NATIONAL ECONOMICS UNIVERSITY FACULTY OF FOREIGN LANGUAGES ENGLISH FOR BUSINESS DEPARTMENT *** - Hanoi, May, NATIONAL ECONOMICS UNIVERSITY FACULTY OF FOREIGN LANGUAGES ENGLISH FOR BUSINESS DEPARTMENT *** - RECOMEMDATIONS TO ENHANCE INTERNATIONAL PAYMENT BY L/C IN SAI GON - HA NOI JOINT STOCK COMMERCIAL BANK, THAI HA SUB-BRANCH Field : English for Business Studies Code : Supervisor:, M.A Hanoi, May, iii ACKNOWLEDGEMENT After a period of studying theoretical framework and researching real status in SHB Thai Ha sub-branch, I have finished my report: “Recommendations to enhance international payment by L/C in Sai Gon Ha Noi joint stock commercial bank, Thai Ha sub-branch” To fulfill this research, I have received great help and encouragement from many people Foremost, I would like to thank the teachers and supervisors of Faculty of Foreign Languages, National Economics University for highly valuable knowledge imparted to us for the past years It is the important foundation supplying me with sufficient knowledge to carry out this research Next, I would like to express my deep thanks to Ms Last but not least, I am very grateful to my parents and my friends for all invaluable encouragement and support during my lifetime They are always by my side and the motivation for me to never give up and complete my research as best as possible With all my heart, I wish all of them will be healthy, happy and successful in whole life ii `TABLE OF CONTENTS ACKNOWLEGEMENT….……………………………………………………… i TABLE OF CONTENTS …………………………………………… ……… ii LISTS OF ABBREVIATION………………………………………… …….….iv LIST OF TABLES AND CHARTS .iv 2.5.1 Evaluation through banks 10 2.5.2 Evaluation through customers .11 The safety degree of L/C transaction process 11 2.6.1 External factor 12 iv LISTS OF ABBREVIATION  ABA: Asian Banker Association  SHB: Saigon - Hanoi Joint Stock Commercial Bank  L/C: Letter of Credit  ICC: International Chamber of Commerce  UCP: The Uniform Customs and Practice for Documentary Credits  SWIFT: Society for Worldwide Interbank Financial Telecommunications LIST OF TABLES AND CHARTS Table The value of Import & Export L/C in SHB Chart Issuance of a Letter of Credit Payment under Letter of Credit The reality of Import & Export L/C in SHB The total revenue from L/C payment in SHB The proportion of revenue in Thai Ha sub-branch v EXECUTIVE SUMMARY For many decades, Letter of Credit (L/C) is used as an effective tool to boost economic exchange and to facilitate a variety of financial transactions, either as a method of payment or as a credit enhancement, within as well as across the borders of countries in the world Not only in Vietnam, but also in Vietnam, Letter of Credit quickly becomes popular in import-export activities This report mainly focuses on the reality and how to improve the effectiveness of L/C payment in SHB Thai Ha sub-branch Apart from Introduction and Conclusion, my report is divided into chapters In the first chapter, the reader is oriented forwards background of SHB and Thai Ha sub-branch as well as the international payment activities of Thai Ha sub-branch The second chapter, providing theoretical framework about Letter of credit including process, criteria of assessment and factors affecting on L/C payment is considered as the premise for next part The next chapter about the findings and analysis collected during my internship is also the centre of this study The author will show readers the reality of L/C payment and give deep assessment on L/C payment’ efficiency of Thai Ha sub-branch Finally, in the last chapter, some recommendations to enhance international payment by L/C in Thai Ha sub-branch will be presented This report is carried out with the aim to find out really effective and practical way to boost L/C payment in Thai Ha sub-branch The author hopes that this research will be useful not only with SHB but also in other banks in Vietnam vi INTRODUCTION Introduction of the research topic Nowadays, trading overseas has opened great opportunities and issued outstanding challenges for not only enterprises but also banks worldwide Therefore, selecting the most appropriate payment method and ensuring accuracy in dealings, can make the difference to enterprise’s success – minimizing the risks to business while maintaining the goodwill of customers The method chosen will depend on the reliability degree between the parties, credit capacity, local export-import regulations and the nature of the goods Among methods of international settlement, L/C is appreciated by its convenience and safety for all parties This method has been a time-tested instrument and has proved its preeminence in international trade Hence, L/C plays a critical role in boosting trading overseas in the economic integration of Vietnam Finding answer for the question: “How to improve L/C payment?” becomes a pressing task in any bank This motivates me to choose “Recommendations to enhance international payment by L/C in Sai Gon Ha Noi