MINISTRY OF EDUCATION & TRAINING

NATIONAL ECONOMICS UNIVERSITY

-------- --------

COMMERCIAL BANKING
Class: Corporate Finance CLC 63A
Teacher: PhD. Le Phong Chau
Group 1

Student ID Full name

11210407 Le Huy Anh
11210635 Nguyen Thi Quynh Anh
11217670 Pham Linh Chi
11211292 Vu Tien Dat
11211906 Nguyen Ngan Ha
11212669 Dinh Khanh Huyen
11213181 Le Phuong Linh
11213416 Phung Ngoc Linh
11213884 Nguyen Phuc Minh
11217386 Nguyen Tran Khanh Nha
11214802 Nguyen Ha Phuong
11218696 Dang Viet Thanh
11216283 Hoang Tuan Vu

1
Ha Noi, 02/2023
 MAIN CONTENTS
A. INTRODUCTION................................................................................. 1
B. SERVICES............................................................................................. 1
I. DEPOSITS........................................................................................... 1
1. The advantages and disadvantages of deposits today.........................1
2. Typical products................................................................................. 1
3. Interest rate......................................................................................... 2
4. The differences................................................................................... 3
II. PAYMENT SERVICES.....................................................................3
1. Vietcombank...................................................................................... 4
2. GP Bank............................................................................................. 6
III. LENDING SERVICES...................................................................10
1. Interest rates on lending products.....................................................10
2. Service fees for loan products...........................................................12
3. Loan procedures............................................................................... 12
IV. FOREIGN CURRENCY EXCHANGE........................................13
V. GUARANTEES................................................................................ 14
1. Loan guarantees................................................................................ 15
2. Payment guarantees.......................................................................... 15
3. Tender guarantees............................................................................. 15
4. Tax guarantee for import/export commodities..................................16
5. Advance payment guarantees...........................................................16
C. CHALLENGES AND OPPORTUNITIES........................................17
I. DEPOSITS.......................................................................................... 17
1. Opportunities.................................................................................... 17
2. Challenges........................................................................................ 19
 II. PAYMENT SERVICES...................................................................20
1. Opportunities.................................................................................... 20
2. Challenges........................................................................................ 21
III. LENDING SERVICES...................................................................24
1. Opportunities.................................................................................... 24
2. Challenges........................................................................................ 30
IV. FOREIGN CURRENCY EXCHANGE........................................32
1. Opportunities.................................................................................... 32
2. Challenges........................................................................................ 33
V. GUARANTEES................................................................................ 35
1. Opportunities.................................................................................... 35
2. Challenges........................................................................................ 35
C. CONCLUSION.................................................................................... 37
A. INTRODUCTION
Vietcombank, also known as Joint Stock Commercial Bank for Foreign
Trade of Vietnam, is one of the four largest banks in Vietnam. Moreover,
Vietcombank used to be the Foreign Exchange Department under the State Bank of
Vietnam.
Although being less well known than VCB, GP Bank - Global Petro
Commercial Joint Stock Bank is 100% state-owned bank operating and developing
under the control and management of the State. Few people know that GP Bank
was acquired for 0 VND in 2015. After being acquired, GP Bank was managed by
one of the four largest banks in Vietnam jointly with the state bank, Viettinbank. 
Due to the difference in size, history as well as the reputation of both banks,
our group chose these two banks’ services as references for the first part.

B. SERVICES
I. DEPOSITS
Deposits are one of the most important services of the bank. Thanks to this service,
the person who does not need the money will be able to give money to the person
who needs it through the banking system.
1. The advantages and disadvantages of deposits today
a. Advantages
 Safe investment channel, stable profitability at the signed interest rate.
 Digital transformation helps people not necessarily go to transaction points
anymore. There is also a reduction in costs thanks to online deposits.
 Variety of packages sent.
 b. Disadvantages
 Savings interest rates are usually not high and are variable over time.
 If customers settle in advance, they will receive a much lower non-term
interest rate than the original interest rate.
 If customers do not select carefully, they may choose 1 bank with low
liquidity, leading to easy deposits.
2. Typical products

 Interest payment method: Pay interest later.

Flexible deposits and  Channel: Online or over the counter
withdrawals
 Number of original withdrawals: unlimited
 Interest payment method: Interest entered into
Electronic savings, principal or transferred to the customer's own VND
online payment account
 Implementation channel: Online 
 Fixed interest rate during the deposit period
 Interest payment method: End-of-term interest
Deposits returned at payment
the end of the period  Channel: Online or over the counter
 Fixed interest rate during the deposit period
 Interest payment method: Early interest payment
Early return deposit  Channel: Online or over the counter
 Fixed interest rate during the deposit period

3. Interest rate
The following is a chart of annual interest rates of 2 banks (%/year)
4. The differences
The differences of deposit products between 2 banks are:
 Interest
With the difference in size between the 2 banks, customers can clearly see the
difference in interest rates compared to the size of each bank.  Vietcombank with
much lower interest rates than GP Bank.
  Audience of the product
Vietcombank is a leading commercial bank, so it only focuses on the
general customer in the market, it is still large enough to be able to send foreign
currency for a period of time.
GP Bank is a weak joint stock bank so they will focus on specific classes
and offer specific incentive packages: the elderly, low-income people. But also
because of its small size, this bank does not have foreign currency deposit
products.

II. PAYMENT SERVICES

Compare payment services of 2 banks:

Vietcombank GPBank 

Advantage  - Quick payment, easy service. - Cash can be withdrawn on

- Services associated with e- foreign ATMs: ITMX
commerce platforms, payment (Thailand), PayNet (Malaysia),
applications widely and KFTC (Korea) and
conveniently. LaoVietBank.
- As one of the leading banks in - Already applied interbank
terms of safety and security. payment, Napas fast payment
- Take the lead in updating user 24/7.
trends. - Integrating other electronic
- There are many advantages wallets, but not too popular.
when using the service. - Can pay online for services…
- The annual fee is quite low. - Update some incentives when
buying goods and using
GPBank's services.

Disadvantage  - High fees related to bank - Haven't updated some quick

accounts: money transfer fees, user trends.
SMS fees... - Some affiliate utilities failed.
- Many card transactions take a - Internet Banking is not yet
 long time to update in the popular and trusted by many
application. people.

