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Executive MBA in Finance and Banking

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Corporate Governance in Joint Stock Commercial Bank for Foreign Trade of Vietnam

Prepared for: Prepared by:

Prof. Rolf Dubs Le Van Hoang Thai Nhat Linh Mai Hong Chi

Class:

EMFB 8

Date of submission: 28 November 2011

TABLE OF CONTENTS

1 Introduction ............................................................................................................................ 3 2 Vietcombank Overview ......................................................................................................... 4


2.1 2.2 The Scope of Activities: ........................................................................................................................................................ 4 Milestones: .................................................................................................................................................................................. 4

3 New Corporate Governance Model Analysis..................................................................... 5


3.1 3.2 KISS Framework ...................................................................................................................................................................... 5 Vietcombanks Corporate Governance Aspects ...................................................................................................... 6 Corporate Governance Aspects are well defined in Vietcombank ............................................................6 Size, development and internationalization ........................................................................................................ 6 Audit and Risk Management ...................................................................................................................................... 7 Corporate Governance Aspects are not yet defined in Vietcombank ......................................................9 Corporate Governance Aspects are not defined in Vietcombank ........................................................... 11 Ownership......................................................................................................................................................................... 11 Board Management ..................................................................................................................................................... 11

3.2.1 3.2.1.1 3.2.1.2 3.2.2 3.2.3 3.2.3.1 3.2.3.2

4 Access Vietcombanks Corporate Governance Situation ............................................. 13


4.1 Strengths and Weakness .................................................................................................................................................. 13 Strengths:................................................................................................................................................................................... 13 Weaknesses............................................................................................................................................................................. 13 4.1.1 4.1.2 4.2 4.3

The Impact of WTO.............................................................................................................................................................. 15 Issues and Solutions to Improve Vietcombanks Corporate Governance ................................................ 16 Issues: .......................................................................................................................................................................................... 16 Solutions ..................................................................................................................................................................................... 16

4.3.1 4.3.2

5 Solutions to Improve Vietnam Banking Systems Corporate Governance ................. 18 6 Conclusion ........................................................................................................................... 19 7 References ........................................................................................................................... 20 2

Introduction

When Vietnam becomes an official member of WTO, the issue of corporate governance has become an urgent and important requirement in the development of the economy. Vietnamese commercial banks need to focus on the improvement of corporate governance to adapt the needs of international standards such as the application of Basel II and the liberalization in technology and service. A weak bank in corporate governance will not only cause damages to the banking system but also creates certain risks that lead to the failure of the business. Thus, building good corporate governance is necessary because it will directly impact not only the value of the bank but also the position and reputation of the bank. Vietnamese banks should improve corporate governance to decline the risks to the banking system and catch up with the development of the world economy. In order to have effective corporate governance, the board needs to set up good policies and procedures, have strategies and goals to promote transparency, and improve risk management that requires sufficient audit functions and good information systems to ensure information securities and to keep informed of deficiencies and initiate corrective action when problems suddenly occur. In addition, the opening up policies to the banking system is necessary to ease backward regulations and reduce the impact of the government on managing the operation of commercial banks. As a consequence of this, this will attract the investment of foreign banks in Vietnamese banks as a potential strategic patterns and expanding operations in Vietnam because foreign banks have more advantages than commercial banks in Vietnam in terms of capital, technology, management skills, especially they provides new banking products and services. As a result, the Vietnamese banks are able to improve the management system together with innovate the technique as well as the diversification of products and services to meet the increasing demands of clients in particular and the market in general. With the participation of many large foreign banks, the competition between domestic and foreign banks become more intense so Vietnamese banks need to ameliorate corporate governance system to improve the competitive position. Hence, the corporate governance of Vietnamese commercial banks is extremely important. This is the basis of potential development of Vietnamese commercial banks to overcome negative effects and achieve the successes in organizational management and business. In this assignment, we expect to introduce and analyse some key features of corporate governance together with the strength and weakness in the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) that is a large and potential bank in Vietnam and to take into consideration of giving the effective approaches to solve serious problems in corporate governance of this bank.