joint stock commercial bank, Thai Ha subbranch” as the topic of my research This research will supply reader findings and analysis to have a deep sight on reality of L/C payment and suggest some useful solutions to improve L/C settlement in Thai Ha sub-branch Figures in this report are collected by combining two methods: observing, talking for primary data and gathering based information from books, magazine as well as books for secondary data Rationales For a long time, international trade has become an essential part in the world economics in general and Vietnam in particular Especially when Vietnam joined the World Trade Organization, the door of foreign trade has open for banks and financial organizations of Vietnam Sai Gon–Ha Noi bank (SHB) also has provided many international payment methods: advanced payment, open account, letter of credit to meet the demands of customers However, being a new comer in international payment services, SHB had to face and overcome many difficulties due to limitation of technology, knowledge of staff, and reduction of risks… This study is not only derived from the author’s interest but more important is from the necessity of L/C payment’s improvement in Vietnam Findings and recommendations are given to improve L/C transactions in SHB as well as other banks After observation, collection and assessment, some effective solutions will be presented to improve L/C payment as well as international payment of Vietnam Research Questions During the time of internship in SHB Thai Ha sub – branch, I have observed, collected and analyzed to find the answer for these questions: What’s the reality of L/C transactions of Thai Ha sub –branch? What are the reasons of limitations of SHB in L/C transactions? What should SHB to enhance international payment by L/C? Scope of the research In the scope of the research, I focus on the real status of Thai Ha sub-branch in L/C payment activities and also give some evaluation on achievements and limitations of this activity in the period from 2007 - 2010 In the last part of research I recommend some solutions to boost L/C payment in Thai Ha sub-branch as well as whole SHB in Vietnam Methodology In this research, I collect information and data form sources: primary and secondary Firstly, to gather primary information I have observed daily operations of Thai Ha branch I also talked with some officers and some customers of SHB Thai Ha to collect details about L/C transactions Secondly, secondary information is collected through reports and figures of SHB and Thai Ha sub – branch in particular In addition, I also find lots of information from books, magazines, newspapers and internet CHAPTER I INTRODUCTION OF SHB AND SHB THAI HA SUB – BRANCH 1.1 SHB and Thai Ha sub- branch overview 1.1.1 SHB overview Saigon - Hanoi Joint Stock Commercial Bank (SHB) was established in 1993 with headquarter at Can Tho city Starting from a rural commercial bank, SHB has developed constantly and achieved many valuable awards from high-renown organizations: “Best bank in Vietnam in 2010”, “National famous branch 2010” “Top 20 biggest banks in Vietnam” With proper competitive strategy, modern technology and professional working style, SHB has taken leading position in Vietnam banking and provide customers with superior banking services At present, SHB has more than 100 branches and sub- branches in many big cities and provinces of Vietnam with high growth speed The SHB customers include thousands of small & medium enterprises, households & individuals, stated groups…The main banking operations of SHB are: mobilizing capital, giving short –medium-long terms loan, dealing international payment, discounting commercial documentaries, dealing foreign exchange…In future, SHB aims to become one of the ten best retail banks in Vietnam and a strong financial holdings group to meet the requirement of world economic integration Being successful as today, SHB has overcome many challenges and followed principle in core values The core values: ▪ Customers: SHB pledges to supply various, safe, secure, friendly & prompt products/ services because “The customer’s satisfaction is the SHB’s success” ▪ Shareholders: SHB ensures to grow constantly and maximize return to shareholders ▪ Staff: SHB creates dynamic, professional working environment and bring developing opportunities for every staff ▪ Business principle: SHB improves the transparency and integrity in every activities of bank ▪ Innovation: SHB encourages research and innovative approach to develop new products & services and make differentiation ▪ Brand value: SHB becomes modern and reputed retail bank with slogan “Solid partner, Flexible solutions” 1.1.2 SHB Thai Ha sub-branch overview According to Decision 49/ NHNN – HAN7 of Sai Gon – Ha Noi Joint Stock Commercial bank, Thai Ha sub-branch was established on January 15 th, 2007 This branch is located on 17 Thai Ha Street, Dong Da District, Ha Noi and is the first