1. Vietcombank
Payment tools for:
a. Individual:
- An account online, cards such as international credit cards, international debit
cards, domestic debit cards...
- Types of savings and loans (Consumption, real estate purchase, car purchase,
mortgage...)
- Digital Bank, insurance, investment...
- Transfer and receive money (domestic, foreign).
Advantages:
• Quick payment, easy service.
• Services associated with e-commerce platforms, payment applications
widely and conveniently.
• As one of the leading banks in terms of safety and security.
• Take the lead in updating user trends.
• There are many advantages when using the service.
• The annual fee is quite low.
Disadvantages:
 High fees related to bank accounts: money transfer fees, SMS fees...
• Many card transactions take a long time to update in the application.

b. Enterprise:
- Vietcombank's regular corporate payment account helps businesses track and
manage daily funds quickly, safely, accurately with the lowest cost.
- Insurance and investment services...
- Corporate credit: short-term loans, working capital financing, project financing...
- Payment and monetary management of revenues and expenditures.
- Card services for businesses (credit cards, debit cards).
- International payment, trade finance.
- Fund management, investment portfolio.
- Electronic banks, investment banks (securities, custodians...)
- Foreign exchange and capital markets
- Issuing guarantees and checking information...

Advantages:
• Many term options with attractive interest rates;
• Increase income by balance;
• Make the most of profit from idle money;
• Odd maturities and early withdrawal options create maximum flexibility for
businesses.
• Simple account opening procedures and trading methods
• Can open an account in VND or foreign currency
• Money on the business account will be safe and secure
• Deposit and withdraw money easily and conveniently at all Vietcombank
branches
• Make an instant transfer in Vietcombank system
• Use a variety of payment services conveniently and at the lowest cost
through Vietcombank's extensive network of branches and correspondent
banks.
• Using modern electronic banking services: VCB-Money, Internet Banking
• Provide special support such as: Automated investment, centralized capital
management.

Disadvantages:
• Some credit files have customer legal documents, incomplete project legal
documents, loan application appraisals, inaccurate financial capacity,
unanalyzed appraisal reports, poor ability assessment, etc. debt repayment
sources, project efficiency, and capital borrowing plans.
• Some documents are disbursed when they are not eligible for approval,
disbursement documents are incomplete, new loans are disbursed or interest
 payments are made, there are cases where disbursements are made without
checking the vouchers from leading to customers forging, repairing and
increasing the invoice value many times to withdraw bank capital.

2. GP Bank
Payment tools for:
a. Individual:
- Types of payment accounts such as depositing, withdrawing money, transferring
money and making payment transactions via banks by means of payment such as
eBank, ATM...
- Electronic banking services for individuals.
- Remittance money transfer (international, via Western Union...)
- Card service (My card, MMember Card, Student Card...)

Advantages:
• Subjects: Vietnamese and foreign individuals who are living and legally
residing in Vietnam.
• Exclusive customer benefits at GPBank: You have the right to choose a
transaction name (GP.Name) according to your preferences for your
personal payment account.
• Actively spent, money is continuously profitable: You can perform
transactions (withdrawal, money transfer, deposit...) at any time according to
demand. Deposits in accounts enjoy interest rates without term
• Safe: You don't need to keep cash in your home or bring it with you when
you're on business
• Convenience: You can use non-cash payment services such as payment
order, collection order, check, ATM card...
• Diversity: You can open a payment deposit account in VND, EUR, USD...
• Fast: You can open a trading account for yourself within just 02 minutes.
Check your account quickly and easily with SMS Banking.
• Cash can be withdrawn on foreign ATMs: ITMX (Thailand), PayNet
(Malaysia), KFTC (Korea) and LaoVietBank.
• Already applied interbank payment, Napas fast payment 24/7.
 • Integrating other electronic wallets, but not too popular.
• You can pay online for services…
• Update some incentives when buying goods and using GPBank's services.

Disadvantages:
• Haven't updated some quick user trends.
• Some affiliate utilities failed.
• Internet Banking is not yet popular and trusted by many people.

b. Enterprise
- Domestic payment (receiving incoming money, transferring money out)
- International payments (letter of credit for export, import)
- Export finance before delivery, international guarantee...
- E-banking via E-banking service, SMS banking service.
- Foreign currency transactions (swap, forward).
- Deposit payment services, project loans, investment, fixed assets...
Advantages:
• There is an attempt to diversify payment services.
• Expanding the international payment market in many regions.
• There is an investment in digital banking.
• The forex market is well-invested.

Disadvantages:
• Some payment services have not been completed yet, and users still
encounter many errors when using them.
• There are not many best deals for businesses yet.
• Interest rates and fees are highly competitive with other banks in the same
payment service.
• The customer base has not been expanded.
• Complaint settlement time is still time consuming and not thorough.

Data sheet of 2 banks in the years 2020, 2021, 2022 

Data  Year Vietcombank GP Bank

Sales of payment 2020 (73.4 million) Achieve (32,6 million)

and card usage 98% of the year's plan
(customers) 

2021 (93.37 million ) Up (37.2 million) Up

19.2% compared to 2020 12.1% compared to
2020

2022  (135.7 million) Up 31.2% (42 million) 

compared to 2021

New E-banking 2020  2.85 million customers (no data) 

customers 

2021  3.69 million customers (no data)

2022  5,77 million customers 1,63 million customers 

New individual 2020 3.69 million customers (no data)

customers 

2021 1,75 million customers (no data)

2022 2,56 million customers 1,48 million customers

Foreign currency 2020  53.6 billion USD  31,056 million VND  

trading volume

2021  60.7 billion USD  21,661 million VND 

2022  73 billion USD  42,681 million VND 

Comment:
 The number of consumers choosing payment services at Vietcombank over
the years has increased at a stable rate, the increase is also seen quite clearly
in GPBank but not too high.
 E-Banking service at Vietcombank is performing very well, many customers
trust and choose, especially in 2022 with 5.77 million customers, however,
this GPBank is showing difficulties and no road the correct way to develop
the bank's Internet Banking, marking 1.63 million customers in 2022.
 The number of customers opening personal payment cards at Vietcombank
increased quite slowly from 2020 to 2021, but marked a return in 2022 with
an increase of 46%.
 The increase in foreign currency sales of Vietcombank has always been
stable and high compared to the general level. GPbank also showed its
position when it reached VND 42,681 million in 2022, however, the
previous year 2021 was an unsuccessful year in this field for the bank when
it dropped significantly compared to the same period in 2020. The level of
foreign currency trading volume at Vietcombank is estimated in billions of
USD, while at GPBank it is only million dong, showing a certain success in
this field of Vietcombank.
 In general, Vietcombank's increasingly stable development across the entire
portfolio and fields can be seen that this bank is gradually asserting its position on
the map of banks in Vietnam, while we can see the effort to revive GPBank after a
difficult period of restructuring in 2012 and having to receive support from a
number of other large banks.

