CHAPTER 2: CURRENT CIRCUMSTANCE OF RISK MANAGEMENT IN
3.3.3. Propose to Vietnam Joint Stock Commercial Bank for Industry and Trade. 61
- Firstly, the Bank needs to maintain a sufficiently large amount of capital to cover its risky activities, it is necessary to determine the minimum capital ratio required to compensate for the risks, this is the minimum level of capital. calculated by the bank's weighted risk
- Secondly, it is necessary to properly assess the types of risks that you face and need to follow the principles:
+ There is a process for assessing the adequacy of the bank's capital following a sound strategy to maintain that capital.
+ Risk management staff members need to review and re-evaluate the evaluation process on the internal capital level as well as loans taken up by the customer room to re-verify accurately and quickly.
+ The bank's capital level should not be reduced below the prescribed minimum capital level.
- Thirdly, the information should be reasonably disclosed according to market principles, capital structure information, capital adequacy level, information related to the sensitivity of banks to credit risks.
- Fourthly, coordinate closely with the State Bank to effectively organize the exploitation of credit information from credit centres (CIC) to help prevent credit risks in the best way.
- Also, the bank may expand the form of cofinancing to rationalize the use of capital or syndicated lending methods to spread risks:
+ Vietnam Joint Stock Commercial Bank for Industry and Trade, together with other banks, lend to a loan project or a customer loan plan.
+ Providing syndicated loans in cases where the client's capital needs exceed the lending capacity of Vietnam Joint Stock Commercial Bank for Industry and Trade; or cases where the Vietnam Joint Stock Commercial Bank for Industry and Trade considers that it is necessary to share risks; or other necessary cases.
+ Vietnam Joint Stock Commercial Bank for Industry and Trade can provide syndicated loans as a focal bank or as a participating bank.
- Banking departments also need to continue supporting branches in their business activities. There must be a close link among branches, considering the basis of local real situation to adjust business plans to suit the region as well as the orientation of the bank. Support for training, especially in modern banking operations, should be issued on criteria of the whole system, especially executives and credit officers.
- Strengthen facilities towards modernization of modern equipment, programs and software for customer loan management.
- Establish a specialized division of overdue debt collection to improve the quality of debt collection.
CONCLUSION OF CHAPTER 3
With the orientation of Vietnam Joint Stock Commercial Bank for Industry and Trade, Thanh Xuan Branch strives to reach over 200 corporate customers/year by 2020 and expand its operation to more than 20 transaction offices. strengthening credit risk management in the system is an objective and urgent requirement.
The group of solutions to prevent and limit credit risks focuses on the construction of a system of restriction, risk prevention and loss prevention in each stage and credit-granting process. It includes credit risk management environment, credit granting process, credit measurement and monitoring process, risk control, the role of supervisory authority or department. Also, there are recommendations from the State Bank to improve the role and effectiveness of banking inspectors, improve the legal environment and the information system to support banks in their appraisal.
CONCLUSION
Joint Stock Commercial Bank for Industry and Trade of Vietnam, as well as other commercial banks, are facing challenges of competition and international integration, making it more demanding than the standards of safety and health in financial, operating capacity and risk management.
Therefore, building and improving an effective risk prevention system in a bank is an urgent and important requirement, in order to ensure economic efficiency in the operation and development process of a commercial bank.
Banking activities always involve risks, especially and often are credit risks. Therefore, in order to have a stable growth, it is necessary to strengthen credit quality control, gradually reduce the risk provisioning, affecting the bank's business performance. Therefore, proposing solutions to limit credit risk prevention at Joint Stock Commercial Bank for Industry and Trade of Thanh Xuan branch is really a top concern.
Stemming from the above reality, the theme tries to identify and systematize the current credit risks at Vietnam Joint Stock Commercial Bank for Industry and Trade; analyze and clarify the advantages and shortcomings in credit risk management activities at Vietinbank; apply theoretical bases and combine with the combined comments from the results of interviews, discussions and discussions with credit managers and officers at the Branch.
Since then, proposing solutions to prevent and limit credit risks is highly practical, contributing to improving and improving the effectiveness of credit risk management in particular and business activities in general. Vietnam Joint Stock Commercial Bank for Industry and Trade Thanh Xuan Branch.
I hope this seminar will contribute a small part to the innovation in credit activities at Joint Stock Commercial Bank for Industry and Trade of Vietnam - Thanh Xuan Branch. However, in limited time conditions, my
knowledge is not much, so the topic is approximately limited. I am therefore looking forward to advices and critical comments of lecturers and supervisors.
REFERENCES Vietnamese
1. Nguyen Van Tien (2013), "Curriculum on business risk management of Banking", Statistical Publishing House.
2. Vietinbank Thanh Xuan Branch, Annual Report from 2016 to 2019.
3. General Director of Vietnam Joint Stock Commercial Bank for Industry and Trade, Decision No. 509-QD-TGD dated March 31, 2016, promulgating the Credit granting process to customers of Vietnam Joint Stock Commercial Bank for Industry and Trade.
4. Board of Directors of Vietnam Joint Stock Commercial Bank for Industry and Trade, Decision No. 337/QD - HĐQT August 20, 2014, promulgating the Regulation on Risk Management of Vietnam Joint Stock Commercial Bank for Industry and Trade.
5. National Assembly (2004), Law No. 20/2004/QH11 on amending and supplementing a number of articles of the Law on Credit Institutions.
6. National Assembly (2010), Law No. 47/2010/QH12: Law on credit institutions.
7. Government (2014), Decree No. 26/2014/ND-CP: The Government on the organization of operations of the Bank Inspectorate.
8. State Bank (2013), Circular No. 02/2013/TT-NHNN, Provisions on classification of assets, level of deduction, method of setting up risk provisions and use of provisions to handle risks in activities of credit institutions and foreign bank branches.
9. State Bank (2013), Circular No. 12/2013/TT-NHNN: Amend and supplement a number of articles in Circular No. 02/2013/TT-NHNN.
10. State Bank (2019), Circular No. 22/2019/TT-NHNN: Regulation on safety ratios and limitations in operation of foreign banking and oversea Branches.
English
1. Anthony Saunders, 2007. Credit Risk Management In and Out of the FinancialCrisis: New Approaches to Value at Risk and Other Paradigms.
Wiley Finance
2. Anthony M. Santomero, 2007. Commercial Bank Risk Management: an Analysis of the Process. Wharton Financial Instutions Center
Website:
1. VietinBank Thanh Xuan celebrates 15 years of establishment and gives
gratitude to customers, 2013 [Online]
https://www.vietinbank.vn/web/home/vn/news/13/01/vietinbank-thanh-xuan- ky-niem-15-nam-thanh-lap-va-tri-an-khach-hang.html&p=1
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Some problems of commercial bank credit risk [Online]
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5. Phi Trong Hien, 2005. Theoretical basis, practical challenges and solutions for the Vietnamese commercial banking system [Online].