Myanmar set to grant foreign bank licenses

Myanmar is preparing to grant up to 10 foreign bank licenses next month, a senior government official said, allowing overseas lenders to start doing business in the country after decades of being frozen out.

The recipients of the highly coveted licenses, which won't be announced until September, will be limited to banking for foreign corporations and foreign-exchange services, according to people close to the licensing process, a move aimed at protecting the country's domestic lenders.

"We are trying not to introduce a severe competitive environment for the local banks," Set Aung, deputy governor of Myanmar's central bank, told The Wall Street Journal. "We cannot afford to have them totally maligned."

Foreign governments, starting with the US in 1988, gradually imposed sanctions on Myanmar after its military government put down pro-democracy uprisings and put thousands of political prisoners behind bars. But the country, which was closed off to foreign investment until 2012, has been economically isolated for five decades, leaving lenders from abroad with only representative offices. Forty-two foreign lenders have representative offices in Myanmar, a country with four state-owned banks and 22 privately owned lenders, the biggest of which is Kanbawza Bank Ltd.

On Monday, Myanmar shortlisted 25 of the 30 foreign banks that applied for the licenses, among them Industrial Commercial Bank of China Ltd., China's largest bank by assets, and Japan's three biggest banks – Mitsubishi UFJ Financial Group Inc., or MUFG; Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc.

Banks from India, South Korea, Australia and Southeast Asia were also on the shortlist, which was disclosed by the government. Among these were two from Malaysia: CIMB Group Holdings Bhd., the country's second-biggest bank by assets, and RHB Capital Bhd., which are in merger talks with a third bank in their home market.

The banks that are awarded these licenses will be allowed to have only one branch and won't be permitted to engage in retail banking. The banks will have their activities limited to corporate banking for foreign investors, say people close to the licensing process.

Foreign banks will also be limited to lending only in foreign currencies rather than in kyat, Myanmar's official currency, and will be restricted from lending to Myanmar-registered companies directly. Overseas banks will be able to lend to these domestic companies only through local financial institutions, via syndicated loans arranged by a group of lenders.

http://www.information.myanmaronlinecentre.com/myanmar-set-to-grant-foreign-bank-licenses/