sub-branch of SHB in Ha Noi capital Thai Ha sub-branch mainly performs activities relating to capital mobilization, loan project and international payment In addition, the sub-branch also hold training courses, recruit new staff and research products development to support for headquarter With the positive performance in consecutive years, SHB Thai Ha has remarkable contribution to the development and reputation of SHB Thai Ha sub-branch is also considered as one of the most effective sub-branch in the sub-branch system of SHB in Ha Noi In coming years, the sub-branch has intended to expand customer network, increase its competitiveness and enhance activities to become the best sub-branch of SHB 1.2 Background of International payment by L/C in Thai Ha sub-branch Before 2008, all international payment transactions of SHB had to be carried out through other banks (Military Bank, Vietcombank) However, SHB has been officially allowed to perform international payment services directly after the State Bank passed through the SHB’s requirement of implementing international payment transactions in 2008 Although SHB has just entered international trade directly for only years, the bank has received positive recognition from famous organization: “Bank has excellent international payment service” by Wachovia Bank in June 2009, “Best Trade finance Banks and Providers of Vietnam” by Global Finance… SHB’s international payment system now applies three methods of payment: 21 Firstly, customers are relatively satisfied with the fee for L/C payment transactions Comparison with other banks like Vietcombank and Eximbank shows that the SHB’s fee is reasonable and sometimes lower than theirs Secondly, attitude of Thai Ha sub-branch officers also has positive affect on customers in creating a good image of SHB Many groups of customers from enterprises to individuals always show satisfaction and feel content with the staff’s attitude and working style Almost of officers are enthusiastic, friendly and they are always willing to consult customers to choose the most appropriate products To obtain high satisfaction of customers, SHB Thai Ha as well as SHB staff keep improving themselves and work with the slogan “The customer’s satisfaction is the SHB’s success” 3.2 Evaluation of international payment by L/C in Thai Ha sub-branch 3.2.1 Achievements Although international payment is a new SHB’s operation, Thai Ha sub- branch tries best to supply customers with high-quality and safe service Thanks to good preparation, SHB satisfies customer’s demand in international payment transactions and get many awards from prestigious organizations in over the world Some of them are: “Best bank in Vietnam in 2010” by magazine The banker; “ Best Trade finance Banks and Providers of Vietnam” by Global Finance, "Bank for excellent International Settlements Service 2009" , Gold Cup for products / services "Vietnamese Trademark in WTO integration"… Firstly, SHB has a relatively appropriate technology system: computer, internet…to ensure the data exchange process between head office and branches smoothly and exactly Besides, SHB also set up modern payment system: SWITF – Society for Worldwide Interbank Financial Telecommunication to facilitate oversea trading transactions This is the newest system of payment in over the world and helps to save time as well as money for customer Secondly, SHB is good at risks management in L/C settlement operation It is proved that there hasn’t any payment refusal or depute in L/Cs payment since international payment operation of SHB was officially allowed to carry To avoid risks in payment, officers are very careful in each steps of process: collecting and processing information In addition, increase in percentage of deposit applied in Thai Ha sub-branch is also a useful method to minimize the risks 22 Finally, customer care service is also a strong trait of SHB Nowadays, Vietnam has so many banks, but only few banks really put customer’s satisfaction in its priority SHB has created special feature in caring their customers, delivering excellent quality in all products and services Officers are friendly and polite; they are always willing to help customers consult, solve difficulties so that customers can take the most profitable and appropriate services SHB always defines that the international payment especially L/C payment is one of the strategic objectives in development of the bank Their mission is to create SHB’s image as a "reliable partner", always brings the "appropriate solution" for customers Because of that mission, SHB is gradually changing and improving itself to give the excellent services for customers and become one of the top banks in Vietnam 3.2.2 Limitations Being a new comer in international payment field, together with considerable achievement in recent years, SHB and SHB Thai Ha in particular still have certain limitations that affect on Thai Ha sub-branch performance:  The ineffective