1

STATE BANK OF VIETNAM

MINISTRY OF EDUCATION AND TRAINING

BANKING UNIVERSITY OF HO CHI MINH CITY
-------------------------------------------

NGUYEN DA THAO
THE EFFICIENCY OF INTERNATIONAL SETTLEMENT
OPERATIONS OF VIETCOMBANK 2015 - 2017.
BACHELOR’S THESIS
MAJOR: FINANCE - BANKING
ID: 734021

HO CHI MINH CITY, 2018


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STATE BANK OF VIETNAM

MINISTRY OF EDUCATION AND TRAINING

BANKING UNIVERSITY OF HO CHI MINH CITY
-------------------------------------------

NGUYEN DA THAO
THE EFFICIENCY OF INTERNATIONAL SETTLEMENT
OPERATIONS OF VIETCOMBANK 2015 - 2017.

BACHELOR’S THESIS
MAJOR: FINANCE - BANKING
ID: 734021

SUPERVISOR
DR. NGUYEN PHUOC KINH KHA

HO CHI MINH CITY, 2018


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DECLARATION
The thesis, which I have submitted, is my own research and, with the exception of
quotations (which are clearly marked and referenced), is written in my own words.

Signature:

Date:


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ABSTRACT
The process of internationalization of the world's socio-economic life has been
more and more intense, and international trade has more and more conditions for
development. For a developing country like Vietnam, import-export activities play a
very important role in the economic development, thus, the international payment of
commercial banks should recieve more attention in banking operations. Viet Nam
Foreign Bank is the most outstanding bank in Vietnam regarding of international

settlement. In recent years, Vietnam Foreign Trade Bank has always paid attention
to innovation in external relations in order to improve the efficiency and
development

of

international

settlement,

enhancing

the

prestige

and

competitiveness as an international bank regionally and globally.

Based on the research on the efficiency of international settlement operations at
Vietcombank, it can be seen that besides the positive results, there are still some
limitations in the development of settlement quality as well as bringing efficiency to
this activity. Therefore, in order to improve the efficiency of international
settlement operations at the Foreign Trade Bank of Vietnam in particular and
commercial banks in general, there should be synchronized coordination from many
parties, not only the relationship between banks and clients but the strong
combination among solutions. The implementation should be carried out at the
same time to bring about its effect.



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Table of Contents
DECLARATION ................................................................................................................................... 3
ABSTRACT ........................................................................................................................................... 4
LIST OF ACRONYMS.......................................................................................................................... 7
LIST OF PICTURES ............................................................................................................................ 8
INTRODUCTION.............................................................................................................................. 10
1.

Rationale ..................................................................................................................................... 10

2.

Literature Review .................................................................................................................... 12

3.

Research Objectives ................................................................................................................ 12

6.

Data and Methodology............................................................................................................ 13

7.

Dissertation Outline ................................................................................................................ 13

CHAPTER I ........................................................................................................................................ 14

THEORETICAL BACKGROUND OF OPERATIONAL EFFICIENCY OF
INTERNATIONAL SETTLEMENT................................................................................................ 14
1.1.

Fundamental theories of international settlement ................................................ 14

1.1.1.

Definition of international payment..................................................................................... 14

1.1.2.

Characteristics of international payment .......................................................................... 14

1.1.3.

The role of international payment ........................................................................................ 15

1.2.
1.2.1.

The efficiency of international settlement operations in Commercial Bank 17
Definition of the efficiency of international settlement operations ........................ 17

1.2.2. Criteria to evaluate the efficiency of international settlement operations in
Commercial Banks ........................................................................................................................................ 19
1.2.3. Quantitive criteria for evaluating the operational efficiency of internationl
settlement operations ................................................................................................................................. 21
1.2.4. Quanlitative criteria for evaluating the operational efficiency of international
settlement operations ................................................................................................................................. 23


CHAPTER II ...................................................................................................................................... 25
ASSESSMENT OF THE EFFICIENCY OF INTERNATIONAL SETTLEMENT
OPERATIONS AT VIETCOMBANK ............................................................................................. 25
2.1. An Overview Of Bank For Foreign Trade Bank Of Vietnam ........................................ 25
2.1.1.

