Bond investment activities of Vietnamese commercial banks - 2

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• Bond investment activities of Vietnamese commercial banks - 1
• Bond investment activities of Vietnamese commercial banks - 3
• Investment and trading activities of bonds of Vietnamese commercial banks - 1
• Quality of financial appraisal of investment projects in lending activities at Vietnamese commercial banks (Actually taken from Joint Stock Commercial Bank for Industry and Trade of Vietnam) - 1
• Quality of financial appraisal of investment projects in lending activities at Vietnamese commercial banks (Actually taken from Joint Stock Commercial Bank for Industry and Trade of Vietnam) - 2

(Source: State Bank Website)

As of December 31, 2019, the Vietnamese commercial banking system has 31 joint stock commercial banks, 4 state-owned commercial banks (including the Bank for Agriculture and Rural Development and 3 joint stock commercial banks that were acquired by the State Bank for 0 dong in 2015, which is : Vietnam Construction Bank, Global Petroleum Bank and Ocean Bank). Of the 31 joint-stock commercial banks, there are 10 banks listed on the Ho Chi Minh City Stock Exchange (Bank for Investment and Development of Vietnam, Joint Stock Commercial Bank for Industry and Trade of Vietnam, and Joint Stock Commercial Bank for Import and Export of Vietnam). , Military Commercial Joint Stock Bank, Saigon Thuong Tin Joint Stock Commercial Bank, Vietnam Foreign Trade Joint Stock Commercial Bank, Ho Chi Minh City Development Joint Stock Commercial Bank, Vietnam Technological and Commercial Joint Stock Commercial Bank, Tien Phong Commercial Joint Stock Bank, Vietnam Prosperity Joint Stock Commercial Bank, 3 banks listed on the stock exchange. Hanoi Stock Exchange (Asia Commercial Joint Stock Bank, National Commercial Joint Stock Bank,

* Asset status of commercial banks

The total asset value of the entire banking system and the average asset value of a bank in Vietnam continuously increased, from 151,412.43 billion VND in 2015 to 243.96.13 billion VND in 2019. Based on the regulation In terms of asset size, the Vietnamese banking system can be divided into three groups: (i) Group 1: including banks with an asset size of over

1,000,000 billion VND. These are the banks with the largest asset value in the system of banks in Vietnam today, including: Agriculture, Investment, Industry and Trade, and Foreign Trade, 5-6 times higher than the average level of banks in Vietnam. a bank; (ii) Group 2: includes banks with asset size from over 300,000 billion VND to over 500,000 billion VND in 2019 (no bank has an asset size between VND 600,000 billion and VND 1,000,000 billion); (iii) Group 3: includes banks with an asset size of less than VND 300,000 billion in 2019, including banks with an asset size of less than VND 100,000 billion.

* Status of capital sources of commercial banks

The charter capital of the whole banking system and the average charter capital of a bank in Vietnam have increased slightly over the years, of which 4 banks hold the 1st position in terms of assets (including: Investment, Industry and Trade. , Foreign Trade, Agriculture) and commercial banks have charter capital about 3 times the average of a bank. Some banks have rapidly increased their charter capital in the last two years such as ĩ Thuong, Vietnam Prosperity...

The equity capital of the whole banking system and the average equity capital of a bank in Vietnam increased slightly over the years, especially the Investment bank had a strong growth in 2019. Four banks held the group position. 1 in terms of assets (including: Investment, Industry and Trade, Foreign Trade and Agriculture) with equity in 2019 from 4-5.5 times the average level of a bank.

* Business performance of commercial banks

During the period 2015-2019, ROA, ROE of banks fluctuated continuously over the years.

Banks with high asset value and equity (group 1) such as: Investment, Industry and Trade and Agriculture are not the banks with the highest ROA and ROE (except Foreign Trade). Some banks have average asset value and equity capital (group 2 banks) in the whole system such as Hanoi Commercial Bank, VN Prosperity, Phuong Dong, Military, etc. are banks with ROA. High. International, Pioneer, Oriental, Asian, Military... are banks with quite high ROE. Some banks like Public, Vietnam Thuong Tin... (group 3) have negative ROA and ROE for some years.