process of L/C payment As mentioned in the first chapter, Thai Ha sub-branch has only responsibility in first steps Verifying documents is carried at sub-branch and the rest steps must be dealt with International payment Department Waiting time is usually rather long and makes customers unsatisfied Besides, customers have to spend much time proving the reliability of their documents with bank Moreover, L/C procedure of SHB itself in contacting with foreign banks and foreign customers is very troublesome because this is very strict in the matter of Central bank’s principle As a result, domestic customers meet many obstacles in opening L/C and doing business with foreign organizations  Unbalance of L/C revenue in total revenue of Thai Ha sub – branch Although the total revenue of Thai Ha sub–branch has grown every year, revenue from L/C payment and international payment only takes modest part and just go up slightly Being one of the major sub-branches in Ha Noi, SHB Thai Ha has not yet cared properly about international settlement activities Normally, officers give priority on capital mobilization, credit activity than L/Cs payment 23  Limited correspondent banks With the current number of correspondent banks, it’s difficult for SHB to compete with other banks in international settlement operation (VCB has around 300 correspondent banks in the world) The Thai Ha sub-branch has correspondent with many partners but most of them are domestic banks In 2010, SHB became an official member of Asia Banker Association (ABA) and broadened relationship with many foreign banks However, this number is still limited in Asian countries With the aim to boost international payment activities, SHB in future must extend relationship with more foreign banks in the world  Limited products One of the biggest advantages of other banks like Vietcombank and Eximbank in international settlement is the diversity of products They almost can provide any L/Cs in accordance with demand of customers such as Irrevocable L/C, Standby L/C, Back to back L/C, Irrevocable Conforming L/C …Meanwhile, SHB only use some basic L/C such as Irrevocable L/C, Revolving L/C Thus, international payment of SHB is still operated in small scale and has not widely developed in international trade field  Limited customer SHB’ target customers in recent years are mainly small and medium enterprises; household customers – are groups of customers having low demand on L/Cs settlement On the other hand, traditional big customers like: Vietnam National Coal & Mineral Industries Holding Corporation limited (TKV), Vietnam rubber Group and T&T Group only cover a small proportion in international payment revenue because they mainly require inside services such as salary services, sale collection…As a result, a matter relating to the development of Thai Ha sub branch have been set is how to re-identify the target customers and develop positioning strategy to enhance international payment operation  Limited currencies At present, many commercial banks in Vietnam are facing with the high restriction in the number of foreign currency available in L/C operation In particularly, the Thai Ha sub – branch only uses some basic foreign currencies: USD, EUR, and SGD When customer requires using other foreign currencies, the sub-branch has 24 to contact with other banks to take needed currency, leading to waste more time and cost more money for customers 3.2.3 Reasons of limitations Basing on the theory presented in previous chapters about the factors affecting on the efficiency of L/C payment and reality about L/C payment of SHB, this part will discuss about the reasons of shortcomings There are main groups of reasons: External factors including economic context, government policy, customer knowledge and internal factors including human resource, technology, network of banks, marketing activities  External factor • Economic context In 2008, inter-bank market in Vietnam suffered economic and financial crisis which affected directly on banking activities in general and international payment activity in particular This was expressed through considerable fall in quantity and revenue of L/Cs payment in 2008 However, from 2009 - 2010, Vietnam’s economy shows positive signs in development: recover quickly after the economic crisis and achieve high average growth around % in 2009 & 10 % in 2010 There are many foreign organizations are interested in investment in Vietnam and revenue of international trade activities recovers and goes up as well • Policy of government Up to now, the policies of government and the guiding documents of relating industries have not been comprehensive and appropriate to the development of international payment activities Currently, Vietnam commercial banks only depend on UCP 600, issued by ICC The incomplete legal environment sometimes is obstacle to international settlement system Therefore, there are many difficulties in carrying out L/C payment