HANOI, 2014PREFACEThe purpose of the report is to describe my valuable experience during the internship in Import Export Office of VietinBanks Main Operation Center. This report is also to fulfill the requirement for my Finance and Banking course in Foreign Trade University. For the whole internship, I had opportunity to learn general operation process in that Bank and to observe how banking officers perform their duties day by day. Besides that, I was able to put my theoretical knowledge into the real cases and gain a lot experience.

In the report, I intend to concentrate on analyzing the business performance of the whole VietinBank and suggesting some recommendations to improve the effectiveness in its operation. Therefore, I would like to divide my report into 3main parts, including:

Chapter 1: An overview of VietinBanks Main Operation Center.

Chapter 2: Internship journal.

Chapter 3: Recommendations to improve the effectiveness in VietinBanks performance.

Over the period of internship, I would like to give my special thanks to my internship guide Mr. Nguyen Thanh Hai and other banking officers in Import - Export Office for their supports and suggestions. And the person I most wish to thank is my supervisor Professor. Tran Thi Thu Huong for her dedicated instructions to help me accomplish my internship report.

Chapter 1: An overview about Main Operation Center of Vietnam joint stock commercial bank for industry and trade31.Profile of Vietinbank31.1.Formation and development31.2.Organization structure and function of Main Operational Center41.3. Current performance of Vietinbanks Main Operation Center.7Chap 2: Internship Journal9Chapter 3: Nghip v thanh ton L/C xut nhp khu ti SGD12

Chapter 1: An overview about Main Operation Center of Vietnam joint stock commercial bank for industry and trade1. Formation and developmentVietinbank was established on 26 March 1988 after its separation from the State Bank of Vietnam in accordance with Decree No.53/HDBT by the Ministers Council. Its register name in English is VIETNAM JOINT STOCK COMERCIAL BANK FOR INDUSTRY AND TRADE and its trade name is VietinBank. The head quarter is located in 108 Tran Hung Dao Street, Hoan Kiem District, Hanoi, Vietnam with the network of 147 branches across 63 provinces and cities nationwide and 3 foreign branches: 1 branch in Frankfurt, Germany, 1 branch in Berlin, Germany and 1 branch in Vientiane, Lao PD.

In terms of scope of business, VietinBank offers a wide range of retail and wholesale banking products and services both at home and abroad. VietinBank also operates in the following areas: lending, investment, trade finance, guarantee, re - guarantee, forex trading, deposit, payment, money transfer, card services, local and international credit card, travelers cheque, securities trading, insurance, financial leasing, and many others.

Since 16 July 2009, Vietinbank stock has been official traded on HCM City Stock Exchange (HOSE). The diagram below illustrates its formation and development over a twenty five years period.

Figure 1: Twenty five years of construction and development

Phase 1: 1988-2000Established and transformed into a two-tier bank, officially put Vietnam JSC Bank for Industry and Trade into operation Phase 2: 2001- 2008Successfully implemented the organized restructuring project in terms of debts handling, general policies & mechanisms and business operations. Phase 3: 2009 to presentSuccessful carried out equalization and conducted a complete system innovation towards modernization and standardization in all aspects of banking act ivies; converting the current organization model and corportate governance in accordance with interantional standards and practices

Source: Vietinbank annual report 2013Before, period of foundation, VietinBank was a bank in small size and had only 01 transaction center. However, over the time, up to now, VietinBank has developed an operation network comprising of01 Transaction Centers, 150 branches,over 1000 transaction offices/savings offices. It alsoestablished correspondent relationship with 900 banks, financialinstitutionsof 90 countries and territories all over the world.

Over the period of building and development, until now, VietinBank has been achieving many outstanding results in fund allocation and its credit activities. In 2004, it successfully mobilized VND 64,160 billion and lent to a large number of companies about VND 121 billion. And after that, these figures increased to VND 422,995 billion and nearly VND 468 billion. Over the recession period, this bank still maintained nonperforming loan (NPL) ratios under 3 %. Up to present, in implementing the States reform guidelines, the bank has been active to mobilize medium and long term capital besides the State budget fund for important projects and works.