III. LENDING SERVICES

Criteria Vietcombank GP Bank

Interest High (mostly 7.5% per year) Low (5.5% to 6.25%)

The amount of 90% of PCE (Personal 80% of PCE

money is able to Consumption Expenditures) Up to 100% value of
 be lended 70% ~ 80% value of collateral  collateral

There are 2 ways: There are 2 ways:

1, At the counter, the 1, At the counter, the
Procedure
paperwork paperwork 
2, Send online via app 2, Send online via app

1. Interest rates on lending products

a. For consumer loans
 Vietcombank:
 6.79%/year for the first 6 months with loans of 12 months or less.
 6.99%/year for the first 6 months with loans over 12 to 24 months.
 7.29%/year in the first month with loans over 24 months.
 GP Bank:
 Support up to 70% of production and business capital needs for individual
customers (products classified as consumer loans)
 Loan period up to 60 months.
 Flexible lending and repayment methods to best meet the needs of
customers.
 Competitive lending rates.
 The interest rate applied by GP Bank to customers when taking out a loan is
quite low compared to the common ground, at approximately 5.5%- 6.25%,
meanwhile the interest of Vietcombank is mostly 7.5% per year. Interest rates
of lending products are always stable, and in the mid-range in the market. The
service, enthusiasm and convenience of GP Bank are the advantages to attract
customers, the main targets are small business households, focusing more on
consumer lending. The lending services of Vietcombank will have many
incentives but not as diverse as those of GP Bank.

b. For business loan products

 Vietcombank: In the first period of 2022, Vietcombank has spent VND 80,000
billion to implement a short-term production and business loan program for
individual customers and business households to borrow additional working
capital with preferential interest rates such as: after:
 5.5%/year for loans under 6 months.
 6.1%/year for loans from 6 to 9 months.
 6.6% with 10 to 12-month loan.
 GP Bank: Low-interest rate, more favorable than many other banks in the
market. Interest rates will range from 5.5 %/year to 6.99 %/year depending on
the loan package and the customer's profile and credit history. Loan packages
such as business support with an interest rate of 6.25%/year, unsecured
overdraft loan with an interest rate of 8.25%/year...
 Most of GP Bank's business loan products are aimed at small businesses and
small business households. The products are often created with interest rates
that are not considered high compared to other commercial banks in the
country. Including Vietcombank. In addition, the lenders that Vietcombank's
products target are usually small and medium-sized enterprises with high-
interest rates compared to the lending market.

2. Service fees for loan products

 Vietcombank:
 Loan account service: Free
 Change of collateral issued by Vietcombank: Free
 Change of collateral as other assets: 200,000 VND/time
 Borrowing documents of collateral: 200,000 VND/time
 Issuance of confirmation of loan details: 100,000 VND/time
 GP Bank:
 Customers only have to pay fees as prescribed by GPBank and other costs
such as notarization fees; security transaction registration fees according to
the regulations of these agencies.
 As for the service fees of the two commercial banks above, we can see a clear
difference between them. The larger bank, Vietcombank, will be exempted
 from some service fees for problems arising from lending products to
customers, while GP Bank - a smaller bank with better products and services,
products closer to the needs of customers are exempt from all fees associated
with its loan products.

3. Loan procedures
 Vietcombank:
Borrowers must have the following documents according to Vietcombank's
procedures:
 Certificate of registration of legal ownership of the collateral.
 Other documents when required by the bank.
 GP Bank:
Customers need to prepare loan documents to request a loan with the bank.
Required documents in the loan application:
 Bank loan application form.
 Notarized copies of the following documents: ID card, household
registration book, payroll, and labor contract at the capital (according to the
form of Vietcombank).
 Household registration/ Certificate of temporary residence, ID card/
Passport.
 Certificates of land use rights.
 Proof of monthly income and ability to repay debt.
 Certificate of identity
 Documents related to collateral for mortgage borrowers.
 Letter of commitment for the purpose of using capital and payment method.
 In addition, depending on each case, customers need to prepare other
necessary documents such as sales contracts, business contracts...
 Both banks have simplified procedures so that customers can have easier access
to their available loan products. Thereby, it can be seen that the loan procedures
of the two banks have basic steps such as a mortgage, collateral, and necessary
identification documents to complete the loan procedure.
IV. FOREIGN CURRENCY EXCHANGE
Foreign currency exchange is one of the first banking services. This is a really
important service since firms have to buy ingredients or sell products to other
countries, the exchange rate would affect a lot on the firm’s decision. For
individuals, foreign exchange rate affects travellers, foreign exchage students and
exporting workers.
Vietcombank GPbank
Exchange rate Higher     (Buy: Lower (Buy:
23,610~23,640; Sell: 23,980) 23,300~23,580; Sell:
23,860)
Fee No fee No fee
Transportation Through app and over the Through app and over the
counter counter
Procedure Easy and quick Easy and quick
Money exchange $100/ person / day 
limit For industrial customers, it depends on the balance of each
bank.
 Even though the exchange rate of GP Bank is lower, many firms and
individuals use Vỉetcombank’s services for their foreign currency balance is
much bigger than the GP Bank’s one.
 All foreign exchange payment transactions and remittance are freely undertaken
by residents and non-residents via their current accounts in accordance with the
law on foreign exchange management. Residents must transfer foreign currency
income from export of goods and services or from other current revenues in
foreign countries to foreign currency accounts opened at the licensed credit
institutions. Non-residents are allowed to buy/sell, transfer or carry foreign
currencies abroad for the following purposes: overseas study and healthcare,
business, travel and visit, supporting relatives, inheritance remittance to
overseas heirs, remittance for overseas settlement purposes and one way
transfer for other legitimate needs. In the territory of Vietnam, all transactions,
payments, listing, advertisement, price quoting, contracting, agreements and
 other transactions are not allowed to be denominated in foreign currencies,
except for certain cases in accordance with SBV's regulations.

V. GUARANTEES
A bank guarantee is a type of financial backstop offered by a lending
institution. The bank guarantee means that the lender will ensure that the liabilities
of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank
will cover it. A bank guarantee enables the customer (or debtor) to acquire goods,
buy equipment, or draw down a loan.

Vietcombank GP Bank

Other guarantee Variety Less

services

Fee Must be paid  Must be paid 

(0,2% - 3,5% / year) 0,02% - 2%

Client Individual, organizations Businesses and SME 

and businesses

Time Fast, simple, procedure Fast, simple, procedure

1. Loan guarantees
 Vietcombank:
Loan guarantee refers to a written commitment ensuring the beneficiary the
performance of debtors' repayment obligations. In case the debtors don’t (fully and
timely) repay the debt, Vietcombank will pay on their behalf upon presentation of
a complying demand by the beneficiary
 GP Bank:
A guaranteed loan agreement may be made when a borrower is an
unattractive candidate for a regular bank loan. It is a way for people who need
financial assistance to secure funds when they otherwise may not qualify to acquire
them. And the guarantee means that the lending institution does not incur excessive
risk in issuing these loans.

