Internship report 201 1 VIETNAM NATIONAL UNIVERSITY International University School of Business

INTERNSHIP REPORT
BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM (BIDV)
Submitted for: MBA. Hoang Thanh Nhon Submitted by: Nguyen Thi Phuong Loan- BAIU08053

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Student name ID Company Name (BIDV) Type of internship Internship period

: Nguyen Thi Phuong Loan : BAIU08053 : Bank for Investment and Development of Vietnam

: Credit agent assistant : 20/06/2011to 20/08/2011

Number of internship: 48 days

Supervisor signature

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Contents
Contents...................................................................................................... 3

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I.

Introduction

In my opinion, theories should be parallel to practices, so the knowledge we have studied from our lecturers is just first step, the last step is how we apply them in the practice. At the time, we match theories and practices; we actually get the whole studies. Moreover, practice is always the fastest way to study, study from ourselves experiences. Therefore, internship is a good occasion for us to experience, challenge and discover ourselves. It is also a new step in students life because internship is the period of changing from educational environment university from business environment earning profits. That is why internship program is put as part of the academic curriculum in the university. In fact, we will be studied how to apply all of theories we have already gotten in jobs. Taking an internship in Relationship Department 1 of Bank for Investment and Development of Vietnam ( BIDV)- Gia Dinh Branch gives me the opportunity to work in the professional environment, understand more about theories from university, and improve skills which cannot be taught by my school. This report will specifically discuss about the general image of BIDV and its Relationship Department 1, my activities during the internship, and what I can perceive and gain from my internship.

II.

Brief summary of the internship

The Bank for Investment and Development of Vietnam ( BIDV) is a large state-owned bank in Vietnam. In 2010 It was the nation's number one bank in net income and the second biggest bank in asset. According to the United Nations Development Programme report on the 100 largest enterprises in Vietnam, BIDV came in at the 4th position after Agribank, VNPT and EVN. Among many different business units in the bank, its Relationship Department 1is recognized as one of the most important departments to search, coordinate, and attract more potential corporations because most of revenue of the bank comes from these operations. This department is just to take responsibilities in dealing with loan the money for many potential projects of corporations, be guarantee in exchange money between partners, Therefore, being a Credit agent Intern brings me chances to understand more about BIDVs organizational structure, learn professional working style and be

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familiar with performing under high pressures and requirements. All activities I do during my internship are related to help in creating L/C, assess corporations investment projects. In detail, my main tasks consist of arranging the necessary forms in creating L/C, analysing the investment project from the corporations which would like to borrow the money from the bank to investigate, replying corporation emails, answering phone calls, and other minor activities for Relationship Department 1 documents.

III.

Description about BIDV

1. Introduction about BIDV

International name: Bank for Investment and development of Vietnam Trade name: Bank for Investment and development of Vietnam. Abbreviated name: BIDV

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Address: Block A, Vincome City Towers, 191 Ba Treu Str, Hai Ba Trung Dist., Hanoi. Tel: (04) 2200422 Fax: (04) 2200399 Website: www.bidv.com.vn Email: bidv@hn.vnn.vn Bank for Investment and Development of Vietnam (BIDV) was established under Decision No. 177/TTg dated 26th April, 1957 by the Prime Minister. BIDV is the first to be established among four largest State-owned Commercial Banks in Vietnam and it is a special State-owned enterprise organized as a State General Corporation. As of 31st Dec, 2004, the Banks total assets reached approximately VND 104,000 billion and total chartered capital was supplemented to reach VND 3,860 billion. Organizational structure has been transformed toward the model of a modern, international financial group. At present, BIDV comprises five units namely State-owned Commercial Bank unit (including 3 transaction centers and branches nationwide), Subsidiaries, Administrative, Joint-Venture and Investment Unit. Total employees of the whole system reached over 8,000, those who are well equipped with expertise and knowledge of modern banking technology. BIDV functions as a universal commercial bank providing a full range of currency, credit, banking and non-banking services, and acting as authorized agency funding projects with sources from domestic and international financial institutions. With its experience investing in key projects, BIDV plays the leading role in development investment and project financing in Vietnam. The chart below shows profit before tax of BIDV during the years of 20062010.

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The profit before tax has the trend increasing steadily from 2006 to 2010. In the year 2006, BIDV earned 1,000 billion VND and it increased double to 2,000 billion in the next year. Continuously, earning before tax grew up slightly, up to 2,400 billion in year 2009. Then in 2010, BIDVs profit before tax increased dramatically, up to 4,626 billion, approximate double compare to earning in 2009. In general, with the high grow rate, BIDV will continue to develop and expand in the future.