The history and development of Vietcombank................................................................ 25

2.1.2.

The organizational structure................................................................................................... 26

2.2.
2.2.1.

The reality of international settlement operations at Vietcombank ............... 28
Structure of International settlement – Trade Finance Centers and Branches.. 28


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2.2.2.

The reality of international settlement operations at Vietcombank ...................... 30

2.3.
Assessment of the efficiency of international settlement operations at
Vietcombank ........................................................................................................................................ 35
2.3.1. The efficiency of international settlement operations evaluated by quantitative

criteria 35
2.3.2. The efficiency of international settlement operations evaluated by qualitative
criteria 36
2.4.

Advantages and drawbacks ............................................................................................. 42

2.4.1.

Advantages...................................................................................................................................... 42

2.4.2.

Drawbacks ...................................................................................................................................... 43

CHAPTER III ..................................................................................................................................... 47
ENHANCEMENT OF THE EFFICIENCY OF INTERNATIONAL ECONOMIC
OPERATIONS IN VIETNAM .......................................................................................................... 47
3.1.
Orientations for development and expansion of business in general and
International Settlements in particular in Vietnam. ............................................................. 47
3.1.1.

General development orientation ......................................................................................... 47

3.1.2. Orientation to enhance the efficiency of International settlement operations at
Vietcombank ................................................................................................................................................... 48
3.2.
Recommendations to enhance the efficiency of international settlement
operations in Vietnam. ..................................................................................................................... 49

3.2.1.

Recommendations to Vietcombank...................................................................................... 49

3.2.2.

Collaborative recommendations to clients........................................................................ 60

3.2.3.

Recommendations to the government ................................................................................ 61

CONCLUSION.................................................................................................................................... 63
REFERENCES .................................................................................................................................... 64


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LIST OF ACRONYMS
Acronym

Meaning

IS

International Settlement

ICC

International Chamber of Commerce


L/C

Letter of credit

T/T

Telegraphic Transfer

D/P

Documents against payment

D/A

Documents against acceptance

UCP

Uniform Customs and Practice for Documentary Credits

USD

United States Dollar

VND

Vietnam Dong

SWIFT


Society for Worldwide Interbank Financial Telecommunication

VCB

Joint Stock Commercial Bank for Foreign Trade of Vietnam

BIDV

Bank for Investment and Development of Vietnam

ACB

Asia Commercial Joint Stock Bank

MHB

Housing Bank of Mekong Delta

MB

Military Commercial Joint Stock Bank

HSBC

Hong Kong and Shanghai Banking Corporation


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LIST OF PICTURES
Name

Page

Figure 2.1: Corporate governance model of Vietcombank

27

Figure 2.2: Management structure of Vietcombank

28

Figure 2.3: Structure of International settlement – Trade Finance Centers
and Branches
Figure 2.4: Market share of Vietcombank 2015 - 2017
Figure 2.5: International payment – trade finance revenue of
Vietcombank 2015 – 2017 (USD billion)
Figure 2.6: Export and Import Settlement Revenue of Vietcombank
2015 – 2017 (USD billion)
Table 2.7: International settlement revenue and market share of some
Commercial Banks in Vietnam 2015 - 2017 (USD billion)
Table 2.8: Value of each payment methods of Vietcombank 2015 – 2017
(USD billion)
Figure 2.9: Proportion of each payment methods in export settlement
value of Vietcombank 2015 – 2017
Figure 2.10: Proportion of each payment methods in import settlement
value of Vietcombank 2015 - 2017
Table 2.11: Analysis of the efficiency of international settlement
operations of Vietcombank 2015 – 2017 (USD billion)


29

30

31

31

32

33

34

34

35


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Table 2.12: International settlement product portfolio of Vietcombank

39

Table 2.13: Vietcombank remittances services

40


Table 2.14: Core banking softwares of Commercial Banks in Vietnam

41


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INTRODUCTION
1.

