Developing Vietcombank in the international economic integration

The main reason is that the competing capability of Vietnamese banks ia still low such as asset, safety and effectiveness in business, the capability on service supply, banking technolog

PROGRAM ON MASTER OF MANAGEMENT (MMVCFB6)

-

NGUYỄN CHÁNH TRỰC

DEVELOPING “VIETCOMBANK”

BRANDNAME IN THE INTERNATIONAL ECONOMIC

INTEGRATION

THESIS OF MASTER OF MANAGEMENT

HOCHIMINH CITY

(2007)

PROGRAM ON MASTER OF MANAGEMENT (MMVCFB6)

-

NGUYỄN CHÁNH TRỰC

DEVELOPING “VIETCOMBANK”

BRANDNAME IN THE INTERNATIONAL ECONOMIC

INTEGRATION

THESIS OF MASTER OF MANAGEMENT

Adviser: Mr Hồ Diệu, Ph.D

HOCHIMINH CITY

(2007)

PROGRAM ON MASTER OF MANAGEMENT (MMVCFB6)

-

NGUYỄN CHÁNH TRỰC

DEVELOPING “VIETCOMBANK”

BRANDNAME IN THE INTERNATIONAL ECONOMIC

INTEGRATION

THESIS SUMMARY OF MASTER OF MANAGEMENT

HOCHIMINH CITY

(2007)

PROGRAM ON MASTER OF MANAGEMENT (MMVCFB6)

-

NGUYỄN CHÁNH TRỰC

DEVELOPING “VIETCOMBANK”

BRANDNAME IN THE INTERNATIONAL ECONOMIC

INTEGRATION

THESIS SUMMARY OF MASTER OF MANAGEMENT

Adviser: Mr Hồ Diệu, Ph.D

HOCHIMINH CITY

(2007)

CHAPTER I : BRANDNAME AND THE CHARACTERISTIC ON BUILDING IT IN VIETNAM BANKING SERVICE

1.1 –The concept of brandname :

In the market economy, competition is an indispensable rule, the core value of products and services is not much differentiated So brandname is the key that creates the differentiation The brandname itself is making increasingly not only the value of products and services but also the revenue to business , or

in other way, brandname is an intangible asset

The brandname is a signal of entity on the market It is used to recognize and distinguise this entity to others However, if brandname is only a signal, it can not become an asset Therefore, if it is simply a name, it can not a brandname According to view of many marketing specialists, brandname must

be the total of many factors and be given an intellectual proprietary right in that country The factors such as the name of entity, logo, slogan, theme, picture and design of products are called the part of outside, the brandname is the part of inside and showed out vision and mission In addition, if it is not known and understood the vision and mission in right way (due to not advertisement), it will not be enough idea or value

1.2- The concept of brandname of the bank :

“Brandname of the bank” is the term of marketing It is the name of the bank with its prestige and charater It makes the clients getting deep memories to the bank and differentiating to others in banking service

In the competing and integrating condition, the brandname of a bank exists not only history, network but also the philosophy of right, obvious business, the advantages and the prominence on high quality service and soft

price that are created on the basis of using mordern technology and restructuring the organization and management

1.3- The composition of brandname of the bank :

The composition of brandname of the bank is protected by the State according to the law on intellectual proprietary right

The banks create the value in the way of making the obvious differentiation on banking service on the basis of brandname, holding and developing the loyalty of the clients to the brandname These values can change into financial income In fact, the most valuable asset of the bank is not only tangible asset but also intangible one such as brandname Therefore, the brandname of a bank is the intangible asset that is valuable and must be cared and properly invested

In the developing of brandname, we must think it brandname, not a name

of product and service that we are seeing on the ads at the beginning We must

do it famous At the beginning, the brandname must be a prism We need to have

a strategy and a project with the clear and specific details to appraise and be quantitative

Because of the developing of new product/service is so important, the marketing specialists are often to get a mistake on the history of brandname to manage it

Example : Vietcombank brandname, a long time, these products/service to those, this ad to another and it has become easy to mind to clients Today, Vietcombank brandname has got an enough position

Brandname management means to get lessons and experiences from the history in order to save the time To brand is to see it as second hand one at the beginning

1.4- Branding and developing brandname in the Vietnam commercial banks : 1.4.1- The fact :

Nowadays, brandname is a new thing, the banks have not yet been interested in It is only mentioned when the joint stock commercial banks have issued the shares to public and the equitization of the state owned ones So, the branding and developing brandname are more and more interested in and awaked of In 1990s, the Vietnamese commercial banks have had the activities

to brand, however, it was unprofessional because they have not yet recognized the importance of brandname toward the business Up to now, most banks have recognized the branding and developing brandname , so there are many programs that are more specific for branding and advertising brandname Many banks have got many success and stably stood on their own brandnames

In 2004, Vietcombank is elected to be the bank having the strongest brandname Vietcombank brandname had a 43 – year history To be a bank that keep the most important role in Vietnam banking system, having trustworthiness

in financing, export – import settlement, foreign exchange and international banking financing service From 1996 to 2003, Vietcombank was continously elected to be the bank having the best service on international standard settlement

officially announced that the Asia commercial bank (ACB) has been ranked to

be one of the 500 famous brandnames in Vietnam With the aim of becoming a top banking brandname, ACB is continuously giving out many products, services, developing the technology in order to meet the clients’ needs that are more and more increasing A bank’s characteristic is to actively participate in the social activities, it is a resposibility to the community development

1.4.2- The activities :

1.4.2.1- Intensifying to advertise the brandname, the image of the bank :

- The symbols, the logoes or the images of the banks are more and more appearing on the mass media, from television, newspapers, magazines, internet, etc to the panoes on the routes, especially in international airports, ports, fashion shows, variety shows, football matches and sports events