2. Payment guarantees
 Vietcombank:
Payment guarantees refers to a written commitment ensuring the beneficiary
the performance of your payment obligation. In case you don’t (fully) perform it,
Vietcombank will pay on your behalf on due date upon presentation of complying
demand
 GP Bank:
A payment guarantee provides the beneficiary with financial security should
the applicant fail to make payment for the goods or services supplied.

3. Tender guarantees
 Vietcombank:
Tender guarantees refers to a written commitment ensuring the bid inviter
(the beneficiary) the performance of your bid participation obligation. In case your
have to pay a fine due to violation of bidding regulations but don’t (fully) pay it,
Vietcombank will pay on your behalf upon presentation of complying demand.
 GP Bank:
Tender Guarantee a customary standby letter of credit or bank guarantee or
surety issued by an Issuing Lender, in each case in favor of counterparties of the
Parent Borrower or any of its Restricted Subsidiaries or any of its Joint Ventures
for the purpose of securing the obligations assumed under any tender, for
construction work or other services.

4. Tax guarantee for import/export commodities

 Vietcombank:
Tax guarantee for import/export commodities is a bank guarantee in which
Vietcombank commits to impleent your tax obligations for import/export
commodities in case you do not make any tax payment or do not pay in full
amount in the due date.
 Through the online gate, the customs will receive Vietcombank’s electronic
advice of guarantee immediately after the import/export tax guarantee has been
issued by the bank.
 GP Bank:
GP BANK assits import/ export enterprises in customs clearance with the
issuance of tax payment guarantee combined with data transmit service via the
portal of the General Department of Customs.

5. Advance payment guarantees

 Vietcombank:
Advance payment guarantees refers to a written commitment ensuring the
beneficiary the refund of advance payment/deposit according to the contract signed
you signed with the beneficiary. In case you violates the contract and have to
refund the advance payment/deposit but don’t (fully) repay, Vietcombank will pay
on your behalf upon presentation of complying demand.
 GP Bank:
A written document issued by GP BANK at the request of a customer to the owner
of a contracted construction or the buyer of a sales deal, guaranteeing the applicant
will fulfill the contractual obligations after the owner or the buyer makes advance
payment.

C. CHALLENGES AND OPPORTUNITIES

I. DEPOSITS
1. Opportunities
a. Technology
Data will change the nature of all banking and financial services. The future
bank with a data-driven model will build a 360-degree panoramic view of
customers to enhance its service delivery and legal compliance capabilities.
Banks and financial technology companies are gradually applying artificial
intelligence combined with data science to change traditional business models to
new, more agile, and flexible models such as Digital Banking, Platform banking,
Platform Economy, Banking as-a-Service, Incumbent Banking...
Banks have also built a data warehouse, centralized, standardized digital
infrastructure that allows sharing and integration to create a digital ecosystem
spanning many industries and fields such as Mobile banking ecosystem connected
to services public services, finance, telecommunications, electricity, transportation,
healthcare... so that on mobile phones, customers can use more utilities than direct
transactions at banks.
Applying technology in management to reduce management costs,
traditional branch investment costs, developing many new products and services on
the 4.0 technology platform to attract a wider customer reach, take advantage of
Use economies of scale and sharing economy to develop.
New technology will make an important breakthrough in the implementation
of modern new banking services, meeting the diverse needs of customers. The
trend of applying artificial intelligence and data science to enhance customer
experience, and provide highly personalized banking products to users at the right
time and right demand.
Over the past time, the risk warnings of banks and financial institutions to
customers have continuously provided one of the factors that show that technology
criminals always put their sights on security gaps. of banks to attack.
Not only telecommunications companies, but many banks have also had to
continuously issue safety warnings to customers in electronic transactions. Military
Bank (MB) said that recently, many new forms of fraud have emerged on the
market, including the trick of pretending to "transfer money by mistake" into a
bank account. Meanwhile, Vietnam Maritime Bank (MSB) also advises customers
to be vigilant against tricks of bad guys to appropriate assets. VietA Bank
(VietABank) warns that a new trick of technology criminals is to send messages
impersonating a bank with malicious links. SmartPay e-wallet will warn of
fraudulent tricks so that crooks will receive calls or confirmation codes (OTP) to
perform functions such as re-issue PIN/password/OTP to perform transactions
from your e-wallet account.
 Despite facing many risks, accessing technology for extensive application in
banking activities is an indispensable way to approach technology applications and
keep up with the common progress of the international community financial
technology. Therefore, the banking world is required to solve the current
brainstorming problem in implementing security solutions.

b. Volatility of real estate and stock markets

The real estate market "freezes": recently announced that, in the third quarter
of 2022, the level of interest in real estate for sale across the country continued to
decline sharply. Demand for all types of real estate decreased sharply in
September, the number of land plots nationwide decreased by 50%, apartments
decreased by 9%, private houses decreased by 25% and townhouses decreased by
12% compared to the first period. 2022. The investor's thirst for capital has been
going on since the beginning of the year, while homebuyers also have difficulty
accessing real estate loans from banks. Another reason is the state's policy on real
estate, which can be mentioned as information on taxing second real estate.
Vietnam stock market dropped sharply: According to the research team,
Vietnam's stock market dropped sharply in 2022 due to several main reasons such
as (i) the general trend of downward adjustment after the hot-up period; (ii)
increased risks and challenges to the global economy as well as Vietnam; (iii) cash
flow into stock market decreased; (iv) great pressure to release mortgages; (v)
psychology and confidence of investors are affected in the context of increased
risks and especially after the market violations have been prosecuted recently; (vi)
crowd psychology affects the behavior of investors, especially individual investors.
→ According to experts, bank savings are still the most attractive investment
channel in the current context, at least until the end of the first quarter of 2023.
Although commercial banks have recently committed to reducing deposit interest
rates to below 9.5 %/year, the roadmap to lower interest rates may take more time,
especially when the liquidity of some banks is low.
2. Challenges
Depositors' trust in banks is being affected
a. World banking crisis
The turmoil of the US banking system in March 2023 and fears of a new
economic recession have kept investor confidence (depositors in particular) at its
lowest level in 20 years.
On March 10, the Federal Deposit Insurance Corporation (FDIC) took
control of SVB when the bank was massively withdrawn and insolvent.
The tragedy began about 48 hours earlier, when SVB announced that it had
"sold at a loss" a lot of securities and would sell an additional $2.25 billion of new
shares to "strengthen" its balance sheet. These developments caused panic among
depositors at SVB, leading to the bank's demise.
On March 12, FDIC closed Signature Bank after depositors massively
withdrew money from this bank due to concerns about the collapse of SVB. Both
banks have unusually high rates of uninsured deposits.
On March 15, after seeing the share price of Credit Suisse bank plunge 30%
and then UBS - Switzerland's largest bank - agreed to buy crisis rival Credit Suisse
in a deal. emergency rescue to prevent panic in the financial markets.
The collapse of mid-tier US banks, SVB and Signature Bank, and then 167-year-
old Credit Suisse, has raised concerns among depositors in Vietnam about other
potential banking crises.
Meanwhile, the Government of Vietnam ensured that deposits were always
protected during previous banking crises. Therefore, depositors in Vietnam are
advised not to withdraw suddenly when a bank in Vietnam encounters difficulties
because the Government will guarantee the depositors' benefits if the bank fails.