Rationale

Although operating in any form, a commercial bank usually consists of three main
operations: capital mobilization, lending and intermediary. International settlement
is a part of the bank's intermediation business. International settlement operations
create momentum for the development of other operations. Therefore, how to
achieve efficiency in international settlement is a matter of top priorities of banks
for the following reasons:
Firstly, international development activity facilitates the increase of revenue and
profit. Vietcombank, playing the role as the leading bank in this type of business in
Vietnam, not only does the bank's revenue increase significantly thanks to the fees
charged for providing more services to its clients, but also in support of other bank
operations. This creates advantages for Vietcombank to increase deposit, create
favorable conditions for expanding the scale of credit, especially to increase the
foreign currency capital due to the temporary management of the idle capital of
enterprises with payment via banks.
Secondly, the operation of international settlement development, facilitating banks
to disperse risks. Banking is the business that contains the most risky elements.
Especially in the current context, the more volatile, fraudulent trickery increasingly
sophisticated, the more and more risk that Vietcombank incurred: credit risk, risk

interest rates, foreign exchange risks, liquidity risk, technology and operational
risks, national risk, etc. Diversification of business and service types is the most
effective way to diversify risk in banking business. Revenue from International
settlement would support banks when the market fluctuates, helping banks to
maintain stability. International settlement would

help strengthen the bank's

competitiveness. In the field of import-export capital which contains many risks, it
is required that the International settlement should apply from receiving to
processing information. To meet that requirement, Banks has to innovate


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technology, organize well the international settlement from technical equipment to
training specialists to help the process of performing business safely and effectively.
Thirdly, international development operations would contribute to expanding the
scale and network of banks. International settlement would help banks to better
meet the needs of their clients, thereby improving their reputation in the
international market. This business side is not only working with documents but
also showing in the consultancy side so that clients are provided with perfect
documents. International settlement operations help banks move beyond the
national borders, communicate with banks around the world, enhance the prestige
of the bank, and develop agency relationship, get access to source funded by foreign
banks and the international financial market to better meet the needs of socioeconomic development.
To sum up, the payment between countries would be done through Vietcombank
and the role of Vietcombank in the International settlement is very necessary, which
is an important bridge between the business and domestic and foreign investors.
Secure the import and export parties as well as finance them in production and

business operations. Because of the above reasons, the efficiency of international
settlement operations should inevitably be studied to find out the positive aspects as
well as the remaining constraints to overcome, enhance the business of banking. In
the modern economy, it is required for the bank's International settlement
operations to be effective and risk minimized. An effective international settlement
system is the foundation for the sustainable development of the banking payment
sector. The efficiency of the bank's International settlement operations is required to
get access to more clients.
It is the driving force for this thesis, which is on the subject of the efficiency of
International settlement operations at the Foreign Bank of Vietnam, in particular its
performance in recent times.


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2.

Literature Review

From the above arguments, the efficiency of international settlement operations has
always been focused during the development of commercial banks, especially the
leading bank in this field – Vietcombank. But there have been very few researches
on this subjects which focus on Vietcombank in recent time. Some previous
researches on the same subjects were:
“Solutions to enhance the efficiency of operating international settlement at
Vietcombank in the period of 2008 - 2013” the thesis of Pham Minh Thu (2013)
focused on solutions for Vietcombank in the period of 2008 – 2013, before
Vietcombank established its second International Settlement and Trade Finance
Center in Ho Chi Minh City.
“Solutions to enhance the operating international settlement of commercial banks in

Vietnam” of Dr. Tran Nguyen Hop Chau (2009) gave a thorough assessment and
systematically solutions for commercial banks in Vietnam 2007 – 2011.
3.

Research Objectives

The main objectives of this research are to evaluate the efficiency of international
settlement operations at Vietcombank during the period from 2015 – 2017, to make
ground for addressing advantages and drawbacks in the process and some solutions
from the author’s point of view. This main objective could be divided into two more
detailed objectives:
- Give an assessment of the efficiency of International settlement operations of
Vietcombank.
- Proposed solutions to enhance the efficiency of international settlement operations
of Vietcombank in the coming time.
4.

Research questions

-

How to evaluate the efficiency of international settlement operations?


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-

Are there any missing in the process of Vietcombank and what it should do


to enhance its operational efficiency of international settlement operations?
5.