- Logoes, symbols of many banks are also more and more appearing on the front pages or first pages of many kinds of newspapers, magazines such as Saigon Times, Saigon Entreprenuers Magazine, Financial Magazine, etc

- The banks are also paying attention to present logoes, symbols, images that are salient, easy to look and making impression on the clients from head offices to brands, transaction offices

- Some are increasingly advertising the brandnames, the images by the way of sponsoring to some activities such as : Vietcombank with “Stock Exchange Bulletin” on VTC1 channel; Incombank with fashion shows, other charity, social activities, the scholarship to the students; Techcombank with education programs on TV; VP bank with “information on 24 hour market price”

on VTV1; ACB with “The knowledge on financing and banking” on HTV9, etc

- Some are connecting to many famous brandnames to allure the clients such as : East Asia Bank and Vietcombank in issuing ATM, ANZ with Sacombank and Southern bank in widening banking service

1.4.2.2- Public Relation :

- Organizing the advertizing show on the time of giving out new products , services such as fund mobilization, card issuance, loans ect They are advertised not only on mass media but also on banrons, brochures The contents of advertisement are not only insisting on usefulness but also having promotion and

after sale activities; must comply with the tendency that is honest, making salient

to products, services, not to compromise to the trustworthiness of other banks; diversified and modern, designed by the famous advertising companies

- Organizing the clients meetings, marketing

- The sponsorship to the sport games such Agribank with Agribank Cup, Viecombank with Vietnam Football Team, East Asia Bank took the power on

Ho Chi Minh Police Team and renamed “Dong A – Pomina” Team and sponsors

to Vietnam badminton championship

- Filing to patent in overseas such as Bank of Investment and Development of Vietnam (BIDV) in USA

- Differentiating to products, services

- Applying to soft price on the basis of public relation in stead of the transaction in passing time according to the strategy on bank – client relation

- Changing process of service supply that is making clients more convenient

- Widening channels and lenghthening the working time Making the differentiation in channels by the way to set up specializing branches such as Sacombank with March 8th branch that only serving to ladies

- Using modern equipments to serve clients quick, convenient and more accurate

- Upgrating service quality by the way to set up service center, call center

- Applying new technology in management and service supply

- Employing and training

1.4.3- Limitations :

The process of building the brandname of the banks is not yet professional, still unprompted Moreover, though the banks all have brandnames

but they are unsustainable Example : Asia Commercial Bank (ACB) where there is a rumour, it has got the risk of liquidition immediately

The brandnames of the banks are only famous in domestic market , not in foreign ones The main reason is that the competing capability of Vietnamese banks ia still low such as asset, safety and effectiveness in business, the capability on service supply, banking technology :

Firstly, the equity of Vietnamese banking system is about one billion USD and is chiefly concentrated on five state owned commercial banks , in the meanwhile, the average equity of a bank in ASEAN such as : Singaporean bank

is one billion USD and Citibank is 20 billions USD

Secondly, the products, services of the Vietnamese banks are not diversified In average, the total of the services of the Vietnamese banks are

400, in the meanwhile, there are more than 2,000 in Thailand, 5,000 in Janpan

Thirdly, the return of a bank is characterized by ROE and ROA ROE of the Vietnamese banks get from 4% to 14%, ROA from 0,2% to 2% In the meanwhile, Malaysian banks get ROE 17,6%, ROA 3,6% It is said that the business result of the most of the Vietnamese banks are not yet symmetrical to the widening scale of asset

1.5- The building and development of Vietnamese banks’ brandnames in the international integration process :

The international integration process is increasingly wide and deep, the pledges to the Treaties are obvious There is no time to execute them while the competition of the Vietnamese banks is still very low Therefore, the Vietnamese banks had to hurry up to build and develop their own brandnames in order to take a existence in globalization environment

The Vietnamese banks should learn how to make brandname from the multinational banking corporation :

- Meeting the customer needs in everywhere

- Choosing the main target markets and advertising, developing the brandnames

- Planning

- Developing the competitive capabilities

- Making the strategy for developing brandnames in the line with booking, supervision, technology renewal, training

CONCLUSION OF CHAPTER I

In this chapter, we have clearly made the concepts of brandname, brandname of the bank, the composition of the bank brandname, the fact of building and developing of Vietnamese banks in present

In order to clearly understand the building and developing Vietcombank

brandname, we shall continuously research in chapter 2 as below

CHAPTER 2 : BUILDING AND DEVELOPING “VIETCOMBANK” BRANDNAME IN PRACTICE

2.1- Vietcombank profile :

On the legislation, the history of the appearance of the word

“Vietcombank” had a point that is noted The decree with the number 171/CP dated on October 26th, 1961 which was promulgated by the government regulating on the function, mission, authority and organization chart of the State bank of Vietnam, was the first time the name “Bank for Foreign Trade of Vietnam” mentioned In detail, it was obviously stated at article 4 of this decree that relating to the organization chart of the State Bank of Vietnam, amongst the bureaus and offices, there was “Bureau of Foreign Exchange, Bank for Foreign Trade” It was an unit that replacing The Service of Foreign Exchange established in January 1955, in the organization chart of the Central Bank at that time, called Vietnam National Bank until January 1st, 1960, it was changed the name “The State Bank of Vietnam” Whether Vietcombank was set up in October, 1961 by the decree number 171/CP above - mentioned?

