 4.828 83,45 6.326 85,65 6.382 76,73 8.701 81,64 + Foreign currency regulations VND 957 16,55 1.060 14,35 1.935 23,27 1.957 18,36 2/. Total debt balance credit and investment (billion) 4.816 100 5.298 100 6.360 100 7.323 100 + VNÑ 3.633 75,44 4.223 79,71 4.781 75,17 5.027 68,65 + Foreign currency regulations VND 1.183 24,56 1.075 20,29 1.579 24,83 2.296 31,35 Interpreting on buying and selling foreign currencies, transfer money overseas remittance and exchange currency Year 2004 2005 2006 2007 1/. Sales to buy foreign currency to the U.S. dollar (USD million) 529,32 569,45 561,64 786,22 2/. Sales of foreign currencies into U.S. dollars 529,15 569,97 561,82 786,88 3/. Total remittance of overseas remittance into U.S. dollars (million USD) 67,79 126,13 156,95 215.57 4/. Total purchase (the collection) Foreign currency aspects of the U.S. dollar (USD million) 123,3 95,29 109,28 168,00 5/. The rate of foreign currency bought on the total value of foreign currency purchases provided USD 23.29% 16.73% 19.46% 21.36% Vietnam's foreign currency face read Year 2004 2005 2006 2007 1/. Foreign currency revenue side of the U.S. dollars (USD million) 383,80 362,71 437,18 505,13 2/. more aspects of foreign currencies into U.S. dollars (USD million) 382,01 359,41 434,04 511,33 1.1.4) Cost increases in management reasons legacy status, lack of presence of foreign currencies Vietinbank MTOII and commercial banks in the Ho Chi Minh City: In general of Vietnam and Ho Chi Minh City in particular did not have a central air-conditioned foreign currencies face to air-conditioned source foreign currency for the present commercial banks. Therefore, commercial banks have to be air-conditioned foreign currencies face their own ways in face of foreign currencies abroad (when excess foreign currency side) and enter the face of foreign currency from abroad (when the present lack of foreign currency). As a result, costs for the management of foreign currencies increased surface because they must pay the cost of buying and selling foreign currency surface, transport and insurance for foreign currency import / export. According to statistics from the state banks in Ho Chi Minh City, the amount of foreign currency cash import, export through commercial banks from 2003 to 2008 in Table Ho Chi Minh City, as follows: Unit: measured in U.S dollars Year process ( In there at…) Value of foreign currency Imported Value of foreign currency Exported Value Foreign currency Export > Import 2003 418.500.000 775.989.069 357.489.069 (Vietibank MTOII) (16.000.000) (16.000.000) 2004 278.230.000 1.137.600.000 859.370.000 (Vietibank MTOII) (170.000.000) (170.000.000) 2005 218.923.360 1.601.820.348 1.382.896.988 (Vietibank MTOII) (206.500.000) (206.500.000) 2006 448.000.000 1.704.000.000 1.256.000.000 (Vietibank MTOII) (255.500.000) (255.500.000) 2007 723.637.750 1.533.948.150 810.310.400 (Vietibank MTOII) (3.000.000) (286.400.000) (289.400.000) 6 months of 2008 613.350.000 1.084.580.000 471.230.000 The estimated total cost incurred on average in the face of foreign currency (selling foreign currency as a foreign bank) the equivalent of 1 million USD is USD 1.760 and the total average cost incurred for the importation of foreign currencies surface ( buy foreign currencies presence of foreign banks) the equivalent of 1 million USD is the 983 USD from 2003 to June 2008 commercial banks in the province of Ho Chi Minh City had to read out over 16 million USD for to import foreign currency cash Unit: measured in U.S dollars Year Process Costs for import of foreign currencies cash Costs for export of foreign currencies cash The total cost of import export of foreign currencies cash 2003 411.385,50 1.365.740,76 1.777.126,26 2004 273.500,09 2.002.176,00 2.275.676,09 2005 215.103,36 2.819.203,81 3.034.307,17 2006 440.384,00 2.999.040,00 3.439.424,00 2007 711.335,91 2.699.748,74 3.411.084,65 6 months of 2008 602.923,05 1.908.860,80 2.511.783,85 Total 2.654.631,91 13.794.770,11 16.449.402,02 However, over here is a just cost incurred to import foreign presence only if the computer is enough to include both the amount of additional damages arising from the management to use funds that commercial banks are losing by disparity in interest rates to mobilize term is not between VND larger foreign currencies USD the purchase of foreign currencies into USD in cash and payment in VND. Level disparity in interest rates raised short-term up to date 30 June 2008 between VND and USD at