To innovate the private capital in order to create harmoniously competitive environment for the hcm city commercial banks, vietnam
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INDEX
INTRODUCTION .......................................................................................... 1
CHAPTER I. PROBLEM STATEMENT AND ITS BACKGROUND .............. 4
1.1. PURPOSE OF STUDY ................................................................................... 5
1.2. INTRODUCTION ............................................................................................ 5
1.3. PROBLEM STATEMENT .............................................................................. 6
1.4. IMPORTANCE OF STUDY ............................................................................ 6
1.5. HYPOTHESES OF THE STUDY ................................................................... 8
1.6. SIGNIFICANCE OF THE STUDY .................................................................. 9
1.7. SCOPE AND DELIMITATION OF THE STUDY ............................................ 9
1.8. CONCEPTUAL FRAMEWORK ................................................................... 10
1.9. RESEARCH INSTRUMENTS ...................................................................... 10
1.10. TREATMENT OF DATA .............................................................................. 11
1.11. RESEARCH PROCEDURES ....................................................................... 12
1.12. RESEARCH APPROACH ............................................................................ 14
CHAPTER II. SURVEY OF RELATED LITERATURE AND STUDIES ....... 15
2.1. SOME GENERAL ISSUES OF STOCKHOLDER’S EQUITY OF
COMMERCIAL BANK ................................................................................. 16
2.1.1. Overview of the equity capital of commercial bank ................................. 16
2.1.2. Constitute stockholder’s equity of commercial bank ............................... 17
2.1.3. The characteristics of the equity capital of commercial banks ................ 19
2.1.4. Basic functions of stockholder’s equity of commercial banks ................. 20
2.1.4.1. Stockholder’s equity performs responsibility function of asset for
depositor. ....................................................................................... 20
2.1.4.2. Stockholder’s equity performs investment function to meet
requirements of bank business operations ................................... 21
2.1.4.3. Stockholder’s equity performs function to set up limitation for
business operation of bank ........................................................... 21
2.2. REQUIREMENTS TO ENSURE CAPITAL SAFETY IN BUSINESS
OPERATIONS OF BANK ............................................................................ 22
2.2.1. General provisions on capital safe regime in business operation of
bank ......................................................................................................... 22
2.2.1.1. Regulation of capital safe concepts .............................................. 22
2.2.1.2. Regulations of determination regime of safety stockholder’s
equity ............................................................................................. 24
2.2.1.3. The policies about shareholder ..................................................... 26
2.2.1.4. Legal regulations about adjustment these assess safety of capital
standards in the country ................................................................ 28
2.2.2. Factors impact the safety-capital assessment Standards ....................... 32
2.3. DUTY, CONTENT, MODEL AND MANAGEMENT CONDITIONS OF
OWN FUND IN TRADING OPERATIONS OF COMMERCIAL BANK ....... 35
2.3.1. Duty of own fund management of commercial bank ............................... 35
2.3.2. Content of own fund management of the commercial bank .................... 35
2.3.3. Models of managing the own fund of commercial bank .......................... 37
2.3.3.1. Own fund management following traditional model ...................... 38
2.3.3.2. Own fund management following the model associated with risk
ratio ............................................................................................... 39
2.3.3.3. Funds management following ROIF and ROFL model. ................ 40
2.3.3.4. Capital management in internal financial growth model ......... 45
2.3.4. Conditions on the own fund management of the commercial bank ........ 47
2.4. ROLE OF RISK AND INCOME MANAGEMENT IN THE MANAGEMENT
OF OWN FUND OF COMMERCIAL BANK ...................................................... 48
2.4.1. Role of risk management ........................................................................ 48
2.4.1.1. Risk management on operations................................................... 48
2.4.1.2. Risk management in credit operations .......................................... 49
2.4.1.3. Risk management in organizational structure ............................... 50
2.4.1.4. Management of risk affecting from outside ................................... 50
2.4.2. Role of income management .................................................................. 51
2.4.2.1. Management of factors affecting directly the income .................... 51
2.4.2.2. Management of factors affecting indirectly the income ................. 52
2.4.3. Role of general management of risk and income .................................... 52
2.4.3.1. General management of risk and income in short terms .............. 52
2.4.3.2. General management of risk and income in long terms ................ 54
2.5. EXPERIENCES LEARNED BY REGIONAL AND WORLD BANKS FROM
THE OWN FUND ......................................................................................... 56
2.5.1. Experiences of bank own fund management at macroscopic scale ..............56
2.5.1.1. In the world .................................................................................... 56
2.5.1.2. In Asian region .............................................................................. 57
2.5.1.3. In Asian ......................................................................................... 58
CHAPTER III: RESEARCH METHODOLOGY ........................................... 60
3.1. MANAGEMENT REAL SITUATION OF STOCKHOLDER’S EQUITY OF
COMMERCIAL BANKS AT VIETNAM ........................................................ 61
3.1.1. Economic context before requirements of stockholder’s equity
standardization ........................................................................................ 61
3.1.1.1. World economic context ................................................................ 61
3.1.1.2. Economic context of Vietnam ........................................................ 62
3.1.2. Specific characteristic of activities of commercial banks in Vietnam....... 64
3.2. MANAGEMENT REAL SITUATION OF STOCKHOLDER’S EQUITY AT
JOINT STOCK COMMERCIAL BANKS AT HO CHI MINH CITY ............... 65
3.2.1. General real situation in management of stockholder’s equity at joint
stock commercial banks at Ho Chi Minh City .......................................... 65
3.2.1.1. The holding structure of business financial sources ..................... 65
3.2.1.2. Business financial operations ........................................................ 66
3.2.1.3. To ensure the capital safety targets .............................................. 70
3.2.1.4. Liquidity ......................................................................................... 72
3.2.1.5. The quality of account outstanding for loan .................................. 74
3.2.1.6. Financial status of business .......................................................... 76
3.2.2. Analysis of the financial capacity of joint stock commercial banks at Ho
Chi Minh City ........................................................................................... 79
3.2.2.1. The changes according to specific characteristic of
development.. ................................................................................ 79
3.2.2.2. The changes in the operation ........................................................ 81
3.2.2.3. The change in resistance capacity of risk .................................... 86
3.2.2.4. The changes in the quality of operation ........................................ 89
3.2.2.5. Assessing financial capacity of the joint stock commercial banks
at Ho Chi Minh City ....................................................................... 92
3.2.3. Analysis of effective in application of assessment standards for safety
stockholder’s equity in accordance with regulations of BIS in the Asian
commercial banks (ACB) ......................................................................... 95
3.3. RESULTS AND LIMITATIONS IN THE MANAGEMENT OF
STOCKHOLDER’S EQUITY AT JOINT STOCK COMMERCIAL BANKS
AT HO CHI MINH CITY .............................................................................. 102
3.3.1. Achieved results .................................................................................... 102
3.3.2. Constraints in the own fund management in HCMC stock commercial
banks ..................................................................................................... 103
