Myanmar Oriental Bank aims to improve with IFC support

The International Finance Corporation (IFC) is looking to strengthen its partnership with Myanmar Oriental Bank, according to the bank’s chair U Mya Than.

Although foreign institutions are currently forbidden from owning any part of domestic banks, many expect the laws to change to allow more foreign participation. In the meantime, Myanmar Oriental and the IFC are discussing a convertible loan that could allow the IFC to take an equity stake in the firm.

“We are discussing equity participation in MOB, and have made good progress, to an extent,” he said.

Myanmar Oriental Bank has been running for more than 20 years, being one of the first, along with banks like First Private Bank, Myanmar Citizens Bank and Co-operative Bank, to open their doors following a change in government policy toward private banks in the early 1990s.

U Mya Than said there was a huge gap between what Myanmar businesses required and what state banks were able to provide when Myanmar Oriental Bank set up in 1993. As one of the first private banks that emerged in the early 1990s, it aimed to help fill these holes in the market.

The bank has connections with the local Chinese community. Its founding family has Chinese roots, and connections with other businesspeople in Asian countries such as China, Taiwan and Singapore, with corresponding banking agreements.

There are a total of 25 shareholders in the bank, from various backgrounds. U Mya Than himself was an employee of state-owned Myanma Investment and Commercial Bank before joining the private sector.

Established in 1993, Myanmar Oriental has shared the tumultous history of the banking sector in general.

In 2003, several large Myanmar banks failed in a banking crisis. However, Myanmar Oriental recovered to continue operations. Now with over two decades of experience, it has 26 branches – more than some, but less than KBZ, the market leader, which has over 150 across the country.

U Mya Than said Myanmar Oriental has decided to focus on areas like internet banking and treasuries trading when it becomes available rather than simply adding more branches. It also has made a commitment to ensure 95 percent of financing goes to small and medium enterprises.

“Widening branch networks is a very traditional way of doing business. Domestic banks normally have offered the same products and compete with each other in markets that are smaller than their dignity, but this habit will change,” said U Mya Than.

Myanmar Oriental is aiming for a wide customer base, and also looking to perform more international banking functions, he said.

U Mya Than added that while the Central Bank of Myanmar has eased some restrictions on banking, commercial banks need to upgrade their capabilities while the Central Bank needs to improve from a regulatory standpoint.

The agreement with the IFC is to be partly aimed at improving Myanmar Oriental’s capabilities.

The IFC has already signed a deal for a US$5 million convertible loan with Yoma Bank in September, plus an agreement to improve its risk management and corporate governance.

In February, Myanmar Oriental and the IFC signed an agreement for a $5 million trade finance facility, aiming to assist local companies increase their imports and exports.

U Mya Than said the IFC also provides guarantees for Myanmar Oriental’s letters of credit used in trade financing, as well as assisting with corporate governance and risk management processes.

Source: Myanmar Times

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