Since 1961, after the period of restoring and improving, the economy of North Vietnam got a lot of achievements, the government began the mission of re-building the socio – economy in the north with larger scale and executed the 5 – year plan (1961 – 1965) The mechanism on exclusively holding foreign exchange and foreign trade was constructed In the field of foreign exchange, the management and business got the higher requests It was necessary to obviously state on them in the functional unit of the State bank of Vietnam As a result, the decree with the number 171/CP called it “Foreign Exchange Service – Bank for Foreign Trade”

socio-It meant that, in the organization chart of State bank of Vietnam at that time, Bureau of Foreign Exchange took responsibility for the function of management on foreign exchange and the function of business belonged to Bank for Foreign Trade (Actually, the writing “Bureau of Foreign Exchange” was enough, but adding the name “Bank for Foreign Exchange” behind made the misunderstood on setting up a new legal person)

Practically, at the that time of Vietnam National Bank, if they just called

“Bureau of Foreign Exchange”, it could not enough contain 2 functions : the management and business on foreign exchange of Vietnam National Bank at that time; in the meanwhile, the Bureau of Foreign Exchange also carried out enough the duties of a commercial bank, and the banking services and products was more and more diversified

With the above awareness, in reality, the State Bank of Vietnam just used the name “Bureau of Foreign Exchange” and did not add the name “Bank for Foreign Exchange” behind; it proved that the Bureau of Foreign Exchange was mainly the Service of Foreign Exchange before, if there is a difference, it could

be the scale of business on the international market at that time much more developed and enlarged than before The indifference from the name “Service

of Foreign Exchange” in the past, at that time, the name used in international trade had to be State Bank of Vietnam (a legal person) with cable name Vietbank

Why they had to establish Vietcombank with the official brandname

“Vietcombank” in replacement to VietBank? The domestic background was said as above – mentioned

At that time, the international background was in the period of the cold war between two systems as the socialism and the capitalism which were led by the Soviet Union and the United States Because of the tendency of international deùtente, peace and pushing up the commercial and economic coorperation, emulation in production pushed up by the socialists, there was the appearance of internal chances for developing cooperation and trading relationship with other countries, especially, that was the cooperation of trading in bloc of the socialist countries; between the socialist countries and capitalist ones; the others also strengthened the diversification of trading relationships The development of trading economy relationships between North Vietnam and other countries was too Specially, in the business of Bank for Foreign Trade, at the end of 1960’s, they had had the relationship with 171 banks in 34 countries

In conditions of new development, the system of State bank of Vietnam recognized the demands on the seperation between the function of currency management and the business activity That was the reason of the appearance the new organization chart in the big cities and provinces “The Branch of State bank” in order to carry out the role of management on banking business and the system of the business branches of State Bank at the towns and districts That was the foundations for the State Bank carrying out the business for directly serving customers

In the organization of Central Bank, Bureau of Foreign Exchange continued to shoulder the business as Bank for Foreign Trade It was the time to give out the request that there had to be a professional bank about foreign exchange, having had the legal position and the brandname on domestic and international market It replaced the business function of the State bank of VietNam That was mainly the reason why the Central bank had reported to the

Government for setting up Vietcombank after the decree 171/CP, being the Vietnamese first and unique commercial bank at that time exclusively banking in Foreign Exchange To this problem, Vietnam consulted the experiences of Soviet Union and other socialist countries For example, Mr Nguyen Au, former officer of Bureau of Foreign Exchange – former deputy director of Vietcombank, wrote his memoirs as follows:

“In May 1958, the Vietnamese bank delegation lead by Mr Le Viet Luong attended the first conference of the socialist bankers in Praha (Czech and Slovakia) After that, the banks in socialist countries carried out a re-engineering In 1961, Soviet Union, Czech and Slovakia, East Germany and Bungary set up Bank for Foreign Trade In Vietnam, because of the new demand and duty in the correlation of foreign activities and good service for the successful construction the socialism in the North and struggle for unification In

1963, Vietcombank brandname officially appeared (The banking magazine , No

It was completely suitable with Vietcombank chairman’s speech : “After the period of restoring and transforming the economy of North Vietnam, matching the expansion organization and activity of State bank of Vietnam, it was really necessary to establish Vietcombank (in April 1963) in order to meet the requirement of economic and cultural development following the first 5

year plan in Vietnam It was a bank carrying out all of banking service with the international standards under the macroeconomic directions of State Bank (Appendix of Vietcombank information, No 3 and 4, issued in 1998)

Vietcombank was officially established in November 30th, 1962 by decree No.115/CP of Government

With 2 decrees No.171/CP and No.115/CP, in the State bank at that time, theorically, there were 2 defined organizations : Bureau of Foreign Exchange with the function for management of foreign exchange and research of macroeconomic policy , and Vietcombank has done business on foreign exchange

The logic was to promote to establish Vietcombank On that basis, all foreign exchange activities of State bank in the decree No.171/CP would be transfered from Bureau of Foreign exchange to Vietcombank Bureau of Foreign Exchange managed the organization model on foreign exchange and researched macroecomomic policy and Vietcombank has done in foreign banking activitiy

At that time , Vietnam obviously knew the practical experiences in China (1955) and Soviet Union as well as some other countries in East Europe such as Romania, Poland, Bungary, East Germany and Czech and Slovakia (since 1961)

Yet the history of the activity of Bank for Foreign Trade in Vietnam happened in another way Was it a creative solution in compliance with the situation was being splited and struggling for independence? Vietnam could not follow the route of the others above - mentioned

After preparation, in April 1st 1963, Vietcombank officially inaugurated to operate in reality with an independent legal person and being done business in the domestic and international markets as a professional bank for foreign trade of State Bank of Vietnam with the brandname “Vietcombank”

The history of brandname “Vietcombank” in the domestic and international market since 43 years before was a key feature in the history of Vietnam banking industry

Nowadays, Vietcombank has played a crucial role in the banking system

of Vietnam Vietcombank is ranked as one of 23 special corporations by the State and is one of the first members of the Vietnam Bankers Association and member of the associations including the Asian Bankers Association, Asean Pacific Banker’s club

