Local lender Myanmar Oriental Bank will receive a $7 million convertible loan from the World Bank’s private lending arm International Finance Corporation (IFC) to expand financing for small and medium enterprises in urgent need of capital to grow their businesses.
“IFC’s investment enables Myanmar Oriental Bank to better serve the needs of Myanmar’s small and medium enterprises,” said U Mya Than, chairman of Myanmar Oriental Bank.
“The much-needed additional capital, together with IFC’s expertise advice and emerging-market experience, will support us in becoming a leading SME bank in Myanmar.”
As Myanmar’s financial system is still at an early stage of development, more than half of the smaller businesses in the country do not have bank accounts – a figure that is far lower than that of neighbouring countries.
IFC said its long-term financing will help Myanmar Oriental Bank move closer toward its goal of providing more than $200 million in loans to small and medium enterprises, its core client group, by 2019.
The loan complements IFC’s ongoing advisory support to Myanmar Oriental Bank on strengthening its corporate governance and improving its trade-finance operations.
Myanmar Oriental Bank was the first bank in the country to join IFC’s Global Trade Finance Program in early 2014 with a $5 million trade line, which aims to help local companies process their imports and exports, generate more foreign exchange reserves, and create jobs.
IFC said it will also advise Myanmar Oriental Bank on establishing policies and procedures to identify and manage environmental and social risks associated with the business activities it finances.
“IFC looks forward to working with more Myanmar banks to expand financial services and develop systems and governance structures that will allow them to grow sustainably and raise funding from long- term sources,” said Vikram Kumar, IFC’s Resident Representative in Myanmar.
“By supporting Myanmar Oriental Bank, IFC aims to strengthen the bank’s operations and provide long-term capital that will allow it to grow and take advantage of the tremendous business opportunities in the banking sector.”
Source: Myanmar Business Today