Vietinbank MTOII is at 4,5%/ year (interest rate mobilize VND deposits is 6% and raised deposit USD is 1,5%). II. Scale transaction revenue and expenses in foreign currencies cash Vietinbank MTOII II.1) Source revenue foreign currency cash: Vietinbank MTOII foreign currency revenue from surface activities or provision of services and deposit money at the request of customers: + Foreign currency cash by the branch in the South of Vietinbank submitted to Vietinbank MTOII to be credited to your account deposit of foreign currencies branch in Vietinbank Head Office + Cash foreign currency sent by customers in savings Vietinbank MTOII + Money buying currencies gained through the transaction contracts signed with foreign currencies on credit institutions: Vietinbank MTOII receive cash foreign currency of credit, charges filed and present foreign currency transfer foreign currency into the account of the credit institutions in Vietcombank or banks abroad + Foreign currency cash by customers are economic organizations (business operations are allowed to sell goods, provision of services to customers in Vietnam to collect money in foreign currencies) to submit financial of units open at Vietinbank MTOII. + Foreign currency cash receipt of Vietinbank HO to ensure pay foreign currency as a customer of Vietinbank MTOII air-conditioned or foreign currency in the face of system Vietinbank. Vietinbank MTOII collects foreign currency cash business in foreign currencies: + Cash income in foreign currencies by buying foreign currencies face of the anonymous (personal customers, tourists, customers who are not residents, etc) + Cash into foreign currency income by buying foreign currencies aspects of our clients are the economic organizations of business operations are allowed to sell goods, provision of services for customers in Vietnam + Cash into foreign currency income by buying foreign currency aspects of the agents Foreign exchange Vietinbank of the table and money exchange in the province of Ho Chi Minh City + Cash into foreign currency income by buying (import) of foreign currency bank foreign agents, such as HSBC, UOB, AMERICAN EXPRESS BANK II. 2) Source of foreign currency cash: Vietinbank MTOII more foreign currency as a customer at work or provision of services and deposit money at the request of customers: + Branches of the South Vietinbank withdraw cash in foreign currencies Vietinbank MTOII + Customers withdrawing cash from foreign currency savings accounts in foreign currencies Vietinbank MTOII + Organizations receive credit for cash of foreign currency Vietinbank MTOII and return by writing for Vietinbank MTOII through foreign accounts Exchange Rate of through foreign currency accounts of Vietinbank HO foreign entire value of foreign currency received fees plus exchange currency transfer foreign currency surface obtain under contract transactions signed with foreign currency Vietinbank MTOII + Customers are organizations in domestic and foreign, who do not reside (the Embassy, consular, etc.) have deposit accounts in foreign currencies Vietinbank MTOII withdraw cash foreign currency under the provisions + Companies overseas remittance withdraw cash in foreign currencies Vietinbank MTOII to pay for paid to customers under contract agents pay overseas remittance has signed with Vietinbank MTOII + Customers personally receive money overseas remittance in foreign currency cash + Cash foreign currency transfer for Vietinbank HO to mediation in the face of foreign currencies Vietinbank system Vietinbank MTOII more foreign currency cash for business operations, foreign currency: + Cash read out foreign currency by selling and / or foreign currency exchange thoai face for the anonymous customer (customer individuals, tourists, customers who are not residents ...) + Foreign currency cash out by selling more foreign currency for the present credit organization under contract buying and selling foreign currency credit organizations signed with Vietinbank MTOII + Foreign currency cash out by selling more (in) a foreign currency bank to foreign agents, such as HSBC,UOB, AMERICAN EXPRESS BANK; II. 3) Cost foreign currency transactions present: Customers pay for Vietinbank MTOII when submitting to withdraw cash from foreign currency deposit accounts opened in payment Vietinbank: Bank / Customer Vietinbank MTOII collect maximum % on number of foreigner currencies cash of customers Pay accounts in foreign currency deposits Withdrawn