Solutions to expand card services at petrolimex group bank

That is the reason why I choose the topic “ Solution to expand card services at Petrolimex Group Bank ” for my internship report to understand the situation and find the solutions to imp

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM

- -Bachelor Thesis TOPIC:

SOLUTIONS TO EXPAND CARD SERVICES AT

PETROLIMEX GROUP BANK

Student’s name :

NGUYEN VIET HAI

Internship guide : Mr NGUYEN VIET HUNG Supervisor : ASSOC.PROF.DR BUI HUY NHUONG

Hanoi, 2012

TABLE OF CONTENTS

ACKNOWLEDGEMENT

ABBREVIATION

LIST OF TABLES

LIST OF FIGURES

CHAPTER 1: INTRODUCTION 1

1.1 Rationale 1

1.2 Research objective 2

1.3 Research methodology 2

1.4 Scope of research 2

CHAPTER 2: THEORITICAL FRAMEWORK 3

2.1 Bank card 3

2.2 Factors affect the expanding of card services 12

2.3 Expanding the card services 14

CHAPTER 3: OVERVIEW OF PETROLIMEX GROUP BANK 19

3.1 The establishment of PG Bank 19

3.2 Vision and Culture 21

3.3 Organizational structure of PG Bank 23

3.4 Strategic Shareholders 24

3.4 Products and Services 25

3.4 Overview of Hanoi Card Centre 28

CHAPTER 4: CURRENT SITUATION OF CARD SERVICES AT PG BANK 30 4.1 Types and benefits of PG bank cards 30

4.2 Flexicard Issuing Procedure 32

4.3 Fees and Charges of Flexicard 33

4.4 Quality of Flexicard 37

4.5 Distribution and Promotion of Flexicard 37

4.6 The results of Card services of PG Bank in comparison with other banks 38

CHAPTER 5 SOLUTION TO EXPAND CARD SERVICES AT PETROLIMEX

GROUP BANK 48

5.1 Overall assessment of card services at PG Bank 48

5.2 Solution to expand card services 52

5.2 Recommendations 55

CHAPTER 6: CONCLUSION 57 COMMENTS

It is a great pleasure for me to work with the report based on the topic “Solution to expandcard services at Petrolimex Group Bank” which is very significant for economy I hopeworking on the topic will help me to gather various exposures to practical field So, at thevery beginning, I would like to express my gratitude to several people who help me tocomplete this thesis

First of all, I would like to thank National Economics University (NEU), especiallyAdvanced Program, for providing much precious opportunities to know real nature of thebanking activities through this internship

Equally important, I am sincerely grateful for all the help and advice I received from mysupervisor Assoc.Prof Dr Bui Huy Nhuong, Director of Advanced Educational Programs

ofNational Economics University I appreciated all time and effort Mr Bui Huy Nhuongput into guiding and encouraging me during the time of marking this thesis

Also, I sincerely thank all of the staff at Petrolimex Group Bank who gave me favorableconditions, helps and guidance in the days of internship at the bank

Lastly, I would especially like to thank all my friends in Advanced Class Intake 50 for alltheir encouragement and intellectual support that has made this report possible

StudentNguyen Viet Hai

PG Bank Petrolimex Group Bank

ATM Automated Teller Machine

POS Point of sale

EDC Electronic Data Capture

MOIT Ministry of Industry and Irade

LIST OF TABLES

Table 4.1: Charges for Debit Cards 33

Table 4.2: Charges of withdrawal cash at the Petrolimex petrol stations 34

Table 4.3: Charges for Prepaid Cards 35

Table 4.4: Charges for Debit Cards of Commercial banks 36

Table 4.5: Market share of Total number of bank cards in 2011 39

Table 4.6: Market share of Total Used Turnover of bank cards n 2011 41

Table 4.7: Market share of Total Payment Turnover of Domestic cards in 2011 43

Table 4.8: Market share of ATMS and POSs in 2011 46

LIST OF GRAPHS

Graph 2.1: Process of issuing card 5

Graph 2.2: Process of paying card 6

Graph 2.3: 4Ps Marketing mix 15

Graph 3.1: Organizational Structure of PG Bank 23

Graph 3.2: Organizational Structure of Hanoi Card Centre 28

Graph 4.1: Total number and Market share of PG Bank Flexicards 38

Graph 4.2: Total Used Turnover & Market share of PG Bank Flexicards 40

Graph 4.3: Total Payment Turnover & Market share of Domestic bank cards 42

Graph 4.4: Total number of ATMs and POSs 44

Graph 4.5: Market share of PG Bank ATMs & POSs 45

CHAPTER 1:

INTRODUCTION

1.1 Rationale

Bank cards payment comes from the purchase on credit of retail goods and the application

of technology in banking While bank cards have played an important role in daily life ofmany people all over the world, especially in the developing countries by dint of theirusage and convenience, that mean of payment is really attracted Vietnamese people andcommercial banks in recent years Seeing the born of bank cards in 1995, facts show thatbank cards services of Vietnam increase in services quality to satisfy customer needs

Realizing the benefits of development in bank card services, Petrolimex Group Bank withtheir craft strategies has penetrated that new market in order to meet the customer needs

It is undeniable that despite gaining much specific achievement, the bank card services of

PG Bank still be inadequate in some circumstances in reality

Being a collaborator of Retail Banking at PG Bank, I have experienced in their campaign

of issuing cards That is the reason why I choose the topic “ Solution to expand card

services at Petrolimex Group Bank ” for my internship report to understand the situation

and find the solutions to improve the quality of card services as well as the competitiveability with other commercial banks

1.2 Research objective

Through this research, I would like to

 Study the basic overview of card services of PG Bank

 Interpret and evaluate the real situation of card services quality of PG Bank

 Propose the solutions to improve the quality of card services as well as thecompetitive ability of PG Bank with other commercial banks

1.3 Research questions

 What is the current situation of card services at PG Bank?

 What are the factors affecting card services at PG Bank?

 What are the existing problems of card services at PG Bank?

 What are solutions and recommendations should be carried on to overcome theseexisting problems and to expand card services at PG Bank?

CHAPTER 2:

THEORITICAL FRAMEWORK

2.1 Bank cards

2.1.1 Definition of bank cards

Bank cards, the non-cash instrument, are issued by banks for customers A standard bankcard must be required with its three dimensions 8.5cm x 5.5cm x 0.7cm The front of bankcard needs to have bank trademark, bank logo, embossed card number and user name.Equally important, magnetic stripe with encoded information and signature of user must

be included at the back of bank card

2.1.2 Main types of bank cards

Based on technical features, there are three types of bank cards: Embossed card,

Magnetic card and Smart card All information is encoded in each type, but in different

levels For instance, embossed card is no longer used because of low level of datasecurity Whereas, magnetic card with the magnetic stripe for encoding is the mostpopular at the present, while smart card with all information encoded and secured by amicrochip is modern with high level of data security

Based on payment methods, bank cards are classified in three types: Debit card, Credit

card and Prepaid card To specify, debit card allows drawing of funds up to the available

balance in cardholder’s account By comparison, credit card allows drawing of funds up

to an approved credit limit based on the prestige and payment ability of customers Thelast type is prepaid card, which is normal card without issuing procedure but limitednumbers of money and time period

2.1.3 Parts involved in bank card services

There are four basic part of the chain of activities involving issue, use and payment ofdomestic banks in Vietnam market, which are Issuing bank, Payment bank, Cardholderand Merchant (Card acceptance point) Besides, one more important part is Vietnam BankCard Association Every part plays the essential role in order to maximize the function ofthis non-cash instrument method

 Vietnam Bank Card Association: is the head of the system of all banks that operate

in card services This organization makes the basic regulations, and acts as anintermediary of member banks Especially, Vietnam Bank Card Association has nodirect relationship with the cardholders and merchants, because this organizationjust provide the national telecommunication network for all member banks