3.2. SITUATION OF BOND INVESTMENT ACTIVITIES OF VIETNAM COMMERCIAL BANKS

3.2.1. Legal basis for bond investment activities of Vietnamese commercial banks

In addition to legal documents (Law on Credit Institutions, Law on Securities, Law on Enterprises), Government Decree on bond issuance), over the years, the State Bank of Vietnam - the state management agency in The banking sector has issued a circular to create a legal basis for bond investment activities of Vietnamese commercial banks (36/2014/TT-NHNN; 06/2016/TT-NHNN; 19/2017/TT -NHNN; 02/2018/VBHN-NHNN; 22/2016/TT-NHNN; 15/2018/TT-NHNN; 22/2019/TT-NHNN).

* Regulations on bond investment conditions

According to current regulations, commercial banks that want to invest in corporate bonds must have: (i) An internal credit rating system, ratings of bond issuers; and (ii) Promulgating internal regulations on buying corporate bonds in accordance with current regulations of state management agencies, including at least the following contents:

- Process and procedures for appraisal, approval and decision to buy corporate bonds; principles of decentralization and authorization of corporate bond purchase decisions and approvals; regulations on risk management in corporate bond purchases, ensuring publicity and transparency between the appraisal and decision to buy corporate bonds;

- Principles and criteria for assessing and determining the level of risk of buying bonds for corporate entities and all types of corporate bonds;

- Risk measurement and management system, risk treatment conditions, measures and processes; make provision in accordance with regulations;

- Internal control of corporate bond purchases.

In addition to the above provisions, from February 12, 2018 according to Circular No. 19/2017/TT-NHNN and Circular No. 02/2018/VBHN-NHNN (effective from February 12, 2018), if you want to invest in bonds corporate bonds, commercial banks must ensure a capital adequacy ratio of at least 9%; Banks are not allowed to grant credit to customers for investment and trading in corporate bonds if the bad debt ratio is greater than or equal to 3%.

* Regulations on bond investment limits

Circular No. 22/2016/TT-NHNN (effective from August 15, 2016) stipulating that the balance of investment in corporate bonds shall be included in the total outstanding credit balance for one customer, for a customer and related person. Therefore, bond investment activities must also comply with credit limit regulations. Commercial banks are responsible for specifying limits on buying corporate bonds: Buying bonds of an issuing company; buy bonds of an issuer and an issuer related to the issue; buy secured and unsecured corporate bonds; buy corporate bonds for investment purposes and hold to maturity.

Circular No. 36/2014/TT-NHNN (effective from February 1, 2015): only stipulates that the credit balance limit for a customer does not exceed 15% of the bank's own capital; a customer and related person must not exceed 25%; There is no specific regulation for bond investment. However, because the balance of investment in corporate bonds is included in the total credit balance, banks also need to comply with this regulation.

Circular No. 06/2016/TT-NHNN (effective from July 1, 2016): supplementing the regulation "Commercial banks are not allowed to grant credit to customers for investment and trading in unlisted corporate bonds ; State-owned commercial banks (SBV) can invest up to 25% in government bonds, joint-stock commercial banks can invest up to 35% of the average short-term capital of the preceding month. there".

Circulars No. 19/2017 and 02/2018/VBHN-NHNN (effective from 12/02/2018): supplementing regulations that the total outstanding loans granted to credit institutions for investment and business in corporate bonds of credit institutions cannot be than 5% of the charter capital or allocated capital of the credit institution. According to current regulations, the balance of investment in corporate bonds of commercial banks is an integral part of the total outstanding loans, but the total balance of corporate bonds invested by commercial banks is not subject to adjustment in this regulation. .