transactions, especially, when disputes occur, Vietnam always takes disadvantages • Knowledge of customers Vietnam is a newcomer who is lack of experience in international trade including international payment Almost of import- export businesses in Vietnam have only 25 little knowledge of international customs, laws and rules in international trade activities When disputes occur, customers don’t know how to solve timely but complain to their bank This weakness makes international transactions hard to perform smoothly and efficiently Moreover, bank acts as a settlement intermediary, which always has to face fraud derived from exporters, importers and transformers Especially, existence of bogus organizations and sophisticated tricks cause loss for both banks and customers  2.3.2 Internal factor • Human resources quality Human resource takes an important role in any organizations not only in the banks During my time at SHB Thai Ha, I found that international payment transactions are mainly carried out by a tellers or credit officers There is no officer who major in international transactions In addition, almost officers in SHB Thai Ha sub-branch lack foreign languages skill, technology skill and experience in dealing with complicated situations Officers always take much time to understand the abbreviated words in L/C and sometimes they have to look into dictionary to find the difference among technical terms like: FOB, CFR, CIF, CPT Therefore, SHB should pay attention to staff quality and open some training courses to improve staff’ quality • Technology and facilities Together with human recource, technology and facilities are factors having direct effect on L/Cs payment operation Firstly, some support tools like fax machine and Internet is not effective and should be changed & upgraded Secondly, modern technology like SWIFT has been not made all of uses Officers sometimes get troubles in using this settlement system and take much time to correct mistakes Finally, the working area is rather small, which also causes uncomfortable feeling for customers According to the SHB’s plan in 2011, they will add needed equipment and improve intranet system to support international services • Network of banks 26 Economic development in recent years leads to increase in the number of commercial banks and foreign banks in Vietnam and especially in Ha Noi Until now, there are more than 100 domestic banks and 10 foreign banks in Vietnam As a result, competition among banks becomes fiercely and SHB has to share market and customers with other banks Moreover, foreign banks have advantages in modern technology, simple procedure and perfect customer policy so SHB Thai Ha sub– branch meets many difficulties in attracting customers • Marketing and PR activities Marketing is an effective tool to draw customers in using bank’s services However, marketing activities in SHB, especially for international settlement is not really efficient The volume of target customers and customers using L/Cs payment is a proof of ineffective marketing SHB in general and Thai Ha sub-branch in particular have not yet had specific marketing strategy Officers in the sub-branch have been on the defensive when customers require introducing L/Cs payment Obviously, SHB have not cared properly about L/C payment operation Consequently, many target customers who are importers use credit loan operation of SHB but use international settlement of other banks CHAPTER IV RECOMMENDATIONS TO ENHANCE INTERNATIONAL PAYMENT BY L/C IN THAI HA SUB-BRANCH 4.1 Orientations of Thai Ha sub- branch in 2011 Despite a later comer in financing and banking field, SHB has quickly stood at leading position with various banking products/ services, perfect trade sponsor; modern technology…SHB in general and SHB Thai Ha in particular has made a good impression as a reliable and customer-oriented bank in recent years 27 At the year the world economy had to confront serious problems and considerable challenges as in 2009, Global Finance – the most famous banking and financing magazine voted SHB as “The best trade finance bank and provider of Vietnam” by its impressive achievement Mr Joseph D Giarraputo – Publishingdirector and Chairman of Global Finance said: “The reason they choose SHB because this bank is always side by side with customers when credit is under close control and they found out creative way to minimize risks and increase cash flow in international payment transaction.” (http://vneconomy.vn/, March 28th 2010) In the context of the economics’ integration as present, SHB as well as SHB Thai Ha sub-branch have proposed a course of action to enhance international payment by L/C in coming years Firstly, Thai Ha sub-branch continues to improve and extend international settlement activities by L/Cs meanwhile develop other settlement methods such as collection, remittance…to meet the demand of customers Secondly, the bank intends to strengthen foreign currency exchange