 Issuing bank: is the bank issued cards with their own trademark All bank cardsmust include the name of issuing bank That bank requires terms and conditions forusing card to customer Issuing bank may sign agency contracts with a third partybank, a credit institution or other card issuers That activities bring the benefit toissuing bank with taking full advantage of experience and penetration the market

of the agency banks, but issuing bank has to act as a guarantee for them whendealing with financial risks

 Payment bank: is the bank accepting all cards as the method of payment viasigning a contract with the merchants (card acceptance points) Payment bankprovides each merchant with services equipment, guides them the way to operateand tackle the process In most cases, payment banks charge the service fees foracceptance as a merchant of them base on the value of each transaction

In fact many banks are not only the issuing banks but also the payment banks Asissuing banks, they regard the customers as cardholders otherwise their customersare the merchants if the banks act as payment banks.

 Cardholder: The bank issues official cards for cardholder, who is individual orrepresentative person for an organization directly benefit the card services Acardholder can own many types of cards Using cards as the convenience paymentmethod is the primary advantage for cardholders Furthermore, the customers whouse credit cards will receive the statement with fully information of eachtransaction, balance of debit, expire date and the money they must pay for banks

 Merchant is a goods or services company (hotels, supermarkets, commercialcenter, etc) which signs a contract with cards issuing bank for acceptance that card

as a method of payment Merchants play the importance role in expanding thescope of payment by cards and bringing the banks to be closer with customers

2.1.4 Process of issuing and paying card

2.1.4.1 Process of issuing card

Graph 2.1: Process of issuing card

(Source: Report of Vietnam Bank Association)

Bank cardBank card

Registrationform

Customers’

Information

First of all, the customers who would like to have a new bank card have to fill theregistration form of the bank The information of customers was secured and transferred

to Card Centre For Debit cards, the bank needs only the basic information such as name,address, contacts, and the signature of customers But in case of Credit cards, by dint ofthe bank’ credit ratings the customers will be evaluated via the regular income (forindividuals) or financial situation (for corporations) After few days, the new card withfull information of customers for transaction will be produced and sent to Issuing bank.There, the customers receive the bank card with the Personal Identification Number(PIN) The PIN is very important for the security of bank card When the customersreceive the default PIN from Issuing bank, they should change it immediately in the firstusing time

2.1.4.2 Process of paying card

Graph 2.2: Process of paying card

(Source: Report of Vietnam Bank Association)

Payment bank

Issuing bank

Advance

Bill ofservices

Debits

Credits

Statement /MessagesPayment

Buy goods/ services

Bill of services

Merchants such as hotels, supermarkets, commercial center, etc are the places thecardholders buy goods or services, and receive the bill of services That bill will be sent toPayment bank, and then the merchants are gave the advance for the transaction The data

of transaction is transferred to issuing bank There, the Debits are accounted to Issuingbank, and the Credits are accounted to the opposite side for Payment bank If thecardholders would like to know about all of the transaction in periods, the issuing bankwill send the monthly statement or messages after each transaction in order to update theinformation timely

2.1.5 Role of bank cards

For issuing banks, card is one way for capital mobilization by dint of increasing indeposits Secondly, cards payment is conducive to more professional, more convenientand safer payment activities Thirdly, credit cards are useful for bank to set up the creditrating system as well as develop the credit activities Also, the banks can gain a largeamount of money from service fees

For cardholders, using cards is a safety holding money place They do not have to worryabout the risk of counterfeit money when doing transactions Another benefit users canachieve from that convenient and flexible mean of payment is the sales promotion andpresent program As the result of maintaining amount of money in their accounts even if

no transaction, the cardholders will receive the interest at the end of period with smallinterest rate because the banks consider that money as bank deposits

For payment banks, the trade discounts and withdrawing cash fees which they chargefrom card acceptance points are their most important revenue Besides, they also receivethe benefits from issuing banks via their accounts as well as the cardholders

For card acceptance points (Merchant), being card acceptance points, they can avoid risksfrom counterfeit money as well as reduce the cost of administration Their accounts atbanks via cards help them to increase the effectiveness of capital turnover.