Vietcombank Overview
: Ngn hng Thng mi C phn Ngoi thng Vit nam : Joint Stock Commercial Bank for Foreign Trade of Viet Nam. : Vietcombank : VCB : www.vietcombank.com.vn

Full name in Vietnamese Full name in English Transaction name Short name in English Website

Logo

2.1

The Scope of Activities:


Capital mobilization: Funding: receiving deposits, term deposits and saving deposits; issuing certificates of deposits, promissory notes, bills and bond to mobilize capital at home and abroad. Receiving loans from state bank in the form of financing loans of credit institutions, financial institutions in the country and abroad as ruled by law. Credit activities: Bank credit to organizations and individual in foreign countries are the following forms: loan, bank guarantee, credit card issuance, domestic factoring, international factoring provions by law, discount, rediscount of negotiable instruments and other valuable papaers. Payment services and treasury: Bank account payments, payment service providers and other funds for domestic and foreign goods as prescribed by law. Payment services provided by banks include: domestic payment, international payment.

2.2

Milestones:
Establishment. Vietcombank becomes the dependent banks under Decree 53/HDBT.

April 1, 1963. March 26, 1988.

November 14, 1990. Change the Bank for Foreign Trade of Vietnam into the state owned commercial bank named The Bank for Foreign Trade of Vietnam, in short the Bank for Foreign Trade. 1991-2005. Become the first bank in Vietnam having centralized capital management structure. Become the first commercial bank in Viet Nam to deal foreign currencies, always takes the largest market share in the interbank forex market.

December 31, 2008. Vietcombank was listed on Ho Chi Minh Stock Exchange.

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3.1

New Corporate Governance Model Analysis


KISS Framework

The analysis in this assignment is based on the approach of New Corporate Governance, where principles of good corporate governance applied in a firm should be kept situational, strategic, integrated and controlled (Hilb, 2008). Based on KISS. framework, the following topics should be addressed and discussed regularly by the board: Keep it situational: normative, legal and ethical contexts influencing corporate governance (compliance). Keep it strategic: the strategic direction responsibilities of boards, based and addressed issues such as board teams, culture, structure and strategic success measures (strategy). Keep it integrated: the integrated board management function through its responsibilities regarding selection, feedback, remuneration and development of board and management teams (people). Keep it controlled: the monitoring function of the board (operative effectiveness). (Hilb, 2008).

This integrated approach of new corporate governance will be applied to examine the corporate governance of Vietcombank.

3.2
3.2.1

Vietcombanks Corporate Governance Aspects


Corporate Governance Aspects are well defined in Vietcombank

3.2.1.1 Size, development and internationalization


The Vietcombanks size, development and internationalization are well defined in the bank. Vietcombank is the fourth largest bank in term of chartered capital and the best managed bank in Vietnam. (Vietnam Banking Sector Report, 2011).

It is also the third largest bank in term of operating networks. As of December 2010, the bank has 1,300 correspondent banks in 100 countries and territories. It has 72 branches nationwide, 3 foreign companies and representative offices, 3 domestic companies and 6 joint ventures and associates. (Vietcombank Annual Report, 2010). Vietcombank leads the market in international payment (20%) and trade finance (30%). (HSC, 2009). In addition, the bank reaches the highest card revenue with 23.4% of market share. (Vietnam Banking Sector Report, 2011).

Vietcombank stills maintain its stable profitability during the financial crisis 2008-2011.

(Source: HSC, 2009) Vietcombank still maintains its competitive advantages in term of capital, assets and profitability. The bank recently has sold 15% strategic stake to Mizuho, the biggest financial group in Japan, raising its charter capital to VND 23,640 billion. The bank aims to develop in technology, management and become the 70th largest financial group in Asia with the support from Mizuho. (Vietnam Banking Sector Report, 2011).

3.2.1.2 Audit and Risk Management


Vietcombank follows well the best international practice in audit and risk management. Audit Management: External Audit: In order to ensure the true and fair value of the financial position of Vietcombank, the bank always have one of the big four audits companies such as KPMG Vietnam and Ernst & Young Vietnam to audit its financial statements. Internal Audit: the compliance department is responsible for internal audit.

Risk Management: Vietcombank applies the following strategies to manage financial derivatives instrument risk, credit risk and currency risk. Financial derivatives instrument risk: Vietcombank manages derivative products risk by compliance with State Bank of Vietnams regulations and internal regulations. The Head Office

monitors directly the foreign exchange transactions and other capital transactions. The bank also uses swap to hedge its assets risk. Credit risk: Credit Risk Handling Committee and Credit Committee are set up to manage and control credit risk in lending activities and investment activities. The bank also establishes credit policy, set up credit rating systems, loan classification and decentralized authorization in credit activities to manage credit risks. The bank also builds different credit limits for different customers financial performance as well as settling bad loans. Currency risk: The bank manages currency risk by monitoring on a daily basis and hedging strategies to ensure the currency are maintained within the set limits. (Vietcombank Annual Report, 2010)

In addition, Vietcombank sets up the following committees, which follows best international practice to better control its risk management: Risk Management Committee: responsible for managing financial risk, operational risk and environmental risk. Asset and Liability Management Committee: responsible for supervising financial risks. Corporate Credit Committee: responsible for credit policies, approve on credit limit and implementing risk management policies to corporate customers. Financial Institutions Credit Committee: responsible for the guidance financial institutions in risk management, approve credit ratings and credit limits for financial institutions. (Vietcombank Performance, 2005).