b. A series of recent cases of customers losing billions when depositing money

at banks have made many people bewildered
Typically, the most recent case is the loss of money at Sacombank with the
amount of 46.9 billion dong. According to the initial verification results, the
Deputy Transaction Office of Sacombank Cam Ranh, who was prosecuted for
embezzlement of assets, and his subordinates appropriated VND 46.9 billion from
the bank account.
→ From the above factors have affected the trust of depositors at commercial
banks in Vietnam

II. PAYMENT SERVICES

1. Opportunities
a. Technology
The digitization capacity of banks has great potential to continue to be
improved through the ability to exploit the applications of the most advanced
technologies such as: AI, machine learning, cloud computing, Blockchain. This is
an opportunity for commercial banks to continuously improve customer experience
and promote new financial products.
The network of telecommunications infrastructure, internet, smart phones
with 3G and wifi connections in recent years has rapidly developed and become
widely available across the country. This increases the availability of financial
services and becomes a platform for service developers. Additionally, application
of QR code also stimulates this process. They offer customers a variety of
functions including payments (via digital wallets), money transfers, and online
shopping.

b. The government’s encouragement

The State promulgates policies to develop non-cash payments in the
economy.
On October 28, 2021, the Prime Minister signed Decision No. 1813/QD-
TTg approving the project to develop non-cash payment in Vietnam for the period
of 2021-2025. The overall objective of the Project is to create a positive change in
non-cash payments in the economy with a high growth rate, making the use of
electronic payment facilities in society a habit of the people in urban areas;
gradually develop in rural, deep-lying and remote areas; reduce the social costs
associated with cash.

c. Changes in consumer’s behaviors

 Cash payment is less popular and is decreasing in most countries around the
world. Therefore, it is gradually being replaced. Instead, non-cash payment is an
inevitable trend and a driving force in the development of global trade and
economy.
The dominant reason is that it brings many benefits:
 Fast and convenient: If traditional payment needs to go directly to the
address to buy goods and services to pay in cash, with online payment you
just need to make this transaction in a simple and fast way quickly on
electronic devices such as computers, smartphones with internet connection.
In addition, you can pay online anytime, anywhere.
 Save costs and time: Also thanks to the convenience, there is no need to
spend time, the cost of going to the address to buy goods and services, so
paying online will help optimize costs and travel time.
 Flexible payment: Online payments can be made through a variety of
methods such as: e-wallets, electronic payment gateways, debit cards, credit
cards... to help flexibly choose online payment line according to your needs.

2. Challenges
a. Crime, fraud in electronic payment
Crimes and frauds in electronic payments have recently tended to increase in
the context of online services and transactions becoming popular with new and
more sophisticated acts and tricks and using public information more technology.
Forgery and technical risks: Nowadays, scams entice people to send money
illegally and hacker risks are increasingly sophisticated. Therefore, potential risks
for banks and customers using online payment services still exist.
Some problems arise in the field of electronic payment with complicated
developments, such as: some organizations and individuals use POS machines and
mobile devices originating from abroad to accept payments in the territory.
Vietnam, not complying with the law; or payment activities for services of foreign
organizations and enterprises providing cross-border services into the territory of
Vietnam... still have difficulties and obstacles in the handling process.
Risk of information insecurity: It can be caused by subjective factors such as
customers sharing personal account information, transferring money from
unsecured websites or giving a phone/computer with installed applications to other
users other. From there, creating opportunities for bad guys to make illegal online
payments.

b. Legal frame
The legal corridor on e-commerce is still not specific: Currently, the law
does not have clear regulations on risks in e-payment. It is this ambiguity about
responsibility that creates confusion for both the customer and the bank when
something goes wrong.
Therefore, the development of regulations on electronic payment services is
an extremely urgent and important thing. Besides, each person also needs to raise
awareness and be wary of all tricks.
The legal corridor for payment activities has been continuously improved, a
number of legal documents have been reviewed, revised, supplemented and issued
to guide and adjust payment activities in order to meet the needs of customers,
meet development requirements and needs of practice; create synchronous and
favorable conditions, encourage the development of the commercial center;
strengthen the management of cash payments and ensure security and safety in
payment activities, meet the requirement of the country's economic development
and integration.

c. Inadequacies in infrastructure
Infrastructure and technical equipment for payment activities are still
inefficient. Compared with other countries in the region, the ratio of number of
ATMs to the population of Vietnam is still low: the average ratio of ATMs per
100,000 adults in ASEAN in 2017 was 42.34, while Vietnam is 24.44 (Pham Tien
Dung, 2019).
Moreover, non-cash payment services focus on developing in big cities,
industrial parks and export processing zones. In fact, the network of automatic
teller machines or POS machines is still very limited because they are mainly
installed in the city area and concentrated in supermarkets, commercial centers,
restaurants, hotels..., while there are few in rural and mountainous areas, making it
difficult for cardholders to use daily, leading to a large amount of cash payments in
the economy.

d. Consumer psychology
Propaganda information about non-cash payment methods has not been paid
attention and attention. The strategic goals, orientations and major policies for the
development of payment activities have not been fully and properly recognized by
the public. Therefore, not only people but also businesses have little or vague
understanding of payment services and non-cash payment means.

