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Enhancing The Competitiveness Of Agribank In Vietnams Market Finance Essay

To implement plan in restructuring system of commercial joint stock bank and state bank follow decision by the Prime Minister in 2001. With becoming 150th member in World Trade Organization (WTO) in 07/11/2006, the commercial banks Vietnam had implemented many solutions to complete well plans which proposing from Prime Minister. Many measures had offered in enhancing competitiveness such as: increasing authorized capital, restructure liabilities, innovating about managing, enhancing quality of human resources, investing in technology and so on. In addition, nowadays more and more the foreign banks was penetrating deep into Vietnam’s market, as well as the agreements allow opening the banking sector in international economic integration process. Through there, it made competition among commercial banks in Vietnam more and more intenseness

The Vietnam Bank of Agriculture and Rural Development (Agribank) also followed policy and that trend. Although Agribank had advantages in competition compared with other commercial banks. However Agribank also exist many weaknesses, as well as being faced with the difficulties and challenges ahead. To make good use of themselves advantages on the basis of determining weaknesses, taking advantage of opportunities that WTO brings to overcome these challenges.. I chose the topic “Recommendation to enhance the competitiveness of Vietnam Bank of Agriculture and Rural Development (Agribank) in domestic market to study. It really is a topic that meets necessary of Agribank in current period

Research objective:

Systematic of the fundamental issues about competition and competitive ability of the commercial banks, the factors affecting competitive ability and the criteria to assessment competitiveness of a commercial bank

Analyzing and assessment the strength point, weak point, opportunity and challenge of Vietnam Bank of Agriculture and Rural Development (Agribank). From there, evaluating competitive ability of Agribank with the other commercial banks such as: Vietcom Bank (VCB), Bank for investment and development of Vietnam (BIDV), Asia Commercial Bank (ACB)…

Give the solutions to enhance competitive ability of Agribank in trend “ international economic integration”

The main contributions of the project:

The results of the project research will contribute additional and systematize issues about competition and competitive ability, generalize competitive trend of commercial banks in the next time, assess the strengths, weaknesses, the opportunities and challenges of Agribank, offering solutions to help improve the competitiveness of the Agribank, making reference for research, learning about subjects..

Introduction:

Economic integration was being as a trend for innovation and development process of economy. In financial integration trend, banking system is not only play an important role in domestic but also expanding outside

Integration creates motivation for all commercial banks in domestic can innovate and develop, but integration also brings to the big challenges for Vietnam’s banking system which still young. Besides, in integration process the Vietnam’s commercial banks will receive many opportunities, cooperation, as well as new innovation from the foreign banks in the world. But besides those advantage we must face with challenges, risk because in fact the financial ability of Vietnam’s commercial banks are still low, the ability in management still limit, the products and service are not diversified as well as low in innovation and so on. Therefore the competitions among the banks are very drastic and difficult. It requires the commercial banks in Vietnam must try to join this integration process to survive and develop

Vietnam Bank of Agriculture and Rural Development (Agribank) also approach that trend. Although it had advantage compare with the commercial banks, Agribank still exists the weakness as well as the difficulties, challenges. taking advantage of opportunities that WTO brings to overcome these challenges.. I chose the topic “Recommendation to enhance the competitiveness of Vietnam Bank of Agriculture and Rural Development (Agribank) in domestic market to study

Part 1

1) Overview about competitiveness of commercial bank

Commercial banks as a financial institution typical intermediate, plays an important role in adjust capital flow and meet investment needs of entities in the economy, simultaneous it also keeps important role in ensuring the economy operate smoothly, efficiently.

Globalization offers many advantages for the country’s economy in general and banks in particular, but goes along with the opportunities and challenges is risks that the Vietnam’s banking system facing. This indicated that the competition is very tough, it requires each bank must have the correct orientation to go off, catch up.

Competitions in the banking sector and the characteristics of competition in the banking sector.

Like all businesses, the commercial bank is also an enterprise as a "special enterprise", so banks also exist the ultimate goal is achieve profit. Therefore, the banks also find out many measures to provide products and services with high quality to meet benefits for customers. With the price and the best competition cost, besides ensuring the accuracy, reliability and the most convenient to attract customers as well as expand market share to achieve the highest profit possible for bank. Thus competition in the commercial bank is also the rivalry, scrambling customers based on all possibility of banks to meet the demand of customers about providing products and services has high quality. Creating their own characteristics compared with other commercial banks in the domestic market; create an advantage competition, increase bank profits, creating prestige, and brand position in the domestic market.

