Officials aim for foreign banks to be introduced as early as this year, though questions still surround the process that could see up to 10 international banks licensed in Myanmar.
Letters were sent to foreign banks with a domestic presence requesting expressions of interest by May 30. Lawmakers have since suggested hiring a foreign consultancy to oversee the licensing process, with Roland Berger seen as a candidate after running a similar process for 2013 telecoms tender.
Allowing foreign banks is a controversial move in Myanmar, with some claiming it will ease access to capital restrictions faced by businesses and others saying they could out-compete domestic banks.
U Win Myint, secretary of parliament’s Bank and Monetary Affairs Development Committee, said that likely between five and 10 licences will be issued this year, adding there is currently talk about hiring a foreign consulting agency to oversee the process.
“The process will take some time,” he said. “We hope foreign bank entry can start at the end of 2014, or just after.”
Senior officials from the Central Bank of Myanmar – the body that grants licences to banks – declined to reveal more information about the tender, claiming they want to ensure the information does not harm any of the concerned parties.
Myanmar’s existing domestic banks have been vocal in their opposition to too much foreign banking presence, with some officials claiming they could crowd out domestic players at a time where they are just beginning to be able to expand.
Economist U Khine Htun said there will be some negative effect on big and small local banks.
“However, CBM regulations such as market limitation for foreign banks could mitigate the negative effects,” he said. Local banks could also expand by becoming public companies and selling shares, he added.
Myanmar has 35 foreign representative offices. A number are state-run trade banks while the rest are a mixture of regional and international commercial banks.
The Bangkok Post reported on June 16 that four of Thailand’s largest banks are aiming for Myanmar licences. Bangkok Bank, Siam Commercial, Krung Thai Bank and Kasikornbank all have Yangon representative offices.
Other foreign banks have told The Myanmar Times they would like to play a larger role in Myanmar.
“I really appreciate the process that invites foreign banks to the local market, we hope there will be sufficient policies for us to contribute to the development of local society,” said Yoshiyuki Morii, chief representative of Sumitomo Mitsui Banking Corporation.
International Monetary Fund official Matt Davies, who led an Article IV consultation team in Myanmar from June 4 to 17, said at a press brief the while the fund has no position for or against foreign banks, it is working closely with the Central Bank to implement their chosen policy.
“It is important this is done in a way that works for the good of the country, promotes investment and growth and minimises risk,” he said. “The most important element of this is a solid regulatory regime by the Central Bank long-term.”
Parliament officials also complained the committee to license banks is unbalanced because six of the nine members are Central Bank officials, with no representation from existing commercial banks. However, Central Bank director Daw May Toe Win said this came in accordance with the rules of the existing laws governing financial institutions, according to television reports. – Additional reporting Jeremy Mullins
Source: MYANMAR TIMES