III. LENDING SERVICES

Currently, demand for lending in Vietnam is really huge while retail banking
has been strongly promoted, helping the lending market to have a stronger
development momentum.
1. Opportunities
The potential for development of the consumer lending market is huge.
Vietnam's economy recovers with growth rate being quite high (6.5 - 7% in the
period 2021-2030) and increasing income per capita (about 6%/year to 2030).

a. Government
 The government has and will continue a number of support packages for
socio-economic recovery and development, as well as the policy of restructuring
credit institutions, thereby contributing to stimulating consumer demand and
reducing black credit.
Banks begin to lower lending rates for real estate
Up to now, all 4 state-owned banks (Big4) have preferential loan programs,
reducing interest rates to support customers.
- Agribank will consider applying a policy of reducing interest rates up to
3% per year for customers with outstanding loans for real estate business as of
January 31.
Agribank also said that it is expected that in 2023, Agribank will continue to
spend more than VND 100,000 billion to implement preferential credit programs
with interest rates for corporate customers, import-export customers, the healthcare
industry, and the education industry, education; reduce interest rates for customers
in industries that face difficulties in production and business activities;…
- SeABank launched a preferential package of VND 3,000 billion, reducing
the lending interest rate up to 1%/year for short-term loans for business purposes
such as livestock, agriculture, forestry, fisher... In addition, SeABank also reduced
0.5%/year for business loans not in the above-mentioned fields.
- Vietcombank also committed to reduce interest rates by 0.5%/year for all
customers with existing and new outstanding loans from the beginning of 2023.
- Sacombank offers preferential loan interest rates for individual customers
and corporate customers nationwide with interest rates from 7.5%/year, applicable
to businesses that need capital to pay for imported goods, import, export goods or
close business customers.

b. People's habits of consumption and borrowing are increasingly changing

In recent years (excluding 2020 due to the impact of the COVID-19
epidemic), the economy has grown rapidly, per capita income has increased, the
middle class has increased, so the demand for household consumption and
shopping has increased, leading to an increase in the demand for credit and
consumer lending.
 Analysis
- 36 million more consumers may join Vietnam’s consuming class by 2030.
They are defined as consumers who spend at least 11 USD a day in purchasing
power parity terms.
This is a major change. In 2000, less than 10 percent of Vietnam’s
population were members of the consuming class, which has risen to 40 percent
today. By 2030, this figure may be close to 75 percent.
The two highest tiers of the consuming class (those spending 30 USD or
more per day) are growing the fastest and may account for 20 percent of Vietnam’s
population by 2030.

- Urbanization is an important contributor to income growth. Cities are

likely to be Vietnam’s engine of growth, contributing roughly 90 percent of all
consumption growth over the next decade. The story of Vietnam’s urbanization has
often been centered around the populous cities of Hanoi and Ho Chi Minh City,
with each city home to more than 10 million people and most of Vietnam’s middle
class. However, our analysis finds that over the next decade, sources of urban
consumption are likely to spread to smaller cities, including Can Tho, Da Nang and
Hai Phong.
 - Across Asia, households are shrinking. The size of the average Vietnamese
household has decreased by around 20 percent over the past two decades, from 4.5
people per household in 1999 to 3.5 people per household in 2019. If the
experience of other Asian markets holds true in Vietnam, the declining size of
households may lead to new types of demand, including smaller homes, increased
ownership of pets and new forms of entertainment.
- Vietnam remains a young country overall, with a median age of 32 in
2020. However, the number of people aged 60 and over is projected to increase by
5 million; seniors could account for more than 17 percent of Vietnam’s population
by 2030. Spending by seniors is expected to triple in the next decade, growing at
more than double the rate for the population as a whole. So-called digital natives
born between 1980 and 2012, including members of Generation Z and millennials,
are expected to account for around 40 percent of Vietnam’s consumption by 2030.
- Members of this digitally savvy generation live online and on their
mobiles. Almost 70 percent of Vietnam’s population in 2020 are internet users.
Rapid digitisation is changing the daily channels and communication methods used
by Vietnamese people, particularly in e-commerce, where regional players, such as
Shopee and Lazada, and local players such as Tiki, are active.
- The rapid emergence of digital consumers has fuelled innovation in retail
and purchasing behavior.

d. Digital lending – a revolutionary change for SMEs and banks

The strong digital transformation process has created many opportunities for
the lending market to modernize, diversify products, improve customer experience,
reduce costs and increase customer access.
 Value of lending loan book via digital financial services in Vietnam from
2019 to 2021, with forecasts for 2022 and 2025
In 2021, the value of lending loan books via digital financial services in
Vietnam reached two billion U.S. dollars. By 2025, the digital lending loan book
value was forecast to amount to 18 billion U.S. dollars. Vietnam has a fast-growing
fintech sector, with digital payments being the largest segment within this sector.
Analysis
- Artificial Intelligence: AI can offer a few advantages to the lending
industry including convenience, efficiency, a more organized application process,
and the ability to make lending decisions fairer.
+ The ease of a process in which an interested home buyer is able to log on,
apply for lending, submit all documentation, and then receive a pre-approval. On
the other side of things, the lender can increase their client list, without spending
time screening applicants or tracking down information, instead, leaving it to the
technology of AI.
+ A fully automated lending experience challenges the following barriers:
Borrowers who give up on the process.
Borrowers who are too busy to handle multiple phone calls.
Loans falling through because of missing information.
 A lengthy process as many of these barriers can lead to a lengthy pre-
approval process.
Examples of Artificial Intelligence in the Lending Industry
- Artificial intelligence in lending has already proven to be successful. Some
top-name lenders have implemented it successfully to not only reduce human error
but to also identify borrower habits. Artificial intelligence is able to indicate when
borrowers may have trouble making payments, while also giving suggestions so
they can maintain their credit rating. Others have used it to track market changes
and even estimate upcoming trends.
- With an estimated 15% of venture funds raising capital for AI in the
banking industry, it’s clear that artificial intelligence is an important part of the
future of the lending industry.
 Online Lending
- Faster lending, with an automated timeline, in an online setting, can help
lenders increase their earnings and close sales faster, which allows them to take on
even more clients. In addition to streamlining the borrower’s experience, this
comprehensive experience also makes it easier for lending officers to keep track of
numerous applications. No longer will they have to repeatedly contact borrowers to
request additional information because it will all be done, right in the system.
- Users can upload all required documents, including credit application,
income statements, W-2s, Social Security number, bank statements, proofs of
down payment, photo ID, and 1040s, with an online checklist.
 Mobile Lending
- Because customers prefer to conduct their banking tasks online through
smartphones, studies show that mobile check deposits have increased. Whereas
many banks and lenders have some digital presence, not all offer mobile lending
opportunities. When mobile opportunities are applied to the lending process, it can
significantly speed up the process, providing borrowers with alerts when additional
documents are needed.
- The mobile opportunity also provides borrowers with a better experience.
It is not just the lending experience that can be frustrating and lengthy to a
borrower. Consider a traditional home buyer. Once they have chosen a lender, then
they have to find a realtor, appraiser, inspector, and title company. If the sale falls
through or there are additional questions about the borrower’s credit history, it can
slow down the process and in some cases, require them to start over.
- In addition to the long list of required documents, the process can also be
especially confusing to buyers. They are not always informed of when to obtain
insurance, submit income documents, schedule an inspection, or when they can
expect to close. With an automated system, they are given updates throughout the
process. If we have learned anything in 2020, it is that consumers, including
borrowers, want convenience, especially in the banking industry.
→ Banks must act quickly to give smaller businesses state of the art digital
lending. SMEs will benefit from a much more automated, slicker and faster
process. Banks should see their operating costs fall while increasing their lending
as barriers to credit are removed. Most importantly, they can leverage core lending
into more loyal SME customers, whose needs they better understand and can serve.
The technology and demand exist. Banks need to act now, or risk FinTech and
others taking market share in SME lending.