from the account deposit foreign currencies U.S. dollars Currency U.S. dollars Currency Credit Organization 0,14% 0,65% 0,1% 0,15% Economic Organizations 0,5% 0,7% 0,15% 0,2% Companies overseas remittance /////////////// /////////////////// 0,1% 0,08% Overseas remittance individuals /////////////// ////////////////// 0,15% 0,2% Customers individuals 0,5% 0,7% 0,15% 0,2% Deposit money Free Free Free Free Vietinbank system Free Free Free Free Vietinbank MTOII pays for customers are foreign banks when selling (or buying) foreign currency with the face of this bank and return (or return) in foreign currency transfer the same type. For agents collect change, Vietinbank MTOII buy foreign currency to pay by VND cash and pay the additional fee income for commission change. Bank / Customer Vietinbank MTOII must pay % maximum on the amount of foreigner currencies cash have Buy Sell U.S. dollars Currency U.S. dollars Currency bank HSBC and UOB 0,06% 0,12% 0,08% 0,22% agents to collect 0,1% 0,1% ////////////// ////////////////// III. Model professional business presence in foreign currencies Vietinbank MTOII III.1) OPERATIONAL ORGANIZATION OF FOREIGN CURRECY BANKNOTES SERVICES Business Activities foreign currency aspects relating to banking services such as service funds, deposit services, service pay / bar accounting checks tourism, services credit card international service pay overseas remittance, service foreign currency exchange, active buying and selling foreign currencies, etc. At Vietinbank MTOII business foreign currency trading is done face in the room features: Forex Service Department Customer’s accounts Department Card service Department Cash services Department Planing Department III.2) TRANSACTION FLOW CHART (Please see Attached appendix No. 4 to 8) 1) Foreign Currency bank-notes Exchange 2) Credit Card (C.C.)/ Travelers Cheques (T.C.) Payment 3) Overseas Vietnamese Remittance Payment 4) Selling Foreign Currency notes to eligible 5) Foreign currency bank-notes dealing with banks in Ho Chi Minh city: + Delivering foreign currency bank-notes + Receiving foreign currency bank-notes IV. Network customers - the bank's foreign currency transactions with Vietinbank MTOII IV. 1) Banking network, customers filed into the face of foreign currencies Vietinbank MTOII Unit: measured in U.S dollars Analyze revenue (revenue from Vietinbank MTOII) Total value of foreign currencies face Vietinbank MTOII revenue in the year 2005 2006 2007 Vietinbank system 184.001.040 215.170.344 226.287.138 Credit organizations in the province of Ho Chi Minh City 4.620.207 15.309.435 4.581.100 Customers deposit savings 68.993.373 81.829.039 60.859.322 Economic organizations 9.814.696 8.920.805 32.290.115 purchase of personal income and change agents 95.285.304 109.278.565 168.004.258 Purchase of UOB, HSBC 3.000.000 Another component 6.672.788 10.103.185 Total 362.714.620 437.180.976 505.125.118 Recognition of revenue: The amount of foreign currency by side branches to submit Vietinbank Vietinbank MTOII accounting for the highest proportion of the total value of foreign currency income in the face of Vietinbank MTOII, in 2005 was 51% in 2006 is 49 % In 2007 and is 45%. This source of revenue can bring Vietinbank MTOII advantages and disadvantages of benefits, as follows: + Advantages: Vietinbank MTOII of foreign currency to meet present timely for all customers including customer deposit savings in foreign currencies there needs to withdraw foreign currency face there needs to withdraw foreign currency in the face Vietinbank MTOII, enhancing competitiveness and quality of service suppliers to customers This is a source of foreign currency income Vietinbank MTOII surface that can take advantage of the cost to acquire the number of read out, such as offering transactions with other banks, or used to pay money overseas remittance in foreign currencies or face the customers' needs to withdraw foreign currency from the face of foreign currency accounts opened in Vietinbank MTOII. + Disadvantage: Foreign cash of revenue will increase capital funds cash in Vietinbank MTOII and if consumption is not timely will cause waste of capital. Conservation fund cash foreign currency (excessive necessary) the higher the efficiency in foreign currencies cash the lower. According to regulations of the Vietinbank HO Vietinbank MTOII not be allowed to refuse to receive foreign currency face by branches of Vietinbank submitted to the cruel face of foreign currency