3.2.2

Corporate Governance Aspects are not yet defined in Vietcombank

Vietcombank is going to apply the new business model after transform from state owned bank to joint stock commercial bank to become a financial investment group. The current business model of Vietcombank is mother company and subsidiaries model in which the bank manages all its subsidiaries. New subsidiaries are set up to manage new business lines. (HSC, 2009).

(Source: HSC 2009) Vietcombank will apply the new financial investment holding model to become a financial investment group and to better adapt to the changing economy. The new business model will follow the best international practice and will be called Vietcombank Financial Investment Holdings Model. Under this model, Vietcombank Holdings holds stakes of other entities and manage them like an investment portfolio. Vietcombank will be a subsidiary of the Vietcombank Holdings. This will make Vietcombank

shares to be more attractive to investors because shareholders of Vietcombank are now becoming shareholders of Vietcombank Holdings. (HSC, 2009)

(Source: HSC 2009)

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3.2.3

Corporate Governance Aspects are not defined in Vietcombank

3.2.3.1 Ownership
The Vietcombanks ownership is not yet defined and no plans to do so in the future. Although Vietcombank becomes a joint stock bank, 90.72% of its shares still belong to state owned. The bank is planning to sell shares to raise its capital but shares owned by the State of Vietnam will maintain at not less than 51%. It can be seen that the state owned wants to maintain its representative in the management board. In the past, the control of state owned creates disadvantages for the bank such as 30%-40% of its loans and investments are given to state owned enterprises, which are financial weak and poorly managed. Typically, the insolvency of state run shipbuilder Vinashin makes global credit rating agencies alarm Vietcombank and Fitch Ratings downgrade the bank from D to D/E. (Vietnam News Today, 2010). In brief, Vietcombank wants to become a joint stock bank and financial investment group; it has no plan to reduce the control of state owned.

3.2.3.2 Board Management


The organization structure of Vietcombank management includes: General Meeting of Shareholders. Board of Directors Board of Management Supervisory Board.

The management board has total 20 members in which women accounts for 35% of the board members. Most members have university degree in which 60% members have MBA and PhD degree

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in economics. The team roles of each member are clear and each member responsible for a specific area. The chairperson plays an important role in leading the board management and works closely with the CEO to set up strategies for the bank. The success of Vietcombank is measured in each year base on its profitability, bad debt ratio, credit quality and capital increase. Besides advantages of Vietcombanks management board, there are stills issues that need to be consider and full fill: Due to state owned holds major shares of Vietcombank, the management board does not have much of authority in decision-making and has to follow the state owned. There is also a political orientation in the management board; so, most members of the management board are also members of Communist Party. This creates the problem of unequal opportunities for candidates of CEO position. The bank does not have an evaluation system or board selection; therefore, it is unfair to evaluate board management positions. There is stills a contradiction between responsibility and authority of Vietcombank. The Board of Directors directly manages some activities but the CEO is legally liability for such activities. To illustrate, the Board of Directors directly govern several activities such as administering the interest rates, foreign exchange rates and fees but the CEO is legally liability for these activities. Although the board management analyses the current situation of the bank and develops the bank strategy in each year, the business environment is not monitored and incorporated in the strategy process. The bank does not have an evaluation system to evaluate the board management. Although Vietcombank has a meeting with customers in each year but the bank does not focus so much on measure customers satisfaction. The Supervisory Board observes the Board of Management and Board of Directors but there is no board to measures the performance of Supervisory Board.