Research subject and limitations

-

Subject:

The

efficiency

of

international

settlement

operations

of

Vietcombank.
-

Limitation of time: from 2015 to 2017

-


Limitation of space: Joint Stock Commercial Bank for Foreign Trade of

Vietnam
6.

Data and Methodology

There are difference choices of research approaches, designs, strategies, sample
selection, data collection methods to perform researching. This research follows a
mixed method, which include:
Qualitative and quantitative method in giving assessment of the efficiency of
International settlement operations of Vietcombank.
Qualitative method in giving theoretical research and proposed solutions to enhance
the efficiency of international settlement operations of Vietcombank in the coming
time.
7.

Dissertation Outline

Apart from the declaration, conclusion, table of content and appendix, this thesis is
divided into three chapters
Chapter I: Theoretical background of operational efficiency of international
settlement
Chapter II: Assessment of the efficiency of international settlement operations at
Vietcombank
Chapter III: Enhancement of the efficiency of international economic operations in
Vietnam for the period


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CHAPTER I
THEORETICAL BACKGROUND OF OPERATIONAL
EFFICIENCY OF INTERNATIONAL SETTLEMENT

1.1.

Fundamental theories of international settlement

1.1.1. Definition of international payment
International settlement is the fulfillment of monetary obligations arising from
economic, trade, financial, credit and other non-commercial relations between
individuals of other countries to finish the cycle of international trading by means of
transfers or clearing accounts on banks.
As such, international payment activities are not only based on commercial
relationships but also on other economic activities such as remittances, foreign
loans and grants (with or without reimbursement) between financial and nonfinancial institutions and between countries.
1.1.2. Characteristics of international payment
From the above concept can show that international payment activities have
different characteristics from domestic payment as follows:
- Parties participating in international payment activities are organizations and
individuals in different countries. Each transaction involves at least two countries.
- International settlement activities relate to the legal systems of different countries.
- The currency used in the international payment may be the currency of the
importing or exporting country or may be the currency of the third country, but
usually a convertible currency.


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- Language used in international payment is English.
- International payment requires professional qualifications and professional
qualifications commensurate with the international level.
- International settlement operations bear high risks.
International payment is an important part of import-export business. The economic
efficiency of this business is largely due to the quality of the payment. Payment is a
step to ensure that the exporter gets the money and the importer has the right to
receive the goods.
1.1.3. The role of international payment
1.1.3.1.

To the economy

Every country in the world has its own natural, socio-economic characteristics.
Thus, each country has its own advantages to produce goods that other countries
could not produce or produce at higher production costs. On that basis, the
international division of labor has been established and increasingly developed, and
exchanges between countries are increasingly diverse. Moreover, in the process of
seeking profits, capital flows from one country to another overlap at a dense rate.
The process of carrying out the above operations, inevitably arise the need to pay,
payment of money between the subject in different countries. Due to the need for
International settlement operations, International settlement is a very important part
of foreign trade. Through International settlement operations, the flow of goods and
services is transferred from one country to another and it involves the movement of
money between countries. International settlement brings a large source of foreign
exchange, contributing to the cause of industrialization and modernization of the
country.
International settlement is a condition for promoting goods. Throughout
International settlement operations, business entities purchase and sell goods and
services. This ensures that the reproduction process is carried out normally, and the



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goods and services are cleared smoothly. Therefore, if there is no International
settlement activities, the production and stock of goods could not develop. Through
the purchase and sale of goods and services in the market, international interest
plays an important role in extending the ability of consumption, raising the level of
enjoyment of individuals and enterprises, contributing to the promotion of
production and expansion. the social labor, the revolution in science and technology
in the branches of the economy. International settlement is the basis for expanding
and promoting the foreign relations of the country. International settlement has fully
exploited comparative advantage of each country, reaching the maximum scale for
each production sector, creating conditions for the development of key economic
sectors, improving labor productivity and lower production costs, facilitate the
development of new technologies, attract investment capital from the outside,
increase the speed of growth and efficiency of the economy.
1.1.3.2.

