This thesis has been completed with a lot of valuable assistance and cooperation from many people, whom I am sincerely grateful for.
Firstly, I would like to express my gratitude and appreciation to my supervisor, Luong Thai Bao, PhD, for providing me professional guidance and direction throughout my study. His careful editing contributed enormously to the production of this thesis. I could not have imagined having a better supervisor and mentor for my study.
Besides my supervisor, I would like to thank the rest of my thesis committee, for their encouragement, insightful comments, and hard suggestions in completing this thesis.
My sincere gratitude also goes to the professors in the EMBA program and EMBA staff, as well as the professors in NEU, for offering me great knowledge and supports.
Last but not the least. I would like to send my special thanks to my fellow colleagues of Bank for Foreign Trade of Vietnam for their great support in collecting and using the data during my thesis completion, for their ideas and advices, as well as their enthusiasm during the in-depth interviews in order to complete this thesis.
Chu Thi Thu Ba
TABLE OF CONTENTS
LIST OF TABLES2
LIST OF FIGURES3
CHAPTER 1: THEORETICAL BACKGROUND AND LITERATURE REVIEW ON CREDIT RISKS AND CREDIT RATING15 1.1. Credit risks and credit risk management in banks15
1.1.1. Definition of credit risks15
1.1.2. Classification of credit risks16
1.1.3. Features of credit risks.17
1.1.4. The main basis in determination of the credit risk levels.18 1.1.5. Consequences of credit risks.19
1.1.6.Reasons for credit risks21
1.1.7. Credit risks management in banks23
1.1.8. Credit risk management by internal credit rating systems31 CHAPTER 2: FINDINGS ON IMPLEMENTATION OF THE VIETCOMBANK INTERNAL CREDIT RATING SYSTEM FOR ENTERPRISES48 2.1. Introduction of Bank for Foreign Trade of Vietnam48
2.1.1. Introduction of Bank for Foreign Trade of Vietnam48
2.1.2. Business results in recent years:50
2.2 Credit activities of VCB in the year of 2007 and 2010:52 2.2.1. Real fact of quality of VCB credit activities:52
2.2.2. Persistent problems in credit activities operation in VCB56 2.2.3. To analyze causes of the problems in credit activities operation in VCB:57 2.3. Loan classification policy of Vietcombank58
2.3.1. Principle of loan classification58
2.3.2. Groups of loan:59
2.3.3. Loan classification for enterprise customers:59
2.4. Overrall of the internal credit rating systems for enterprises in Vietcombank62 2.5. Process of credit scoring and ranking for enterprise customers64 2.5.1. Process of credit scoring and ranking for standard business enterprise and potential enterprise64 2.5.2. Process of credit scoring and ranking for newly established enterprise79 2.6. The application of the results of the credit rating system at Vietcombank83 2.7. To analyze the current practices of internal credit rating for enterprises in Vietcombank84 2.7.1 Achievements:84
2.7.2. Limitations and problems88
2.7.3 To analyze the causes of remaining problems of credit rating for enterprises in Vietcombank90 CHAPTER 3: IMPROVING THE CREDIT RATINGSYSTEM FOR ENTERPRISES IN VIETCOMBANK104 3.1. Impact of international economics integration trend to banking operations104 3.1.1 Opportunities to Vietnamese bank system.105
3.1.2 Difficulties and opportunities to the banks system of Vietnam106 3.2. Orientation of credit activities of VCB in the coming years107 3.3. Objectives of improvement of corporate credit rating of Vietcombank110 3.4.Recommendations for improving the corporate credit rating system of VCB110 3.4.1. Recommendations for Vietcombank111
3.4.2 Recommendations for...