activities with the aim to supply more foreign currencies for import- export payment operation Thirdly, the bank concentrates effort on extending network of correspondent bank– this is also the strategic task in developing and extending international payment operation With the wide range of correspondent banks in many countries, international transactions will be faster and more economical Fourthly, Thai Ha sub-branch will pay attention to modernizing the technology and facilities for international payment activities Finally, SHB will focus on training and improving the quality of human resources quality to ensure transactions performed smoothly and exactly 4.2 Recommendations Attracting more customers and improving the efficiency of L/C are top-ranking tasks of SHB Thai Ha sub-branch and require comprehensive measures In this part, the author would like to propose some recommendations to enhance international settlement by L/C in SHB Thai Ha There are six main solutions that Thai Ha subbranch as well as SHB can implement to improve L/C payment operation including: improve human resources quality; invest and make use of modern technology; 28 enhance the quality and diversify products; boost marketing activities; expand correspondent banks; increase types of foreign currency sources using in L/C payment 4.2.1 Improving human resources quality Human resource is a decisive factor in development of any organizations To perform L/Cs payment process smoothly & efficiently and minimize risks for parties, staff must be expert in foreign trade, market’s features and technology information Therefore, the sub–branch need standardize staff quality by applying some really effective solutions First and foremost, SHB should build a careful recruitment process to find out the brightest candidates with high professional knowledge, foreign language and information technology skills The bank also gives special priority to experienced candidates who clearly understand the process of L/C operation and can settle any accidental situation Second, SHB should organize discussions about L/C operation to improve knowledge about foreign trade, insurance and transport operations for all staff At the same time, the sub-branch ordinate with experts in International payment Department to hold training courses in professional competence, foreign language and up-to-date law relating to L/C process Third, Thai Ha sub-branch can have periodical examination about the knowledge and skills of staff by small tests or direct interviews Through these examinations, the bank will timely supplement staff necessary information or knowledge which the staff is lacking In addition, the bank should encourage them to partake in contests about international payment and L/C payment to improve their skill and techniques Last but not least, SHB should have incentive policies to motivate staff For example, the bank should give appropriate salary and make bonuses for highproductivity staff If SHB can combine training courses with incentive policies properly, staff quality and productivity will be improved 29 4.2.2 Investing and making use of modern technology Development of technology has assisted people in every field, especially economics Therefore, SHB should take opportunities and invest in modern technology to improve business efficiency and integrate into world banking At present, SHB Thai Ha equipments have not been invested properly, some machines are rather old & hard in using, which causes some troubles in L/C payment process Firstly, Thai Ha sub-branch should equip modern machines and facilities such as high capacity computer, high-speed intranet, synchronous software With the support of modern machines, staff will facilitate transactions and assure safety, accuracy in L/C payment process However, staff also need improve IT skills, so that they can exploit all the functions of equipments and make use of modern technology in working It is suggested that bank open the training courses to instruct the correct and effective usage Secondly, first image in the customer’s mind once entering banks is the style and appearance of sub-branch Hence, the sub-branch should rearrange the facilities in a neat and friendly way to make customer comfortable when they use services 4.2.3 Enhancing the quality and diversifying L/Cs products With the strong development of banking technology and the significant increase of rivals, SHB need have clear orientations to diversify banking products as well as L/Cs Diversification of L/C products will show the scale & quality of bank and meet the high demand of customers Trying to give the best products to customers is the main task of SHB expressed in SHB business philosophy: “The satisfaction of customers will bring success to SHB, therefore SHB commit itself to supply various, safe, secure, friendly and quick products” – SHB General Director, Nguyen Van Le said (Vũ Minh, SHB- Một năm thành công March 28th 