To the Foreign bank of Viet Nam

International settlement operations play an important role in Vietcombank's
business operations, which not only generate revenue for the bank, but also provide
support for operations. Other business development and improvement of business
efficiency of the bank. As a result, the more international settlement operations, the
stronger the development of other services, attracting clients to trade, on that basis
would create high efficiency in business as well as increase the operation scale of
the bank.
When performing payment services on behalf of the traders, import-export
enterprises, invisible banks have become the intermediary of payment between the

two parties.
As a payment intermediary, Vietcombank conducts payment according to the
requirements of clients, protects clients' interests in payment transactions,
consultancy, guiding clients with technical solutions for international payment. Risk
management, creating trust for clients in foreign trade transactions. On the other


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hand, if the client is not able to finance the bank's financial support, Vietcombank
would implement the import-export finance for them to meet the demand for
capital for clients.
In order to carry out the role of International settlement Center, Vietcombank has to
network through its branches and its correspondent banking system, extending all
over the world, namely 1200 correspondent banks in 80 countries.
International settlement operations play an important role in the bank's business. It
is an indispensable link in the chain of operations, since the preparation of the steps
necessary to produce the goods until the export of foreign currency or foreign
currency to import goods for production. production, human life. Therefore, the
research on the contents of international settlement operations, the improvement of
technical operations of International settlement techniques to handle the
characteristics and characteristics of each country's economy to improve efficiency.
International settlement operations are always considered important tasks of
Vietcombank.

1.2.

The efficiency of international settlement operations in Commercial

Bank

1.2.1. Definition of the efficiency of international settlement operations
According to microeconomics, efficiency is the process of making the best use of
the available resources to achieve the desired results. In term of making the best use
of resources, economic efficiency has close relationship with the use of existing or
potential production capacity to achieve maximum targets. The performance of the
business is the result obtained from the management measures of the enterprise
against the costs incurred. The operational efficiency of an enterprise’s performance
is measured by quantitative indicators (economic variables) and qualitative
indicators (corporate credit, client service quality, etc).


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International settlement is one of the main types of services that commercial banks
provide to their clients. To assess the performance in a comprehensive and correct
manner, it is necessary to carefully calculate the factors affecting the performance
of banks in general, and to achieve the objectives of maximizing profits and
minimizing risks in particular.
According to modern economics, efficiency is the achievement of six goals:
- Economic.
- Polictics
- Society
- Coherence
- External
- Compatibility
In particular, with the International settlement - Trade Finance, the above objectives
reflect in the fact that: The efficiency of payment operations is not merely a loss or
profit in the payment service implementation in a given period of time. The
efficiency of the International settlement operation for a commercial bank is the
overall benefits that it could bring, including its quantifiable or not quantifiable

benefits; indirect and direct interests in the economy, in favor and in harmony with
the interests of the sector, other parts of the economy in which commercial banks
are an integral part; Economic benefits may also include the exogenous impact of
the banking sector on other sectors to create a total benefit for the national
economy.
Either taking the perspective of microeconomics or modern economics, the
efficiency of international settlement operations also has close relationship with the
parties taking part in the whole process. Whether or not the participants in
international settlement operations have achieved their goals effectively is the basis
for assessing how effective an approach is.


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Within the limitation of the subject research, parties being concerned are banks with
their goals as follows:
- To meet the requirements of clients.
- Profit maximization.
- Enhancing the prestige and cooperation in the domestic and international market.
- To implement the State's foreign exchange management policy, contributing to the
national economic, political and social objectives.
With the traditional, sustainable relationships with clients, technical facilities,
management qualifications and professional qualifications of bank officers,
Commercial banks have provided effective import and export payment services and
the potential to limit the risk in international trading, become a professional in
evaluating financial information of enterprises as well as the ability to control the
accuracy of these sources of information. At the same time, banks ensure the speed
of payment and assists enterprises in drafting export contracts.
1.2.2. Criteria to evaluate the efficiency of international settlement operations
in Commercial Banks

Banking performance is concerned on a set of economic and financial indicators
through its direct or indirect impact on the economy. The commercial banks are also
one of the components of effective banking operations. However, there has been no
specific standard in assessing the efficiency of international settlement operations.
To the author's perspective, the efficiency of international settlement operations at
commercial banks could be concerned from different angles:
1.2.2.1.