funds in Vietinbank MTOII was excessive needed The amount of foreign currency to buy surface Vietinbank MTOII through the collection directly from agents and foreign currency exchange accounted for 20% of the total value 20% of the total value of foreign currency income in the face of Vietinbank MTOII (2004 is 23%, 2005 is 17%, 2006 is 19% and 2007 is 21%) while the percentage who bought this in the City lake Chi Minh City with only 10% in 2004 and reduced to 3% in 2007. This source of revenue can bring Vietinbank MTOII advantages and disadvantages of benefits, as follows: + Advantages: This is the revenue side with foreign currency flexibility because Vietinbank MTOII information can be collected in quantities through the Vietinbank MTOII. Announced exchange rate Foreign exchange surface if you want to collect more foreign currencies face the Vietinbank MTOII purchase price yet to face high foreign currency (or pay fees rose Foreign exchange surface for the collection agents) and vice versa if they do not want to return to face the foreign currency Vietinbank MTOII price yet to buy foreign currencies face low or no notice to buy foreign cash + Disadvantage: Foreign currency revenue in the face of mainly just to solve the demand of foreign currency deficits cash immediate with few or to balance foreign currency status. Therefore, if not to return for the purpose will be used to fund conservation work for foreign currencies to increase and exceed the needs and increase the cost of capital. In four consecutive years 2004, 2005, 2006 and 2007 Vietinbank MTOII receivable in foreign currencies with large numbers from the table and cleaning agents and buying foreign currencies change also reflects a dependent on Vietinbank MTOII (in management, adjust cash foreign currency) from supplying the foreign currency with the high costs of this. Moreover, economic efficiency less of foreign currency revenue from the table surface change and cleaning agents of foreign currency exchange will increase if Vietinbank MTOII right to buy foreign currency with prices in line with the selling rate of foreign currencies in which the free market. In fact, the rate is usually higher than the rate on the sale of foreign currency market and inters bank rate purchase and sale of foreign currencies by Vietinbank MTOII posted. Total value of foreign currency receipts from side to send customers to save foreign currency equivalent to the total value of foreign currencies face for customers to withdraw savings deposits in foreign currencies in three years. However, in the short period of time with the fluctuation of interest rates to mobilize foreign currency exchange rate to buy or sell foreign currency, it always takes a balanced incomes and expenses in foreign currencies face makes Vietinbank MTOII conservation fund to increase foreign currency face make up effective business operations foreign currency being reduced. Typically the period from 15 August 2008 until the end of October 2008 interest rates by mobilizing savings deposits decreased from USD 1,5% per year down to 1,25% per year while the rate on USD / VND on the free market tends to increase from 16.650 VND / USD (on 14 August 2008) to 16.850 VND / USD at the end of the month at October 2008 Vietinbank MTOII amount customers send save foreign currency from 4.863.052 U.S. Dollars, on August 2008 is reduced to 3.513.630 USD on September 2008 and only 2.257.666 USD on October 2008. Conversely, the amount of customers to withdraw savings deposits U.S. dollars on August 2008 only 4.261.950 USD has increased to 5.287.233 USD on September 2008 and increased to 8.312.057 USD on October 2008. 4) Although the percentage of fees collected% on sales deposited cash into foreign currency accounts of our customers are economic organizations (be allowed to sell / supply services revenue in foreign currencies cash) and personal levels are comparatively high compared with the rate Vietinbank MTOII% fee revenue when foreign currency transactions with other credit organizations, but the amount of foreign currency face Vietinbank MTOII derived from customers is economic organizations and individuals do not significant. Cause: + Vietinbank MTOII only 5 department transactions / Point transaction dependent ,+ and almost all economic organizations are allowed to sell goods / provision of services in the province of Ho Chi Minh City's presence in foreign currencies,etc only open accounts at Vietcombank or