With its special characteristics, competition in the banking sector also had the major characteristics:

Firstly, the business of banks is directly related to all sectors and aspects of economic life-society. Therefore banks should have diversified productions system, widely branch network and linked together to serve all customers in any geographical location .The commercial bank must build credibility, create trust with customers because any the difficulties of commercial bank can also lead to the downfall of other subjects involved.

Secondly, the business of banking is a service, especially that service related to currency. This is a sensitive sector, so:

The capacity of the bank staff is the most important factor to express quality of banking products and services. Requirements for bank staff must create trust with customers by knowledge, professional style, professional knowledge, ability to consult as well as factor about physical appearance

The bank's services must quickly, accurately, conveniently and security. Especially with high safety require bank has to have infrastructure solid floors, modern technology systems. Moreover, the amount of information and customer data is extremely large so bank need to have the store system and managing all this full information.

Moreover, by money services of bank is sensitive so to create the trust of customers who choosing to use their services. Banks must build reputation and brand value over time.

Thirdly, to implement currency trading, commercial banks must play a role held intermediaries to mobilize capital in society. The capital expenditure of bank are major come from mobilized capital and small part comes from equity capital of bank. So requirement bank must have professional management qualifications, strong financial ability as well as ability in control and prevent risks effective business to ensure safe, effective.

Finally, the major trading of bank is currency. The currency is a tool which State use to manage the macro economy. Therefore, the currency is controlled tightly by State. Business activities of commercial banks compliance outside the general provisions of the law still is dominated by separate legal system for banks and monetary policy of Central Bank.

The criteria to evaluate the competitiveness of commercial banks:

Financial ability:

Financial ability of commercial bank represented by the factors such as:

Equity capital:

Theoretically, charter capital and equity capital is playing a very important role in banking operation. The high charter capital will help banks create prestige in the market and create confidence for public .The low equity capital express weak financial ability and ability to support risk is low. Accordance Bassel Committee, the equity capital of commercial banks must meet a minimum 8% of total risk assets conversion of that bank. It is condition to guarantee safe operations in business of banking.

Scale and ability to raise capital:

The ability to raise capital is one of the criteria for evaluating the performance business of banks. The ability to raise capital also shows effective, capacity and prestige of those banks in the market. The ability to raise capital well also means that that bank used the product ,service or tool to raise capital effectively, attract customers.

The ability in liquidity:

According to international standards, solvency is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. This target measures the ability of bank can meet the needs cash of consumers. if the demand for money by depositors is limited, the prestige of that bank will significantly reduced, those commercial bank will go bankrupt if this happen

http://en.wikipedia.org/wiki/Solvency

Profitability:

Profitability is a measure to evaluating the business of commercial banks. Profitability is analyzed by the following parameters

Return on equity: ROE=

ROE expresses income ratio of co-shareholder equity

Return in asset: ROA=

ROA shows how profitable a company's assets are in generating revenue.

Level of risk

The level of risk often expresses by 2 basic criteria as:

Capital adequacy ratio ( CAR)

Credit quality

Capital Adequacy Ratio (CAR) is a ratio that regulators in the banking system use to watch bank's health, specifically bank's capital to its risk. Regulators in the banking system track a bank's CAR to ensure that it can absorb a reasonable amount of loss. According to international standards, the CAR ratio must be at least 8%. The higher CAR ratio shows the stronger in financial ability of banks , generate more prestige as well as trustworthiness of customers with bank

http://www.maxi-pedia.com/capital+adequacy+ratio+CAR

Credit quality is major expresses through bad debt over total outstanding liabilities. The lower the kind of this ratio shows credit quality of that bank is good and good financial ability and inverse.

Diversity of products and services:

With the particularity of banking sector are products and services. So there are no differences among the other banks. The commercial banks promote their competitiveness not only the basic products but also in the uniqueness, diversity of their products and service. Besides, the bank should use internet that a tool in marketing their service and products. For many reasons, it is assumed that internet-based firm can operate with a far lower cost structure than traditional brick-and-mortar firms. Further, it is assumed that is far easier to comparison shop on internet. Besides, with the low cost ,it still brings consumers into a store, hoping that they will then buy several more profitable items while they are physically in the store because it is too inconvenient. ( Metters, Kinh-Metters, Pullman, Walton (2006), pg 32)

A bank can make a difference for their each type of product based on traditional products will make product catalogue became more varied, this will satisfy almost requirements for all consumers. Thereby easily dominate market share and increase strong competition from banks.