3.3.2.1. General assessment on constraints ............................................ 103
3.3.2.2. Assessment on the constraints of the own fund management
aspect .......................................................................................... 104
3.3.2.3. Assessing the limitations in terms of governance, shareholder
management ............................................................................... 104
3.3.2.4. Assessing the limitations in terms of operation safety ................ 105
3.4. THE MAJOR CAUSES OF SHORT COMING INMANAGEMENT OF
STOCKHOLDER’S EQUITY AT JOINT STOCK COMMERCIAL BANKS
AT HO CHI MINH CITY .............................................................................. 106
3.4.1. The inadequacies of the business environment .................................... 106
3.4.2. Weaknesses in risk management ......................................................... 106
3.4.3. Weaknesses in the management and administration ........................... 107
3.4.4. Shortcomings in the financial ability ...................................................... 108
3.4.5. Shortcomings in the fund ownership structure ...................................... 109
3.4.6. Weaknesses in the management and supervision of State bank ......... 109
CONCLUSION CHAPTER 3 ................................................................................ 111
CHAPTER IV: INNOVATION OF STOCKHOLDER’S EQUITY
MANAGEMENT AND CREATING COMPETITIVE
ENVIRONMENTAL JOINT STOCK COMMERCIAL
BANKS AT HO CHI MINH CITY ....................................... 112
4.1. DEVELOPMENT ORIENTATION AND INNOVATION OF
STOCKHOLDER’S EQUITY MANAGEMENT FOR JOINT STOCK
COMMERCIAL BANKS AT HO CHI MINH CITY IN PHASE 2007-2020.. 113
4.1.1. Demand of minimum stockholder’s equity for development target in
phase from 2010 to 2020. ..................................................................... 113
4.1.1.1. The socio-economy development goals of HCMC. ..................... 113
4.1.1.2. Forecast of minimum capital requirements for banking at Ho Chi
Minh City. .................................................................................... 113
4.1.2. Managing the average stockholder’s equity growth process for joint
stock commercial banks HCMC. ........................................................... 116
4.2. MANAGEMENT INNOVATION SOLUTION OF STOCKHOLDER’S
EQUITY FOR JOINT STOCK COMMERCIAL BANKS AT HO CHI MINH
CITY ........................................................................................................... 123
4.2.1. Amendment of institutions, determining the model and positioning
target market. ........................................................................................ 123
4.2.1.1. Modify institutions, equity ownership. .......................................... 123
4.2.1.2. Development of banks according to versatile financial corporation
model. .......................................................................................... 124
4.2.1.3. Reposition the active target market. ............................................ 126
4.2.2. Renewal of risk management mechanism under modern management
technology. ............................................................................................ 127
4.2.2.1. Complete overhaul of the factors affecting the risk management
mechanism. ................................................................................. 127
4.2.2.2. Innovation of accounting systems, internal audit in accordance
with international standards......................................................... 129
4.2.2.3. To improve risk prevention mechanism....................................... 131
4.2.3. Renew the capital safe management mechanism in accordance with
requirements of the BIS......................................................................... 133
4.2.3.1. Innovation of structure to determine stockholder’s equity safely. 133
4.2.3.2. Restructuring of all activities in accordance with capital safe
requirements. .............................................................................. 135
4.3. EXPANDING THE FRAME OF ASSESSMENT RATE OF SAFE
STOCKHOLDER’S EQUITY ...................................................................... 137
4.4. SYSTEM APPLICABLE CAPITAL TARGETS ASSESSED SAFETY
SELF-DIVERSITY ...................................................................................... 141
4.5. IMPLEMENTING THE MULTI-LAYERED MECHANISM FOR
MANAGEMENT AND MONITORING CAPITAL ADEQUACY .................. 143
4.6. BUILDING THE REGIME OF SAFETY CAPITAL DISCIPLINE STRICTLY
AND CLEARLY .......................................................................................... 145
4.7. PERFECTING THE MECHANISM OF INSPECTION AND MONITORING
CAPITAL ADEQUACY .............................................................................. 146
4.8. PROPOSING SOLUTIONS TO SUPPORT, INNOVATE, MANAGE
EQUITY ...................................................................................................... 148
4.8.1. Proposing to Vietnamese state ............................................................. 148
4.8.2. Recommendations for the State Bank of Vietnam ................................ 151
4.8.3. Recommendations to People’s Committee of Ho Chi Minh city ............ 155
CONCLUSION OF CHAPTER 4 .......................................................................... 157
CHAPTER V: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 158
5.1. SUMMARY OF THE STUDY ..................................................................... 159
5.2. CONCLUSION ........................................................................................... 159
5.3. RECOMMENDATIONS .............................................................................. 161
5.4. OPPORTUNITIES FOR FURTHER RESEARCH ...................................... 161
REFERENCE ....................................................................................................... 162
A. ROPOSED INTERVIEW AND SURVEY QUESTIONNAIRE ........... 162
B. PROPOSED BIOGRAPHY .............................................................. 165
LIST OF TABLES
Table (1.1): The profitability ROIF and ROFL .................................................... 42
Table (1.2): Debt balance and profitability of ROFL .......................................... 43
Table (1.3): Analys debt balance and profitability of ROFL ............................. 44
Table (1.4): The rate share holder in commercial foreigner banks in Asean
countries ............................................................................................................... 58
Table (1.5): The rate keep asset foreign bank in Asean countries from 90 – 01......59
Table (1.6): Amount of foreign banks and commercial banks in Asean
countries from 90 – 01 ................................................................................................ 59
Table (2.1): The holding structure of business financial sources of
Commercial banks HCM City 12/31/2010 ........................................................... 65
Table (2.2): Operating commercial banks at Ho Chi Minh City in 10/09.......... 66
Table (2.3): Structure of business financial capitals of Commercial banks
HCM City to 31/12/2010 ........................................................................................ 68
Table (2.4): Safe equity of Joint stock commercial banks 12/31/2010 .............. 71
Table (2.5): Liquidity of commercial banks at Ho Chi Minh City in
31/12/2010. ............................................................................................................ 73
Table (2.6): The structure of financial collection sources commercial banks
at Ho Chi Minh City in 2010 ................................................................................. 76
Table (2.7): Business financial result of Commercial banks HCM City in
2010 ....................................................................................................................... 77
Table (2.8): The development situation according to level of capital of
commercial banks at Ho Chi Minh city from 2004-2009 ................................... 80
Table (2.9): Classification of quality market of commercial banks at Ho Chi
Minh City from 2006 – 2009 ................................................................................. 81
Table (2.10): Situation in Merger, Acquisition of commercial banks at Ho
Chi Minh City from 97 – 06 ......................................................................................... 83
Table (2.11): Situation buy share for foreign partner of joint stock
commercial banks in HCM City to 12/31/2010 ................................................... 85
Table (2.12): Equity and fund percent on risk Assets of five joint stock
commercial banks in HCM City in 2010 ............................................................. 87
Table (2.13): Evolution of profitable asset mechanism on the total assets of
the joint stock commercial banks at HCMC from 2005 – 2009 ........................ 89
Table (2.14): Situation of transferring profitable assets structure of joint
stock commercial banks in HCM city from 04 – 09 ........................................... 91
Table (2.15): Financial capacity of the joint stock commercial banks at Ho