1.1. Organization structure and function of Main Operational Center1.1.1. Organization structure

Figure 2: Organization chart

Branch networkImport Documentary Settlement 1 Dept. Bank guarantee & Import Documentary Settlement 2 Dept.Factoring and Receivables Financing Dept. Accounting DeptHR and administration Dept .DEDeptResearch and service development DeptSWIFT & test key Dept.Technical DeptCash transfer DeptOperational center (Transaction center)Main functional divisionsSupporting divisionsExport Documentary Settlement DepartmentVietinbanks headquarterGeneral directors-CEOBoard of directors

Source: HR and administration Dept.

1.1.2. Function of main divisions of Main Operation CenterExport Settlement DepartmentThis is an outstanding product of VietinBank, ensuring that the exporter will be paid upon delivery of goods/services and presentation of the documents complied with the terms and conditions of the L/C. VietinBank will serve you as an advising bank, paying bank, confirming bank or negotiating bank. Exporters will receive consultancy about unfavorable orexceptional points,... upon receipt of L/C and during preparation of documents to claim for payment according to L/C. Exporters will be financed through export financing solutions with favourable terms and preferential interest rates.

Import Settlement Department (1 &2)After clients import goods and theirpartners want to select a secure payment method, VietinBank will issue L/C for the importers and pay/accept to pay foreign banks upon receipt of compliant shipping documents within the validity of the L/C. Importers will receive free consultancy oninternational trade rules and practice and special terms and conditions of the L/C in order to minimize risks arising from foreign trade payments. VietinBank will be responsible for checking the compliance of the documents. Importers will be financed through import financing solutions.

Factoring and Receivable Financing Dept.As a leading bank in international payments, Vietinbank always provides the best services, facilitating the international trade activities. Services at the department include: export factoring/financial risk guaranty and proflifting. Factoring is a special form of short-term finance where Vietinbank purchases the sellers receivables and assumes the credit rish, either with or without recourse to the seller. .Porfaiting Recently, export factor is a common new practices Stipulated tolerances in credit amount, quantity, unit price or other variables have not been met. SWIFT & test key Dept.Xc nhn ch k ca ngn hng thng bo xem c ng hay khng.Accounting Dept.Accounting Division is responsible for the mobilization and administration of the Bank's financial resources, both the assets and liabilities, and for the management of the Bank's liquidity, accounting and financial records, and the relations with financial markets and intermediaries. In addition, it manages the Bank's accounting system and is responsible for keeping the accounts and mandatory ledgers (annual accounts and accompanying documents, as well as the periodic reports).HR & Administration Dept.The generic function of this department are: recruitment of new employees; orientation and placement of the recruited employees; administration of benefits and compensation programmes; ensuring efficient HR Information Systems; developing and running with a strategic approach to human resources; monitoring compliance with legal requirements as well as administering award and recognition programmes. Under the same division lies the Staff Benefits Section which is responsible for all employee welfare matters including the administration of pensions; administration of the medical aid scheme; administration of group life insurances for members of staff; supervision of the sports club; employee wellness.1.3. Current performance of Vietinbanks Main Operation Center.