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2. History of BIDV and their main branches

a. History of BIDV BIDV was established on 26 April 1957 as the Bank for Construction of Vietnam, under which name it operated until 24 June 1981, at which point it changed its name to the Bank for Investment and Construction of Vietnam. It adopted its present name on 14 November 1990. In January 2007, the government announced that it would sell a minority stake in the BIDV and three other banks. In March of that same year, they sought the government's permission to invest in highway projects. In September, they announced that they would form Vietnam's first aircraft finance group in Hanoi in a joint venture with Vietnam Airlines,Petro Vietnam, and Vietnam Post and Telecommunication. b. Main branches of BIDV

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There are three main branches in BIDV branch system in Vietnam, divided into three areas along to the country: North, Middle area, and South. The central office of BIDV is located in Hanoi city, one of the biggest branches in the North. It is the place to give the policies and plans to manage and develop the whole bank system in Vietnam. BIDV- Gia Dinh branch which is the place I took the internship belong to branch system in the South. It is found in the year 2007. Although it is new and just four years old, its assets was up to 3,584 billion VND in the year 2010, it was equal one-hundred the total asset in the whole BIDV in the year 2010( 366,268 billion VND). In fact, Gia Dinh branch had the high grow rate and operated very effective.

3. An organization chart of BIDV and the main responsibilities of each department

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BIDV has four main departments and each of them is linked with each other. Those are risk management, operations, finance & accounting, and business support. The departments in BIDV can undertake many different tasks at the same time. They cannot only fulfill their functions at the basic level but also are involved in the work of other departments. So, in this report I will mention about some departments responsibilities.

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Board of directors responsibilities:

Manage all of business activities in BIDV, make sure the bank is doing business well.

Bear the highest responsibility before the law and all members in BIDV.

Enhance the strategies to develop BIDV, drive bank on the right ways.

Build partnership with other banks and the relationship with potential individuals and companies.

Risk management responsibilities:

To identify, measure and more importantly monitor the profit of the bank.

Because risk management system is the pro-active action in the present for future, managing risk is nothing but managing the change before the risk manages.

to handle and overcome the risks due to the new projects or investments.

Based on the chart above, we see that credit management department belongs to risk department. In fact, credit management department is divided into two parts, relationship department 1 (for corporations) and relationship department 2 (for individuals). Because I took the internship at relationship department 1, I would introduce about its responsibilities. There are

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To create L/C, evaluate the corporations projects to make the loans. To assess customers creditworthiness according to their business model and risk appetite.

Watching corporations businesses out to decrease credit defaults.

Operations responsibilities:

To obtain a complete understanding of the deposit Auto Journal. Determine how it is used to reconcile deposits on a daily basis.

To confirm the details of transactions with other banks. Review the rate change process. To wire funds to other firms and confirm the receipt of funds To ensure transactions are booked property in bank systems To reconcile transactions between different computer systems To obtain a listing of all general ledger suspense accounts for which the operations area has responsibility for reconciling.

Finance and accounting responsibilities: To provide strategic financial support regarding operational and general business planning To provide daily financial services functions To meet and surpass the internal and external needs and financial reporting requirements of the company at large. To provide financial reporting, bank reconciliations, transactional journal entries, adjusting journal entries, ancillary schedules and record keeping, fixed asset management, substantive balance sheet analysis, etc.

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Records and makes payment of expenditures for each department

Business support responsibilities:

Administrative office: maintaining day to day financial, accounting, administrative and personnel services in order to meet legislative requirements and support municipal operations. Human resources department: Screening, Interviews, recommendation and approval for hiring, and medical examination. Corporate planning department: negotiations of loans and grants with external aid agencies. compliance with project covenants. guidelines on potential linked credit plan

IV.

Description about internship activities

1. Working experiences in credit department In the first days, I have been read the documents related to the department as how they work, what the regulations and guidelines are, what the responsibilities of employees and managers are, and more importantly the credit rating for corporations. Indeed, At the transaction level, credit ratings are useful measures of evaluating credit risk that is prevalent across the entire organization where treasury and credit functions are handled. At BIDV, I am studied about how to use credit rating to decrease the default risk in lending the money to corporations. Credit ratings are determined by credit ratings agencies. Credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. By distinguishing corporations based on credit rating, my supervisor showed me how important it is, how BIDV declined the risky in transactions and investments.

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Later on, my tasks were checking the phone call to department and replying the email from customers to show me the familiar corporations to the bank. After that, I learn the way how to check accounts, transactions, the exchange rate be currencies, interest rates, etc., In addition, I often helped to arrange the documents which involve to procedures getting the fund, creating L/C, buying the foreign currencies and then transfer the documents to other departments. This helps me to figure out the connection among the departments and how they work.
2. The activities of the credit department and the role of it to the

company Credit Department is the authority concerned with reviewing and auditing the loans and the credit facilities. There are two tasks the department carried out that are credit policy and loans. Credit policy:

The department defines and plans the Banks general policies in the field of credit as well as establishing explicit rules and instructions pertaining to granting credit within the framework of policies which aim at realizing sound lending status. Loans:

The department supervises the loan applications from the time they are submitted to the bank and processed in the concerned departments ad sections to be approved in accordance with the guarantees submitted and the credit studies and research of suh loans. The loans and credit facilities activity is closely monitored and followed-up and settled in coordination and cooperation with the other departments.