2. Challenges
a. Banks required to cut rates to support economic recovery
Governor of the State Bank of Vietnam (SBV), has directed banks to
continually reduce input costs with an aim to cut loan interest rates. Banks have
been required to cut operating costs and unnecessary expenses, as well as
administrative procedures, so as to have room for lending interest rate reduction to
support the economic recovery and development.
Banks have been also instructed to continually promote the implementation
of the Government’s interest rate support programme for loans of enterprises,
cooperatives and business households according to the Government's Decree
31/2022/NĐ-CP dated May 20, 2022.
“The SBV will monitor banks, which continue to raise interest rates, and
take measures to deal with the violation cases,” the Governor noted.
At a recent meeting, the Vietnam Bankers Association (VNBA) called on its
members to keep deposit interest rates at 9.5% or below to reduce lending interests
and boost economic recovery. The move was made after many banks raised their
rates to up to 11.5% per year for a 12-month term.
 Bank representatives at the meeting agreed with the proposal to keep deposit
interest rates at 9.5% maximum.
Up to now, all 4 state-owned banks (Big4) have preferential loan programs,
reducing interest rates to support customers. Most recently, VietinBank announced
the implementation of the SME UP interest rate incentive package with a scale of
VND 10,000 billion, applied to small and medium-sized businesses that borrow
money at VietinBank for the first time, or have not disbursed loans within the past
6 months.
Previously, Vietcombank committed to reduce interest rates by 0.5%/year
for all customers with existing and new outstanding loans from the beginning of
2023. The period from January 1, 2023 to the end of April 30, 2023. , applied to
individual and institutional customers with existing and new outstanding loans at
the bank, except for the group of customers operating in risky fields such as real
estate, securities, etc.
Also applied until the end of April 30, 2023, BIDV implemented a short-
term loan package with a scale of VND 30,000 billion. Customers participating in
the loan package to serve production and business needs will enjoy a preferential
interest rate of only 8%/year for loans with a term of less than 6 months; or only
9%/year for loans from 6-12 months.
At the end of 2022, Agribank also announced a further 20% reduction in
lending interest rates to support customers. Most recently, this bank has just
announced a maximum reduction of 3% interest rates for real estate borrowers. The
program applies to customers with outstanding loans for real estate business as of
January 31, 2023, having difficulties due to the impact of the COVID-19 epidemic,
or the impact of the macro economy.
In the private group, many banks have pioneered to reduce interest rates.
From February 10, MB will reduce the loan interest rate by 1% for corporate
customers with revenue below 100 billion.
Sacombank has just announced the implementation of preferential lending
rates for individual and corporate customers nationwide. For individual customers
to borrow money for short-term production and business purposes (including
agricultural production) or consumption for daily life, Sacombank applies a
minimum interest rate of only 8.99%/year.
 Sacombank applies a preferential interest rate of only 7.5%/year for
corporate customers who need capital to pay for imported or exported goods.
According to experts, in order to make banks feel secure in agreeing to
lower deposit interest rates, the SBV has made efforts to support liquidity for
banks through the open market operation (OMO) channel.
Under the newly issued document, the SBV also directs banks to give loan
priority to agriculture, export, small- and medium-sized enterprises, supporting
industries, high-tech enterprises, industrial park construction and solvent real estate
projects for low income people.
Banks must strictly control credit risks for investment activities in corporate
bonds, securities and real estate sectors, according to the documents - VNS.

b. Inflationary
Undoubtedly, inflation is one of the main measures of the health of the
economy. When the indicators of inflation increase, which means that there is a
devaluation of the currency, investors will consider switching to safer reserve
channels rather than gold or USD, thereby reducing the supply funds to lend and
raise interest rates.
Citing data at the Forum "Vietnam Economic Forecast 2022-2023, Dr.
Nguyen Bich Lam, former Director of the General Statistics Office forecast,
Vietnam's inflation may surpass 5% in 2023.
The socio-economic recovery and development program with a scale of 350
trillion VND, along with the support packages of 2021 that are penetrating all areas
of the economy, will cause a sudden increase in aggregate demand and demand.
The sharp increase in consumer demand for goods and services after a long period
of being affected by the pandemic will put great pressure on inflation in 2023.
In addition, inflationary pressure also comes from rising raw material prices.
When raw materials were broken due to the war between Russia and Ukraine; The
Covid-19 pandemic will have a strong impact on Vietnam's economy
Based on the impact factors from supply chain inflation; supply shortage;
aggregate demand spiked sharply. With labor shortage and expected increase in
regional minimum wages, our country's inflation may surpass 5% this year (about
5%-5.5%).
IV. FOREIGN CURRENCY EXCHANGE
1. Opportunities
a. Supply
The supply amount of foreign currency increase due to many reasons:
The sponsors overseas give more suppliance foreign currency to
Vietnam: At the end of 2022, International Development Finance Corporation
(DFC) signed a loan of 200 million USD to SeABank; ADB and VPBank signed a
social loan package worth 500 million USD. Foreign currency supply is likely to
increase the amount of foreign currency reserves of commercial banks. Having
more foreign currencies means commercial banks can lend more foreign
currencies.
The amount of remittances increases: Remittances contribute and create a
very important source of foreign currency for commercial banks, helping to reduce
pressure and balance foreign currency loans.
The State Bank buys foreign currencies and conducts open market
operations: Foreign currency inflows often see a positive trend in the first period
of the year. In addition to remittances, the State Bank also regularly performs the
exception purchase operation, encourages the replenishment of foreign exchange
reserves and provides payment in VND.

b. Government policies
The State Bank has stepped up the management and sanctioning of illegal
foreign currency trading activities. From March 9, 2023, the State Bank has
strengthened supervision, inspection and handling of illegal foreign currency
trading. According to regulations, foreign currency trading can only be done at
commercial banks and authorized dealers. If all people buy and sell foreign
currency on the unofficial market, it will cause restrictions on the foreign currency
trading activities of commercial banks. This action of the State Bank has confirmed
the importance of commercial banks in the domestic foreign exchange market.

c. Technology
People's demand for international travel has increased after the COVID-19
pandemic, so an online foreign currency exchange service that is both fast, safe and
legal will help people relieve anxiety. Moreover, the development of science and
technology requires commercial banks to be more modern in business. For
example, HDBank has started to allow people to buy foreign currency online from
2022. People only need to order foreign currency on internet banking and pick it up
at the point of payment.