Chi Minh City in 10/09 .......................................................................................... 92
Table (2.16): Change in financial capacity of the joint stock commercial
banks in HCM city from 06-10 ............................................................................ 94
Table (2.17): Analyzing the method of own fund determination so as to
calculate the minimum safe rate following the old and new calculation ........ 96
Table (2.18): Analyzing the method of internal risk determination following
the old and new methods .................................................................................... 97
Table (2.19): Analyzing the method of external risk determination following
the old and new methods .................................................................................... 99
Table (2.20): Analyzing the method of determining the interest and foreign
currency dealing contracts following old and new calculation methods ..... 100
Table (2.21): Analyzing the method of determining the small equity and risk
asset contracts following old and new calculation methods ........................ 101
Table (3.1): The minimum capital requirements for banking operations in
the period 2009 – 2018 ....................................................................................... 114
Table (3.2): Evaluation of environmental conditions and economic
development goals bank from 2010 – 2015 ..................................................... 116
Table (3.3): The thesis proposed overall financial plan from year 2010 -
2014 for the City as commercial banks ............................................................ 119
Table (3.4): Additional average equity capital from internal resources for
the commercial banks in Ho Chi Minh City 2010 – 2014 ................................ 121
Table (3.5): Expected additional demand of average equity from external
sources of capital for commercial banks in Ho Chi Minh City from 2010 to
2014 ..................................................................................................................... 122
Table (3.6): Swapping the risk of loss (SWAP)............................................................ 136
Table (3.7): Build the frame rate of assessment equity and safety for the
commercial banks .............................................................................................. 138
FIGURES LIST
Figure (1.1): The profitability ROIF and ROFL ................................................... 42
Figure (1.2): Debt balance and profitability of ROFL ........................................ 43
Figure (1.3): Analys debt balance and profitability of ROFL ............................ 44
Figure (2.1): The holding structure of business financial sources of
Commercial banks HCM City 12/31/2010 ........................................................... 65
Figure (2.2): Operating commercial banks at Ho Chi Minh City in 10/09 ......... 67
Figure (2.3): Structure of business financial capitals of Commercial banks
HCM City to 31/12/2010 ........................................................................................ 68
Figure (2.4): Safe equity of Joint stock commercial City banks and Top 5
bank ....................................................................................................................... 71
Figure (2.5): Liquidity of Joint Stock commercial Top 5 banks and
Commercial banks in City ................................................................................... 73
Figure (2.6): The structure of financial collection sources commercial
banks at Ho Chi Minh City in 2010 ...................................................................... 76
Figure (2.7): Business financial result of Commercial banks HCM City in
2010 ....................................................................................................................... 78
Figure (2.8): The development situation according to level of capital of
commercial banks at Ho Chi Minh City from 2004-2009................................... 80
Figure (2.9): Classification of quality market of commercial banks at Ho Chi
Minh City from 2006 -2009 ................................................................................... 82
Figure (2.10): Situation in Merger, Acquisition of Phương Nam banks at Ho
Chi Minh City from 1997–2001................................................................................... 83
Figure (2.11): Situation buying share of ACB bank ........................................... 85
Figure (2.12): Equity and fund percent on risk Assets of five joint stock
commercial banks in HCM City in 2010 ............................................................. 87
Figure (2.13): Evolution of profitable asset mechanism on the total assets
of the joint stock commercial banks at HCMC from 2005-2009 ....................... 90
Figure (2.14): Situation of transferring profitable assets structure of joint
stock commercial banks in HCM city from 04 – 09 ........................................... 91
Figure (2.15): Financial capacity of the joint stock commercial banks at Ho
Chi Minh City in 10/09 .......................................................................................... 93
Figure (2.16): Change in financial capacity of the joint stock commercial
banks in HCM City from 06-10............................................................................. 94
Figure (2.17): Analyzing the method of own fund determination so as to
calculate the minimum safe rate following the old and new calculation ........ 97
Figure (2.18): Analyzing the method of internal risk determination following
the old and new methods .................................................................................... 98
Figure (2.19): Analyzing the method of external risk determination
following the old and new methods ................................................................. 100
Figure (2.20): Analyzing the method of determining the interest and foreign
currency dealing contracts following old and new calculation methods ..... 101
Figure (3.1)_A: The minimum capital requirements for banking operations
in the period 2009-2018...................................................................................... 114
Figure (3.1)_B: The equity requirements for banking operations in the
period 2009-2018 ................................................................................................ 114
Figure (3.2): Evaluation of environmental conditions and economic
development goals bank from 2010 – 2015 ..................................................... 117
Figure (3.3): The thesis proposed overall financial plan from year 2010 -
2014 for the City as commercial banks ............................................................ 119
Figure (3.4): Additional average equity capital from internal resources for
the commercial banks in Ho Chi Minh City 2010 – 2014 ................................ 121
Figure (3.5): Expected additional demand of average equity from external
sources of capital for commercial banks in Ho Chi Minh City from 2010 to
2014 .................................................................................................................... 122
Figure (3.6): Build the frame rate of assessment equity and safety for the
commercial banks .............................................................................................. 138
LIST OF EQUATION AND PICTURE
Equation (1.1): The principal targets for Self-determination of the full Basel
Committee ............................................................................................................ 28
Picture (1.1): Models of managing the own fund of commercial bank ........... 37
Equation (1.2) ........................................................................................................ 38
Picture (1.2): Own fund management following traditional model .................. 38
Equation (1.3): Model of ROIF and ROFL ........................................................... 41
Equation (1.4): Model of ROIF and ROFL ........................................................... 41
Equation (1.5): Sunainasu Growth models ........................................................ 46
Equation (1.6): General pattern ROA and ROE ................................................. 47
Picture (1.3): Model of incresed operation commercial Bank .......................... 56
Picture (2.1): Vietnam Map for research locale of the study ............................ 63
Candidate’s full name: Nguyen Thanh Nam
Proposed Study
“TO INNOVATE THE PRIVATE CAPITAL IN ORDER TO
CREATE THE HARMONIOUSLY COMPETITIVE
ENVIRONMENT FOR THE HCM CITY COMMERCIAL BANKS,
VIETNAM”
INTRODUCTION:
To manage private capital or to manage capital safely is actually a
harmonious management between risks and incomes, in order to create a
wholesome financial environment for the banks to develop stably. The effective
capital management is also a condition for the banks to approach quickly the
safe, modern technology of measurement, evaluation of capital safety having the
high accuracy. According to process of globalization, the requires used for
evaluating capital safety will be more strict as well as the ties of Law on the Bank
will increase.
