Bank of Tokyo Mitsubishi UFJ (BTMU) gears up for real time settlement in Yangon

Bank of Tokyo Mitsubishi UFJ (BTMU) is preparing the systems at its Yangon branch to be “operational-ready” for the Central Bank’s new settlement system.

The Japanese lender, through the Japan International Cooperation Agency (JICA), is working with the Central Bank on its soon-to-be launched Real Time Gross Settlement (RTGS) system, said Go Watanabe, CEO of Asian and Oceania Region.

The system will allow the immediate settlement of large domestic interbank payments.

Rather than physically moving money or using cheques, both the creditor and debtor’s accounts can be adjusted electronically when a transaction is made, making the process much more efficient. The system is due to be introduced by early 2016.

BTMU has seconded staff to the project development team, said Mr Watanabe in an email.

The Japanese bank was the first of nine foreign banks to open its branch office in Yangon this April, becoming the first international lender to begin operations in the country for more than 50 years.

It is now able to provide basic financial services including foreign exchange and derivatives trading, and is preparing to launch a more comprehensive suite of trade finance solutions, said Mr Watanabe.

“I believe these market enhancements will bring about greater convenience and efficiency for both the Myanmar people and businesses,” he wrote to The Myanmar Times.

He said he expects the Central Bank to review regulations governing foreign exchange, which will lead to greater efficiency for cross-border transactions and international settlement.

“Foreign financial institutions will stand to gain several benefits with the easing of regulations, establishment of an interbank market, and the development of local banks in Myanmar,” he said.

BTMU is one of three Japanese banks permitted to offer banking services in Myanmar, and opened its Yangon branch with initial capital of US$100 million. It provides services including deposits, loans and foreign exchange to foreign companies and domestic banks.

Mr Watanabe said competition among the nine foreign banks is to be expected, but that more collaboration is needed for the long-term development of Myanmar’s financial market.

“Given Myanmar’s banking industry is still in its infancy, it would make sense for the foreign banks to pull our knowledge and expertise together to develop the necessary banking and finance related infrastructure to help move it to the next level,” he said.

Under existing regulations, foreign banks in Myanmar can only deal directly with foreign companies, local-foreign joint ventures, and Myanmar domestic banks. They do not yet have access to local retail or corporate clients.

In addition to working with global corporates, Mr Watanabe said BTMU plans to leverage its majority stake in Thailand’s Bank of Ayudhya PCL – known in Thailand as Krungsri – by “tapping its Thai SME segment to further attract investors into Myanmar”.

In both Thailand and Japan, he said, many companies are looking to diversify their investments, and could potentially begin investing in Myanmar.

The bank will also leverage its partnership with Co-operative Bank (CB Bank) especially in the area of transaction banking, he said. BTMU signed an agreement with CB Bank back in 2013, to act as a technical adviser.

The two banks have a joint committee of senior management executives, said Mr Watanabe, which aims to encourage knowledge and relationship sharing.

Source: Myanmar Times

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