branches foreign banks in Ho Chi Minh City and foreign currency transactions presence through this bank. IV. 2) Banking network, customers withdraw foreign currency from the surface unit Vietinbank MTOII Unit: measured in U.S dollars Analyze the source spend (Vietinbank MIOII to spend) The total value of foreign currencies cash Vietinbank MTOII spend in the year 2005 2006 2007 Branches Vietinbank 18.160.000 17.541.000 34.892.000 Credit Organization in the province of Ho Chi Minh City 53.950.000 51.920.000 83.421.714 Customers withdraw savings 58.700.000 74.256.148 64.169.642 Customers and overseas remittance companies 22.100.000 34.825.486 42.450.721 Sold for UOB , HSBC 206.500.000 255.500.000 286.400.000 Total 359.410.000 434.042.634 511.334.077 Consider about the source spend: 1) The amount of foreign currency face Vietinbank MTOII for branches Vietinbank consecutive in three year 2005, 2006 and 2007 only from 8% to 15% the amount of foreign currency cash due to Vietinbank affiliates filed for Vietinbank MTOII. Therefore, most of foreign currencies cash of revenue from its branches Vietinbank Vietinbank MTOII be used for paying customers to save foreign currency, overseas remittance customers individuals and companies in overseas remittance Vietinbank MTOII. By paying foreign currency as a customer overseas remittance companies and overseas remittance Vietinbank MTOII not only solve the conservation fund cash foreign currency but also about the fees collected more money overseas remittance improve the efficiency of foreign currency cash business presence . 2) In three years 2005.2006 and 2007 Vietinbank MTOII made to foreign currency cash for the credit organization in the province of Ho Chi Minh City with the quantity is not much compared with a total foreign currency earned from side branches of Vietinbank and agents to collect foreign currency. However, the amount of foreign currency cash Vietinbank MTOII assigned to the organized credit is hundreds of times in both the number of foreign currencies cash Vietinbank MTOII income from credit organizations, especially in 2007. Therefore, vietinbank MTOII has gained increased fees from foreign currency cash to the surface for the credit organization in the province of Ho Chi Minh City and reduce management fees for foreign currencies cash conservation fund. 3) Due to the loss of balance in revenue and foreign currency cash so Vietinbank MTOII has to sell up 50% of the foreign currency cash gained to two foreign banks are HSBC and UOB to: + Reduction fund foreign currency cash at Vietinbank MTOII avoid waste of capital in the business + Deposit foreign currency in foreigners has been using the purpose of paying to import and / or sale of foreign currencies. Vietinbank Head Office for interest income to offset partially the cost of mobilizing foreign currency cash at Vietinbank MTOII V. Efficient business operations foreign currency Gained: + Through foreign currency transactions presence has set up more and expand their relations deposits, payment transactions, investment credit with commercial banks on locality of Ho Chi Minh City + Timely foreign currency to face demands to pay more money overseas remittance of overseas remittance companies, to withdraw cash in foreign currencies overseas remittance customers personally, anonymous. Needs to withdraw cash from objects of others customers such as tourists, oversea, go to study abroad, etc. + Expanding network of customers in the country, foreign banks dealing with foreign currency Vietinbank MTOII + To regulate foreign capital as a currency system Vietinbank in the South, increasing liquidity for Vietinbank MTOII through the transaction, conversion and / or sale of foreign currency to meet payment needs foreign currency to customers + Increased revenue (PHI, interest) and reduced foreign currency funds survive for vietinbank MTOII, specifically: Interpreting Results of the implementation % perform 2005 2006 2007 2006 compare with 2005 2007 compare with 2006 1/. Turn over buying and selling of foreign currencies USD 1.139.420.000 USD 1.123.458.866 USD 1.573.071.017 USD 138% 140% 1.1) Buy foreigner currencies 569.450.000 USD 561.638.184 USD 786.176.724 USD 138% 140% (Buy foreigner currencies cash) (95.285.304 USD) (109.278.565 USD) (168.004.258 USD) (115%) (153%) 1.2) Sell foreigner currencies 569.970.000 USD 561.820.682 USD 786.894.293 USD 138% 140% (sale for customers in local transactions II) (sale for HSC of and