2. Challenges
a. Legal frame
The appearance of many lawbreakers has threatened the foreign currency
business of commercial banks. Scammers hire people to go to commercial banks
and buy foreign currencies in large quantities and then sell them on the unofficial
market. Some banks that are victims of this behavior are: ABBANK, HDBank,
Sacombank, MSB…
According to the law, a person can exchange 100 USD per day for 10 days.
However, the law also allows credit institutions to oversell based on the balance of
cash and foreign currency sources. The maximum amount of foreign currency cash
that an individual is allowed to bring abroad without having to declare to the
custom agency is 5,000 USD. Therefore, just by faking travel records, the
scammers were able to exchange foreign currencies in large quantities at
commercial banks.

b. Inflation
The world economy is strongly affected by the conflict between Russia and
Ukraine.
The pressure to increase energy and food prices, commodity prices, world
inflation sharply increased, the trend of tightening monetary policy continued and
spread across the globe. To control inflation, the US Federal Reserve (Fed)
continuously raised the target interest rate at about 4.25 - 4.5%, leading to the
decline of most currencies in the world. Thus, in general, commercial banks will
suffer losses when they have to earn less profit because of the decrease in the value
of foreign currencies.
 This affects the profitability of commercial banks. Because foreign currency
trading activities bring profits to commercial banks from the difference between
buying and selling exchange rates.

c. Floating exchange rate management

Commercial banks' income comes from exchange rate differences.
Therefore, income from this activity may fluctuate when the Central Bank makes a
move to adjust the exchange rate. This proves that foreign exchange business is
dependent on State policy.
Moreover, the State Bank of Vietnam now applies a central exchange rate
mechanism, which means that the central bank publishes the exchange rate daily
and limits the fluctuation range instead of announcing the exchange rate for a long
time as before. This requires the bank to be more active in business strategy, in
market prediction and to strengthen risk management measures.

d. Outflow of money abroad

In Vietnam, there is a flow of money moving abroad. Some reasons for
Vietnamese money to be transferred abroad: studying, getting medical treatment
abroad, traveling abroad, paying fees and charges abroad, one-way money transfer
for legal needs other measures…
This puts pressure on the foreign currency supply of the commercial banking
system. This means that commercial banks are required to have more foreign
currencies to meet the needs of people for foreign currency payment.

V. GUARANTEES
1. Opportunities
a. The use of technology on risk prevention of commercial banks
Traditional banks tend to use mortgage guarantees as the main means of risk
prevention in the process of borrowing and lending to customers because they have
little knowledge of customer information. With the promotion and application of
financial technology, banks use Internet technology to investigate customer past
transaction information. While the non-editable modification of the system can
ensure the authenticity and reliability of information resources such as customer
information and transaction records, thereby facilitating the transformation of bank
risk control from single-point risk control to comprehensive risk control and real-
time information analysis.

b. The blockchain technology’s appearance in commercial banks

With economic and social development, modern technologies such as big
data, artificial intelligence, and blockchain have become more and more widely
used in various industries, the emergence of blockchain-based digital currencies is
a sign of the application of blockchain technology in the financial industry. In line
with the development trend of the future financial industry. In order to accelerate
the further promotion and application of blockchain technology , the banking
industry , on the one hand, should study the characteristics of blockchain
technology and the integration with banking business.On the other hand, the
banking industry also accelerate the application of blockchain technology in
banking Research on application scenarios. So the application of blockchain
technology Promote the development of the banking industry.

2. Challenges
a. Some changes in guarantees documents may cause legal loopholes
Article 335.2 of the 2015 Civil Code stipulates: “Parties may agree that the
guarantor shall only perform the obligation for the principal in the event that the
principal is incapable of performing the guaranty obligation.”.
In contrast, Article 361 of the 2005 Civil Code provides: “Parties may agree
on that the guarantor shall only perform the obligation for the principal in the event
that the principal is incapable of performing his obligation.”.
There is a fundamental legislative error with respect to the phrase “guaranty
obligation” at the end of Article 335.2 of the Code. In a guarantee relation, the
guaranty obligation is not the obligation of the principal, but rather the obligation
of the guarantor in the guarantee contract which he has concluded with the
beneficiary.
Notwithstanding, because of the misuse of phrase, it is not complete and
might potentially cause confusion for the parties and even the court. This provision
will be more complete if the phrase “guaranty obligation” is replaced by the phrase
“guaranteed obligation” or “his obligation”

b. The joint guarantor’s contribution is being questioned

Still talking about the 2015 Civil Code , Under Article 338 of the Code, after
a joint-guarantor has fully performed the obligation, that guarantor is entitled to
request the other joint-guarantors to perform “their portions of obligation” to him.
The general rationale behind this provision is that, when multiple guarantors
conclude a joint-guarantee, it means that each person is an obligor in the guarantee
relation and they share the equal responsibility since each of them may be
requested by the beneficiary to perform the guaranty obligation in its entirety.
When a joint guarantor has performed the entire guaranty obligation, the
guaranty obligation terminates and other joint guarantors are not obliged to
perform their obligation to the beneficiary anymore.
However, the provision on determination of “portions of obligation” in case of
joint guarantee remains quite vague in the Code. Despite not being specified in the
Code, the joint guarantors are allowed to agree in the guarantee contract on the
division of the guaranty obligation into portions. These portions might or might not
be equal. The parties must specify both the division of the guaranty obligation into
separate portions as well as the joint guarantee in the guarantee document. By
agreeing on these two important issues, the risk of the guarantors being deemed as
multiple independent guarantors by the court, as well as the issues around the
determination of portions of the guaranty obligation in the joint guarantee will be
effectively addressed.

C. CONCLUSION
Banking services in Vietnam have improved greatly in procedures and the
facilities thanks to the help of technology, changes in consumers’ habitat and some
short-term policies. However, there are still some challenges concerning legal
frames and economics situations. In general, commercial banking services is doing
great in developing their services and helping Vietnam economic grow.
Nevertheless, some potential services remain under-developed such as guarantee.
***** THE END *****