Moreover, the banks also use complementary products and other services to attract customers, generate revenue for banks as well as provide periodic statements, financial counseling

Human resources:

In a service business enterprise such as banks, the human factor plays an important role in expressing the quality of service. The staff who directly giving the customers the feeling about product and service of bank, and create customer confidence found with bank. Those are important requirement which banks' staffs must have. From there, it can help banks dominate market share and increase efficiency business to improve their competitiveness. In addition, human resources costing influences management decisions about human resources activities. Pressures to produce may increase short-term profitability, but this pressure may reduce long-term profitability because of employee resentment and turnover. On the hand, the development of human resources systems and the creation of an effective management team require outlays of times and money that reduce the short-term profit.( David J. Cherrington (1995) (pg 68)

The competitiveness about human resources of commercial bank evaluated by two aspects is quantity and quality of labor force

Technological capability:

In the banking sector, the application of technology is one of the principal factors creating competitive strength of the banks. To improve product quality services and meet all the requirements of customers so technology needs is very important. Nowadays, the commercial banks are implementing and developing products with high technology applications. Using the application of technology is as a measurement to evaluating competitiveness, especially in the field of payment and electronic products

Management capacity in bank:

An important factor which determining the success or failure in any business is the role of business leaders. Their decisions had impact to overall business operation of enterprise.

Management capacity, monitoring and administration of the leaders in banking has very important role in ensuring the effectiveness and safety in bank's operation. The vision of leaders is important factor which help bank has right strategy in the long term. Normally assessment management capacity, monitoring and administration of a bank, we often review the standards and the strategies that the bank building for its operations. High performance, with growth over time and the ability to overcome difficult time as an evidence for high management capacity of the bank.

A number of criteria to show the management capacity of bank are:

Business strategy of the bank including marketing strategy (building reputation, brand), market segmentation, developing product and services.

The organizational structure and ability to apply efficient methods in banking management.

The growth in business operation of banks.

And now let’s study about process in improving enhance competitiveness of HSBC bank to Agribank consider and learn lesson about experience in their development process

In Vietnam, HSBC first opened an office in Saigon (now Ho Chi Minh City) in 1870. In August 1995, HSBC opened a full-service branch in Ho Chi Minh City. In 2005, HSBC also opened its second branch in Hanoi and established a representative office in Can Tho. 

On 29 December 2005, HSBC acquired 10% share capital of Vietnam Technological and Commercial Joint Stock Bank (Techcombank), one of the largest joint stock commercial banks in Vietnam by equity. In July 2007, HSBC became the first foreign bank to increase its stake in Techcombank to 15%. In September 2008, HSBC completed the increase of its stake in Techcombank to 20%, became the first foreign bank in Vietnam to hold a 20% interest in a domestic bank.

In September 2007, HSBC acquired 10% share capital of Bao Viet Holdings, becoming the sole foreign strategic partner of Vietnam’s leading insurance company. In October 2009, HSBC signed an agreement to increase its shareholding in Bao Viet Holdings to 18% from 10% for VND1.88 trillion (approximately US$105.3 million).

On 1 January 2009, HSBC started operating its locally incorporated entity and became the first foreign bank to incorporate in Vietnam, after gaining approval from the State Bank of Vietnam (SBV) to set up a Wholly Foreign-Owned Bank (WFOB) in Vietnam in September 2008. The new entity, HSBC Bank (Vietnam) Ltd., is headquartered at the Metropolitan Building, 235 Dong Khoi Street, in Ho Chi Minh City’s District 1. With a registered capital of VND3,000 billion, HSBC Bank (Vietnam) Ltd. is 100 per cent owned by The Hongkong and Shanghai Banking Corporation Limited, the founding and principal member of the HSBC Group.

HSBC is now the largest foreign bank in Vietnam in terms of investment capital, network, product range, staff and customer base. HSBC’s history in Vietnam and knowledge of its culture reflects its commitment to delivering excellence in customer service, every time

( http://www.hsbc.com.vn/1/2/about-hsbc_en/about_HSBC)

The development in strategic relationships also play an important role for the development of HSBC in Vietnam. So far, "HSBC is the unique foreign banks hold a maximum of 20% shares in a domestic bank and is unique foreign strategic partner holds 10% stake of Bao Viet. HSBC attaches much importance to investment in Bao Viet and Techcombank because these are models that has great potential for development in the long term. With the investment and long-term stability in the banking and other strategic partners, HSBC now has a very good position to develop in Viet Nam.