1. PROPOSED STUDY
In the short term, the BIS’s standard system of evaluating Base I and II
capital safety is one of the top challenges for Commercial Banks in Vietnam,
specially the small, weak and shortcoming Commercial Banks in developing
countries. In the current conditions of Vietnam, the early and full awareness of
the role, importance of innovation in private capital management in order to
standardize the private capital management step by step which is stable with the
general rules of the world and local is a significant activity for effective and
sustainable development of Commercial Banks.
Page 1 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
2. METHODS AND TECHNIQUES OF THE STUDY
The study will be a combination of descriptive and explorative methods of
research. Descriptive method is used to describe characteristics of objects,
people, groups, organizations, banks, environments of a given situation by
addressing who, what, when, where and how questions (Zikmund et al, 2008).
Explorative method is used to increase the understanding of a concept by
clarifying ambiguous situations or discovering ideas that may be potential
business opportunities (Zikmund et al, 2008).
As the purpose of the study is to provide an in-dept analysis and a full
scenario of the current activities of commercial banks from which an application of
BIS model is proposed to enhance the control capacity of those enterprises, the
study used different methods of data collection including in-dept interview,
survey questionnaires, and secondary data study.
3. POPULATION AND SAMPLE OF THE STUDY
The samples will be conducted from about 15 commercial banks. Those
commercial banks build to operate in HCMC. The commercial banks can operate
under different types of other types of bank financial institutions, and non banks.
System of commercial banks in Vietnam has the presence of four types of
ownership: state commercial bank, joint stock commercial bank, joint-venture
commercial banks and foreign commercial banks.
4. RESEARCH LOCALE
Economic context of Vietnam
The impact of reform policies in 1986 to transition from subsidized
economy to market economy and international integration of Vietnam's economy
on the banking financial institutions and international trade organizations, such
as ASEAN, AFTA, ASEM, BTA, WTO,... are changing a series of standards
related to bank management issues such as accounting, statistics, laws,...; The
increase in foreign investment and joining the increasing competition of foreign
banks are forcing domestic commercial banks to quickly raise equity capital in
Page 2 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
various ways, have promoted the appearance of more and more of the new
ownership forms in the financial structure of banks.
The rise and serial development of SMEs in the recent time have
created new target markets, created pressure for domestic commercial banks
must prepare yourself for a strategy to position market, development of capital
steadily more to attract good customers, obtaining feasible the project.
Page 3 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
CHAPTER I
PROBLEM STATEMENT
AND IT’S BACKGROUNDS
Page 4 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
1.1. PURPOSE OF STUDY
The purpose of this thesis bring out the meaning the scientific foundation
not only about theory but also about reality of private capital management of
Commercial Banks in the market economy. To survey the reality of private
capital management and put forward the innovatory solution systems of private
capital management which is stable with safe standard required in the activity of
international bank, to create favorable conditions for HCM City Joint – stock
Commercial Banks to develop effectively, stably and durably.
1.2. INTRODUCTION
To manage private capital or to manage capital safely is actually a
harmonious management between risks and incomes, in order to create a
wholesome financial environment for the banks to develop stably. The effective
capital management is also a condition for the banks to approach quickly the
safe, modern technology of measurement, evaluation of capital safety having the
high accuracy. According to process of globalization, the requires used for
evaluating capital safety will be more strict as well as the ties of Law on the Bank
will increase.
In the short term, the BIS’s standard system of evaluating Base I and II
capital safety is one of the top challenges for Commercial Banks in Vietnam,
specially the small, weak and shortcoming Commercial Banks in developing
countries. In the current conditions of Vietnam, the early and full awareness of
the role, importance of innovation in private capital management in order to
standardize the private capital management step by step which is stable with the
general rules of the world and local is a significant activity for effective and
sustainable development of Commercial Banks.
Page 5 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
1.3. PROBLEM STATEMENT
The general research question of the study is “How can the BIS’s standard
system of evaluating Base I and II capital safety help HCM City Commercial
Banks to enhance capacity.”
Specifically, the study needs to answer the following sub-research
questions:
1. What are the benefits that HCM City Joint stock commercial Banks can
have through the application of the BIS’s standard system of evaluating
Base I and II?
2. How should HCM City Joint stock commercial Banks prepare for BIS’s
standard system of evaluating Base I and II application in terms of
organizational readiness, perceived ease of use and external pressure
(customer demand)?
3. How can BIS’s standard system help HCM City Joint stock commercial
Banks enhance capacity through its marketing tools?
1.4. IMPORTANCE OF STUDY
The thesis has contributed some important contents following:
1. To analyze preliminary in order to define the role and importance of the
innovation of private capital management in the bank’s business activity in
the fact of the requirements of safe and durable development; international
economic competition and integration.
2. To analyze depth the methods of private capital, the relationship between
private capital management and the requirement of capital safety
standards, as well as between the importance of effective private capital
management and requirements of capital safety improvement, as the
same time, has summed up some experiences from researching the
private capital management of the banking activities in our country. Based
on surveying reality of private capital management at HCM City Joint –
stock Commercial Banks, analyzing the achievements, the limit, the thesis
has shown the reasons of the shortcomings which need to be solved.
Page 6 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
3. In reference to the methods and reality have been analyzed, to spring from
the requirements of developing economic, social and banking goals;
based on the scientific foundations, the thesis have forecast the demands
and drawn up the average growth processing of private capital; defined
goals, principles and oriented the innovation of private capital for HCM
City Joint – stock Commercial Banks.
4. For HCM City Joint – stock Commercial Banks, the thesis have put
forward the innovative solutions of private capital according to
International Capital Safety Standards (BIS’s standard system) which are
stable with the real conditions of each bank, in order to create favorable
conditions for safe, effective, firm, durable development, including:
- To innovate the regulations of proprietary rights in stock capital in
order to be stable with the innovation of the Law on Business, orient
the developing model and determine the goal markets.
- To innovate comprehensively the regulations of risk management
according to modern technology.
- To innovate the regulations of private capital management by
technological solutions.
- To build the strategy of restructuralizing the own of stock capital
durably; the important goal is specialized labor and foreign strategic
partner.
5. The management offices supervise the bank in order to improve the effect
of management; supervise, speed up the HCM City Joint – stock
Commercial Banks to innovate quickly the Standards of Capital safety
management. The thesis have put forward the solution to improve the role
of macroeconomic management which is stable with developing
requirements of economy and the implement processing of international
engagements, detailing is:
- To orient the program, content, structure, policy of management,
supervise the capital safety according to Basel Standard.