3.2.2. Actual situation of organization and management of bond investment activities of Vietnamese commercial banks

3.2.2.1. Actual situation of issuing internal regulations on bond investment

To comply with the State Bank's current regulations on bond investment, over the past years, in order to have a basis for the organization and implementation of bond investment activities, most banks have issued internal documents regulating the investment in bonds. with this activity. However, the coverage of regulations for different types of bonds varies. There are banks that issue separate internal documents for each investment activity (investment in corporate bonds, investment in government bonds such as PVcomBank, MB,...). Some banks only regulate investment in corporate bonds. There is a bank that regulates the general investment of all types of bonds.

In addition, there are also some banks that do not issue internal documents on bond investment. Based on the reality of the bond market, the Board of members/BOD of the bank shall issue a resolution on the bond investment policy of each issuer, specifying the maximum number of bonds to invest in. invest and assign the General Director to direct the transaction office and related units to implement.

3.2.2.2. Actual situation of organizing and implementing bond investment activities

To deploy bond investment activities, depending on their own conditions and development strategy, each bank can choose a different organizational model:

(i) Organizing specialized investment activities through the establishment of a fund management company, or a bond investment fund (such as Techcombank's TCB, Baoviet's BVBF, MB's MBBF, VietinBank's VTBF.. .);

(ii) And/or invest in the bank's existing units.

Most banks organize bond investment activities based on the available units of the bank. Participating in investment activities usually includes departments such as: Business units (branches, transaction offices...); At the Head Office, there are the following divisions: Business Division/Capital and Financial Markets Division, Operations Division, Risk Management Division, Internal Inspection and Control Division, Finance and Accounting Division, and Legal Division. ...

Basically, Vietnamese commercial banks have built and implemented the process of investing and trading in bonds according to the order of conventions: setting goals, choosing types of business investment, business investment strategies. , choose the type of bond and finally

measure and evaluate results.

Investment activities in bond trading are aimed at many different goals. However, the main goal is still to serve and support the business management of the bank's own available capital, ensuring the solvency of the whole system. In addition, bond investment activities also aim to diversify business to bring relatively stable income for the bank in the context of large mobilized capital but the ability to lend and perform other forms of investment. Other forms of credit are limited.

3.2.3. Current status of bond investment results of Vietnamese commercial banks

3.2.3.1. Number of commercial banks, size and ratio of bond investment/total assets

In recent years, most Vietnamese commercial banks have invested in bonds, but the scale and ratio of bond investment to total assets are different. Large banks (group 1) such as Industry and Trade, Investment, Foreign Trade, and Agriculture have an investment scale of over VND 100,000 billion/year, but there are also banks that only invest with a scale of over VND 1,000 billion/year – these are usually small banks in group 3 of the NCS classification above.

The ratio of investment to total assets of the whole banking system tends to decrease gradually over the years, from 20.66% in 2015 to 14.8% in 2019. Some banks have an investment/total ratio. assets are quite high, which are banks in group 2 and group 3 such as: Ocean, Hai, Bao Viet, Tien Phong....

Table 3.10: Ratio of total investment/total assets of commercial banks in Vietnam Period 2015-2019

Unit: %

TT

Source: Compiled from reports of the State Bank of Vietnam and audit companies over the years

3.2.3.2. Current status of bond investment structure

Table 3.11: Bond investment structure of Vietnamese commercial banks by product Period 2015-2019

Unit: %

TT

Source: Compiled from reports of the State Bank of Vietnam and audit firms over the years

In recent years, the bond investment activities of commercial banks have focused mainly on government bonds (accounting for about 50%), the rest are corporate bonds and bonds of other credit institutions. The ratio of bond investment to total assets of commercial banks tends to decrease, from 20.66% in 2015 to 14.8% in 2019. In which, the biggest decrease is the ratio of capital invested in bonds. corporate bonds with a decrease of over 50%, (from 5.85%/total assets to 2.57%), while the rate of investment in government bonds decreased slightly and investment in bonds of other credit institutions remained unchanged. much.