With long experience in banking services and a contingent of well-trained, dynamic and enthusiastic staff, Vietcombank continues to play a crucial role in Vietnam’s banking sector Six years in a row, since 2000 to 2005, thanks to its excellent performance, Vietcombank has been awarded “Bank of the year in Vietnam” by The Banker Magazine

As the oldest commercial bank for external trade in Vietnam, Vietcombank has long been recognized as the most prestigious bank in trade finance, import-export payment and other international banking and financial services By the end of 2005, Vietcombank was also recognized for its well-established network consisting of:

transaction bureaus;

- 3 subsidiaries;

company and 1 technology investment company), 7 banks and 1 credit fund;

- Participation into 4 joint-venture enterprises;

Vietcombank has established correspondent relationships with over 1,250 banks in 90 countries and territories around the world to serve the demand of our customers internationally Apart from being the leading bank in utilizing the global telecommunication payment system (SWIFT), Vietcombank is considered

as the most modern bank in Vietnam in terms of IT More importantly, Vietcombank has well-trained and enthusiastic staff

Vietcombank has also marked the accomplishment the first stage of restructuring project Now, Vietcombank has become one of the most modern bank in Vietnam with modern technology system that can do integrated connection to all products, services and having made good conditions to supply modern banking services to customers with high quality Due to strongly apply the other state of the art methods, Vietcombank has been making steady advances in order to become a financial banking holdings corporation of the area and the world

2.2 – Business activities in 5 years (2001 – 2005) :

From 2001 to 2005, overcoming 5 years in doing restructure program, Vietcombank has gotten the successful results : cleaning NPLs and upgrating financial power; widely opening the business activities; modernating technology and giving out new services; renewing and arranging the organization structure, upgrading managing power This result is stable steps to make equitization in the next years

In 5 years, total sources of funds are 20% per year in average, taking 19.8% market share At the end of 2005, total fund is 138,665 billions dong, more 2.1 times than year 2001

In the stage 2001 – 2005, credit line was going up, especially in 2002, 28% per year in average – higher than the speed of increasing total asset, the

rate total loans and total assets at the end of the year 2005 reached 40.5%, higher than the figure of 2000 with 22.9% Up to the end of year 2005, outstanding loans increased 4 times higher than the year 2000, had significantly improved the loan market share of Vietcombank

In accordance with the policy to increase credit activities, credit quality has also been improved Overdue debts were controlled and upheld at the low level with the rate being accounted for 2.7% at the end of year 2005

International settlements of Vietcombank has reached the stable growth

In the stage of 2001 – 2005, Vietcombank upheld as much as 28% of the total export and import payments of the country at the average level 26% per year

Vietcombank is also the leader in card service, supply new products with new utilities, state of the art and safety for customers About the market share, card payments handled 50%, international card 40% and 60% for local cards By putting ATM card and POS network of the whole system, card services had gained achievements, the bank’s international card payment volumn increased 300% within 5 years of restructuring program By developing new products – ATM connect 24 – attracted nearly one million customers within the lastest 3 years (in 2006, more than one million customers)

Year 2001, Vietcombank Core Banking was put into use, marked the development of Vietcombank technology and concentrated all informations and settled transactions and changed the practices on transaction of customers as well On this base, Vietcombank has developed the mass products such as :

- “Vietcombank online” has activated on May 2002 and has been developed by all branches The customers can withdraw their money anytime at all offices of Vietcombank in the country

- “Vietcombank money” was a service that is supplying “Home Banking” and “eBank” to the customers The customers do not need going to the bank for transaction

- “Credit card service”, “ATM system” and “Vietcombank Connect - 24” which got international standards have been occupying card service market share

in Vietnam; this system can also be connected to other banks in Vietcombank card coalition

- “Vietcombank Cyber Bill Payment” makes easier to customers in using Vietcombank Connect – 24 card from ATM in order to pay fees for electricity, tap-water, telephone, bills, credit cards, ect

- “Vietcombank Global Trade” is a commercial funding product with integrated capacity to other ones, meeting customers’ demands on commercial transactions all over the world

- “Vietcombank Treasure” is a treasuring product with concentrated managing capacity to the fund of customers, making many facilities to intensify profitability of the fund Otherwise, in the line with concentrated management on communication, Vietcombank is also to bring forward advices to customers in using banking services that making maximum advantages to customers

Being aware of the importance of the bank’s reform is to renew management and organization, so the restructurring project (phase 2) of Vietcombank concentrates on model of customer oriented organization and management based on international standards Due to the assistance from World Bank and Dutch Government, Vietcombank completed the new organization project and submitted to State Bank of Vietnam as well as having deployed the model of credit risk management in 3 branches (HaNoi, DaNang, Hochiminh city) and in the whole system in 2006 In 5 passing years, the mass of the mode

of modern risk management has been researched and applied such as : the scoring and rating systems for corporate customers, credit control, treasury management etc

To gain the growth and the network development of Vietcombank, the human resources is always increased both quantity and quality Up to now, the numbers of employees in the whole system has reached 6,700 persons (increased 2.5 times compared with the year 2000), including 21 Doctor (Ph.D), 192 MBA and more 6,000 BA Yearly, Vietcombank has appointed hundreds of the employees to attend short, middle and long term courses for training in the country as well as the overseas to collect new knowledges, to consolidate and to upgrade the advanced level with the aim to meet customers’ demands

The earning before tax of Vietcombank increased 17% per year in average, gained VND1,900 billion in the year 2005 However, this figure reached nearly VND3,000 billion if including provision, 5 times more than year

2000

The growth of the Vietcombank’s income in the lastest years is one of the important factors which makes the premise to consolidate financial potential of Vietcombank

