The International Finance Corporation, the World Bank’s private-sector investment arm, has agreed to provide Yoma Bank Ltd with a US$5 million convertible loan and help improve its risk management and corporate governance to support its growth strategy, the IFC said on September 16.
It said its loan would help Yoma Bank expand lending to small and medium-sized enterprises (SMEs), which it described as “a sector of Myanmar’s economy in desperate need of financing to grow and create more jobs”.
The loan is the first step in IFC’s financial support for the bank, which may be further increased to up to $30 million in coming years in the form of equity, senior debt and trade guarantee lines under IFC’s global trade finance programme, a statement from the IFC said. Additional support for Yoma Bank will be subject to further due diligence and subsequent approvals from IFC’s management and board, it said.
“As Myanmar emerges from years of isolation, the demand for financial services in the country is huge. More than 70 per cent of adults do not have formal access to credit, deposit, and other financial services, such as insurance and remittance; only 5 per cent of adults have a bank account in their name,” the statement said.
Yoma Bank CEO Serge Pun said, “Yoma Bank is proud to grow its business in partnership with the IFC to support SMEs in Myanmar, which are critical for the country’s economic and social development. It is our aim to be a leading SME bank in the country and to contribute toward developing a vibrant SME sector.”
He also said that loan amounts are not important in small loans, but the type of businesses the loans are given to is important.
The IFC will also advise Yoma Bank on identifying and installing a core banking system, enhancing its risk management and corporate governance, and developing new products and delivery channels for SMEs over the next three years. “Yoma Bank will also develop policies and procedures to identify and manage environmental and social risks associated with the business activities it finances,” the IFC statement said. It said that its investment and advisory support was expected to help Yoma Bank provide 1,000 more loans worth $370 million to SMEs in Myanmar by 2019.
“IFC puts a strategic focus on supporting the development of Myanmar’s financial and banking sector as banks are critically important in helping entrepreneurs grow their businesses and contribute to the overall economy,” said Karin Finkelston, IFC’s vice president for Asia Pacific. “IFC supports Yoma Bank and other lenders to develop environmental and social sustainability and standards and governance structures that will help them integrate into the international banking community and better serve the needs of Myanmar’s small and medium enterprises.”
Founded in 1993, Yoma Bank is one of Myanmar’s leading fully licenced commercial banks with 2,300 employees and more than 50 branches. The IFC statement said Yoma is “recognised as one of the most progressive banks in Myanmar and is leading an effort to bring responsible banking to the country with a strong emphasis on good corporate governance and conservative capital-ratio policies”. The lender is well positioned to support Myanmar’s continued economic growth, it added.
The IFC, together with the World Bank, say they are supporting reforms and investments in Myanmar to strengthen the private sector and create jobs to reduce poverty and boost “shared prosperity”. The IFC said it aims to improve the country’s investment climate, access to finance, and infrastructure, with an initial focus on the power and telecommunications sectors.
Source: ELEVEN MYANMAR