Page 7 Major in: Financial - Banking Management economy
INTRODUCTION .......................................................................................... 1
CHAPTER I. PROBLEM STATEMENT AND ITS BACKGROUND .............. 4
1.1. PURPOSE OF STUDY ................................................................................... 5
1.2. INTRODUCTION ............................................................................................ 5
1.3. PROBLEM STATEMENT .............................................................................. 6
1.4. IMPORTANCE OF STUDY ............................................................................ 6
1.5. HYPOTHESES OF THE STUDY ................................................................... 8
1.6. SIGNIFICANCE OF THE STUDY .................................................................. 9
1.7. SCOPE AND DELIMITATION OF THE STUDY ............................................ 9
1.8. CONCEPTUAL FRAMEWORK ................................................................... 10
1.9. RESEARCH INSTRUMENTS ...................................................................... 10
1.10. TREATMENT OF DATA .............................................................................. 11
1.11. RESEARCH PROCEDURES ....................................................................... 12
1.12. RESEARCH APPROACH ............................................................................ 14
CHAPTER II. SURVEY OF RELATED LITERATURE AND STUDIES ....... 15
2.1. SOME GENERAL ISSUES OF STOCKHOLDER’S EQUITY OF
COMMERCIAL BANK ................................................................................. 16
2.1.1. Overview of the equity capital of commercial bank ................................. 16
2.1.2. Constitute stockholder’s equity of commercial bank ............................... 17
2.1.3. The characteristics of the equity capital of commercial banks ................ 19
2.1.4. Basic functions of stockholder’s equity of commercial banks ................. 20
2.1.4.1. Stockholder’s equity performs responsibility function of asset for
depositor. ....................................................................................... 20
2.1.4.2. Stockholder’s equity performs investment function to meet
requirements of bank business operations ................................... 21
2.1.4.3. Stockholder’s equity performs function to set up limitation for
business operation of bank ........................................................... 21
2.2. REQUIREMENTS TO ENSURE CAPITAL SAFETY IN BUSINESS
OPERATIONS OF BANK ............................................................................ 22
2.2.1. General provisions on capital safe regime in business operation of
bank ......................................................................................................... 22
2.2.1.1. Regulation of capital safe concepts .............................................. 22
2.2.1.2. Regulations of determination regime of safety stockholder’s
equity ............................................................................................. 24
2.2.1.3. The policies about shareholder ..................................................... 26
2.2.1.4. Legal regulations about adjustment these assess safety of capital
standards in the country ................................................................ 28
2.2.2. Factors impact the safety-capital assessment Standards ....................... 32
2.3. DUTY, CONTENT, MODEL AND MANAGEMENT CONDITIONS OF
OWN FUND IN TRADING OPERATIONS OF COMMERCIAL BANK ....... 35
2.3.1. Duty of own fund management of commercial bank ............................... 35
2.3.2. Content of own fund management of the commercial bank .................... 35
2.3.3. Models of managing the own fund of commercial bank .......................... 37
2.3.3.1. Own fund management following traditional model ...................... 38
2.3.3.2. Own fund management following the model associated with risk
ratio ............................................................................................... 39
2.3.3.3. Funds management following ROIF and ROFL model. ................ 40
2.3.3.4. Capital management in internal financial growth model ......... 45
2.3.4. Conditions on the own fund management of the commercial bank ........ 47
2.4. ROLE OF RISK AND INCOME MANAGEMENT IN THE MANAGEMENT
OF OWN FUND OF COMMERCIAL BANK ...................................................... 48
2.4.1. Role of risk management ........................................................................ 48
2.4.1.1. Risk management on operations................................................... 48
2.4.1.2. Risk management in credit operations .......................................... 49
2.4.1.3. Risk management in organizational structure ............................... 50
2.4.1.4. Management of risk affecting from outside ................................... 50
2.4.2. Role of income management .................................................................. 51
2.4.2.1. Management of factors affecting directly the income .................... 51
2.4.2.2. Management of factors affecting indirectly the income ................. 52
2.4.3. Role of general management of risk and income .................................... 52
2.4.3.1. General management of risk and income in short terms .............. 52
2.4.3.2. General management of risk and income in long terms ................ 54
2.5. EXPERIENCES LEARNED BY REGIONAL AND WORLD BANKS FROM
THE OWN FUND ......................................................................................... 56
2.5.1. Experiences of bank own fund management at macroscopic scale ..............56
2.5.1.1. In the world .................................................................................... 56
2.5.1.2. In Asian region .............................................................................. 57
2.5.1.3. In Asian ......................................................................................... 58
CHAPTER III: RESEARCH METHODOLOGY ........................................... 60
3.1. MANAGEMENT REAL SITUATION OF STOCKHOLDER’S EQUITY OF
COMMERCIAL BANKS AT VIETNAM ........................................................ 61
3.1.1. Economic context before requirements of stockholder’s equity
standardization ........................................................................................ 61
3.1.1.1. World economic context ................................................................ 61
3.1.1.2. Economic context of Vietnam ........................................................ 62
3.1.2. Specific characteristic of activities of commercial banks in Vietnam....... 64
3.2. MANAGEMENT REAL SITUATION OF STOCKHOLDER’S EQUITY AT
JOINT STOCK COMMERCIAL BANKS AT HO CHI MINH CITY ............... 65
3.2.1. General real situation in management of stockholder’s equity at joint
stock commercial banks at Ho Chi Minh City .......................................... 65
3.2.1.1. The holding structure of business financial sources ..................... 65
3.2.1.2. Business financial operations ........................................................ 66
3.2.1.3. To ensure the capital safety targets .............................................. 70
3.2.1.4. Liquidity ......................................................................................... 72
3.2.1.5. The quality of account outstanding for loan .................................. 74
3.2.1.6. Financial status of business .......................................................... 76
3.2.2. Analysis of the financial capacity of joint stock commercial banks at Ho
Chi Minh City ........................................................................................... 79
3.2.2.1. The changes according to specific characteristic of
development.. ................................................................................ 79
3.2.2.2. The changes in the operation ........................................................ 81
3.2.2.3. The change in resistance capacity of risk .................................... 86
3.2.2.4. The changes in the quality of operation ........................................ 89
3.2.2.5. Assessing financial capacity of the joint stock commercial banks
at Ho Chi Minh City ....................................................................... 92
3.2.3. Analysis of effective in application of assessment standards for safety
stockholder’s equity in accordance with regulations of BIS in the Asian
commercial banks (ACB) ......................................................................... 95
3.3. RESULTS AND LIMITATIONS IN THE MANAGEMENT OF
STOCKHOLDER’S EQUITY AT JOINT STOCK COMMERCIAL BANKS
AT HO CHI MINH CITY .............................................................................. 102
3.3.1. Achieved results .................................................................................... 102
3.3.2. Constraints in the own fund management in HCMC stock commercial
banks ..................................................................................................... 103
3.3.2.1. General assessment on constraints ............................................ 103