2010, http://vneconomy.vn/) Recently, L/C has become the most common methods and made up a large proportion in international settlement Therefore, the sub- branch should diversify services, extend the scale and improve the quality of L/C payment activities Apart 30 from basic L/Cs like irrevocable L/C and L/C confirmed irrevocable, Thai Ha sub – branch can provide such L/Cs:  Back-to-back L/Cs and Transferable L/Cs for products required intermediaries: electronics products, coal  Revolving L/Cs for processing goods, bartered goods, and multipleshipment goods like: clothes, food-wares…  Standby L/Cs for farming goods or spoiled–easy goods like: foods, vegetables, flowers… Depending on features of goods, bank officers can consult customers to choose the appropriate L/Cs to maximize profit and minimize risks for both customer and bank 4.2.4 Boosting marketing activities to improve image of banks and extend target customers At present, SHB is facing with strong competitions from so many domestic and foreign banks in Ha Noi, thus Thai Ha sub – branch need to give attractive, flexible and effective policies to attract more customers Through marketing activities, SHB can consolidate and expend a good image in customers and other banks Effective marketing strategies will help to attract more customers, encourage customers to use new products and increase the revenue from L/Cs payment  Building proper customer policy Customer is very important factor, deciding the existence and development of enterprises Thai Ha sub- branch also puts a premium on customers, and operates with the slogan “Prosperity of customer is the prosperity of Thai Ha sub- branch” Therefore, in the high-competitive environment as today, Thai Ha must apply a proper policy to attract customers Firstly, the sub- branch should take the initiative in finding more customers especially import- export enterprises Instead of relying too much on traditional customers like TKV, Vietnam rubber Group….the sub-branch should find more new customers in different fields It is recommended for Thai Ha sub – branch to 31 purchase customer data base from research companies and make use of this information to approach and set up relationship with potential customers Secondly, Thai Ha sub-branch can classify and evaluate customers to give suitable incentive policies: interest incentive, charge incentive, deposit rate For core customers, bank can give the remission of charge, reduction on loan interest…to maintain good relationship with traditional customers For new customers with limited experience in international trade, officers should focus on consultancy in L/C process, risks minimization… From these activities, the bank will create trust in customers mind and build good relations with them  Strengthening marketing and public relation activities Marketing strategy takes an important part in attracting customers and popularizing the L/C payment of the sub- branch However, Thai Ha has not had effective and clear marketing strategy yet In future time, the sub – branch should attach special importance to advertising and broadening the image of bank They can take advantage of various means of mass media to spread the image of banks such as: websites, newspapers, television…Increasing numbers of high-quality and updating articles on SHB website is useful way to supply update information for customers In addition, the bank should advertise itself through delivering free guide & consultancy books, supplying the charge list & promotion of the banks The subbranch should hold meetings or offer gifts for core customers to express caring of SHB to customers Thai Ha sub – branch can also partake and sponsor for large events where there are many potential customers to advertise products 4.2.5 Expanding correspondent banks Thai Ha sub-branch is seeking to build a prosper relationship policy with correspondent banks not only in Vietnam but also in the world The wide range of correspondent banks will raise the prestige of banks, and create good conditions for international payment transactions Thanks to various correspondent banks, transactions relating L/Cs payment will be pushed up, settlement risks will be reduced and the fee will be reduced SHB can also exploit benefit from correspondent bank’s international payment system and learn management 32 experiences from foreign banks At present, SHB is official member of Asia Banker Association with over 100 foreign banks from 27 Asian-Pacific countries This event brought great opportunities to enhance SHB reputation and position in the world banking In future, Thai Ha sub- branch need maintain and consolidate relation with present correspondent banks Moreover, the bank should expand relationship with new banks worldwide to satisfy the settlement demand of customers, especially banks in other continents 4.2.6 Increasing types of foreign currency sources using in L/C payment International payment activities with many countries