2.1.6 Card services activities of commercial banks

The card services activities of commercial banks include issue, payment, riskmanagement, marketing and customer services

 Issue: Basically, that activity of banks involves the following components:

 Organizing of marketing activities to bring their products to market

 Evaluating the customers with specific criteria

 Setting up the credit limit for credit cards

 Purchasing the blank cards

 Relief printing and encoding cards

 Creating the Personal Identification Number (PIN) for customers

 Managing the information of cardholders

 Managing the card using activities of customers

 Managing the real fact of Debit collection from customers

The banks have to set out the rule of using card and collecting the Debits in order tomanage the risks of operation card services For example, the minimum payingrequirement, expire date, grace date, fees and interests, the maximum and minimum ofcredit limit and incentive policies for customers

 Payment:

When the bank expand their payment activities of bank cards overall market, it means thatthe number of merchants will increase and merchants appear at much more places,especially hotels, supermarkets, commercial center, etc The bank cards are acceptable inmany places via more convenience and easier process of payment, which is conducive tomore benefits to cardholders, merchants, issuing banks and payment banks Besides,

maintaining the relationship with customers after purchasing products by dint of a largesystem of merchants is very important The main process of Payment activities involves:

 Setting and managing the customer information system

 Managing the operation of merchants network

 Organizing the payment for transactions at merchants

 Providing the customer services to cardholders

 Training the employee at merchants

 Providing the equipment and machines for merchant

 Risk management:

The more card services are expanded, the more risk management needs to be concerned.The reason is that the risks not only affect directly the revenue and reputation of banks,but also interfere with the customers The risk management includes the followingactivities:

 Preventing and investigating the false card

 Managing the accounts of cardholders whose stolen cards

 Intensifying vigilance by security system of customers’ PIN

 Training the bankers and staff of merchants in solutions when dealing withthe problems of false cards

 Cooperating with appropriate authorities in case of false contracts forissuing cards

 Marketing and Customer Services

Marketing and Customer Services in Card Business include all of method to find andpersuade the customers (cardholders and merchants) to use that non-cash instrument ofbanks Furthermore, encouraging them to become customers of bank in long term is themost significant goal which the bankers need to follow The basic activities in Marketingand Customer Services are:

 Contacting with potential agencies and Persuading them to be cardacceptance points

 Designing the promotion program for Banks and Merchants

 Setting the discount policies for Cardholders and Merchants

 Contacting with Individuals and Corporations and Persuading them to usethe bank cards

 Encouraging the cardholders to take part in long term bank deposits bygiving accumulate bonus points and presents

2.1.7 Risk of card payment activities

2.1.7.1 Fraud

 Fraud in issuing

 Fake application for opening accounts

When the issuing banks do not appraise the information of cardholder written on theapplication for opening accounts, they will have suffer the problems of contact withcustomers and credit losses when the cardholders cannot pay money for the banks or donot want to pay

 Fake cards

Fake cards are made by individuals or organizations in order to take illegally information

on magnetic tape from customers There are many types of fake cards which depend onabilities of the hackers

The first type is Embossed card with re-embossed information We can realize this card

by comparing the signature of cardholders or scanning via the machines using EDC(Electronic Data Capture) technique

The second type is Magnetic card with re-encoded information We can know whether it

is false or not by scanning through EDC machines

The third type is Blank cards with no information These cards will be ejected when doingtransactions at ATMs/ POSs

The most sophisticated type is fake card with new encoded information the actual card.That card is only detected when cardholders do transactions fully and clearly.

 Cards are stolen or lost

In this case, the customers should inform the banks about the problems as soon aspossible so as to ensure the benefit of customers and the reputation of banks

 Fraud in payment

 Fake Merchants

In this situation, the merchants deliberately provide incorrect information with paymentbanks The result is that payment banks cannot recover the money supplied for merchants

 Collusion between merchants and Cardholders

There are two kinds of collusion: Common Purchase Point (CPP) – the merchantsunintentionally store the data of fake cards, which causes many fraud transactions; andPoint of Compromise (POC) – The merchants intentionally do the fraud transactions withfake cards, white cards of customers

