Group 10: Ngô Thị Hồng Điệp

Lê Hà Thảo Ngân

Nguyễn Hồng Ngọc

Dương Thị Kim Tuyến

CLASS 1

1. What are main differences and similarities between banks and credit unions?
- Banks

Definition: A bank is a financial institution that accepts deposits to the customer

while at the same time using the received deposits to create credit and lend it to the
borrowers. It is important to highlight that the bank offers credit to the borrowers with a
particular interest so that the organization can sustain itself while at the same time
meeting its financial obligations when they fall due.

- Credit unions

Definition: A credit union is a non-profit making organization, which is a money

corporation that is formed by members who are brought together or united by a specific
purpose. It is in this credit union where members of the group deposit their money and
are entitled to loans from the pooled resources. It is important to highlight that the loan
offered to members has low-interest rates as compared to that provided by the
mainstream banks. Credit unions are localized and serve the interests of a small group of
people, i.e., organizations.

- Differences between banks and credit unions

Credit unions Banks

Organization Not-for-profit cooperative For-profit corporation

 Primary
Meet member/owner needs Maximize profit
objective

All members who are, by Stockholders who may or

Ownership
definition, users of services may not be customers users

Directors Volunteers Paid directors

Only stockholders vote; one

Member controlled; one vote per
vote per share of stock (more
Decision-making member (each member/ owner has
stock means more voting
the same power)
power)

Dividends issued to members and

Distribution of used for capital development, Dividends issued to stock-
net income additional locations, equipment, holders only
etc. for members

Owners/leaders may live

Community Owners/leaders reside or have an anywhere in the world;
links interest in the community headquarters could be
anywhere in the U.S.

Offer better overall rates and lower

Rates and fees may not be
fees due to the nature of the
Rates/products favorable because of for-
organization and its dividend
profit status of banks
distribution

Generation of Generated only through income Generated through income

 stream and/or issuance of
capital stream
stock

Who benefits Members/owners Stockholders

Yes. Property, sales, Employer-

Yes. Property, Sales,
Taxes Related, Monies & Credits Tax on
Employer-Related, Income
Reserves in iowa

Deposit
NCUA FDIC
Insurance

- Similarities Between Credit Unions & Banks

Despite the many apparent differences, there are also a multitude of similarities
between banks and credit unions.

For starters, both institutions offer savings accounts, personal loans, auto loans,
mortgages and checking accounts.

Both institutions provide services for individuals, and many provide business
banking as well.

And above all, no matter where your money lies, you have insurance coverage for
up to $250,000 by the federal government.

Both banks and credit unions are also subjected to similar laws and agencies
regarding mortgages, loans, and safety. Ultimately, the customer experience they offer
can be very different.

+ Similarities Between Banks and Credit Unions in terms of “Government

Regulation”
 One of the main similarities between banks and credit unions is that they are
highly controlled by the government and other financial agencies like the central bank
and federal banks to ensure that they follow the financial policies of the country. It is
worth noting that both banks and credit unions cannot operate without a license from the
government and while at the same time being subjected to scrutiny and auditing.

+ Similarities Between Banks and Credit Unions in terms of “Products

Offered”

It is worth highlighting that the products offered by banks are very similar to the
products offered by the credit union. Both financial institutions provide savings accounts,
checking accounts, loans, and ATM/debit cards among others. The only difference in the
services provided is that the bank is likely to provide services on a more professional and
large scale as compared to the credit unions. Additionally, credit unions offer these
services to the owners while banks give the services to their customers.

+ Similarities Between Banks and Credit Unions in terms of “Deposit

Insurance”

Because the two financial institutions receive deposits from their customers, they
have implemented a mechanism to protect the deposits of their customers by ensuring
that they secure the funds of the customers with the financial insurance agencies.
Securing the money provides that, in case of any unforeseen circumstance, customers will
not lose their deposits while at the same time shielding the entity from experiencing the
losses. Protection of the customer deposits has increased the reputation of these objects
hence making them attract a large number of customers.

+ Similarities Between Banks and Credit Unions in terms of “Taxes”

Both entities, banks and credit unions, are required to pay corporate tax to the
federal government and other statutory charges as required by the law. There is no
financial institution that is exempted from complying with tax procedures. Some of the
taxes paid include the corporate tax and tax deductions from the employees of the
financial system. Furthermore, the two bodies are required to pay other charges that may
be instituted by local governments despite paying taxes and legal fees to the federal
government.