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3. Some problems of BIDV and the suggestions to solve them

During my internship at BIDV, I found some problems and suggested the solution to solve them to the head of department. Firstly, the working environment in there often uses Vietnamese to communicate with customers, so the chance they use English so rarely and step by step they seem to face the difficulty in communication by English. The gist of decreasing the ability using it or just forgetting it is lack of practice. As we know, English is the international language and it is really useful and necessary in work, therefore, BIDV perhaps has many policies to encourage staff practice more English and then using it more effectively. For instance, opening English competition in the same branch and have reward for winners, requiring all the employees take the English test once a month and give the bonus in salary for who gets the highest mark. Secondly, almost corporations come to BIDV are Vietnamese ones, just a little bit foreign corporations that have the relationship and coordination with BIDV. So, I think BIDV should have strategies to attract more foreign companies come and work with the bank such as privileged rates to get the funds, promotional cost in transactions, etc. These will help the bank extend the relationship in business, increase the revenue, get the higher prestige among the banks in Vietnam, etc. V. Suggestion for thesis topic

Business is the art of extracting money from other's pocket, sans resorting to violence. But profiting in business without exposing to risk is like trying to live without being born. Everyone knows that risk taking is failure-prone as otherwise it would be treated as sure taking. Hence risk is inherent in any walk of life in general and in financial sectors in particular. Of late, banks have grown from being a financial intermediary into a risk intermediary at present. In the process of financial intermediation, the gap of which becomes thinner and thinner, banks are exposed to serve competition and hence are

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compelled to encounter various types of financial and nonfinancial risks. Risks and uncertainties form an integral part of banking which by nature entails taking risks. Business grows mainly by taking risk. Greater the risk, higher the profit and hence the business unit must strike a trade-off between the two. The essential functions of risk management are to identify measure and more importantly monitor the profile of the bank. Each transaction that the bank undertakes changes the risk profile of the bank. The extent of calculations that need to be performed to understand the impact of each such risk on the transactions of the bank makes it nearly impossible to continuously update the risk calculations. Hence, providing real time risk information is one of the key challenges of risk management exercise. Credit risk is the potential that a bank borrower or counter party fails to meet the obligations on agreed terms there is always scope for the borrower to default from the commitments for one or the other reasons resulting in crystallisation of credit to the bank. these loses could take the form outright default or alternatively, losses from changes in portfolio value arising from actual or perceived deterioration in credit quality that is short of default. Credit risk is inherent to the business of lending funds to the operations linked closely to market risk variables. The objective of credit risk management is to minimize the risk and maximize bank's risk adjusted rate of return by assuming and maintaining credit exposure within the acceptable parameters. Balancing risk and return is not an easy task as risk is subjective and not quantifiable where as return is objective and measurable, therefore, I would like to suggest the topic for my thesis: Strategies to minimize credit risk and maximize the banks return of BIDV

VI.

An assessment of internship

Internship teaches me a number of lessons for real life working. During the internship time, I can apply my university knowledge in real life and understand it better. For example, I can have deeper understanding for the course essential of business management I learned 2 years ago. I can apply my knowledge about Business analysis and valuation and Financial Accounting courses to analyze and valuate the companies strategies,

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accounting policies, financing, forecasting and valuating. Moreover, I was studied how to analyze and find out whether investment projects are potential or not. In addition, I can find some new knowledge in business communication when meeting customers. The most interesting thing I got when taking the internship at BIDV was to understand the process and procedures to get the loan from BIDV. It is so useful for my future plans of setting up my own company and making the loan from the banks in Vietnam. Moreover, I learned some skills to find customers, to deal with customers, and to manage the documents. In conclusion, my internship period is very useful to my study at the university. I have realized that from the theory to the practice is a long journey which needs great efforts, experience, and a heart for learning and daring to face difficulties and challenges.
VII.

Conclusion

Generally speaking, taking an internship in Bank for Investment and Development of Vietnam is good and appropriate for students that want to train themselves under high pressures and requirements. Besides that, they can really experience difficulties and challenges but improve their skills and knowledge before graduation. Therefore, being an intern of BIDV, students can have opportunities of actually working in a business environment: professional, dynamic, flexibility, and high pressures and requirements. Otherwise, the existing policies for an intern need to be adjusted so that the bank can have better ways for motivating interns and compensating for them appropriately.

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VIII.

References

Clients and partners , http://www.vsp.com.vn/en-US/clients-and-partners197/bidv-220.aspx. Retrieved August 15, 2011. Folkmanis, Jason (2007-01-07). "Vietnam to sell stakes in 4 banks". InternationalHeraldTribune. <http://www.iht.com/articles/2007/01/07/bloomberg/sxdongbanks.php.>Retrie ved August 15, 2011.

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"introduction of bank for investment and development of vietnam". bank for investment and development of Vietnam, <http://www.bidv.com.vn/English/aboutus.asp>. Retrieved August 15, 2011.. R.S Raghavan (2003), Risk management in banks

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