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4
4.1

Access Vietcombanks Corporate Governance Situation


Strengths and Weakness
Strengths:

4.1.1

Strong brand name. The first state owned bank to make IPO in 2007. The 3rd largest bank in terms of total assets (and Vietcombank with largest capitalization stock market). There are system-wide network of branches (foreign and domestic). Experienced management team with good performance Vietcombank cooperates with foreign financial institution as Mizuho to apply modern technology, increase the capital as well as improve the quality of product and services and expand the market. Vietcombank holds a large amount of database about clients information and owns large shares of credit operations, raises capital and services, business card (holding about 30% market share about ATM, card, credit card and debit card). Vietcombank staffs: dedicated, stability, inquisitive, access to modern knowledge quickly. There are the supports from some large organizations, specially the support from the State Bank and the government. Vietcombank has been equitized and modernizing banking system. Vietcombank is central to the inter-bank foreign currencies, market exchange rates are usually based on rates issued by this bank

4.1.2

Weaknesses
Capacity management and administration are limited compared to modern requirements of commercial banks (shown in the marginal and asset quality is not high). Vietcombank has small the international equity compared to the budget goods in the region. Most sources of Vietcombank is wholesale (trading on the currency markets and loans to large enterprises) and the slow development of retail services (a large number of potential services will determine the survival of the commercial banks in the future). Depending too much on credit activities from corporate, big business. The proportion of customer loans and personal credit is low (about 9 to 10 %). Portfolio is not sufficiently diverse with too few products. The proportion of professional expenses and the profitability of the Vietcombank are worse than other banks in the region (high percentage of bad debts). Restructuring process takes for a long time. 13

The training and employment of staff are insufficient compared to the needs of new business. Mechanisms and policies to encourage the employee are still inadequate. The link between the Vietcombank and other commercial banks are not convenient for customers. The level of coordination in the development of the products and services is not convenient and not to create more convenient for customers to use the connection between the bankcards. To be difficult to change the habit of administrative and human owned by commercial banks into joint stock commercial banks Not transparency, not separate in business tasks and political tasks because the government hold too much shares as a major shareholder (over 90%).

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4.2

The Impact of WTO

In the recent years, Vietnam becomes a member of WTO and implemented commitments that require great efforts of the financial sector and of the state managing agencies as a whole. In the current circumstance, there are several issues set forth to the financial sector. In the near future after Vietnam joined in WTO by 11 January 2007, the competition in the banking sector will become tougher with the participation of foreign competitors thus enterprises need to put reasonable strategies into effect in order to adapt to new business environment and to fit competitive requirements. Vietnam has to oversee commitments and international trading regulations so it need to change ways of management before and after WTO accession, there are some positive changes in perception and in action of enterprises and authorities, for instance, adjusting policies on state budget in terms of revenue structure towards enhancement of local revenue. Furthermore, foreign firms and individuals are allowed to purchase up to 30% of shares in banks. Vietnam also allows foreign banks to establish wholly foreign-owned subsidiary banks. As a result, foreign banks have been willing to take part in the Vietnamese market by establishing their own operations or by acquiring Vietnamese banks. As evidence of this, Commonwealth Bank of Australia bought 15% of shares of Vietnam International Bank (VIB) or Standard Chaptered bought a stake in Asian Commercial Bank and other foreign banks also enter in Vietnamese banking system such as Citibank, HSBC and ANZ. Therefore, this leads to more mergers, acquisition and franchise. In addition, becoming a member of WTO has built up an environment of fair business competition, equal treatment between WTO memberships that creates pressures for administrative reform in the manner of transparency and simplification, which would help companies to save time and transaction costs. Government need to ensure stable, open and clear legal environment and policy system in line with international common practice from preparation to promulgation and organization of implementation. Moreover, Vietnam attracts more FDI after joining in WTO so the financial institutions in Vietnam are able to easily approach the huge financial sources to increase their capital and more liquidity in capital market. Hence, with accelerating acquisition process, state owned enterprises are reformed and acquired. Being as the WTOs member brings more benefits for Vietnam, for example, introduce to Vietnam renovation technologies, setting up the corporate governance standards of local financial institutions up to international standards as well as more productivity, and creating more jobs for Vietnamese people. Also it attracts more investment for education, training, scientific and technological research which will serve as basis for the development of intellectual economy in the future. As a consequence of this, many local residents said that after Viet Nam joined the WTO, richer sources of goods have brought more options for local consumers. WTO accession has brought many advantages to Vietnamese people, particularly farmers, whose products have enjoyed equal treatment at markets of member countries. And open door policies, international integration, economic reforms lead to more opportunities for cooperating with large enterprises in ASEAN as well as around the world. But besides that, enterprises have to face difficulties in corporate governance and they need to set measures to improve corporate governance to withstand the onslaught of outside investors.