in the world require sufficient foreign currency sources To ensure the foreign currencies sources, the sub –branch can apply some solutions to raise the supply of foreign currencies in payment operation First, mobilizing foreign currencies should be encouraged through giving favorable terms for customers such as high interest rate, promotions…Second, the sub-branch should enhance foreign exchange activities by diversifying transaction methods in forex-market (Spot, Forward, Option and Future) or extending participants of the market And finally, SHB can turn foreign currencies of sponsor source into advantages to circulate in international payment activities Besides, improving effectiveness of using SWIFT in international payment is needed When SHB took part in SWIFT, it not only aims to serve for the development of international settlement but also to prepare conditions for joining in world currency market and stock market Therefore, SHB need to automate domestic transactions, standardize operations to save time and money 33 CONCLUSION In the trend of economic and international trading globalization as today, international payment takes a critical role in banking activities and has a tremendous impact on the growth of Vietnam economics Import – export payment operation also thrives more than ever with the participation of many foreign banks As a result, international payment activities of commercial banks extend on a large scale However, domestic banks in general and Sai Gon Ha Noi joint stock commercial bank in particular have to face a fierce competition from joint venture and foreign banks To stand steady and develop strongly in international market, improving international settlement by L/C becomes an essential task for SHB Currently, Thai Ha sub-branch starts having specific orientations in developing L/C payment operation However, efficiency of L/C payment still relies on both external 34 and internal factors The author believes that with right policies, in future, SHB Thai Ha will gain success in this field and create a good image in customers Through main chapters of the report, the readers are provided information about L/C payment operation of Thai Ha sub-branch At first, the author gives premise knowledge about L/C with definitions, criteria for assessment and factors affecting on efficiency Then, the readers will have general overview about SHB as well as the international payment by L/C activities of Thai Ha sub-branch The next part presents achievements, limitations and the causes of current problems Finally, basing on reality of Thai Ha sub-branch, the author gives some practical recommendations to improve and enhance L/C payment operation, in which marketing activities and improving human resources take an important role It’s hope that recommendations presented in this report will be useful not only for SHB but for other banks in Vietnam REFERENCES Vietnamese Ngân hàng TMCP Sài Gòn – Hà Nội (2009) Bản cáo bạch Ngân hàng TMCP Sài Gòn- Hà Nội, Phòng giao dịch Thái Hà Ngân hàng TMCP Sài Gòn – Hà Nội (2009) Báo cáo thường niên, Phòng giao dịch Thái Hà Ngân hàng TMCP Sài Gòn – Hà Nội (2008) Quy trình toán quốc tế, Nguyễn Văn Tiến (2007) Giáo trình toán quốc tế, 291-321, xuất lần thứ Tư, NXB Thống kê, Hà Nội Nguyễn Thị Hương (2008) Phát triển toán không dùng tiền mặt tại Ngân hàng thương mại cổ phần Sài Gòn – Hà Nội, chi nhánh Hà Nội 56, 68, Luận án Thạc sỹ, Trường ĐH Kinh tế Quốc dân 35 Ngân hàng TMCP Sài Gòn – Hà Nội (2010) Tạp chí Global Finance bình chọn SHB “Ngân hàng tài trợ thương mại tốt Việt Nam năm 2009 URL: http://shb.com/tabid/208/articlecd/849/pretabid/92/default.aspx Vũ Minh, (28/3/2010) SHB- Một năm thành công, URL:http://vneconomy.vn/201004020931598P5C9917/shbmot-nam-thanhcong.html English Edward G.Hinkleman, (2003) A short course in International payments, World Trade press, The United states, 176 -178 Eiteman.DK, Athur I.S, Michael H.M, (2003) Multinatinal Business Finance, tenth edition, 719 10 Hill W.L, Charles, (2009) International Business, McGraw Hill International Edition, 548 11 The Toronto-Dominion Bank Financial group (2007) A Guide to Letters of Credit, 5-9 12 Credit Research Foundation (1999) Understanding and Using Letters of Credit, Part I URL: http://www.crfonline.org/orc/cro/cro-9-1.html 13 Ec-finance, (2010) Letter of credit process, URL: http://www.ec-finance.com/ ... of customers Trying to give the best products to customers is the main task of SHB expressed in SHB business philosophy: “The satisfaction of customers will bring success to SHB, therefore SHB. .. sponsor source into advantages to circulate in international payment activities Besides, improving effectiveness of using SWIFT in international payment is needed When SHB took part in SWIFT, it... building incentive policies to enhance export activities In future, SHB Thai Ha should have strategy exploiting export customers market to make it become strength of SHB in international payment