Through experience and development of HSBC, we see now in most Vietnam’s commercial banks got a shortage of skilled manpower. The number of bank professional staffs and experience are still less and this shortage would be show clearly in the future if there is no preparation time timely. Looking back the development of HSBC, Initially, HSBC has seen been considered as a bank for foreigners. But following next years, with the number of clients Vietnam increased rapidly. And this is one of the reasons for HSBC to change that perception and direction to domestic customers .Therefore HSBC had established bank with 100% foreign owned in Vietnam and association in investment become strategic shareholders of Tecombank and Bao Viet insurance company.... So far, HSBC interested in organizing the scholarship program to attract the talent persons... HSBC has plans to train over 400 new employees for HSBC in Vietnam, as well as "targeted" to the convenient location in other places.

Despite the global financial market had many fluctuations but HSBC's operations in Vietnam are still well maintained. HSBC has expanded its activities and services to support its customers in difficult times. Therefore, HSBC has six transaction rooms comes into operation after two months receiving approval from the State Bank of Vietnam for each transaction room. In fact, with the assistance of the State Bank in Hanoi, Ho Chi Minh City and Binh Duong, HSBC has conducted activities expanded rapidly. With long-term strategy in Vietnam, HSBC didn't too worry about short-term fluctuations of the market.

HSBC has judged the sector of banking-financing worldwide have experienced a difficult period and most complex lasted from 2008 until the beginning of 2009. However, the banking sector in Vietnam is not in the "storm" of global financial crisis. HSBC's business activities still thrive in some categories, HSBC remains confident in the sustainable development and its long term market in Vietnam. Through surveying, the retail banking system in Vietnam has great potential for development because only 10% of the total population who have bank accounts. This is one reason many banks are eager to develop its activities in Vietnam market.

Therefore, with the effects of the global financial crisis, HSBC remains loyal to long-term development strategy in Vietnam's market despite the negative signs from the market

Part 2:

Agribank is the biggest commercial bank in Viet Nam with an operating network of 2,300 branches and transaction offices nationwide which have been connected online. With the leading role in rural and agricultural financial market, Agribank has paid attention to expand its operating network to districts and communes in order to facilitate the customers around the country to get access to bank loans easily and safely. The customer base of Agribank now includes over 10 million farm households and 30,000 enterprises. The nationwide network has created Agribank advantage in improving the competitiveness in the challenging integration process.

To meet the demand for import-export payment of local and foreign customers, Agribank has focused on expanding the correspodent relations with other banks. So far, Agribank has 1,034 correspondent banks in 95 countries and territories. Agribank signed agreements with Phongsavanh Bank - Laos, Acleda Bank - Cambodia, Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) on cross border payment from which customers and all parties benefit.

http://www.agribank.com.vn/102/790/about-us/agribank-network.aspx

Operational situation of Agribank:

The main products of Agribank:

Credit Products: Pursuant to use loans aim, Agribank's credit products including: consumer loans (buy car, buy house and payment by wages, income, household shopping ..) business loans real estate, securities lending business, student loans, loans to foreign workers; loans for export and import, loans for purchase fixed assets, investment projects.

Mobilized Products include: demand deposits; deposit payment; Savings Deposit (Savings Deposit secured by gold, money saving), Certification of time deposits, accounts for time deposit; money deposit from other banks.

The guaranteed product in domestic include: bid security, performance security contract, guarantees payment; guarantee full payment, the guaranty of works and equipment, loan guaranty; other Guarantees

About service: Western Union, transfer money service, card service, service of payment salary through credit card, cheque service, buy and sell currency and so on

E-banking product include: SMS banking; Atransfer; Vntopup

The operation result in 2009:

2009 year is the most successful of Vietnam’s banking system after 3 years join WTO. Vietnam Bank of Agriculture and Rural Development (Agribank) also achieves the success as:

In 2009, with effect solutions such as direction and focus on adjust interest; radical debt revoke process that was handled risks, reducing cost, Agribank has created a financial background the most powerful ever. Owner equity increased from 14.040 billion VND in 2008 to 22.176 billion VND in 2009, net profit 4.143 billion VND. The financial ratio such as CAR increase from 8.5% to 12.5% in 2009; ROE: 26.86%, ROA: 1.6%. Besides, total assets of Agribank reached VND 470,000 billion, an increase of 22% compared with 2008; total funding resources reached VND 434,331 billion, and total outstanding loans to the economy reached VND 354,112 billion, of which outstanding loans to agricultural and rural areas was VND 242,062 billion. The financial situation of Agribank expressed below table:

Agribank’s financial situation from 2004- 2009

Currency unit: Billion VND

Year

2004

2005

2006

2007

2008

2009

Profit

(298)

462

1.107

4.515

3.314

4.143

Owner equity

484

781

2.566

10.451

14.040

22.176

Total asset

161.757

192.319

238.495

321.444

396.993

470000

Following this above data, we can realize that the situation of business as well as financial situation of Agribank in many years ago was very good. This is general trend of all the commercial banks in period time of economic integration. The increase in charter capital will contribute expand owner equity of Agribank. This will help Agribank to enhance competiveness in period time of integration

3) Evaluating the competitiveness of Agribank with using SWOT model:

a) Strength:

Network-wide, with over 2000 branches and transaction offices, this is the strongest point of Agribank compared to other financial institutions in Vietnam. Besides, it also creates favorable conditions for Agribank easily develop the retail market

Branding is considered the 2nd strengths that Agribank had when compared to the other financial institutions in the country. Nowadays, the brand is seen as one the important tool in establishing relationships, building trust with local and foreign customers.

Having the support of government and supporting and development fund of international organizations such as ODA, AFD, ADB funded for projects of agricultural development Rural, industrialization the sectors as agriculture, silviculture, fishery. Specifically, the end of year 2007, Agribank has received, managed and deploy effectively 111 projects of the international organizations, especially WB and ADB funded with a capital of over $4 Billion

b) Weak:

Agribank is dominated much from government.

Management mechanism didn’t suitable with currently situation.

Products not yet diversified, still poor on product. The quality of service is not concerned appropriately.

Financial ability is still weak compared to standard of international.

Technology skill, experience, management skill are still limit.

c) Opportunity:

Economic growth is predicted to be positive in the future.

Opportunity to expand market from with facts Vietnamese became a WTO member. Therefore, approaching the technology, management experience from foreign banks is very high.

Games people's awareness has gradually higher, the demand for quality and the use utilities used banks are large, so the opportunity to develop products technology is very good

d) Threat:

The increasing the competition rivals in future with modern technology, strong financial ability, professor in management from foreign.

Market risk increased with the liberalization of financial markets, interest rates, exchange rate , the ability to influence from the financial crises in countries and regions worldwide will increase.

The economy in development process and integration are not really strong and easy broke when meet the fluctuation.

Human resource is easy attracted by other rivals

Macro-management is also in complete period and development, so system system policies and laws are also not consistent, easy to impact economy International capital is still weak.

4) Analysis of competitiveness of Agribank with other competitors:

Financial ability:

Owner equity, total asset of the commercial banks 31/12/2009

Currency unit: Billion VND

Name of commercial bank

Agribank

VCB

ACB

BIDV

Owner euity

22.176

16.710

10107

13.977

Total asset

470000

255.496

167.881

292.198

About financial ability, at 31/12/2009, Agribank was commercial bank that had the strongest financial ability compared to the other commercial banks in Vietnam domestic. But since vietcombank have privatized, it became commercial joint stock bank that have the biggest charter capital in Vietnam. However, the level of that charter capital is still few if compared with the foreign banks. This will reduce competitiveness of Agribank when using the factors related to paid-up capital specific as:

-Loan limits and guarantee: the amount of loan limits and guarantee of credit organization with customer does not exceed 25% of the equity capital of credit organization, total loans by credit organization for a customer does not exceed 15% paid-up capital of credit organization

- Limitation of mobilization: following the banking ordinance in 1990, total mobilization capital of commercial banks up to 20 times the paid-up capital.