Other indicators proved the growth of profit that was maintained yearly, the Bank’s capital adequacy ratio (CAR) has been improved (8,5% according to IAS) and met the demand of international standard

The mission that set up in 2005 was carried out well Three year in a row , Vietcombank has significantly reached in business results Total income amounted VND 10,100 billion in the year 2005, increased 13.5% compared to that of 2004 This is the first year the bank’s total income gained over VND 10,000 billion in which interest income from loans is 48%, forex operation

income is 30% of total income Total expense was VND 7,700 billion, an increase of 51.6% compared to that of 2004 in which interest expense is 62% of total expense (increased 45% in comparision with the year 2004)

The earning before tax on the whole system at the end of the year 2005

reached VND1,900 billion after provision, an increase of 32% compared to that

of 2004 and reached 18.6% of total earning before tax of the overall banking sector

2.3 - The choice for “Vietcombank” brandname :

Each brandname strategy has both strong and weak points However, to choose a good brandname strategy, Vietcombank can not only rely on its strong and weak points Because of the choice of brandname strategy does not make a particular style, but being a strategic decision to Vietcombank brandname with the reason is to improve reputation and the customers’ loyalty Therefore, the choice for brandname strategy of Vietcombank must rely on three factors which are carefully analized such as the diversification and utility of banking service, habit and passion of customers, and the bank’s competitive position in the market

By expanding network, diversifying methods of mobilizing funds as well

as after service programs for customers, the Vietcombank activity of mobilizing funds has been developing The Bank’s funding structure has been changed About credit activities accompanied with corporate customers after many years, credit activities have highly grown Vietcombank has paid more attention to major projects such as : petrolium and gasoline sectors, electricity sector, postal service, infrastructure projects which are the life-line of the economy However, although total outstanding loans have highly grown, the market share has been

modest about the bank’s achievements in comparision with other banks Credit activites has been always controlled by the bank

In paralel with its development on fund mobilization and credit growth, the service of the bank has also continued to be expanded Vietcombank with its strong position in the international settlement, it is also one of the banks which lead in supplying new utilities for customers such as : Vietcombank online, Vietcombank core banking, Vietcombank connect 24, etc

Due to significantly efforts of 6,700 employees in the whole system, the operation of Vietcombank has gained the achievements It ensures that Vietcombank completed the burget contribution as well as provision to settle NPLs that being one of the main targets of the restructuring project Up to now, Vietcombank has gained satisfactory results on capital, forex dealings, IT, IMEX settlements , ect Good results of Vietcombank were auditted by Ernst and Young Auditing Company

The Banker Magazine is one of the reviews of Financial Times (British) has awarded “Bank of the Year in Vietnam” to Vietcombank

to employees who meet with the accident at worksite; giving allowance and gifts

to beneficiary, social welfare and children in poor rurals; blood donation; supporting to the wounded soldiers in Thuan Thanh procinct, Bac Ninh province; contributing to Fund for handicapped children in Hochiminh city; sponsoring for campaign “together take care of martyrs”; supporting to Tuyen Quang province;

supporting to tribesmen in Dac Lac province; supporting to Patronizing Association for Poor Patients in Hochiminh city; supporting to Cuban people for Dennis storm; helping victims of dioxin and tsunami

2.5 - Marketing activities to develop Vietcombank brandname at present :

To affirm that, up to now, Vietcombank has gained many achievements in the restructuring project In addition, Vietcombank continues carrying out reforming program, upgrading the competitive capability

One of the solutions is to settle NPLs, to make balance sheet clean – up,

to increase the bank’s equity, to renew IT and organization and management capabilities, to diversify services, etc Renewing and enhancing of banking marketing method is one of the important solutions to improve quality, business outcomes at present Studying the real situations and using marketing research to develop Vietcombank brandname, some of comments are considered as follow:

Firstly, marketing activities are moving towards international standards Vietcombank is applying general marketing methods as : popularizing brandname, marketing “door-to-door” to customers, diversifying forms of advertisement, promotion, focusing on service, product and customers

change logo, symbol, but just emphasize to colour, e.g, “Vietcombank” is always green colour As a whole, to affirm that, logo or symbol have modern characteristics that comply with international standard, emphasizing of Vietcombank’s specification , making good impression to customers, having graphic, art characteristic, having been listed on copyright at Vietnam industrial property office

Vietcombank has diversified the methods to popularize symbol, logo, image according to international standard such as : supporting to Vietnam

football team, this is the “King” sport that can attract many audiences In addition, on the envelopes, bags, gifts, documents, handbooks, calendars on desk, at the branches and offices, at big trade centers there is “Vietcombank” brandname Vietcombank are putting the posters at the airports, seaports, on the main roads, on the newpapers, in the seminars, ect that have made Vietcombank brandname more remarkable

About marketing, Vietcombank has also carried out many methods such as introducing the bank’s services at corporates’ offices, issuing ATM card, loans to customers, deposits, issuing leaflets, organizing seminars, exchanging sporting events, etc

About advertising :

+ Vietcombank has carried out with many enrichment methods such as advertising on the newpapers , the journals, the radio, the television etc Moreover, Vietcombank also put posters, slogan in front of the bank

+ Content is modern, rich that can attract more audiences and directly effect to customers It also stimulates and makes impression to customers Vietcombank also hires professional advertising companies to design the advertising content that is modern It replaces the picture in which director was sitting on the desk with his telephone and only focuses on one or some products, services of the bank at the time the bank has new services such as issuing ATM cards, remittance, deposit with lottery , loans to customers etc Advertising on the newspapers and the journals has been choosen much and because of many readers, large issuance and being posted on the popular pages

+ Time for advertisement : focus on the time where many persons pay a attention such as : holidays, (lunar) new year, the bank’s foundation celebration, launching a new office or the time that giving out new products etc