 Skimming at POSs:

The customers do not know that in the POS there is extra equipment which can collect theencoded information of cardholders The criminal organization can exploit this gapwithdraw the amount of customers’ money without their cards

2.1.7.2 Credit risk

The credit card allows its holder to buy goods and services based on the holder's promise to payfor these goods and services The issuing bank of the card creates a revolving account and grants

a line of credit to the cardholders from which the user can borrow money for payment to a

merchant or as a cash advance to the users Credit risk is bank's risk of loss arising from

cardholder who does not make payments as promised If this situation appears in large scale, thebanks can go bankrupt because of much loss of capital

2.1.7.3 Technology risk

The risks are the problems of the information system of management which include errors

of connecting, updating data process, or maintaining data security Because card activitiesare continuous and online 24/24h, even small errors will cause the large loss directly tothe transaction time, and the accuracy of payment activities

2.2 Factors affect the expanding of card services

2.2.1 Internal factors

 Qualification of bankers:

Bankers who are the people directly work in card services environment, have clearlyunderstand about payment process, and fraud behaviors By dint of their accumulatedexperience and working awareness, the staffs provide their banks easier access to avoidthe risks, and restrict the losses The more bankers are professional, the more benefits thebanks can achieve to enhance the quality of card services

 Quality of customer assessment

Customer assessment is the most important for the banks issuing credit cards andexpanding the merchants systems Selecting the good customers to contact andmaintaining the relationship with them in long term are the goals the banks follow

 Financial competences and degree of banking technology

The banks with modern and convenience process of card payment can strengthen thequality of card services The customers always would like to have safe and quicktransactions at banks Not every bank can invest to have the optimal method to do that So

as to become a strong and trust bank, the bank should improve itself first

 The development strategies of banks

The development strategies of banks depend on the vision and philosophies of the leader

If they would like to expand card services, finding target customers and marketingstrategies need to be concerned

2.2.2 External factors

 Population environment

The habit of using cash of consumers has been for many years In near several decades,bank cards, the non-cash instrument, appear and develop in the era of modernization ofbanking industry with modern technology Like the any new products, bank cards needmany years to be widely acceptable In fact, many people do not concern about the newfunctions of bank cards and the benefits they can bring for social life Besides, merchants,ATMs, and POSs usually are threatened by hackers and criminal organizations’conspiracies Most of Vietnamese people regard cash as the most convenience method ofpayment Vietnamese bank cards began to appear in the market during the 1990s, butactually develop in recent 10 years Nowadays, in open-market economies, the number ofmerchants, ATMs and POSs increase strongly, which results in the popularity of bankcards not only in large cities but also in rural area, where the banking offices cannotapproach In near future, in Vietnam, bank cards will be the most popular paymentmethod like many developing countries in the world

 Economics environment

In highly competitive economy, the bank cards services have to satisfy the customer need

by the reasonable issue and payment fees because the income of customers are different.Banks should enable every customer, especially poor people to approach the new paymentmethod If the banks do not care for their potential customers in long term, the banks willlost them because the other banks encourage the customers to use their product withhigher quality The high pressure among banks actually brings more choices forcustomers, which results in the development of bank card services in each bank

 Technological environment

The bank cards activities are much influenced by the level of science and technologybecause the safety and time of transactions play the important role in evaluating whetherthe services of a bank is efficient or not Vietnamese technological environment is moreand more expanded, and approached the up-to-date methods of the modern nations Allbanks can get the benefits from that and have the chance to upgrade their ATMs, andPOSs system

 Legal environment

The law and the administration of State Bank of Vietnam affect directly affect not onlydevelopment of the cards business but also the risk management The more clearly andcloser the policies are with real facts, the less frequently risks will appear

2.3 Expanding the card services

By dint of understanding the internal and external factors affecting the card services, thebanks should have judicious strategies for expanding the card services One of thetheories they need to concern is Marketing mix

2.3.1 Marketing mix

The 'four Ps' consist of the following:

Graph 2.3: 4Ps Marketing mix

(Source: Principles of Marketing –Philip Kotler)