3.3.2.2. Assessment on the constraints of the own fund management
aspect .......................................................................................... 104
3.3.2.3. Assessing the limitations in terms of governance, shareholder
management ............................................................................... 104
3.3.2.4. Assessing the limitations in terms of operation safety ................ 105
3.4. THE MAJOR CAUSES OF SHORT COMING INMANAGEMENT OF
STOCKHOLDER’S EQUITY AT JOINT STOCK COMMERCIAL BANKS
AT HO CHI MINH CITY .............................................................................. 106
3.4.1. The inadequacies of the business environment .................................... 106
3.4.2. Weaknesses in risk management ......................................................... 106
3.4.3. Weaknesses in the management and administration ........................... 107
3.4.4. Shortcomings in the financial ability ...................................................... 108
3.4.5. Shortcomings in the fund ownership structure ...................................... 109
3.4.6. Weaknesses in the management and supervision of State bank ......... 109
CONCLUSION CHAPTER 3 ................................................................................ 111
CHAPTER IV: INNOVATION OF STOCKHOLDER’S EQUITY
MANAGEMENT AND CREATING COMPETITIVE
ENVIRONMENTAL JOINT STOCK COMMERCIAL
BANKS AT HO CHI MINH CITY ....................................... 112
4.1. DEVELOPMENT ORIENTATION AND INNOVATION OF
STOCKHOLDER’S EQUITY MANAGEMENT FOR JOINT STOCK
COMMERCIAL BANKS AT HO CHI MINH CITY IN PHASE 2007-2020.. 113
4.1.1. Demand of minimum stockholder’s equity for development target in
phase from 2010 to 2020. ..................................................................... 113
4.1.1.1. The socio-economy development goals of HCMC. ..................... 113
4.1.1.2. Forecast of minimum capital requirements for banking at Ho Chi
Minh City. .................................................................................... 113
4.1.2. Managing the average stockholder’s equity growth process for joint
stock commercial banks HCMC. ........................................................... 116
4.2. MANAGEMENT INNOVATION SOLUTION OF STOCKHOLDER’S
EQUITY FOR JOINT STOCK COMMERCIAL BANKS AT HO CHI MINH
CITY ........................................................................................................... 123
4.2.1. Amendment of institutions, determining the model and positioning
target market. ........................................................................................ 123
4.2.1.1. Modify institutions, equity ownership. .......................................... 123
4.2.1.2. Development of banks according to versatile financial corporation
model. .......................................................................................... 124
4.2.1.3. Reposition the active target market. ............................................ 126
4.2.2. Renewal of risk management mechanism under modern management
technology. ............................................................................................ 127
4.2.2.1. Complete overhaul of the factors affecting the risk management
mechanism. ................................................................................. 127
4.2.2.2. Innovation of accounting systems, internal audit in accordance
with international standards......................................................... 129
4.2.2.3. To improve risk prevention mechanism....................................... 131
4.2.3. Renew the capital safe management mechanism in accordance with
requirements of the BIS......................................................................... 133
4.2.3.1. Innovation of structure to determine stockholder’s equity safely. 133
4.2.3.2. Restructuring of all activities in accordance with capital safe
requirements. .............................................................................. 135
4.3. EXPANDING THE FRAME OF ASSESSMENT RATE OF SAFE
STOCKHOLDER’S EQUITY ...................................................................... 137
4.4. SYSTEM APPLICABLE CAPITAL TARGETS ASSESSED SAFETY
SELF-DIVERSITY ...................................................................................... 141
4.5. IMPLEMENTING THE MULTI-LAYERED MECHANISM FOR
MANAGEMENT AND MONITORING CAPITAL ADEQUACY .................. 143
4.6. BUILDING THE REGIME OF SAFETY CAPITAL DISCIPLINE STRICTLY
AND CLEARLY .......................................................................................... 145
4.7. PERFECTING THE MECHANISM OF INSPECTION AND MONITORING
CAPITAL ADEQUACY .............................................................................. 146
4.8. PROPOSING SOLUTIONS TO SUPPORT, INNOVATE, MANAGE
EQUITY ...................................................................................................... 148
4.8.1. Proposing to Vietnamese state ............................................................. 148
4.8.2. Recommendations for the State Bank of Vietnam ................................ 151
4.8.3. Recommendations to People’s Committee of Ho Chi Minh city ............ 155
CONCLUSION OF CHAPTER 4 .......................................................................... 157
CHAPTER V: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 158
5.1. SUMMARY OF THE STUDY ..................................................................... 159
5.2. CONCLUSION ........................................................................................... 159
5.3. RECOMMENDATIONS .............................................................................. 161
5.4. OPPORTUNITIES FOR FURTHER RESEARCH ...................................... 161
REFERENCE ....................................................................................................... 162
A. ROPOSED INTERVIEW AND SURVEY QUESTIONNAIRE ........... 162
B. PROPOSED BIOGRAPHY .............................................................. 165
LIST OF TABLES
Table (1.1): The profitability ROIF and ROFL .................................................... 42
Table (1.2): Debt balance and profitability of ROFL .......................................... 43
Table (1.3): Analys debt balance and profitability of ROFL ............................. 44
Table (1.4): The rate share holder in commercial foreigner banks in Asean
countries ............................................................................................................... 58
Table (1.5): The rate keep asset foreign bank in Asean countries from 90 – 01......59
Table (1.6): Amount of foreign banks and commercial banks in Asean
countries from 90 – 01 ................................................................................................ 59
Table (2.1): The holding structure of business financial sources of
Commercial banks HCM City 12/31/2010 ........................................................... 65
Table (2.2): Operating commercial banks at Ho Chi Minh City in 10/09.......... 66
Table (2.3): Structure of business financial capitals of Commercial banks
HCM City to 31/12/2010 ........................................................................................ 68
Table (2.4): Safe equity of Joint stock commercial banks 12/31/2010 .............. 71
Table (2.5): Liquidity of commercial banks at Ho Chi Minh City in
31/12/2010. ............................................................................................................ 73
Table (2.6): The structure of financial collection sources commercial banks
at Ho Chi Minh City in 2010 ................................................................................. 76
Table (2.7): Business financial result of Commercial banks HCM City in
2010 ....................................................................................................................... 77
Table (2.8): The development situation according to level of capital of
commercial banks at Ho Chi Minh city from 2004-2009 ................................... 80
Table (2.9): Classification of quality market of commercial banks at Ho Chi
Minh City from 2006 – 2009 ................................................................................. 81
Table (2.10): Situation in Merger, Acquisition of commercial banks at Ho
Chi Minh City from 97 – 06 ......................................................................................... 83
Table (2.11): Situation buy share for foreign partner of joint stock
commercial banks in HCM City to 12/31/2010 ................................................... 85
Table (2.12): Equity and fund percent on risk Assets of five joint stock
commercial banks in HCM City in 2010 ............................................................. 87
Table (2.13): Evolution of profitable asset mechanism on the total assets of
the joint stock commercial banks at HCMC from 2005 – 2009 ........................ 89
Table (2.14): Situation of transferring profitable assets structure of joint
stock commercial banks in HCM city from 04 – 09 ........................................... 91
Table (2.15): Financial capacity of the joint stock commercial banks at Ho
