10170002_bbe_a1.2

Main Findings & Analysis Task 1 1.1 HSBC’s legal status and sector of activity: a) Legal status – Private Public Companies. After acquiring the big companies of Republic National Bank of New York and other large corporations, HSBC established and became one of the members of private limited companies on 31 December 1999. On 1 January 2014, the name "HSBC Private Bank” was used. “The use of the label ‘HSBC Private Bank’ refers to HSBC’s worldwide principal private banking business, and is not indicative of any legal entity or relationship1”. According to Sustainability Report of HSBC (2012), after being listed on five major stock markets including: London. Hong Kong, New York, Paris and Bermuda in 2012, shares of the HSBC Corporation have held a fixed level of 220000 shares in 129 countries.

Figure 1: The summary of HSBC in 5 years

1

Source: http://www.hsbcprivatebank.com

-

Activities of HSBC:

According to Dzhinggarow (2017), one of the advantages of Private Limited companies is protect the shareholders from risk. To manage, create a risk-control environment, HSBC has set up a model to consolidate the risk management approach with three lines:

"Ther first line: responsible for identifying, recording, reporting and managing the risk"

"The second line: responsibility for providing advice and guidance in relation to the risk"

"The third line: responsibility for providing independent risk management framework " Figure 2: The lines to manage the risk of HSBC (Annual Report) However, besides the advantages, the Private Limited Company also has some disadvantages. One of this is "submit annual financial accounts” (Green, 2017). According to the book “Going Private” of Borden and Yunis(2016), the act of disclosing internal information makes it difficult for companies to compete with other competitors. b) Sector: Services Since 2006, HSBC in Viet Nam started to provide many types of services such as: "domestic custody, supervisory services to domestic funds as part of our suite of service to local fund managers" and it has occupied 65% market share in this sector in Viet Nam.2

2

Source: https://www.hsbc.com.vn/1/2/global-banking_en/securities/fund

Depending on the type of different function, these types of HSBC’s services have different benefits. With HSBC in Viet Nam, the service offers several benefits as follows:  Create more competitive value for business. With a diverse industry rivals such as bank. HSBC faces a number of large corporations - owning many types of services such as Vietcombank, BIDV, ...  "Advantages of world-class systems and technology". HSBC is proud to be a modern and well-equipped modern bank offering the most modern and up-to-date banking services.

1.3 The vision, mission, core values, goals and objectives of HSBC: a) Vision: Every company, every business has a different vision to become what they looking for. With HSBC, their vision is “to be the Leading International Bank in Viet Nam. Especially, HSBC in Viet Nam want to become a global, local bank with the desire to understand customers everywhere” b) Mission : To exit and thrive, every company must follow their mission and HSBC always focus on a mission is - co-image the top international banks by maintaining the highest quality to satisfy their customers. c) Core values: Every company always has different own core values. For HSBC, it has proud in 3 main values. First of all, HSBC always believes that they are one of “the most dependable banks” that their customer can trust 100%. Secondly, it is important to respect the different culture in different countries so HSBC "open to different ideas and cultures". Thirdly, the company always has the "connection to customers, regulators and each other". With these core values, HSBC always strives to be transparent, accountable to all parties involved in its business by honesty. With the goal of respect, sharing and mutual support, HSBC is always interested in the internal and external parts of the company, forming a harmony and development.

d) Goals: All goals are set to find the ways, guide the company to follow its objectives. Therefore, HSBC’s short- term goals are:  Expanded international business network - Opportunity to open many international banks in many countries  Support and investment for businesses at local scale. e) Objectives: HSBC’s objectives are to  Make better achievement in finance  Improve, increase HSBC bank’s profit  Invent more efficient services  Develop and create more technology  Develop marketing, advertise brand. To examine the HSBC’s objectives, the S.M.A.R.T tool is used to derive objectives and goals of HSBC. Specific

HSBC’s objectives have 2 sections to finish its target: financial, customer’s satisfaction. HSBC's goals are difficult to identify because it is a short-term goal,

Measurable

do not have long-term goals. Moreover, the plan in revenue of HSBC in 2017 is 3000 billion VND

, growth 0,3% compared to 2716

billion VND in 2016 . With an objective view of economics, international finance, the goals set by HSBC are not beyond the reach of the company in the near future 2020. According to HSBC Vietnam, from 2016, total assets of HSBC Attainable

Vietnam reached nearly 72 billion. However, HSBC Vietnam's net interest income was more than VND2.200 billion, slightly higher than in 2015. With this result, HSBC remains one of the leading banks in the international banking industry. Moreover, it occupies a large market share in this sector not only in Viet Nam but also in the world.