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4.3
4.3.1

Issues and Governance


Issues:

Solutions

to

Improve

Vietcombanks

Corporate

Although Vietcombank has already made initial public offerings and listed on the stock exchange, the nominally joint stock banks continue to be substantially owned by the government (approximately 90% of the shares belong to the state). In the next stage, Vietcombank will sell shares to raise capital, but the ratio of state owned banks charter capital of Vietcombank will be maintained at not less than 51%. Hence the dominant power is still in favour of the government. The economy still retains important non-market elements since the government continues to own and control many enterprises in terms of providing capital, access to raw material, or even to go as far as dictating the price. Additionally, the lack of a level playing field for the private corporate sector as well as between listed and unlisted companies is another negative factor for the development of business and economy as a whole. The board members (including SOEs and Vietcombank) have political orientation, mostly members of the Communist Party (all board members in the SOEs and Vietcombank have to be members of Communist Party); in non-state owned companies it is not compulsory. This creates the problem of unequal opportunities for the candidates for positions such as the board of directors or CEO. The bank also does not have an evaluation system or board selection for the Board of Directors, CEO, according to the behaviour in Vietnam; it is not common to evaluate the capacity of each individual for high ranking positions. The legal system has not clearly specified corporate governance patterns. The mechanism to delimit the accountability is unclear and impractical, notably the delimitation of accountability of Board of Directors and Control Board. At the present, the Board of Directors still directly governs several activities of the banks like administering interest rates, foreign exchange rates and fees. Specially, the contradiction still exists in the delimitation of responsibility and authority in a bank The Board of Directors directly manages but the General Director is responsible for legal liability. Problems of the laid back administrative approach: Due to the lack of expertise and governing capacity the government agencies have been given a socalled laid back administrative approach of setting growth objectives for SOEs. According to this approach, revenues or profits of this year must be higher than that of last year, or the company must grow by a fixed percentage every year, regardless of market condition. This laid back administrative approach may also prompt attempts to manipulate the financial accounts, so that the general directors can retain their positions.

4.3.2

Solutions

There should be a clear separation between the states ownership function and other state functions that may influence the operational conditions for state-owned enterprises, particularly with regard to market regulation: The state often plays a dual role of market regulator and owner of SOEs with commercial operations. In this case, the state plays the role of both a major market player and an arbitrator at the same time. Therefore, the completely separation of administrative responsibilities for ownership and market regulation is a fundamental prerequisite to create a level playing field for SOEs and private companies and to avoid the distortion of competition. Such separation is also advocated by the OECD Principles of Regulatory Reform. Another important case is when SOEs are used as an instrument for industrial

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policy. This can easily result in confusion and conflicts of interest between industrial policy and the ownership functions of the state, particularly if the responsibility for industrial policy and the ownership functions are vested in the same branch or sector ministries. A separation of industrial policy and ownership will enhance the identification of the state as an owner and will favour transparency in defining objectives and monitoring performance. However, such separation does not prevent necessary co-ordination between the two functions. In order to prevent conflicts of interest, it is also necessary to clearly separate the ownership function from any entities within the state administration, which might be clients or main suppliers to SOEs. Generally, procurement rules should apply to SOEs as well as to any other companies. Legal as well as non-legal barriers to fair procurement should be removed. In implementing the effective separation between the different state roles as regards SOEs, both perceived and real conflicts of interest should be taken into account. Board members should not be guided by any political concerns when carrying out their board duties. As a dominant shareholder, the state is, in many cases, able to make decisions in general shareholders meetings without the agreement of any other shareholders. However, the power of making such decision is a legitimate right that follows with ownership, it is important that the state does not abuse its role as a dominant shareholder, for example by pursuing objectives that are not in the interest of the company and thereby to the detriment of other shareholders. As a result, the approaches for this problem are equitized enterprises, for instance, selling shares for foreign parties such as Mizuho to have a right to control the operation of Vietcombank. Moreover, the reduction of interference in management of the government is necessary to increase the initiative and creation to operate more effective business. The legal and regulatory framework should allow sufficient flexibility for adjustments in the capital structure of SOEs when this is necessary for achieving company objectives. The rigidity of the capital structure sometimes makes it difficult for an SOE to develop or fulfil its objectives. The state as an owner should develop an overall policy and provide mechanisms that allow appropriate changes in SOEs capital structure. These mechanisms could include the capacity for the ownership function to adjust the SOEs capital structures in a flexible way but within clear limits. Within certain limits, this could, for example, facilitate the indirect transfer of capital from one SOE to another, such as through some reinvestment of dividends received, or the raising of capital on competitive market terms. As regard the products, they need to diversify various products such as investing in funds or portfolio and building asset management. The adoption of Basel 2 standards helps the banks operation to be better and achieve the international standards. And the technology transferred from potential strategic partners should be applied in Vietnamese banks not only to improve their transparency as they adopt more international standards for reporting and accounting but also to provide better services for clients. Vietcombank should focus on Information technology applications to improve competitiveness and reduce risk such as technical support for bank management, the safety of the banking system, optimizing information technology infrastructure, intensifying security and privacy, diversification in banking services and promoting non-cash payments in the economy. In addition, Vietcombank needs to give policy on the accuracy of the assessment of the capacity to arrange suitable position and pay salary following the accomplishment to attract the people who have eligible competences to work for the bank.

