Thai banks with representative offices in Myanmar have a strong interest in applying for restricted-services licences, after that country recently opened up for such applications from foreign banks for the first time.
Four Thai banks have representative offices in Myanmar – Bangkok Bank, Krungthai Bank, Siam Commercial Bank and Kasikorn-bank. If they can obtain the banking licences, they will be able to receive deposits and provide loans, unlike now when they can only provide consultancy services.
The Central Bank of Myanmar plans to make between five and 10 licences available this year for limited banking services. Only the 42 banks that have already opened representative offices are allowed to submit expressions of interest to win the restricted banking licences.
Of the four Thai banks in Myanmar, Bangkok Bank has the longest history in the country, setting up a representative office in 1995. The other three established representative offices in the past two years.
Kittiya Todhanakasem, first senior executive vice president of Krungthai Bank, said it was hoping to obtain a full branch licence eventually.
She said the competition in Myanmar was intense as there are 42 foreign banks with representative offices but not all will receive a licence. However, KTB will put its best effort into obtaining one.
“We are interested in opening a full branch there to serve clients, as many businesses are waiting for the bank’s services,” she said.
Siam Commercial Bank will submit an application next month, said Kamalkant Agarwal, adviser to chairman of the executive committee. There is a lot of competition because many banks are interested in applying for a licence but no more than 10 will get one, he said.
Myanmar is a high-potential market, in which SCB is interested in the energy and infrastructure sectors.
Teeranun Srihong, president of Kasikornbank, said it would submit its proposal for a licence soon.
The licensees are expected to contribute to the development of the domestic banking sector by letting foreign banks participate in the interbank market. They will not be allowed to do retail banking.
Based on the World Bank’s recommendation, a minimum paid-up capital of US$75 million will be required of the selected foreign banks.
According to Thailand’s Board of Investment, as of the end of March, Thailand was the second-biggest investor in Myanmar with total accumulated value of $10.09 billion.
More than half of foreign direct investment in Myanmar is in the power sector, followed by manufacturing at 21 per cent and 10 per cent in transport. Of Thai direct investment in Myanmar, 78 per cent is in mining and quarrying, followed by financial and insurance activities at 17 per cent.
Source: Myanmar ELEVEN