+ Similarities Between Banks and Credit Unions in terms of “Interest on

Loans”

Interest on the loan is the amount that one has to pay above the principal credit as
a way of catering for the risk associated with the borrowing while at the same time
paying to compensate for the loss in the value of money over time. Both banks and credit
unions charge a significant amount of interests’ rate to cover the risk and decline in the
value of the money while at the same time helping the organization to operate. The only
difference is that the interest charged by the banks is controlled by the forces of demand
and supply while the benefits charged by credit unions is much lower and is internally
determined and controlled.

2. What are the main features of trust companies?

Definition: A trust company is a legal arrangement set up or chosen by the grantor

(an individual or entity) to manage assets and wealth for a certain period. Based on the
purpose of handling and distributing assets and estates to the beneficiaries, it can work in
the capacity of a trustee, fiduciary, custodian, or agent. A professional trust company may
be independently owned or owned by, for example, a bank or a law firm, and which
specializes in being a trustee of various kinds of trusts.

The "trust" name refers to the ability to act as a trustee – someone who administers
financial assets on behalf of another. The assets are typically held in the form of a trust, a
legal instrument that spells out who the beneficiaries are and what the money can be
spent for.

- The main features of trust companies

+ Estate administration
 A trust company can be named as an executor or personal representative in a last
will and testament. The responsibilities of an executor in settling the estate of a deceased
person include collecting debts, settling claims for debt and taxes, accounting for assets
to the courts and distributing wealth to beneficiaries.

Estate planning is usually also offered to allow clients to structure their affairs so
as to minimize inheritance taxes and probate costs. In the United States, one of the
primary profit centers for a trust company is commissions earned from selling various
types of insurance products designed to minimize the estate tax charged to a person.

A trust officer may provide guardian and conservator services, acting as guardian
of a minor's property until adulthood or as conservator of the estate of an adult unable to
handle his or her own finances.

Environmental and historic preservation trusts

Some trust companies are formed not merely for the benefit of a minor or an
individual trustee, but for the preservation of nature or historic sites.

+ Asset management

A trust department provides investment management, including securities market

advice, investment strategy and portfolio management, management of real estate and
safekeeping of valuables.

+ Escrow services

The trust company may also provide escrow services, invest education or
retirement funds or hold 1031 Exchange proceeds where cash from the sale of US real
estate is held in trust (for tax purposes) until used to buy replacement land.

+ Corporate trust services

Trust companies may also perform corporate trust services. Corporate trust
services are services which assist, in the fiduciary capacity, in the administration of the
corporation's debt. For example, in a normal bank loan, the lender normally lends money
to the company (usually with conditions called "covenants"), accepts payments from the
company monthly, and monitors the financial conditions of the company to ensure that it
is meeting all its agreed upon conditions (for example, that its ratio of profits to expenses
stays above a certain amount). However most large companies borrow money not from
banks, but by selling bonds. When the company sells bonds, a corporate trust company
can handle the acceptance of payments from the company (which it passes on to the
bondholders), and is the entity which monitors the company to ensure it is meeting
covenants. In the event of the company's bankruptcy, the corporate trust company
represents the interests of the bondholders and acts to recover as much of the loan
proceeds as possible.

3. Give some examples of Vietnamese trust companies and credit unions

- Trust companies:

Trust Company Limited (Công ty TNHH POULI Việt Nam)

Trust Link Technologies Corporation (Công Ty Cổ Phần Công Nghệ Liên Tín)

Viet Nam Prosperity Joint Stock Commercial Bank (Ngân Hàng TMCP Việt Nam
Thịnh Vượng)

FPT Software Company Limited (Công ty TNHH Phần Mềm FPT)

- Credit unions:

+ Finance company Limited (Công ty tài chính):

VPBank Finance Company Limited (Công ty tài chính TNHH MTV Ngân hàng
Việt Nam Thịnh Vượng)

Viet Credit Joint Stock Company (Công ty tài chính cổ phần Tín Việt)

MB Shinsei Finance Limited Liability Company (Công ty tài chính TNHH MB

Shinsei)
 Home Credit Vietnam Finance Company Limited (Công ty tài chính TNHH HD
Saison)

Mirae Asset Finance Company Vietnam Limited (Công ty tài chính TNHH MTV
Mirae Asset Việt Nam)

Toyota Financial Services Vietnam Company Limited (Công ty tài chính TNHH
MTV Toyota Việt Nam)

+ Finance Leasing Company (Công ty cho thuê tài chính):

Asia Commercial Bank Leasing Company Limited (Công ty CTTC TNHH MTV
Ngân hàng Á Châu)

Industrial and Commercial Bank of Vietnam Leasing Company Limited (Công ty

CTTC TNHH MTV Ngân hàng Công thương Việt Nam)

Sacombank Leasing Limited Company (Công ty TNHH MTV CTTC Ngân hàng
Sài Gòn Thương Tín)