Chi Minh City in 10/09 .......................................................................................... 92
Table (2.16): Change in financial capacity of the joint stock commercial
banks in HCM city from 06-10 ............................................................................ 94
Table (2.17): Analyzing the method of own fund determination so as to
calculate the minimum safe rate following the old and new calculation ........ 96
Table (2.18): Analyzing the method of internal risk determination following
the old and new methods .................................................................................... 97
Table (2.19): Analyzing the method of external risk determination following
the old and new methods .................................................................................... 99
Table (2.20): Analyzing the method of determining the interest and foreign
currency dealing contracts following old and new calculation methods ..... 100
Table (2.21): Analyzing the method of determining the small equity and risk
asset contracts following old and new calculation methods ........................ 101
Table (3.1): The minimum capital requirements for banking operations in
the period 2009 – 2018 ....................................................................................... 114
Table (3.2): Evaluation of environmental conditions and economic
development goals bank from 2010 – 2015 ..................................................... 116
Table (3.3): The thesis proposed overall financial plan from year 2010 -
2014 for the City as commercial banks ............................................................ 119
Table (3.4): Additional average equity capital from internal resources for
the commercial banks in Ho Chi Minh City 2010 – 2014 ................................ 121
Table (3.5): Expected additional demand of average equity from external
sources of capital for commercial banks in Ho Chi Minh City from 2010 to
2014 ..................................................................................................................... 122
Table (3.6): Swapping the risk of loss (SWAP)............................................................ 136
Table (3.7): Build the frame rate of assessment equity and safety for the
commercial banks .............................................................................................. 138
FIGURES LIST
Figure (1.1): The profitability ROIF and ROFL ................................................... 42
Figure (1.2): Debt balance and profitability of ROFL ........................................ 43
Figure (1.3): Analys debt balance and profitability of ROFL ............................ 44
Figure (2.1): The holding structure of business financial sources of
Commercial banks HCM City 12/31/2010 ........................................................... 65
Figure (2.2): Operating commercial banks at Ho Chi Minh City in 10/09 ......... 67
Figure (2.3): Structure of business financial capitals of Commercial banks
HCM City to 31/12/2010 ........................................................................................ 68
Figure (2.4): Safe equity of Joint stock commercial City banks and Top 5
bank ....................................................................................................................... 71
Figure (2.5): Liquidity of Joint Stock commercial Top 5 banks and
Commercial banks in City ................................................................................... 73
Figure (2.6): The structure of financial collection sources commercial
banks at Ho Chi Minh City in 2010 ...................................................................... 76
Figure (2.7): Business financial result of Commercial banks HCM City in
2010 ....................................................................................................................... 78
Figure (2.8): The development situation according to level of capital of
commercial banks at Ho Chi Minh City from 2004-2009................................... 80
Figure (2.9): Classification of quality market of commercial banks at Ho Chi
Minh City from 2006 -2009 ................................................................................... 82
Figure (2.10): Situation in Merger, Acquisition of Phương Nam banks at Ho
Chi Minh City from 1997–2001................................................................................... 83
Figure (2.11): Situation buying share of ACB bank ........................................... 85
Figure (2.12): Equity and fund percent on risk Assets of five joint stock
commercial banks in HCM City in 2010 ............................................................. 87
Figure (2.13): Evolution of profitable asset mechanism on the total assets
of the joint stock commercial banks at HCMC from 2005-2009 ....................... 90
Figure (2.14): Situation of transferring profitable assets structure of joint
stock commercial banks in HCM city from 04 – 09 ........................................... 91
Figure (2.15): Financial capacity of the joint stock commercial banks at Ho
Chi Minh City in 10/09 .......................................................................................... 93
Figure (2.16): Change in financial capacity of the joint stock commercial
banks in HCM City from 06-10............................................................................. 94
Figure (2.17): Analyzing the method of own fund determination so as to
calculate the minimum safe rate following the old and new calculation ........ 97
Figure (2.18): Analyzing the method of internal risk determination following
the old and new methods .................................................................................... 98
Figure (2.19): Analyzing the method of external risk determination
following the old and new methods ................................................................. 100
Figure (2.20): Analyzing the method of determining the interest and foreign
currency dealing contracts following old and new calculation methods ..... 101
Figure (3.1)_A: The minimum capital requirements for banking operations
in the period 2009-2018...................................................................................... 114
Figure (3.1)_B: The equity requirements for banking operations in the
period 2009-2018 ................................................................................................ 114
Figure (3.2): Evaluation of environmental conditions and economic
development goals bank from 2010 – 2015 ..................................................... 117
Figure (3.3): The thesis proposed overall financial plan from year 2010 -
2014 for the City as commercial banks ............................................................ 119
Figure (3.4): Additional average equity capital from internal resources for
the commercial banks in Ho Chi Minh City 2010 – 2014 ................................ 121
Figure (3.5): Expected additional demand of average equity from external
sources of capital for commercial banks in Ho Chi Minh City from 2010 to
2014 .................................................................................................................... 122
Figure (3.6): Build the frame rate of assessment equity and safety for the
commercial banks .............................................................................................. 138
LIST OF EQUATION AND PICTURE
Equation (1.1): The principal targets for Self-determination of the full Basel
Committee ............................................................................................................ 28
Picture (1.1): Models of managing the own fund of commercial bank ........... 37
Equation (1.2) ........................................................................................................ 38
Picture (1.2): Own fund management following traditional model .................. 38
Equation (1.3): Model of ROIF and ROFL ........................................................... 41
Equation (1.4): Model of ROIF and ROFL ........................................................... 41
Equation (1.5): Sunainasu Growth models ........................................................ 46
Equation (1.6): General pattern ROA and ROE ................................................. 47
Picture (1.3): Model of incresed operation commercial Bank .......................... 56
Picture (2.1): Vietnam Map for research locale of the study ............................ 63
Candidate’s full name: Nguyen Thanh Nam
Proposed Study
“TO INNOVATE THE PRIVATE CAPITAL IN ORDER TO
CREATE THE HARMONIOUSLY COMPETITIVE
ENVIRONMENT FOR THE HCM CITY COMMERCIAL BANKS,
VIETNAM”
INTRODUCTION:
To manage private capital or to manage capital safely is actually a
harmonious management between risks and incomes, in order to create a
wholesome financial environment for the banks to develop stably. The effective
capital management is also a condition for the banks to approach quickly the
safe, modern technology of measurement, evaluation of capital safety having the
high accuracy. According to process of globalization, the requires used for
evaluating capital safety will be more strict as well as the ties of Law on the Bank
will increase.