Although HSBC's operating expenses dropped by VND1845 billion compared to previous years, loan loss provisions dropped sharply by 70% y / y, while HSBC's pre-tax profit stood at VND1805 billion 2017, an increase of 46% over the same period. Moreover, with bad debt ratio accounting for more than 0.8% of total outstanding loans - down 1.5% (2016) against 56,100 billion of deposits of customers is a negligible number. Therefore, it is easy to see that: HSBC can fully achieve the goals they set out in 2018. With a long history of development, HSBC has achieved many prestigious awards, which have made a great resounding in the international bgaan world. "Best Foreign Bank of Vietnam” from 2006 to 2017 by “Finance Asia Magazine”

Realistic

"Best International Retail Bank of the Year in Vietnam” in 2016, 2017 by “Asia Banking and Finance", ... "Best Internet Banking for Business Customers in Vietnam" by Global Finance. … With all these achievements, HSBC is confident that they are the No. 1 bank in Vietnam, ready to compete with other banks in today's stiff market.

Time-bound

To get a success of goals and objectives, HSBC need to set up the detail plan period until 2030.

In short, HSBC's goals are clearly reflected in the SMART table. Based on that, we can see that HSBC had understudied and has very clear and definite steps to achieve future goals. 1.3 HSBC’s balanced scorecard:

Measures

Results

2015

Target

2016

Unit (VND)

Revenue: 3.000 billion VND

Revenue

2.909

2.716

(billion) Profit before tax:

Net income Financial Perspective

Maximize stakeholders profit

from business

1.439

1.863

1.229

1.801

1,06%

0,84%

1.500 billion

(billion) Profit before tax (billion) Bad debt rate

Under 1%

In 2015 - 2017, HSBC has satisfied the needs of its

customers

by

providing a full range of Customer Perspective

Financial service

financial services from individual to collective, including:

“Personal

Financial Services” and “Asset “Corporate

Management”, Finance”,

HSBC

always

focuses on quality products with the goal of " The best service customers ".

for

“Global

Financial

Services”,.. (HSBC.com.vn).

Create new services and Customers’ satisfaction

increase the quality of services to bring more efficient. Thanks

to

long-term, plans

appropriate short-term

and

business

strategies, only in 2017, Internal Process

Production line

HSBC of Viet Nam has increased its assets to nearly 71 trillion dong. - With high productivity, the average profit per employee

is

also

significantly higher nearly

Customer deposits

1.5 million dong.

Learning & Innovation

Employees’ behaviors

- Leadership in Payment Volume 2011 2016 and Leadership in Credit Payment Volume 2011 – 2016 by Visa - Top 3 Payment Volume by MasterCard in 2015

Develop and create more

online

services:

mobile

banking,

online

banking, credit card payment

In short, from the Balance Score Card, it is easy to realize that HSBC is one of the most efficient, effectives businesses in Vietnam. Although net income fluctuates slightly in 2016, it reached more than 2.300 billion, go up slightly at 2% compared with 2015. Moreover, not only does HSBC (Viet Nam) focus on the financial, it also concentrates on improving customers services, customers satisfaction and improve the staff’ working condition. From 2010 to 2017, HSBC Vietnam regularly opens many talk shows and programs to contribute to the development of Vietnamese education in many different provinces to advert their brand. Especially, in 2018, "more than 1,300 HSBC Bank employees have pledged to support a program: "Conservation and Management of Water Resources with Community Participation" in 2 years. This project is designed to conserve water `resources and bring clean water to communities in Tram Chim submerged area and Vu Gia - Thu Bon river basin, Quang Nam province. According to “The Young Knowledge Journal” posted on the website on July 6 stating the reason why foreign banks withdrew from Vietnam was due to a series of issues such as governance, the risks from many shortcomings while corporate governance is limited, reducing the attractiveness of Vietnamese banks.

600,000 billion VND of bad dept of Vietnamese banks are the reason for the withdrawal of international banks. Task 2:

Shinhan Vietnam is a subsidiary of Shinhan Financial Group, a Korean financial group listed on the Korean and New York Stock Exchange. The bank opened its first representative office in Ho Chi Minh City in 1993. In 2008, Shinhan Bank was licensed and became one of the first five banks with 100% foreign owned capital in Vietnam. . The Bank acts as a bridge for Korean businesses to invest in Vietnam by providing and supporting financial service. On November 28, 2011, Shinhan Vietnam acquired a 50% stake in Shinhan Vina Bank and after that they changed its name to Shinhan Bank Vietnam.  Goals, objectives, size and growth of Shinhan bank and HSBC: a) Goals: In fact, the common point of 100% foreign owned banks is to focus on two distinct areas: investment and retail, especially retail the market. Because of that, Shinhan is no exception. According to the director Shinhan Bank Viet Nam: “We set our mid-term goal as growing into “ Leading Financial company in Viet Nam” in 2020.One of the key development strategies of Shinhan Bank has been to expand its retail banking segment and focus on improving service quality in order to better serve its customers”. b) Objectives: - Shinhan's objectives are to reach the revenue target of $ 2.5 billion by 2019. - Shinhan Bank will attract more 500,000 card users, helping banks from the 7th position to rise to the 5th in credit card market in Vietnam. - Shinhan Bank will become one of the leaders of the field, with the number of branches expected to reach 30 across the country. c) Compare Size According to Business Essential – Business Environment book (2010), Media said that the sizes of another business always depend on some sectors: the number of its employees, the figure of sale volume, assets employed, earned a