- Limiting the investment and technology development because commercial banks are prescribed only using 50% their own capital for investment in fixed assets, technology

This is table which represented owner equity of some famous bank in the world

Bank

Owner equity (million USD)

Citigroup

112.537

Morgan

107.211

HSBC

98.226

Mitsubishi UFJ Financial Group

83.281

BNP Paribas

56.610

Mizuho Financial Group

52.243

Source : http://en.wikipedia.org/wiki/Bank

With potential about finance of above foreign banks , when commitment of WTO apply , the strength about competition of Agribank will get big affect. Besides, in many recent years commercial joint stock banks noticed much about increasing charter capital in business strategy

Besides increasing their charter capital, the commercial banks have actively chosen strategic partners are the foreign banks to create links to create strong competition through his farming experience in management, technology, products... A number of banks with capital stock of the foreign banks include:

Commercial banks Foreign partners Share percentage

ACB Standard Chartered bank 15%

Connaught Investor ( Jardine Mutheson Group) and 15%

leasing company IFC

Sacombank ANZ bank 10%

Dragon Financial Holdings and 8,73%

Leasing company IFC 6,96%

Techcombank HSBC 20%

VP Bank Oversea Chinese Banking

Corporation (OCBC) 20%

OCB BNP Paris 10%

Phương Nam Cathay USA 15%

UOB Singapore 15%

Eximbank Sumitomo Mitsui Banking

Corporation (SMBC), VOF

Investment Limited-British Virgin 25%

Islands, Mirae Asset Exim

Investment Limited (MAE)

Besides the commercial bank is not only receive the benefits and the actual value when cooperate with the foreign bank or the financial foreign cooperation but also create reputation, their brand thanks to the brand of the above cooperation brand. This is very important to the business operation of the bank. It contributed in increasing the competitive strength of that commercial bank. Therefore, increasing pressure the competitiveness among the commercial bank

Compare ROA, ROE and CAR ratio of some other banks:

The financial ratio of the commercial bank in 2009:

Agribank

VCB

BIDV

SACOMBANK

ROE

26.86 %

25,58%

21,04%

39,16%

ROA

1.6%

1,64%

0,94%

2,9%

CAR

12.5%

8,11%

7,55%

11,07%

Compare with the other commercial banks, the financial ratio assess financial ability of commercial bank . in the end of 2009, Agribank still gain advantage. Especially CAR ratio of Agribank always improves in many recent years and approximately approaches the standard level of international

The quality of manpower:

2009 was also the year Agribank placed a strong focus on training and fostering its staff to meet the requirements of competition and integration. Throughout the year, Agribank conducted training and retraining to a total of 142,635 attendee staff members (an increase of 57% attendance compared with 2008); successfully implemented online training model, and recruited more than 2,000 young staff with strong educational foundation, foreign language skills and IT knowledge in order to prepare human resources for the following years.

http://www.agribank.com.vn/102/784/about-us/history.aspx

Technology capacity:

Aware of the importance of non-traditional credit products and services, during 2009, Agribank utilized modern information technology to develop and introduce modern banking products and services including: Mobile Banking related services, such as SMS Banking, VnTopup, A Transfer, A Paybill, and VnMart; payment connectivity with the State Treasury, in coordination with Taxation and Customs Offices for the collection of state budget; and the issuance of more than 4 million cards of all kinds.

In the context, Vietnam joins in WTO and the international economic integration process. Agribank’s development strategy is to become a multi-sector, multi-function, multi-owner financial group. Following to this, the bank has identified its key goals: remaining the dominant role in rural and agricultural financial market, being the fellow of around 10 million farming households, speeding up the restructuring process, completely settling NPLs, reaching Capital Adequacy Ratio (CAR) following international standards, improving IT infrastructure, diversifying products, increasing service quality, preparing qualified staff, ensuring employees’ interests, promoting awareness of AGRIBANK brand and culture.

Part 3:

Some recommendation to enhance competitive ability of Agribank

To enhance competitiveness for State Bank and Agribank need to make time to sync the following measures:

Accelerating the process of restructuring the Vietnam State Bank system across territory and proceed to open representative offices or branches in neighboring countries. Banking reform in the direction of strengthening executive management, financial capacity, expansion in scale and competitiveness. Links to form strong conglomerate about banking and finance, this really is a benefit condition to learn experience and perfect itself as well as study in increase the charter capital to enhance the competitiveness of the banking. Besides, solving absolute non-performing loans (NPLs) and make more clearly for financial report of bank.

There should be a medium-term business strategy and long term, especially human resources strategy. The bank can expand their strategic human resources at key universities as well as establish training centers in the bank.