* For government bonds

Table 3.13: Government bond investment results of Vietnamese commercial banks in the primary market Period 2015-2019

Year

Source: Hanoi Stock Exchange

In the period 2015-201, the group of members of the bidding are commercial banks with the largest bond purchase volume, accounting for more than 0% of the total volume of bonds issued by bidding. This is also the main investor group in the market with the proportion of winning volume always accounting for over 80%. However, from 2018 to now, the proportion of winning volume of commercial banks has decreased sharply due to the more active participation of the market from insurance companies.

Table 3.14: Government bond investment results of Vietnamese commercial banks in the secondary market (period 2015-2019)

Unit: billion VND

TT

Source: Hanoi Stock Exchange

On the secondary market, the government bond investment activities of commercial banks are carried out through Outright and Repos transactions (of which 28 commercial banks are trading members). Along with the growth of Repos transaction size of the market, Repos transactions of commercial banks also tended to increase continuously from 33% in 2015 to 53% in 2019, accounting for 57% in 2018 alone. Investment activities through Outright transactions of commercial banks tend to decrease, from 6% in 2015 to 4% in 2019.

In the past 5 years, commercial banks have mainly invested in medium-term government bonds. Particularly in 2019 there was a big change in investment structure, long-term investment increased from 5% in 2015 to 82% in 2019. This is due to a change in the Government's capital mobilization orientation with the goal of restructuring. restructuring the public debt portfolio in the direction of extending the loan term of the state budget, enhancing the sustainability of the debt portfolio.

Table 3.15: Government bond investment structure of Vietnamese commercial banks in the period 2015-2019 (by bond term)

Unit: %

TT

Source: Hanoi Stock Exchange

* For corporate bonds

The ratio of corporate bond investment to total assets of the entire banking system tends to decrease over the years, from 5.85% in 2015 to 2.5% in 2019. Banks have a ratio of corporate bond investment / Total assets are quite high, usually banks in group 3 such as: Ocean, Global Oil and Gas, Vietnam Construction, Maritime... Banks in group 1 and group 2 have a high rate of investment in corporate bonds. industry is usually average, or low.

Table 3.16: Investment ratio of corporate bonds to total assets of Vietnamese commercial banks in the period 2015-2019

Unit: %

TT

Source: Compiled from reports of the State Bank of Vietnam and audit firms over the years

* For bonds of other credit institutions

The ratio of investment in bonds of other credit institutions to total assets of the whole banking system tends to be relatively stable over the years, from 4.85% in 2015 to 5.02% in 2019. Some banks has a relatively high rate of investment in bonds of other credit institutions/total assets

such as: Ocean, Global Oil and Gas, Vietnam Construction, Maritime... While these banks have a high investment rate in corporate bonds, the banks in group 1 have a low investment rate.

Table 3.17: Investment ratio in bonds of other credit institutions/Total assets 2015-2019

Unit: %

TT

Source: Compiled from reports of the State Bank of Vietnam and audit firms over the years

3.2.3.3. Income from bond investment activities

Due to difficulties in collecting data on income from bond investment activities of each bank, NCS calculates income from bond investment activities based on the size of each bond investment of the whole system. banking system in each year and the average interest rate of bonds announced by HNX.

Table 3.18: Average interest rate earned by commercial banks from investing in government bonds for the period 2015-2019

Unit: %

TT

Source: Hanoi Stock Exchange and author's calculation

3.2.3.4. Legal compliance in bond investment

Most Vietnamese commercial banks maintain a CAR ratio of over 9%, complying with current laws on bond investment conditions as well as regulations on capital adequacy ratio, bad debt ratio, etc. However, in the period 2015-2019, 03 joint stock commercial banks were acquired by the State Bank for 0 dong in 2015 (Vietnam Construction Bank, Global Petroleum Bank, Ocean Bank) and 01 bank under the control of the State Bank of Vietnam. Special Control (Dong A Bank) does not exist

transparent information on financial situation, lack of information on safety ratio regulations, especially some banks with bad debt ratio above 3%..., these banks still maintain investment activities and are the banks with the highest ratio of corporate bond investment/total assets in the system. Therefore, there is a need for a review of the above banks, especially in the current context of risky corporate bond investment activities.