 Product 

A product is seen as an item that satisfies what a consumer needs or wants It is a tangiblegood or an intangible service Intangible products are service based like the tourismindustry & the hotel industry or codes-based products like cell phone load and credits.Tangible products are those that can be felt physically Typical examples of mass-produced, tangible objects are the motor car and the disposable razor A less obvious butubiquitous mass produced service is a computer operating system

Every product is subject to a life-cycle including a growth phase followed by maturityphase and finally an eventual period of decline as sales falls Marketers must do carefulresearch on how long the life cycle of the product they are marketing is likely to be andfocus their attention on different challenges that arise as the product moves through eachstage of product life

The marketer must also consider the product mix Marketers can expand the currentproduct mix by increasing a certain product line's depth or by increase the number of

product lines Marketers should consider how to position the product, how to exploit thebrand, how to exploit the company's resources and how to configure the product mix sothat each product complements the other The marketer must also consider productdevelopment strategies

 Price 

The price is the amount a customer pays for the product The price is very important as itdetermines the company's profit and hence, survival Adjusting the price has a profoundimpact on the marketing strategy, and depending on the price elasticity of the product, itwill affect the demand and sales as well The marketer should set a price thatcomplements the other elements of the marketing mix

When setting a price, the marketer must be aware of the customer perceived value for theproduct Three basic pricing strategies are: market skimming pricing, marketingpenetration and neutral pricing The 'reference value' (where the consumer refers to theprices of competing products) and the differential value (the consumer's view of thisproduct's attributes versus the attributes of other products) must be taken into account

 Promotion 

Promotion represents all of the methods of communication that a marketer may use toprovide information to different parties about the product Promotion comprises elementssuch as: advertising, public relationships, personal selling and sales promotion

Advertising covers any communication that is paid for, from cinema commercials, radioand Internet advertisements through print media and billboards Public relations is wherethe communication is not directly paid for and includes press releases, sponsorship deals,exhibitions, conferences, seminars or trade fairs and events. Word-of-mouth is anyapparently informal communication about the product by ordinary individuals, satisfiedcustomers or people specifically engaged to create word of mouth momentum Sales staffoften plays an important role in word of mouth and public relations

 Place 

Providing the product at a place which is convenient for consumers to access is veryimportant Place is synonymous with distribution Various strategies such as intensivedistribution, selective distribution, exclusive distribution and franchising can be used bythe marketer to complement the other aspects of the marketing mix

The marketing mix elements called product, price, place, and promotion these are calledthe four elements of marketing mix and also called 4ps of the marketing mix

2.3.2 Steps of expanding process of the card services

So as to expand the card services, the commercial banks can follow the 4Ps marketingmix

As the theory mentioned before, banks should have specific strategy at each period oftime It also depends on the financial competences and degree of their technology Theprocess of making customers’ satisfaction about the bank cards services including foursteps: product mix, pricing mix, promotion mix and place mix

 Product mix

Products of card services are bank cards When the cardholders can use the bank cardseasily and safely, it means that the products of banks are highly appropriated Followingthe theory of product mix, the marketer can expand the current product mix by increasing

a certain product line's depth or by increase the number of product lines In case of banks,issuing many types of bank cards can bring more choices to customers In addition to this,hybrid card is new type of bank card, which allows cardholder to benefit more than onefunction of only one card

 Price mix

The fees for issue and each transaction are the most important things which the customersconcern when selecting the banks to become cardholders When the quality of cards ofdifferent commercial banks is quite indifferent, fee is the most sensitive matter whichaffects the choice of customers

CHAPTER 3:

OVERVIEW OF PETROLIMEX GROUP BANK

3.1 The establishment of PG Bank

■ Petrolimex Group Commercial Joint Stock Bank (PG Bank) was formerly Dong ThapMuoi Rural Joint Stock Bank Dong Thap Muoi Rural JS Bank’s operation permit wasissued by the State Bank’s Governor’s License No 0045/NH – GP dated November 13,

1992 Accordingly, the bank’s initial charter capital was 700,000,000 VND and itsoperating district was Dong Thap province