profit and net worth. Moreover, Scribd.com in 2015 suggests that involves market share is the method of measuring the size of companies. HSBC Bank

Shinhan Bank

In official website, the number In Sustainable Development of HSBC’s employees in Viet Report in 2016 of Shinhan Nam is 1400.

Bank in its official website, the number of employees in Viet

The number of labors

Nam is 1500.  Both of banks have over 300 employees Therefore, in Article 3, Decree 90/2001 of the Government of Vietnam was signed on 23 November 2001 (Law on Enterprises, 2015) on the Law on Enterprises, both of companies have been Considered as big companies in the market and they are very competitive with other businesses in Vietnam.

Customer

Around 47 million customers Around 3 million customers through

four

Global

Businesses. Assets Growth

In 2016, assets growth of In 2016, assets growth of HSBC Bank Viet Nam are Shinhan Bank are 33,32%. 26,84 %

Total Assets:

Total assets of HSBC are Total assets of Shinhan Bank 71,138,048 VND

go 30% over 2015.

In conclusion, with all the information collected about the different criteria (mentioned and analyzed above), HSBC and Shinhan Bank are big organizations

in Vietnam. With such size and scale, these two banks are the promising bank model, full of opportunities for development of Vietnam in the future. d) Growth and sustainability:  HSBC: Applying the modern technology including: Touch ID to allow their customer to access their account easier.  Shinhan Bank: Promoting the development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small and medium-sized enterprises, including through access to financial services. Moreover, Shinhan Bank want to support startup businesses and SMEs to contribute to create decent work and growth sustainable for them, In addition, providing job training opportunities to the youth from low income families to help them become financially independent.  Stakeholder: According to the book Business Essential, Stakeholders are people or individual who relate and have an interest and power impacting on the business operates. Stakeholders can be category into 3 groups: connected stakeholders, internal stakeholders and external stakeholders.

Figure 3: Stakeholder’s map of Shinhan Bank a) Shareholders Shareholder is one of the factions which belong to connected stakeholders group. Shareholders play the most important roles in a company due to they have a certain impact direct and indirect ways of the business in different fields. Shareholders are the people who can join in the election of Board of Directors of Shinhan and make a decision of the heritor in charge of the company in Vietnam. Moreover, Shinhan’s shareholders can follow and continue to provide their flow of money by using their money to invest. Because of this way, the growth rate of Shinhan's Bank increased dramatically and the interest from another shareholders growth

enormously. In addition, their attention and objective are to earn the

maximum profit and lost minimize the cost. According to Sustainable Report of Shinhan Bank in 2016 on an official website; they always respect shareholders so

the relationship between Shinhan Bank and their shareholders become closer. Shinhan has also created and introduced an Investor Department to improve, make these relations are better to receive more investment and more recommendation from them. This has shown the important role of shareholders in this Bank. b) Employees Employees are the core stakeholders in Shinhan Bank, they have played an integral, have a close connection with others position in these company. Although employees are the stakeholder like shareholder but both of them are not the same. Employees do not care about the number of investment, the partner companies,... but they also ensure that the efficiency and the productivity of company every month. This’s the main reason why employees play an important role in groups of stakeholders. The development of Shinhan bank can say that based on the development wholeheartedly of their employees. They try so hard to create, provide the best efficient product and services for the customer while their objective is salary, soft skills, opportunities, welfare, bonus and much different insurance like health care, safety... From Drucker’s view in 2012, employees are factors that directly affect customer service. They are the ones who create, operate and distribute the type of service that customers demand, the desire to consume. Therefore, if the business owner has any discrepancies in operating the staff, the customer service will be affected. For that reason, employees also need to be cared for, depending on the department and management. There will be a different model of care with many policies and working conditions. So understanding: employees are the key to the development or failure of a company, Shinhan's services rely on the productivity of each employee to make every decision. The more satisfied the customers and the employees are, the higher profit of Shinhan get. Because of that, according to the website of Shinhan, they have some policy to protect their employees like:" do not discriminate depend on

other ways and create a safer work environment to improve the work time of our employees.