3.2.4. Research on bond investment activities of some Vietnamese commercial banks

In order to have more bases and practical arguments for assessing the actual situation of bond investment activities of Vietnamese commercial banks, the researcher has selected case studies at three banks:

- Vietnam Joint Stock Commercial Bank for Industry and Trade represents group 1: The group with the largest scale of assets and equity, but average business performance in the system, has a long business history (successful success). established in 1988).

- Military Commercial Joint Stock Bank represents group 2: group with medium size of assets, equity capital, but high business efficiency in the system, medium operating time (last established. 1994).

- The Public Commercial Joint Stock Bank represents group 3: The group has the lowest asset size and equity and the lowest business efficiency in the system, with a short operating period (established at the end of the year). two thousand and thirteen).

Each bank has been researched by the author of the thesis on three common logics, which are: (i) The practice of issuing internal documents on bond investment; (ii) Organizational model of bond investment activities; and (iii) Bond investment results.

3.3. RESEARCHING THE IMPACT OF BOND INVESTMENT ACTIVITIES ON THE PERFORMANCE OF COMMERCIAL BANKS

3.3.1. Research models and methods

- Model:

- Income approach:

Bank Risk (or Profitability) i,t = α 0 + α 1 × LoanInc/OpInc i,t + α 2 × ComInc/OpInc i,t + α 3 × Trad/OpInc i,t + α 4 × Controls t + v i + i,t

The asset-based approach :

Bank Risk (or Profitability) t = β 0 + β 1 × Loan/TA i,t + β 2 × Trade/TA i,t + β 3 × Controls

t-1 + v i + it

In which Bank Risk or Profitability are the dependent variables ROA, ROE respectively to measure business performance and Z-Score to measure the bank's risk.

Controls are control variables in the model, specifically including: TA - Bank size;

LOAN - The ratio of outstanding loans to total assets; EQUITY - Equity to total assets ratio;

COST - The ratio of operating expenses to total assets; DTL - Ratio of customer deposits to total liabilities;

GDP - Economic growth; INF - Inflation rate.

- Data: data of 30 commercial banks in Vietnam in the period from 2009 to 2019. The financial indicators of commercial banks are taken from Bankscope data source, the indexes represent the Macroeconomic characteristics of Vietnam's economy are obtained from IMF data.

- Data processing and analysis methods: descriptive analysis; correlation coefficient analysis, regression analysis according to FEM, REM and GMM models, Hausman test.

3.3.2. Results and data analysis

- The results of GMM regression analysis show that Trad and Loan have a positive effect on ROA, ROE, and have a negative effect on the bank's risk index. This result shows that if these two factors increase, it will reduce the risk for the bank.

- Thus, the bond investment activities of commercial banks in recent years still ensure the core objectives, help increase the bank's income, at the same time disperse risks and enhance liquidity for the bank. .

3.4. GENERAL ASSESSMENT OF THE STATUS OF BOND INVESTMENT ACTIVITIES OF COMMERCIAL BANKS IN VIETNAM

3.4.1. Achievements

Result:

- Bond investment activities contribute to diversifying business activities, increasing income, contributing to ensuring liquidity safety for the bank.

- Basically, commercial banks comply with the State Bank's current regulations on conditions and limits for bond investment.

Reason:

- Most banks have issued internal documents regulating bond investment activities. Faced with the complicated movements of the market and the risk warnings of the SBV, a number of commercial banks have recently stipulated restrictions on investment in corporate bonds issued for the purpose of restructuring corporate debts; do not invest in the primary market for bonds issued by credit institutions.

- The regulations of the State Bank on conditions and limits in bond investment are becoming more and more complete.

- The bond market is growing, creating certain advantages for commercial banks in implementing investment activities.