About promotion : Vietcombank offers many forms to bring the practical benefits and to attract customers to choose bank’s products, services such as:

+ Giving souvenirs with logo, image : raincoat, bag, hat, handbook, calendar, T-shirt etc

+ Applying the flexible interest rate to attract customers who deposit money into the bank

Secondly, Vietcombank has paid money for marketing activities according

to Ministry of Finance’s decisions or Board of Directors’resolutions Costs for advertising mainly concentrate in effectiveness

+ Reducing or free of charge of ATM issuing fees

+ Receiving and paying money at the customers’ offices

Thirdly, Vietcombank has a Public Relation Department to do marketing activities

Fourthly, Vietcombank has made marketing strategy, general marketting plan for year, quarter and reduces sensibility as before

Fifthly, Vietcombank has had a combination, a hierarchy between head office and branches; reducing overlapping and less effectiveness as before e.g branches not to advertise on the nation – wide newspapers, just advertise on the local newspapers Only Head office takes advertisements on the nation – wide newspapers

In brief, marketing activities in Vietcombank has gained achievements, created a reputation and trustworthiness to customers, by which improving fund mobilization, developing new products, services and reducing the expenses

2.6- Customer survey :

Doing the marketing policy, on November and December 2005, Vietcombank carried out a customer survey with the aim that correctly recording

the customers’ comments to upgrade the quality of services of the bank better and better Vietcombank chose Hochiminh City for survey Hochiminh City is a biggest economic center of Vietnam Business activity at here is effervescent and there are many kinds of enterprises Therefore, it is a good condition for Vietcombank’s survey

To summarize the customers’ survey, most of customers are satisfied to the Vietcombank services, products, making a good evaluation to Vietcombank employees

However, customers are not satisfied on problems as below :

- There are many customers coming to Vietcombank offices for transaction and having to wait for a long time

- Bank procedures are still inflexible, verbose They takes many times of customers

- Awaiting time is longer (10 minutes to 20 minutes)

- Computer network has offen a breakdown

- Some employees are unskillful, sometimes the attitude are not good, not cordial, etc

The suggestions of customers to Vietcombank :

- The tellers should know more other informations on banking service to help customers as possible

- Researching some models of management of foreign banks in order to simplify the procedure for banking services

- Launching many more other sevices, etc

From this survey, Vietcombank has concluded the useful lessons to make good the weak points and develops more new services to supply to customers 2.7 - Remaining obstacles, difficulties and shortcoming :

Although Vietcombank has gaind some achievements as above - mentioned, marketing activities to develop Vietcombank brandname has been also remaining some of obstacles, difficulties such as :

- Marketing activities has not been carried out in professionality, skill The content and image for advertisement are not still modern, rich as international criteria

well Advertising and costs for advertisement are sometimes restricted, so there is no effectiveness

- The cost according to Ministry of Finance decision is not suitable and subsidize, and it has interfered too deep the Bank’s operation This rate is too low in comparation with international standard

- Training is still not considered and is an impulsive action

- Advertising between head office and branches, between branches and branches is still overlapped, identical and less effective

2.8 – “Vietcombank” brandname management :

Vietcombank brandname is always known as a symbol of Vietcombank’s philosophy, vision and mission A strong brandname can create value added of Vietcombank and set up a long – term plan, build an original position on the market and polish the bank’s reputation, especially, additional management capability

To build a strong, prestige brandname in the international market, Vietcombank needs to harmoniously combine between 3 basic value: economic value (business operation has to make profit and value-added stock on the stock market); customer value (the bank must meet the customers’ demands) and social value (the bank has to obey some common principles of law, society order, environment protection and social welfare contribution)

To get satisfactory results, value-added Vietcombank, Vietcombank should set up a strategy to co-ordinate economic value, customer one and social one Improving economic value will lead to make investment capability better Satisfying customer value will lead to widen up business operation on the market Social value will bring to the bank a valuation better Thus, Vietcombank’s value will be added If Vietcombank had turned away from customer value and social value, they would loss economic value finally, even if they would like to push up their stock In the recent years, risk business is more and more increasing However, Vietcombank can reduce that risk by keeping the balance of three values

However, brandname management is not simple Its foundation is to design brandname structure, improve relations with customer and upgrade the competition of brandname The importance is to clearly and particularly define

of brandname and to have a best strategy to develop it Vietcombank will continue to offer the methods such as advertising, sponsoring, taking part in social activities etc to market the bank’s trade name to customer For a service, product, the trustworthiness, the safety and the quality is mentioned Toward Vietcombank, it’s the trustworthiness, the renewing ability, the expansion and the upholding

2.9 - Vietcombank with Equitization Process :

Implementing the document No 3120/VPCP.DMDN of the Government office dated June 7th, 2005 on making equitization to Vietcombank; Decision

No 230/2005/QD-TTg of Prime Minister dated September 21st, 2005 on exampling equitization to Vietcombank, Vietcombank has been conducting preparatory steps for equitization To achieve satisfactory results, the bank must prepare itself by achieving a healthy financial condition and to become a

dynamic and competitive entity Up to now, Vietcombank have already met criteria and the bank is currently planning for first issuance of stock

2.9.1 – Non performed loans (NPLs) eliminated and Balance sheet cleaned

The NPLs burden on the bank which had increased up to the period of implementing the Restructuring Program was rather noticeable For the last 5 years, Vietcombank has actively resolved such NPLs by utilizing sources that are mainly derived from the state budget and the bank’s provisions As a result, by the end of 2005, the NPLs of Vietcombank were basically cleaned up with the total amount of VND4,920 billion written off (NPLs by 2000 stood at VND4,392 billion in the project and VND528 billion out of the project) NPLs reduced from 30.8% (year 2000) to 2.7% (year 2005)