As of financial-year-end 2013, Vietinbanks impressive results were driven by increasing growth momentum together with secure and efficient operations. More specifically, Vietinbanks revenue rose significantly throughout the five-year period from 3373 billion in 2009 to 7751 billion in 2013, a growth of 56%. Such achievement was brought about by the diversification of services and other activities which attracts more customers and increases the income from payment fee, money transfer charge, L/C issuance, etc. In the year 2011, Vietinbanks revenue reached a peak of nearly double that in the previous year, which signals the result of a fruitful cooperation between Vietinbank and other international commercial banks. However, likewise the upward trend in profit, its costs tripled from 2400 billion at the beginning to over 6000 billion in 2011. The high total cost was attributed by a rise in surcharges, advertising, promotion and investment on new technology. Vietinbank continuously expands its branches, clearing houses and transaction offices. Figure 3: Vietinbanks performance Source: Vietinbanks annual report, 2013VietinBank always adheres to policies on provisioning for non-performing loans. At the end of the third quarter, the bank continued to maintain a provision of 4.051 trillion VND, significantly higher than the value of non-performing loans. The frequency at which VietinBank makes provisions for credit risk is 1.08 times. This is a factor that ensures safety of operations, allowing the bank to deal with non-performing loans at its discretion.In addition, VietinBank achieved ROA, ROE, and CAR figures that far surpass the targets set by the shareholders committee. This achievement is a testament to VietinBanks effectiveness in increasing capital and profits.Having achieved such results, at the end of the third quarter, VietinBank was the leading bank in Vietnam despite difficult conditions in the economy as well as the banking industry. It is expected that by year end 2014, VietinBanks financial results will be yet more favorable, owing in large part to wise managerial decisions and sound business solutions that are being taken as the year comes to a close.

Chap 2: Internship Journal

Day One: Monday, July 01st, 2014, 12:30 PM 4:30 PM (Hours: 4)

Today is my first day at the Main Operational Center of Vietinbank. The office was nicely and tastefully decorated, which made a deep impression on me. A small bulletin board was hang on the wall and artificial flowers were lying on each table. Working hour is divided in three shifts: the first shift is from 8:0 a.m to 5:30 p.m, the second shift is from 9 a.m to 8 p.m and the third shift is from 1:30 p.m until the work finished.As I walked in my first day, I was greeted with cheerful smiles and positive attitudes. My supervisor, Nguyen Thanh Hai, introduced me to each person present and gave me a description of what types of things they work on. After introductions, he showed me around the office and work center. He described various departments within the work center, such as Export Documentary Dep., Import Documentary Dep. and Factoring and Receivables Bank Financing Dep. We then went on to some personal details and job expectation. It came to my surprise to know that my supervisor, as well as many people there, was a graduate from FTU, K45 and that he had an internship at the headquarter of Vietinbank before.Day Two: Tuesday, July 02, 2014, 10:15AM 4:15PM (Hours: 6)

Today I helped my supervisor, Mr. Hai, with sorting L/C to each group. The Main Operational Center was responsible to monitor banking branches in provinces, so each group of four staff working together to deal with documents from six provinces. The morning shift has fewer tasks than the afternoon one, so fewer bank officers came to the workplace. The first thing that they do in the morning is check their emails, then prioritize their activities for the working day. When observing the staff doing their tasks, I read the operation guideline and found out how close it was to what I had studied at my university so far. The first chapter in the guidebook is steps to open an L/C and the second is about documentary collection. Day Three: Wednesday, July 03, 2014, 9 A.M 4 PM (Hours: 7)

Today I was introduced to the Export Documentary Settlement Department. This office included four men and six women, which was a common picture in most banks. Through observing my supervisor I learned that communication and connection were very essential. Interbank chat was available at all time to help the staff conduct teamwork more effectively. Though the workload was sometimes stressful, I could feel a cozy and comfortable atmosphere where there was always a smile on peoples face. The Main Operation Center seemed to be their second family and occasionally they told jokes toward each other.After having background information about L/C and other documents and categories of service relating L/C that VietinBank supplies, I was guided to check the accuracy of every single document when VietinBank played a role as advising bank. First of all, the banker had to read and understood all terms and conditions of L/C. Subsequently, he/ she continued to check other papers, for example: packing list, commercial invoices, bill of lading, bill of exchange, or some kinds of certificates under the rules of Incoterm 2010. If there is no mistake, discrepancy, then banker would be responsible to pack these entire documents and send them to issuing bank in foreign country and write a notification to customer, informing that VietinBank complete its duty. Otherwise, the banker had to notify to his/her clients and required them to correct the discrepancies until the issuing bank accepted or agreed to pass.