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Solutions to Improve Vietnam Banking Systems Corporate Governance


First, bank management needs a complete set of rules.

International integration has opened up opportunities for the banking industry to exchange and cooperate, access to capital flows and support international technical for the Vietnamese bank, contributing to the management of Vietnams banking system in line better with the level and international standards. But bank management needs to stand on from the perspective of the overall management objectives strategic to the organization and especially the activities of risk management bring about the safety of commercial banks. To create a strategic change in bank management, a familiar turn of the law to change the decree is necessary. Second, restructuring the organization model of the bank

The organizational model of some commercial banks is these days appropriate for operating conditions for small scale, centralized the high level of power. When commercial banks have increasingly large scale with the growing number of branches, the volume and nature of the work becomes more sophisticated, such organizational model will expose the limitations, especially in the organization and layout of the division both at central and decentralized branch is managed by type of business, it has not focused on the market and service subjects. Clearly, with competitive pressures, requiring the standardization of activities together with organization is oriented compact, the effectiveness is required for both large banks and small banks. Third, improve internal management of commercial banks

Management capacity, particularly internal governance capacity of banks is the important element to decide the success or failure in the business of banking. Thus, overall bank management in general and risk management in particular should be based on some principles: the principle of risk acceptance; the principle of permitting risk management, the principle of independent management of special risks, matching between the level of accepted risk and the financial capacity, the principle of reasonable time and suitable with the general strategy of the bank, the principle of economic efficiency, etc. To make well these principles, besides good asset - liability management under Basel Committees principles, building a healthy governance culture, creating a favourable environment for the application of the principles and the practices of risk management. Commercial banks should concentrate on improving the quality of internal control based on the application of banking technology systems, to detect potential risks and give measures to prevent in time. However, there should not be too many emphasises on testing, internal controls without the creativity at work. To satisfy the integration requirements, the system of commercial banks in Vietnam has to take the consideration for proposing policies and laws to improve and meet the needs of international standards, in particular, focusing on the application of modern corporate governance paradigms according to international practices and toward the sustainable development of the banking system.

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Conclusion

The aspects of new corporate governance are develops well in Vietcombank are size, development and internationalization. The bank has sold its strategic stake to Mizuho to develop its technology and management to become the 70th largest financial group in Asia. Besides, the bank follows well international best practice to manage its audit and risk management process. The aspects that are not yet defined but there are activities going to full fill the gap are applying the new business model to become a financial investment group in the near future. The aspects are not defined and there are no plans to do so in the future are Vietcombanks ownership and board management. In order to solve the above problems, Vietcombank needs to have a clear separation between the states ownership function and other state functions. Furthermore, board members should not be guided by any political concerns when carrying out their board duties. As regard to products, the bank needs to diversify various products such as investing in fund or portfolio and building asset management.

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References

Exposure brings State-owned banks under scrutiny, 2010, Vietnam News Today, viewed 26 November 2011, http://www.vietnamnewstoday.com/nd5/detail/business-banking-insurance/exposurebrings-stateowned-banks-under-scrutiny/1385.004004.html Vietcombank-Initiate coverage as HOL, 2011, HSC, viewed 26 November 2011, http://www.ors.com.vn/upload/BaoCaoPhanTich/20090630114818Vietcombank%20Report_June%20 09.pdf. Vietcombank Annual Report, www.vietcombank.com.vn 2010, Vietcombank, viewed 26 November 2011,

Vietnam Banking Sector Report, 2011, Vietcombank Securities, viewed 21 November 2011, http://www.vcbs.com.vn/en/Research/Report.aspx? page=1&report_type=0 Vietcombanks Performance in 2005, 2005, Vietcombank, viewed 21 November 2011, http://www.vietcombank.com.vn/en/annual%20report/2005/4-Vietcombank-Performance-2005.pdf

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