From the economic perspective

The efficiency of International settlement operations is about the ability to support
the economic development through import-export payment operations following the


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government's external economic orientation in each period and contributing to the
improvement of the Balance of Payment.
In addition, the efficiency could be measured by the amount of payments that serve
the capital transfer process in foreign investment activity, attracting more foreign
aid and foreign exchange.
1.2.2.2.

From the client perspective

Clients of commercial banks include individuals, private enterprises, state-owned
enterprises or joint ventures in many different fields of business. Clients are not
only providers of "input materials” for banks, but also the buyer, the recipient of the
output banking products who bring about profits for the bank. Clients also
increasingly create effective business partly thanks to bank's products and services.

Therefore, bank definitely should strengthen its relationship with its clients. In the
field of International settlement and Trade Finance, clients are importers and
exporters who create input materials for banks through deposit relations payment
relationships with foreign countries. The quicker, safer and more accurate operation
of the commercial banks at the commercial banks helps them to quickly recover
their export goods, their capital turnover and create credibility in the international
trading. Therefore, commercial banks have contributed effectively in bringing the
efficiency of import and export business of clients. It is addressed in the growth rate
of import-export turnover of each enterprise in the economy.
1.2.2.3.

From a bank perspective

International settlement Operation is designed to serve the needs of import and
export payment of clients, thereby bringing about economic benefits for the society
and creating service revenue for the bank. If international settlement operation is
safe and effective, it will influence other business operations of the bank. Thus, the
more it develops, the more it enhances the prestige and competitiveness of the bank
in the international market.


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As a result, the performance of International settlement should be comprehensively
concerned under these three aspects. They have a closely complementary
relationship. Only maximizing bank profits without interests of clients is just onesided point of view, and vice versa. In the process of banking business, it is
necessary not only to pay attention to the interests of banks and clients, but also to
pay attention to social benefits, to harmonize the interests of clients, banks and the
economy.
1.2.3. Quantitive criteria for evaluating the operational efficiency of

internationl settlement operations
The efficiency of commercial banks operations at commercial banks could be
determined by a number of absolute and relative measurement criteria:
1.2.3.1.

Absolute quantitative measurement criteria

Firstly, the efficiency of international settlement operations is assessed through
international payment: When implementing the requirements of clients related to
international settlement, Vietcombank collects a certain fee according to the bank's
fee schedule. For each specific transaction such as: L/C issuing fee, L/C amendment
fee, L/C payment fee, collection and handling fees, commission payment fee,
collection fee, transfer payment fee... In order to collect these fees, banks could be
collected at a certain percentage of the value of services rendered or fixed for each
transaction. As these areas of development become more and more effective, the
greater the effect of the International settlement system, the greater the efficiency of
commercial banks. In addition to commissions and fees collected, banks may earn
returns on foreign exchange or convert foreign currency when the importer has no
foreign currency to pay, or the exporter wants to collect the currency.
Secondly, the efficiency of international settlement operations is assessed through
the net profit ratio from international payment. In order to determine the profit from
international payment, banks should calculate the costs incurred for international


22

payment. Then, the profit is the gap between the International settlement revenue
and expense, which is determined in the formula:
Efficiency of international payment
= International settlement Revenue – International settlement Expense


1.2.3.2.
a)

Relative quantitative measurement criteria

International settlement Profit/ International settlement Revenue

This index shows how much profit out of every dollar of revenue a bank can make
from its international settlement operations.
b)

International settlement expense/ International settlement revenue ratio

This indicator shows how much a bank has spent on management, execution... to
earn one dollar of revenue from international settlement operations.
c)

International settlement profit/ Total Revenue ratio

This index indicates the performance of the International settlement in comparison
with other businesses, how much profit is generated by international settlement
operations out of one dollar of bank’s total revenue. The higher this index is, the
more International settlement operations dominate in bank’s business.
d)

International settlement revenue/ Total Revenue ratio

This index determines the revenue structure of International settlement services in
total revenue at banks

e)

International settlement revenue/ Total fee revenue ratio

This indicator shows the share of International settlement income from total service
income at banks.