Vietnam commercial bank) (445.480.000 USD) (124.490.000 USD) (333.150.682 USD) (228.670.000 USD) (492.010.000 USD) (294.884.293 USD) (110%) (184%) (148%) (129%) 2/. Income of receive buying and selling foreign currencies 2.783.674.959 VND 5.709.839.459 VND 7.105.505.937 VND 255% 124% 2.1) the total income 6.950.013.734 VND 7.388.296.494 VND 9.446.367.835 VND 136% 128% + income Foreign currency transaction sides 597.582.626 VND 631.092.927 VND 578.637.053 VND 97% 92% + revenue selling foreign currencies for HSC 928.177.100 VND 1.479.912.500VND 1.834.449.700 VND 198% 124% + draft-positive rate 394.013.760VND 33.117.313 VND + income from buying - selling foreign currency 5.030.240.248 VND 5.277.291.067 VND 7.111.707.382 VND 141% 135% 2.2) Total other expenses 4.166.339.275 VND 1.678.457.035VND 2.340.861.898 VND 56% 139% + difference purchase holes 1.994.092.662 VND 28.850..205 VND 1% + Spend difference negative rate 818.679.727 VND 15.517.713VND 2% + Spend commission agents revenue (spend and buy foreign currencies cash) 1.353.566.886 VND 1.634.089.117 VND 2.340.861.898 VND 173% 143% 3/. Commission fees agents pay for 1 USD to buy 14 VND 15 VND 14VND 4/. Income on the sale of 1 USD 5 VND 10 VND 9 VND 5/. Conservation fund average foreign currency cash 3.310.000 USD 2.960.000USD 2.900.000 USD 89% 98% Loosed: The data analysis as above on the total income from pure business operations foreign currency through three years in 2005, 2006 and 2007 showed that exist in a foreign currency exchange surface Vietinbank MTOII income purebred average selling over 1 USD three were in three years in 2005, 2006 and 2007 in turn is the 5 VND / USD, 10VND/ USD and 9VND/ USD in the meanwhile Vietinbank MTOII to pay commission for the change agents collected on average 1 USD cash to three years in 2005, 2006 and 2007 in turn is 14 VND / USD, 15 VND / USD and 14 VND / USD VI. Provisions on conservation fund foreign currency and face limited buying and selling foreign currencies involved must execute in Vietinbank MTOII VI. 1) Cash foreign currency fund conservation Follow the regulation aspects stipulated by the Vietinbank Head Office Vietinbank MTOII are allowed to fund conservation aspects of foreign currencies U.S. dollars and a maximum of 5.000.000USD. In it, there are 2,500,000 USD foreign currency conservation fund for the coordinating function presence of foreign currencies Vietinbank MTOII for Vietinbank branches in the South and 2,500,000 USD foreign currency cash remaining for use for functional business presence in foreign currencies Vietinbank MTOII. VI. 2) the status of foreign currencies a) Maintaining the foreign exchange status: Credit organizations licensed to conduct foreign exchange transactions shall have to maintain the foreign exchange status as provided for by the State Bank. When customers have appropriate demand for foreign currencies, the licensed banks permitted to carry out foreign exchange transactions shall have to fully and promptly satisfy their demand within the limit of their existing foreign currency sources. Daily, the State Bank announces the average exchange rate on the interbank foreign currency market between dong and US dollar on mass media, and, the credit institutions shall have to report to the State Bank on the foreign exchange atatus as provided for by the State Bank Governor . b) Regulations on foreign currency status: Following present regulations of the Vietinbank Head Office so Vietinbank MTOII is allowed to maintain the status foreign currencies positive (+) or negative (-) end of the day, as follows: - With U.S Dollars: 2.500.000 USD (1 + / -10%) - The total for all other currencies: the equivalent of 500.000 USD (1 + / -10%) c) The status of foreign currency: Status foreign currency = account balances, account balance of the account, your balance. End of the day: purchase foreign + item commitment - a commitment to account, currency business, buy foreign currencies, selling foreign currency d) Limit on foreign currency to buy dollars fine surface to ensure conservation of foreign currency funds in the maximum amount as stipulated: Based on the level of conservation funds to foreign currency and foreign currency status as above can see Vietinbank MTOII can be purchased at the maximum level of foreign currencies face U.S. dollars to fund conservation in order to serve the function of business at the unit is 2.500.000 USD VI. 2) on fixed exchange rate to buy, sell rate immediately of Vie._.