■ After 10 years of operation, PG bank‘s organizational system has constantly beenstrengthened, achieving a steady growth rate with a low overdue debit and an annualbusiness result that always brings about high profits to its shareholders The bank’scharter capital has now reaches 5,000 million VND, which is seven times higher than theinitial charter capital

■ In July 2005, Dong Thap Muoi Bank decided to invite new shareholders to participate,making an increase of the charter capital to 90 billion VND Among the new shareholderswere financially potential and banking-business experienced Vietnam National PetroleumCorporation (Petrolimex) and Sai Gon Security INC (SSI)

■ Petrolimex Group Commercial Joint Stock Bank has made significant progress with thecontribution of big shareholders In September 2006, the bank increased its capital to 200billion VND Its total asset as of December 31st, 2006 was 1,187 billion VND, theoutstanding loan was 801 billion VND, the total revenue in 2006 was 69 billion VND andits profit before tax was 17.49 billion VND

The bank, in cooperation with a foreign consultant, was able to create a long-termdevelopment strategy It was also successful in the selection and deployment of the corebanking software by IFLEX, one of the most modern banking software presently.

■ In March 2007, Dong Thap Muoi Rural JS Bank was authorized to be transformed into

an urban joint stock bank by State Bank Decision No 125/QD-NHNN dated January 12,

2007 and to change its name to Petrolimex Group Commercial Joint Stock Bank (PGBank) by Decision No 368/QD- NHNN dated February 8, 2007

Accordingly, PG bank was licensed to expand its network nation-wide and to perform fullbanking services including international payment and foreign currency trading

■ In May 2007, it was decided at PG Bank Annual Shareholder Conference to increasethe Bank’s capital to 500 billion VND in 2007 with a plan to increase the capital to atleast 1,000 billion VND in 2008 and at least 3,000 billion in the period from 2008 to

2010. In June 2007, PG Bank Hanoi Branch was officially inaugurated and increasedcharter capital to 500 billion VND

■ In November 2008, PG Bank reached the title “2008 A Rating” by the State Bank ofVietnam and begin implementation of international payment PG Bank was granted theaward of Vietnam Excellent Brand 2008 by Promotion Agency (MOIT) and VietnamEconomic Times

■ In December 2009, PG Bank was awarded “Vietnam Top Trade Services 2009” byMinistry of Industry and Trade (MOIT) to honor the outstanding achievements infinancial sector

■ On 17 March 2010, PG Bank’s headquarter officially moved to Hanoi by State BankDecision No 3209/QD-NHNN date December 25, 2009 PG Bank's new headquarterlocated at Office 5, 18T1-18T2 Building, Trung Hoa - Nhan Chinh, Le Van Luong, Nhan

Chinh Ward, Thanh Xuan District, Hanoi In April 2010, PG Bank reached the title “TopTrade Services 2009” by MOIT for the second times In December 2010, PG Bankcontinuously reached the title “Bank grade A” awarded by the State Bank and “Top TradeServices 2010” by MOIT for the third times.

■ Up to now, PG Bank has had 64 branches and transaction offices nationwide PG Bankreaches total asset value of 22.022 trillion dong and pre-tax profit of 184.8 billion dong byMarch 31, 2011

3.2 Vision and Culture

■ Vision

Become a leading commercial joint-stock bank offering outstanding quality financial andbanking services based on highly competent and dedicated personnel, and a world-class technology

■ Corporate Culture

In order to maintain the sustainability of the Bank’s achievements, especially in the fast changing and highly competitive business environment, PG Bank has strived to create andreinforce the Bank’s own unique corporate culture, which involves around five core values:

The logo of PG Bank is meant to represent the dynamic, modern and high-tech

characteristics of the Bank. 