Day Four: Monday, July 08, 2014, 9 A.M 2 PM (Hours: 5)

Today was the first day of the week so everyone in the office got busier than usual and the office was far from being quiet. Everyone received more LC application from the banking branches and customers. Hardly did the printer stop working. Once it was out of order, the fixer came immediately to fix it.The discrepancies among several documents were widely discussed, such as the lack of Certificate of Origin (CO) number, the incorrect measurement of carton, the lack of an unit for weight. For example, a $30 000 contract with Japan lacked the CO form VJ..Common customers of Vietinbank were Viglacera Ceramic Tile Company (Ceramic), Hoa Sen (steel), Tu Thanh Company Lmt. (gherkin), Cty co phan may mac QTN, May 10 Company Lmt (Garment).. Day 20: Tuesday, July 29, 2014, 9 A.M 3 PM (Hours: 6)Today, Mr.Hai gave me a real task: dealing with information using TRADE FINANCE system and SWIFT program. While giving instruction, he always made sure that I remember the key words and typical codes. I became interested to know that most letter of credit was in the SWIFT format, with about 49 terms. A complex term of L/C was included in article 47 of the SWIFT form. During the period, I realized the importance of learning international payment, which I had not studied at my university. My supervisor encouraged me to ask if there was anything sound ambiguous. He emphasized that understanding the procedure thoroughly was of great necessity to conduct a hands-on task.Day 21: Thursday, July 31, 2014, 9 A.M 4 PM (Hours: 7)Today I learned that bank officers need to have flexible attitude and alert mind in the workplace. They enjoyed a cup of coffee after lunch or when feeling drowsy. During the tea break, they received a updated list of banned countries for American companies. Cuba, North Korea and Egypt were examples of the countries with which American companies were banned from doing business. As a result, US dollar transaction with these countries was not allowed and other trade currencies, such as euro, were an optimal choice. For the countries and products which were suspected to encounter trade restriction or limitation, officers in Export Documentary Dept. needed to ask the R&D officers to check.Day 25: Tuesday, August 05, 2014, 9 A.M 4 PM (Hours: 7)Today is the last day I am at the office. It is near the mid-autum festival, so the office was full of moon cake and fruits. Everyone seemed to be cheerfulThe reason why I chose to have an internship in the Main Operation Center is because I have a passion for the banking industry and international finance. I enjoy the aspects of the office: being organized, checking the documents and collaborating with other members, The internship period plays a pivotal role and of great necessity for all undergraduate students. It does not only provide me a golden chance to check theoretical knowledge but also helps me learn how to put theories into practices. The tasks, at first, sounded fairly simple for a newcomer like me. However, I realized that it really requires the staff many qualities such as: carefulness, patience and proficiency. In addition, I also observed the typical works of banking officers and their attitudes when dealing with the problems. Even though, I had only five weeks for my internship in VietinBanks Main Operation Center, I would still feel more self confident than before. And personally, I think this valuable opportunity would be a stepping stone and unforgettable experience for me to prepare the best things for my future career.

Chapter 3: Nghip v thanh ton L/C xut nhp khu ti Main Operation Center

Letter of Credit (L/C), as people know, is a payment method in which the issuing bank, upon request of the applicant (the importer), commits to pay a certain amount of money to the beneficiary (the exporter) or accept the bill of exchange drawn by the beneficiary after receiving the documents in conformity with the terms and conditions of the L/C. More specifically, figure 4 illustrates the process in which L/C is issued and payment is made.

Figure 4: Letter of credit

SellerBuyerContractAdvising bankapplicationpaymentDocumentsIssuing bankIssuePaymentDocumentAdvisingDocumentPayment

payment

Source: Viettinbanks procedure guideline

1. L/C issuanceAt the request of the customer (the importer), the Import Documentary Settelemt 1 and 2 of VietinBank issues the L/C, committing to pay to the beneficiary at sight or at maturity when the beneficiary presents the documents in conformity with the terms and conditions of the L/C. Depending on your credit history, L/C can be issued with or without a deposit. Vietinbank acts like an intermediary ensures safety for both exporter and importer; reduces capital pressure for the importer; and give advises on the transactions to ensure customersbenefits. This is particularly important to bear in mind that Vietinbank only deal in documents, not in goods. In the case L/C amendment, VietinBank amends the L/C upon request of the customer (the importer).As illustrated in Figure 5, L/C is issued by the following process.