In addition, Vietcombank has always considered to collateral settlement For the last 5 years, Vietcombank has settled 126 units with the total value of VND770 billion, contributing to 20% of debt collection So, NPLs were basically cleaned up, this could be considered as a prerequisite for the bank’s equitizatiton implementation

2.9.2 - Financial Capability Enhancement and Standardized Capital Adequecy Ratio (CAR) maintenance :

By the end of 2000, the bank’s equity amounted to VND 2,052 billion Its CAR was 2,7% much lower than international standard (8%) Therefore, an additional capital injection became critical for the Vietcombank Since the beginning of the Restructuring Program, Vietcombank has been received VND 2,200 billion capital in the form of special bonds from the Government The Bank’s equity includes reserves and retained earnings at present about VND 9,300 billion (VAS) and about VND8,000 billion (IAS), and CAR was roughly 10% (according to VAS), over 8,5% (according to IAS)

In order to further strengthen itself, the Bank’s proposal of using excess profit for increasing capital was approved by the Government in 2003 However, the bank’s need for additional capital is tremendous if going on and to achieve an internationally acceptable CAR Thus, equitization is necessary in order to provide the Bank with sufficient capital to improve its financial capability

Vietcombank has already prepared to hire a foreign advising firm to conduct its corporate valuation for equitization The content of consultancy is large, including determining corporate valuation of Vietcombank, analizing and examining business results, building additional capital process, consulting to choose the strategic investors, building project to equitize Vietcombank and issuing stock on the stock exchange in 2007 Vietcombank chose and proposed the list of consulting companies to submit State Bank and Ministry of Finance to make decision

CONCLUSION OF CHAPTER 2

From the above – mentioned analisys, Vietcombank has considered the importance of building and developing brandname In the passing years, Vietcombank has done many marketing activities in order building and developing brandname such as increasingly advertising the brandname, image of Vietcombank ; strongly investing in brandname; creating the differentiations on products, services in diversification and particularization

However, Vietcombank is still many weak points that need to overcome in future times, especially when Vietnam will participate in WTO, banking service must be open – wided to international financial institutions and when Vietcombank desires to become a strongly financial banking holding corporation

in the area and the world as well To get capability to confront the difficulties, to maintain and to develop the position as present, Vietcombank needs to execute a series of remedies in order to develop brandname This will be researched in chapter 3 as below

CHAPTER 3 : THE STRATEGY AND THE SOLUTIONS FOR DEVELOPING “VIETCOMBANK” BRANDNAME IN INTERNATIONAL ECONOMIC INTEGRATION

3.1- Strategy for developing Vietcombank from 2001 to 2015:

3.1.1 – Targets :

In the target of becoming a top Vietnamese financial banking holdings corporation and an multinational corporation of the area in the next decade, with multipurpose activites in the market economy, Vietcombank is carrying out the slogan “Always take the success to the customers” In the process of the international integration, Vietcombank constructed a strategy for developing from 2001 to 2015 with these tenors :

- Increasing competence and competitive power by striving for raising the CAR from 10% to 12% and other important financial ratios in compliance with the international standard In addition, Vietcombank is striving to reach “AA” level according to the standards of international rating corporation

- Completing the process of banking reconstruction in order to get a modern and scientific organization model which is suitable to the target, sure effectiveness, controllable risks and able to provide diversified banking services

in order to meet higher and higher requirements of the market economy and customers’ needs

- Expanding the distribution channel by setting up the branches and transaction offices, installing many more ATM and POS, supplying products, services to customers in fastness, punctuality and effectiveness In order to get maximum effectiveness, Vietcombank negotiated to have a cooperation with foreign banks in multilateral and bilateral alliance

- Continuously developing the foreign affair activities which are the traditional and strong points of Vietcombank by widening the relationship to the foreign banks around the world, establishing the branches in Singapore, Russia, France and Representative office in the USA, enlarging the activities of Vietnamese finance company (Vinafico) in Hongkong as well Developing the international banking services much more, meeting more and more increasing customers’ demands

3.1.2 – Building the customer oriented organization :

To serve customers better and better, Vietcombank has constructed the customer oriented organization model Vietcombank always try to improve quality of service, to create more utilities in order to increase the competitiveness of services, products Especially, Vietcombank is erecting the management model on the base of segmentation such as corporate segment, finacial institutions one and retail one This model is experimentally applying in the head office and some main branches and having collected many optimistic results

3.1.3 – Management and administration :

Vietcombank is continuously developing and perfecting the process of risk management that is conformable to the international standard, consisting of the gathering capital management, the gathering money transfer in the line with the modules of small projects on modernizing the bank and settlement system

Risk management committee (RMC) and asset liability committee (ALCO) are established and being run well to give out the timely and flexible policies so as to minimize the risks

Especially in management of credit risks, Vietcombank finished the credit notebook and a series of documents that relating to the loan procedure Beside that, the approving procedure and the management of credit line to finacial institutions have been erected and applied on The improvement of credit management is opening a period of safety and effectiveness for the bank activities

3.2 - Target and scale of economics :

Facing to the urgent requirements of the process of international economy intergration, Vietcombank defined the concrete target – becoming a financial banking holdings corporation that will rank in the number of 50 to 70 Asian largest financial holdings groups in the period of 2015 – 2020 with the range of activities in both country and global market

Vietcombank trying its best to reach the proposed targets and now there was the first optimistic results such as in 2004, Vietcombank ranked 748 of 1,000 largest banks on earth (Source : The Banker magazine, 2004 and 2005), raising

10 grades compared with 2003 In 2005, Vietcombank reached the position of

648 of 1,000 largest banks on earth, 54 grades up; in Asia (not including Japan and the source of year 2004), Vietcombank ranked the position of 127 on equity and 119 on total asset