3.4.2. Limited and causes

3.4.2.1. Limitations and shortcomings

First , the average size of bond investment tends to decrease. In particular, some commercial banks have a very high investment scale, exceeding the average threshold of the whole system as well as the common average of banks in the world (from 1/5-1/3 of the total number of banks). asset value). The fact that the bond investment is too large can lead to increased risk exposure and change the nature of the operation of a commercial bank to that of an investment bank.

Second , the investment strategy of some Vietnamese commercial banks is going against the popular investment strategy in the world.

Third , investment in corporate bonds in commercial banks has many potential risks.

Fourth , the fact that commercial banks invest in bonds of other credit institutions inevitably leads to a large amount of capital running around in the banking system.

3.4.2.2. The cause of the restriction

* Subjective reasons

- Although most banks have issued regulations on bond investment, there is no detailed regulation on investment limit for each type of bond, especially the regulation on bond purchase limit of enterprises belonging to affiliated companies. risky business lines or investment in bonds issued by enterprises for the purpose of debt restructuring.

- Strategy, implementation process, risk management method in bond investment in some banks are still simple and inadequate. The risk management of some commercial banks, especially small banks, only stops at controlling the compliance with the operating procedures performed by the internal control department, risk assessment and measurement, and recommendations. Solutions to limit risks have not been focused on by commercial banks.

- Human resources for the field of bond investment activities are still thin, a part has not been properly trained and experienced, so it is not professional.

* Objective reasons

- The State Bank has not yet issued regulations on the limit on investment of commercial bonds by commercial banks in risky business sectors and fields, as well as regulations on the ratio of bond investment to total assets.

- The bond market has not yet developed, as shown in the following points: (i) The size of Vietnam's bond market has grown in recent years, but compared with developed government bond markets, the size of the bond market has grown. Vietnam Government bond market size is still small; (ii) Market information and technology infrastructure are still limited; (iii) There are no credit rating agencies in the market, and the market-making role of financial intermediaries is still very limited; and (iv) The legal environment for the operation of the bond market is not yet complete.

CHAPTER 4:

ORIENTATION OF BOND investment activities of VIETNAM COMMERCIAL BANKS AND SOME SOLUTIONs, RECOMMENDATION

4.1. ORIENTATION FOR DEVELOPMENT OF VIETNAM BOND MARKET AND BANKING INDUSTRY PERIOD OF 2021-2025, VISION 2030

4.1.1. Development orientation of Vietnam's bond market

4.1.1.1. Opinion

Firstly, to build and develop a bond market in accordance with the development level of the economy, in sync with other components of the financial market (stock market, money market - bank credit). row).

Second, develop the bond market in both breadth and depth, ensure system safety, approach international practices and standards, and modernize market infrastructure, making the market a become an important medium and long-term capital mobilization channel for the economy with reasonable capital costs.

Third, continue to focus on developing the government bond market as a foundation for the development of the bond market; promoting the development of the corporate bond market, creating favorable conditions for enterprises to mobilize capital, especially medium capital.

and in the long term, contributing to strengthening corporate governance and information disclosure.

Fourth, strengthen publicity, transparency, and protect the legitimate interests of market participants.

4.1.1.2. Target

- Overall objectives

To develop a stable bond market with a complete and synchronous structure of supply and demand factors; expanding the investor base, increasing the scale and quality of operations, diversifying products and operations, ensuring the market operates openly, transparently and effectively. Actively integrating into the international market, each convention approaches international standards and practices.

- Detail goal

Bring the outstanding debt of the bond market to about 65% of GDP by 2030, of which the outstanding balance of the government bond market, government-guaranteed bonds and local government bonds will reach about 45% of GDP by 2030, outstanding debt in the corporate bond market will reach about 20% of GDP by 2030. Strive for the average maturity of the portfolio of domestic government bonds in the 2021-2030 period to reach 7-8 years.

Increase the trading volume of government bonds, government-guaranteed bonds and local government bonds, on average, to 2% of the outstanding balance of listed bonds by 2030. Increase the proportion of government bonds due to Insurance companies, social insurance, pension funds, investment funds and non-bank financial institutions hold 60% by 2030.