The two streaks of light bear the two colors that identify Petrolimex, giving off a feel of the continuous movements forward of the Bank, seeking to seize the opportunities that emerge from the financial market The two light streaks moving together also symbolize the strong bond and great cooperation within the Bank, which play crucial parts in

preserving the success of the Bank

3.3 Organizational structure of PG Bank

Graph 3.1: Organizational Structure of PG Bank

(Source: Official website of PG Bank)

3.4 Strategic Shareholders

■ Vietnam National Petroleum Corporation (Petrolimex) 

Vietnam National Petroleum Corporation (Petrolimex) is the biggest shareholder of PG Bank (40%) As one of very important state corporations, Petrolimex occupies 60% of domestic oil and gas market with nation-wide network. 

Petrolimex has more than 2,000 corporate-owned stations and more than 4,000 owned stations under the Petrolimex brand name

retail-Along with the core business, Petrolimex also achieved much success in other fields, such

as transportation, gasoline, petrochemical, insurance, etc In the end of 2010, total revenue

of the corporation was about VND 140,000 billion, in which VND 25,000 billion was contributed to the state budget

Petrolimex has 41 subsidiaries, 34 branches that are affiliated with 100% state owned subsidiaries, 23 joint stock companies, 3 joint venture companies and 1 private limited company in Singapore

■ Saigon Securities Inc (SSI) 

Saigon Securities Inc (SSI) owns 9.98% of PG Bank’s charter capital Being listed on HoChi Minh Stock Exchange (HSX), SSI has the biggest market capitalization in Vietnamstock market Strong financial capability and professional personnel are among factorsthat enable SSI to provide a diverse range of high quality financial products and services

to customers

With satisfying performance in recent years along with great growth potential, SSI has attracted not only domestic investors but also well-established, internationally recognized

financial institutions such as DBJ, ANZ, Daiwa, JP Morgan, HSBC, Credit Suisse,

CitiGroup In 2010, total revenue of SSI reached over VND 1,500 billion, while profit was about VND 911 billion

As at 30/09/2011, SSI has a large operation network, including 01 head quarter, 08

branches, 03 transaction offices and 01 Fund Management Company located in big cities such as: Hanoi, Hai Phong, Quang Ninh, Nha Trang, Vung Tau and Ho Chi Minh City

3.5 Products and Services

PG Bank provides a comprehensive range of traditional banking products and services,including deposit and lending products, cross-border remittance service, trade financingand card-related services In addition, the Bank has also put great effort in developing andoffering customers more diversified and advanced financial products and services, notablycorporate finance and commodity derivatives

■ Personal Products and Services

PG Bank personal daily products and services include: Accounts, Savings, Loan Products,and Cards,

 Accounts: There are three types of PG Bank Accounts

o Golden Accounts

Those are payment accounts by VND currency for individuals with fully functions such

as cash withdrawal, deposit, transfer money, etc The type of accounts have the minimum requirement balance: 100,000 VND and the monthly minimum requirement balance

monthly: 9,000,000 VND The users of accounts benefit free transactions for transferring

money at bank offices, via Internet Banking, and SMS Banking, free fees for receiving

statement via email and SMS, and receive the interest from 10% to 12% depends on theaccount balance.

o Current Account

The accounts are paid by VND, USD, EUR currencies The minimum requirementbalance of those accounts is 50,000 VND/ 5 USD/ 10 EUR Account users will receivethe interest as the same as non-term deposit

o Flexible Saving Account

The payment accounts are only paid by VND currency The minimum requirement balance is 50,000 VND for each account The interest which account users receive stairs

of interest depends on the account balance, daily accumulated, and monthly paid

 Savings

o Normal Savings

The accounts by are paid by VND, USD, EUR currencies The minimum requirement

balance is much more than Current Account with 1,000,000 VND/ 100 USD/ 100 EUR

At the end of term, the users will receive their interests

o Savings deposit with flexible fund withdrawal

Unlike those above accounts, that saving deposits are paid by VND/USD currency with

the same minimum requirement balance as normal saving 1,000,000 VND/ 100 USD The

interests are 0% with the deposits less than 1 month; 10%-12% for VND, 1.5-2% for USD

in term of 1-36 months deposit

o Savings deposit with interest paid periodically

The payment accounts are just paid by VND currency with the minimum requirementbalance: 1,000,000 VND and the periodically paid interest