Special attention to the wage income as well as other regimes to employees (coverage for workers as well as include insurance policies for their families with the object key employees, senior staff...). Therefore, there should be suitable wage regime in accordance with their capacity, avoid paying wages under the state-owned enterprises

Strengthen and improve the branches network, this is the main strength of the bank as well as go in line with customer care policies and enhance in marketing. Besides, bank should continue to diversify banking products and services: in mobilizing capital, household credit, consumer credit, supporting in export and import , payment services, card, collecting payment, mandating as well as e-banking ...Noting the development of products which associated with stock market and insurance activities.

Modernize banking technology and to consider this strategic goal to compete with foreign banks, improve business efficiency and to attract domestic customers. Especially the payment mechanism must fast, secure, convenient and systematic.

We must determine that the investment in modern technology can increase the initial cost, but will reduce costs in the long term business, attract more customers, manage risk due to rapid information, the efficient operating. Especially banks will raise more money send payment (less interest) by the payment easy, convenient and expanded distribution channels.

To enhance the work of supervision to ensure safety for both the banking system and create trust for public, improve brand Agribank sustainable development for the prosperity of the community. Agribank need to strengthen in internal controls to monitor and prevent errors in each bank. The provisions on monitoring and supervision should be studied and promulgated in accordance with international standards and legislation Vietnam

If the above recommendation makes synchronism way, it will certainly contribute to improving the competitiveness of Vietnam Bank of Agriculture and Rural Development (Agribank) in the process of international integration.

Sustainable development orientation and growth of Agribank:

In 2010 and for the coming years, Agribank is to promote the role of the leading bank in the national economic development and the dominant role in agricultural and rural financial market, serving agriculture, farmers and rural areas. Agribank will make great efforts in fund mobilization from both local and foreign sources, maintain the credit growth at a reasonable level. Agribank will give priority in investment in agriculture, farmers and rural areas especially to farm households with agricultural, forestry, fishery, and salt production and to SMEs which has met the demand for transition to agricultural and rural production. As a result 70% of the total outstanding loans will be in agriculture and rural areas. For maintaining the leading bank providing the modern and high quality products and services, meeting the demand of customers and increasing the noncredit income, Agribank is focusing on renovate and develop banking technology in a modernization manner. Agribank expects to reach the goals for 2010 as follows: the fund resource increases by 22%-25% compared with 2009; the rate of loans to agricultural and rural areas is 70%, NPLs below 5%, noncredit income increases by 20%, profit increases by 10%, CAR complies with international standard.

 

To reach those ends, Agribank will put forth a number of solutions which are following the policy of the Government and the State Bank of Viet Nam on monetary policy, speeding up the fund mobilization from different sources, enhancing the cooperation and connection with big organizations and enterprises, enhancing the fund mobilization in urban areas and cities to supplement capital to rural area and ensure capital for agriculture, farmers, and rural areas; carrying out investment selectively and with priority, focusing on due debts and NPLs collection in order to revolve capital for agriculture, farmers and rural areas as well as key programs of the Government, ensuring the credit growth as instructed by the State Bank of Viet Nam. Agribank plans to carry out a 10 year strategy review (2001-2010), develop business strategy for 2011-2015 towards 2020; develop the promotion strategy for Agribank trade mark. The banking technology will be modernized based on IPCAS II which is used to develop the new products and services with high quality to better serve the customers, enhance competitive advantage. The products like cross border payment, remittance, FX dealing, and valuable papers will be paid much attention to. All procedures will be reviewed and amended as needed according to the new management model and international standards. Human resource development and training will play an important role in developing Agribank trade mark and culture and prestige in local and foreign market. Agribank philosophy is always for the prosperity and sustainable development of customers, partners, of the whole community and the bank itself.

http://www.agribank.com.vn/102/786/about-us/sustainable-development-and-growth.aspx

Conclusion:

International economic integration is indispensable and compulsory with Vietnam in development process. We are involved in organizations and international economic associations on the world like ASEAN, ASEM, APEC, and especially WTO. Integration will order for us many opportunities but also many difficulties and challenging. Banking industry in general and in particular Agribank is not escape that trend. With started the low point and undergone the restructure and rearrange process. Although there have been certain successes, but in general the fundamental elements of competition is still limited.

During the period of integration, competition is seen as inevitable and is the survival of each organization. To improve competition in the domestic market and expanding market outside, Agribank still must improve many troubles in consolidating, enhance financial capacity, improve management and quality of human resources and encourage using application of modern technology to develop their products and services as well as strong pushing in building brands in both domestic and international

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