1. PROPOSED STUDY
In the short term, the BIS’s standard system of evaluating Base I and II
capital safety is one of the top challenges for Commercial Banks in Vietnam,
specially the small, weak and shortcoming Commercial Banks in developing
countries. In the current conditions of Vietnam, the early and full awareness of
the role, importance of innovation in private capital management in order to
standardize the private capital management step by step which is stable with the
general rules of the world and local is a significant activity for effective and
sustainable development of Commercial Banks.
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Candidate’s full name: Nguyen Thanh Nam
2. METHODS AND TECHNIQUES OF THE STUDY
The study will be a combination of descriptive and explorative methods of
research. Descriptive method is used to describe characteristics of objects,
people, groups, organizations, banks, environments of a given situation by
addressing who, what, when, where and how questions (Zikmund et al, 2008).
Explorative method is used to increase the understanding of a concept by
clarifying ambiguous situations or discovering ideas that may be potential
business opportunities (Zikmund et al, 2008).
As the purpose of the study is to provide an in-dept analysis and a full
scenario of the current activities of commercial banks from which an application of
BIS model is proposed to enhance the control capacity of those enterprises, the
study used different methods of data collection including in-dept interview,
survey questionnaires, and secondary data study.
3. POPULATION AND SAMPLE OF THE STUDY
The samples will be conducted from about 15 commercial banks. Those
commercial banks build to operate in HCMC. The commercial banks can operate
under different types of other types of bank financial institutions, and non banks.
System of commercial banks in Vietnam has the presence of four types of
ownership: state commercial bank, joint stock commercial bank, joint-venture
commercial banks and foreign commercial banks.
4. RESEARCH LOCALE
Economic context of Vietnam
The impact of reform policies in 1986 to transition from subsidized
economy to market economy and international integration of Vietnam's economy
on the banking financial institutions and international trade organizations, such
as ASEAN, AFTA, ASEM, BTA, WTO,... are changing a series of standards
related to bank management issues such as accounting, statistics, laws,...; The
increase in foreign investment and joining the increasing competition of foreign
banks are forcing domestic commercial banks to quickly raise equity capital in
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Candidate’s full name: Nguyen Thanh Nam
various ways, have promoted the appearance of more and more of the new
ownership forms in the financial structure of banks.
The rise and serial development of SMEs in the recent time have
created new target markets, created pressure for domestic commercial banks
must prepare yourself for a strategy to position market, development of capital
steadily more to attract good customers, obtaining feasible the project.
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Candidate’s full name: Nguyen Thanh Nam
CHAPTER I
PROBLEM STATEMENT
AND IT’S BACKGROUNDS
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1.1. PURPOSE OF STUDY
The purpose of this thesis bring out the meaning the scientific foundation
not only about theory but also about reality of private capital management of
Commercial Banks in the market economy. To survey the reality of private
capital management and put forward the innovatory solution systems of private
capital management which is stable with safe standard required in the activity of
international bank, to create favorable conditions for HCM City Joint – stock
Commercial Banks to develop effectively, stably and durably.
1.2. INTRODUCTION
To manage private capital or to manage capital safely is actually a
harmonious management between risks and incomes, in order to create a
wholesome financial environment for the banks to develop stably. The effective
capital management is also a condition for the banks to approach quickly the
safe, modern technology of measurement, evaluation of capital safety having the
high accuracy. According to process of globalization, the requires used for
evaluating capital safety will be more strict as well as the ties of Law on the Bank
will increase.
In the short term, the BIS’s standard system of evaluating Base I and II
capital safety is one of the top challenges for Commercial Banks in Vietnam,
specially the small, weak and shortcoming Commercial Banks in developing
countries. In the current conditions of Vietnam, the early and full awareness of
the role, importance of innovation in private capital management in order to
standardize the private capital management step by step which is stable with the
general rules of the world and local is a significant activity for effective and
sustainable development of Commercial Banks.
Page 5 Major in: Financial - Banking Management economy
Candidate’s full name: Nguyen Thanh Nam
1.3. PROBLEM STATEMENT
The general research question of the study is “How can the BIS’s standard
system of evaluating Base I and II capital safety help HCM City Commercial
Banks to enhance capacity.”
Specifically, the study needs to answer the following sub-research
questions:
1. What are the benefits that HCM City Joint stock commercial Banks can
have through the application of the BIS’s standard system of evaluating
Base I and II?
2. How should HCM City Joint stock commercial Banks prepare for BIS’s
standard system of evaluating Base I and II application in terms of
organizational readiness, perceived ease of use and external pressure
(customer demand)?
3. How can BIS’s standard system help HCM City Joint stock commercial
Banks enhance capacity through its marketing tools?
1.4. IMPORTANCE OF STUDY
The thesis has contributed some important contents following:
1. To analyze preliminary in order to define the role and importance of the
innovation of private capital management in the bank’s business activity in
the fact of the requirements of safe and durable development; international
economic competition and integration.
2. To analyze depth the methods of private capital, the relationship between
private capital management and the requirement of capital safety
standards, as well as between the importance of effective private capital
management and requirements of capital safety improvement, as the
same time, has summed up some experiences from researching the
private capital management of the banking activities in our country. Based
on surveying reality of private capital management at HCM City Joint –
stock Commercial Banks, analyzing the achievements, the limit, the thesis
has shown the reasons of the shortcomings which need to be solved.
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3. In reference to the methods and reality have been analyzed, to spring from
the requirements of developing economic, social and banking goals;
based on the scientific foundations, the thesis have forecast the demands
and drawn up the average growth processing of private capital; defined
goals, principles and oriented the innovation of private capital for HCM
City Joint – stock Commercial Banks.
4. For HCM City Joint – stock Commercial Banks, the thesis have put
forward the innovative solutions of private capital according to
International Capital Safety Standards (BIS’s standard system) which are
stable with the real conditions of each bank, in order to create favorable
conditions for safe, effective, firm, durable development, including:
- To innovate the regulations of proprietary rights in stock capital in
order to be stable with the innovation of the Law on Business, orient
the developing model and determine the goal markets.
- To innovate comprehensively the regulations of risk management
according to modern technology.
- To innovate the regulations of private capital management by
technological solutions.
- To build the strategy of restructuralizing the own of stock capital
durably; the important goal is specialized labor and foreign strategic
partner.
5. The management offices supervise the bank in order to improve the effect
of management; supervise, speed up the HCM City Joint – stock
Commercial Banks to innovate quickly the Standards of Capital safety
management. The thesis have put forward the solution to improve the role
of macroeconomic management which is stable with developing
requirements of economy and the implement processing of international
engagements, detailing is:
- To orient the program, content, structure, policy of management,
supervise the capital safety according to Basel Standard.
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