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1.2.4. Quanlitative criteria for evaluating the operational efficiency of
international settlement operations
Firstly, the efficiency of international settlement operations is assessed by how it
contributes to the efficiency and quality of credit operations. When banks provide
loans to enterprises when purchasing materials for exporting or the basis of the
guarantee of L/C, Vietcombank would collect interest on the amount of capital that
has been invested in the credit that would be recovered both the principal and
interest. This would increase efficiency for credit business operations if security
operations are implemented safely.
Secondly, the efficiency of international settlement brought about by strengthening
and supporting export financing, the profit from executing payment methods, fees
collected
Thirdly, the efficiency of international settlement operations is assessed by
contributing to strengthening and creating effective foreign exchange business. In
the process of implementation of international transaction, banks sell foreign
currencies to clients who are in need of payment for imported goods or purchased
from clients with foreign currency sources collected in the payment of export
goods. As the transaction of importing and exporting through banks is developing, it
would create favorable conditions for foreign exchange business to improve its
operating income.

Fourthly, the efficiency of international settlement operations is assessed by the
strengthening and consolidation of banks' capital. When performing foreign
exchange operations, all sources of foreign currency from foreign countries or
foreign currencies for payment to foreign countries, commercial banks should carry
out through the deposit account of foreign banks. As the operation of the
International settlement grows, the transaction revenue through these accounts
becomes larger. International settlement has affected the rate of capital growth at
banks, especially the growth rate of foreign currency capital.


24

Fifthly, the efficiency of International settlement operations is assessed through the
development of the correspondent bank network, the development of external
relations, the enhancement of the bank's prestige, based on cooperation and mutual
assistance.
To sum up, international settlement operations should be linked to the international
economic operations of the country in each period of development. The efficiency
of international settlement operations not only reflect in the profitability of the
operation, but also through its ability to support other bank’s operations as well as
its clients and the economy.

CHAPTER I: CONCLUSION
From the theoretical background of international settlement, the author gives his
definition of the efficiency of international settlement operations in commercial
banks regarding the interests of banks, clients and the economy. The author tries to
give a proper method to assess the efficiency, which is divided into two main sets of
criteria. The quantitative criteria concerns the efficiency as shown in profit, revenue
and other ratios. The qualitative criteria concerns the efficiency from many
perspectives, evaluates it by considering the relationships between international

settlement operations and parties participating. This way of approaching will be the
basis for the assessment of Vietcombank international settlement operations in the
following chapter.


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CHAPTER II
ASSESSMENT OF THE EFFICIENCY OF
INTERNATIONAL SETTLEMENT OPERATIONS AT
VIETCOMBANK
2.1. An Overview Of Bank For Foreign Trade Bank Of Vietnam
2.1.1. The history and development of Vietcombank
To conform to international practices on foreign banking operations of Vietnam, on
October 30th 1962, the Council of Ministers issued Decree No. 115/CP on the
establishment of Bank for Foreign Trade of Vietnam tasked with foreign exchange
trading, International settlement , international credit, and foreign trade loans.
Vietcombank is also tasked with participating in the management of foreign
exchange; contributing to monetary and public property protection; enhancing and
expanding of economic, political relations and cultural exchanges with foreign
countries. After a preparation period, on April 1st 1963, Vietcombank for Foreign
Trade of Vietnam is officially put into operation and, since then, the brand of
Vietcombank for Foreign Trade of Vietnam is officially born.
Vietcombank is honored to be chosen for pilot privatization in banking sector under
the policy of the Party, State and Government. December 26th 2007 became an
important milestone of Vietcombank when the initial public offering (IPO) achieved
significant result that is much better than expected. Vietcombank’s stock has
quickly become the leading share among banking stocks since then.
Then, in September 2011, Vietcombank marked an important milestone by signing
a strategic shareholders agreement with Mizuho Corporate Bank under Mizuho

Financial Group, the third largest financial group in Japan and the 20th in the world.
The sale of strategic stake of Vietcombank became the largest regional M&A