United Amara Bank has moved to head off a potential bank run after U Aung Thaung, father of its majority owner U Nay Aung, was placed on the US blacklist.
U Aung Thaung is a former Minister of Industry and a sitting member of parliament. The United States Treasury placed him on its blacklist on October 31, claiming he is blocking key reforms in Myanmar.
“Aung Thaung is actively attempting to undermine recent economic and political reforms in Burma [Myanmar] and has been implicated in previous attacks on Burma’s democratic opposition,” the Treasury said in a statement.
By being named on the blacklist, US people and corporations will require special permission to do business with U Aung Thaung.
United Amara Bank, as well as the IGE Group conglomerate, is majority owned by U Aung Thaung’s son U Nay Aung. The bank itself is not a target of the sanctions, said United Amara Bank chief executive U Than Win Swe.
While U Nay Aung did not attend a November 4 press conference, U Than Win Swe said at the press conference the bank has adequate reserves to meet withdrawals by customers.
Withdrawals from the bank began outpacing deposits on November 4, with K26 billion (US$22 million) being taken out and K16 billion being deposited, from withdrawals of K41 billion and deposits of K44 billion on November 3.
The bank’s current deposits sit at K440 billion and it has outstanding loans of K230 billion.
“Although there was a K10 billion gap [with more withdrawals than deposits], we are confident in our liquidity ratio and we can manage the situation. Customers don’t need to worry; the Central Bank is also watching,” he said.
Other Myanmar banks have in the past faced runs on deposits triggered by news events.
Market leader Kanbawza bank was faced with a bank run in late 2012 stemming from untrue claims in social media that its chair U Aung Ko Win had been arrested. Kanbawza and the Central Bank of Myanmar then moved to address these concerns and shored up confidence in the bank.
Central Bank deputy director general U Win Thaw said the Central Bank is ready to step in to guarantee United Amara’s deposits if there is a difficult situation.
“We are ready to protect it under the law. We have checked the board of directors, and I can guarantee customers will not lose their money because of any bad reputation of the directors,” said U Win Thaw.
Source: MYANMAR TIMES