Figure 5: L/C opening procedure

Example:SALES CONTRACTDate: 2014-06-26Contract No: S04688Seller: CARGILL INTERNATIONAL TRADING PTE LTD300 Beach Road, #23-01 The Concourse Singapore 199555Phone: (65)6295-1112Fax: (65)6393-8880Co: Reg No.196700442Buyer: HOA SEN GROUPNo. 9, Thong Nhat Boulevard, Song Than II Industrial ParkDi An Ward, Di An Town, Binh Duong Province, VietnamCommodity: Prime Newly Produced Hot Rolled Steel CoilsSpecification: HRC grade: SAE1006

Step 1: Receive documents to open L/COn 20th May, representative from Hoa Sen Group sent L/C application letter and letter to borrow foreign currency. Bank officer checks the information in the application form. The commodity traded is steel coils, so it is in conformity with the business scope of the company. Because the documents related to L/C is sent through fax, SWIFT & Testkey staff is responsible to check the documents, the number of documents received and the signature of Hoa Sen Groups representative. If the signature is correct, SWIFT & Testkey staff notes the words Test Correct on the documents.

Step 2: Open L/CUpon received of the verified documents, Vietinbank rechecks to see if the document fit with international practices, governing rule of Vietnam state bank, international commercial contract, whether it is risky for the customers and issuing banks. If there exists any discrepancy, Vietinbank immediately contacts Hoa Sen Groups representative to review the documents.As Vietinbank follows the SWIFT message body of issurance of letter of credit, it uses MT 700-Issue of a Documentary Credit swift messages when issuing a L/C.

Step 7: Save documentsThe documents is then put together in file and after several days is packed then all the documents was transported to Dong Anh to save. (hn does not have land)

2. L/C advisingVietinBank will serve exporters as an advising bank, paying bank, confirming bank or negotiating bank.At present, it is common practice in Vietinbank that L/Cs are issued as SWIFT messages in a standardized format. This procedure facilitates both the issue of the L/C and authentication at the advising bank, which will then be able to advice it immediately to the seller.

Today, most L/C are issued in a standardized SWIFT format, as shown belowThe box on page shows a standard SWIFT format. This example shows a freely negotiable L/C, available at sight with the issuing bank, and advised to the seller without the advising banks confirmation.

Vietinbank advices L/Cs to the seller through its internet-based advising services, which means that the seller can expect to receive the L/C almost immediately after the bank receives it. In this form of the L/C can then easily be distributed in a standardized electronic format to and within the company, thus increasing its effectiveness and reducing possible errors in transmission.The next phase in the chain, the presentation of documents, can also be completed electronically in some cases, but only if the L/C indicates that it is subject to the eUCP rules. The main limitation in presenting all documents in this form seems to be the transport documents, which are not always available in an electronic format.

Example of an L/C issued through SWIFT

CONCLUSIONAfter more than 25 years of development, Vietinbank has achieved several accomplishments and has been one of the leading banks in Vietnam. It is proved by the continuous efforts of all branch employees on improving service quality as well as maintaining a sustainable growth in both fund mobilization and credit activity. Although there are still some certain difficulties existing, from my point of view, the appropriate strategies and targets of the Bank will guarantee that its stable position in the eyes of customers.

It will be an unforgettable time of my life when I had the experience in working as a banking officer. Moreover, working as an internee assists me to comprehend more about banking system, which is very useful for my future career.

To conclude, I would like to express my gratefulness to everyone, who support me accomplish the report.

REFERENCEAnders Grath, The handbook of International Trade and Finance, Nordia Publishing Ltd for the Institute of Export, 2005, Great BritainAnnual reports of VietinBank from 2009 to 2013, available on VietinBanks website: http://investor.vietinbank.vn/FinancialReports.aspxvAnalysis of ABC securities in 2013 about VietinBanks security.Information about VietinBank, available on website of StoxPlus, http://www.stoxplus.com/