4.1.1.3. Oriented development

- Develop a variety of bond products according to the roadmap suitable to the development of the market and the needs of investors.

- Developing and diversifying the investor system.

- Developing a system of market makers, intermediary institutions and market services.

- Developing and improving the quality of the market information system.

- Completing regulations for goods and market participants.

4.1.2. Development orientation of Vietnam's banking industry

4.1.2.1. Target

Striving for 100% of commercial banks to apply Basel II according to the standard method, piloting the application of Basel II according to the advanced method at the State-owned commercial banks holding controlling shares and the joint stock commercial banks with good governance quality has been completed. applying Basel II according to the standard method;

There are at least 2-3 commercial banks in the top 100 largest banks (in terms of total assets) in Asia (2025); 3-5 banks listed shares on foreign TTC (2025); reaching the development level of the group of 4 leading countries in the ASEAN region by 2025, towards financial inclusion by 2030;

The proportion of income from non-credit service activities in the total income of commercial banks is about 16-17%; Bad debt of the whole system of credit institutions is less than 3%.

4.1.2.2. Oriented development

- Developing modern banking products and services, creating a basis for improving access to banking services.

- Diversify banking service supply channels, promote the development of modern banking transaction channels.

- Developing a system of credit institutions that are capable of competing in the domestic market, each

treaty to improve international competitiveness.

4.2. ORIENTATION OF BOND investment activities of VIETNAM COMMERCIAL BANKS IN 2021-2025, VISION 2030

4.2.1. Forecasting advantages and disadvantages in bond investment activities of Vietnamese commercial banks

4.2.1.1. The advantages

Firstly , with the increasingly diversified development of bond products including traditional and new products, and derivatives, commercial banks will have many opportunities to choose the type of bond that is suitable for their investment strategy. individual banks.

Second , with the orientation "Transforming the business model of commercial banks in the direction from "credit monoculture" to the model of diversifying non-credit banking products and services" (Decision No. 986/QD-TTG). and 34/QD-NHNN); and "Adjusting the regulation on government bond holding ratio of credit institutions towards abolition" (Decision No. 1191/QD-TTg), commercial banks will have the opportunity to raise the investment ratio and increase the initiative and flexibility when choosing and deciding to invest in bonds.

She is the development of intermediary institutions such as the system of market makers, securities companies, fund management companies, etc., along with increasingly complete market services and systems. Bond market information will be improved in the direction of becoming more complete and transparent... are good conditions for commercial banks to make more accurate bond investment decisions, limiting potential risks...

Fourthly , in recent years, the legal framework on the bond market and bond investment activities of commercial banks has been continuously promulgated and revised by state management agencies, contributing to creating a full legal basis. and clearer for commercial banks when participating in this business. With the regulations on the conditions for corporate bond issuance issued in Decree 81/2020/ND-CP dated July 9, 2020, contributing to improving the quality of goods - corporate bonds, thereby contributing to limiting risks for investors, including commercial banks.

4.2.1.2. Difficulties and challenges

Firstly , the development and diversification of the investor system will inevitably increase competition in the market. In that context, the staff in the bond investment and trading departments of some banks have not been properly trained, and/or participated in part-time bond investment activities. Besides, some commercial banks have not really focused on developing the risk research & control department (Middle Offices) in bond investment and trading activities. The number of staff in this department is both small and concurrently holds many positions in commercial banks. This is really a big challenge for some commercial banks that cannot be solved in the short term.

Secondly , besides the majority of Vietnamese commercial banks that have ensured the conditions for investment in corporate bonds according to current regulations, there are still banks that have not yet issued internal documents on bond investment, the basis The infrastructure and technology level are still weak..., so it is not possible to fully support the bond trading business.

Third , the risk management of some commercial banks, especially small banks, still has many shortcomings. Conventions in the process of risk detection, monitoring and treatment are also not clearly and consistently specified.

4.2.2. Viewpoints and orientations for bond investment of Vietnamese commercial banks