Base on the speed of expected growth is 15% per year, Vietcombank will have a capital dimension more 30 billions USD and equity will be about 2 billions USD in 2015 Meanwhile, with the speed of expected growth is 5% per year, the 70th large-size bank in Asia will have total asset of about 20 millions USD and equity is about 1.6 billions USD in 2015

However, the gap between Vietcombank and the 50 Asian largest banks is still quite far : the capital scale of the Asian largest bank is more 83 times than

Vietcombank, the 50 bank is fourfold So,Vietcombank need to have stronger solutions in the future

3.3 - Restructuring activities :

To become an advanced level bank in the area soon, Vietcombank must restructure activities, renew organization model according to international standard, diversify banking services, be the leader on modern banking technology in order to provide the financial banking services with high quality 3.3.1 - Debt restructure and financial clean up :

Although having reached more progresses than last period, but at present, Vietcombank is still facing many risks and challenges such as the paid up capital

is small, yet the non performed loans (NPLs) and outstanding loans are high, the structure of mobilizing funds is not rational – the medium and long-term mobilizing funds only occupy a small rate in total funds

At present, the potiential of Vietnamese commercial banks in general and Vietcombank in particular are still too small Normally, at the first time of industrialization process, the financial capital must have much more accumulating than the industrial capital From that, it can create a good condition

to industrial revolution and industrialization process Meanwhile, in Vietnam, total equity of 4 largest state owned commercial banks is just about VND5,500 billion Therefore, according to the law of the banking institutions, with the stipulation that a bank can only loan maximum 15% of the its equity, the state – owned commercial banks can just loan a maximum value VND825 billion per customer Consequently, when the entrepreneurs would like put money into big projects such as petroleum, electronics, coal, paper, aviation, it is difficult to receive enough capital from domestic commercial banks With property growth

of Vietcombank (20% per year in average), the equity must be USD300 million

at least in 2005, equivalent to over VND4,500 billion These are reliable data to the State bank of Vietnam who can consider to suppliment the equity to Vietcombank

3.3.2 - Restructurring organization and upgrading the adminnitration and management ability:

In the condition that Vietcombank runs with the average dimension and the simple characters, this model is temporarily considered suitable When the Viecombank develops to the larger and larger scale, open-widen distribution channel, the volume and character of work are increasingly much and complicated, this dimension shows out some illegal points For example, it have not yet noticed to marketing and customer targeting administration; a scatter of network, having no the persons who take responsible for collecting and managing informations which will be used for analyzing and appraising risks and the influences of risks to bank’s activities For the reason, restructuring organization model and administration management of Vietcombank are to drive bank’s activities to the customers by changing the mode of ascertain some current departments from professional knowledges to customer services and products so as to better satisfy customers’ demands, improving service quality and economic - social effect

3.3.3 - Modernizing bank’s technology:

Considering that technology is the key of development and the important foundation for successfully reconstructing Vietcombank activities whose important points are to modernize all core banking application, that means to apply the processing system of qualifications which both specialized bank and multipurposed bank must do such as building the system of customer service informations in country – wide that is a base for other mass applications,

especially the management system of public relationship; applying the retail bank system with high level standards; allowing to process online and to be a foundation for expanding online services by the orders of electronic banking services

3.3.4 – Expanding credit activities :

Expanding credit activities in carefulness and safety Carefulness does not mean missing chances and urgency does not mean missing risks

3.3.5 - Expanding the international relationships :

Vietcombank have a world wide relationship with many other banks, ensuring to do transactions for the customers in quickness, accuracy and expense curbing ; opening and maintaining over 80 accounts in the markets such as US, Europe, Asia and Australia, in which there are many accounts in foreign currencies such as USD, EURO, GBP, JPY, etc Vietcombank is the first choice

of big financing banking holding corporations such as (Citigroup, HSBC, Mizuho Financial Group, UBS, Credit Agricole Group, Bank of America, JP Morgan Chase, Deutsche Bank, ING Bank, ABN – Ambro Bank, etc in doing business with Vietnam and is the leader in the international settlement activity In addition, Vietcombank is only the first Vietnamese bank signing a Treaty on commercial funding with foreign banks

Vietcombank is becoming a top ranking bank when getting a highest confidence from the Government and the authorities who are entrusting important duties as the settlement and deposit bank of Vietnamese government for the socio – economic projects which are funded by foreign governments; being the first and the unique bank as well have the representative office in foreign countries (in Paris, Moscow, Singapore and Hongkong); being one of two banks (another is Bank for Investment and Development of Vietnam) is

permitted by State Bank of Vietnam to open the representative office in the USA; being the first state owned commercial bank is chosen to experiment of equitization, especially in present background

Basing on the available relationships and expanding new ones, Vietcombank has strongly cooperated to international financing banking institutions such as International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), Japanese Bank of International Cooperation (JBIC), Japanese International Cooperation Agency (JICA) in receiving aids and investments Some big and important projects are being deployed in Vietcombank such as “Modernizing bank and settlement system” project is funded by World Bank, “Technical Assistance” project is funded by Netherland Government through World Bank in order to completely restructure all Vietcombank activities in compliance with the international standard, to upgrade the competitive power and bank administration, to reach the high economic effectiveness and sustainable growth

Considering communication as the most effective channel, especially the channel of directly connecting bank activities to the customers Vietcombank has had good coorperations with top corresponding and press offices on earth : The Banker, Euromoney, Global Finance, etc not only advertising the banking activities in the period of intergration but also introducing the image of Vietnamese country, people and economy to the financial banking community

Vietcombank is improving and asserting its position toward the international financial banking community with the target that becoming an advanced and modern financial banking holdings corporation and being ready to join in a big market and integrating to global economy