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[YANGON] Myanmar has granted nine foreign banks, including Singapore's Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB), and three Japanese lenders, approval to operate on a limited basis - a move aimed at spurring foreign investment in an economy emerging from decades of military rule.
The banks will be allowed to set up one branch each and will be able to provides loans to foreign companies but only in foreign currency. Lending to Myanmar companies will require the foreign banks to cooperate with local institutions. "This process has taken a very long time and been incredibly competitive," said Veronica O'Shea, a partner at Herbert Smith Freehills in Singapore.
"These banks were never expecting to get a full licence, as long as they can do a reasonable amount of commercial activity then they will be very happy," she said.
The core banking units of Japan's three biggest banks - Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group - gained licences as did the Industrial and Commercial Bank of China Ltd, according to a government document obtained by Reuters.
Two Singaporean banks, OCBC and UOB, Thailand's Bangkok Bank and Malaysia's biggest lender Malayan Banking Berhard (Maybank) also made the cut.
The bidding process was open to around 40 international banks with representative offices in the country and 25 applied. "Given its size, economic potential and its strategic position between China and India, Myanmar is forecast to be one of the fastest growing economies in the region over the medium term," Andrew Geczy, CEO of international and institutional banking for Australia and New Zealand Banking Group, said in a statement.
Myanmar's banking sector was crippled by decades of mismanagement under military regimes and cut off from much of the global economy due to Western sanctions.
The European Union, Australia and other countries have lifted sanctions in response to widespread political and economic reforms initiated by the reformist, semi-civilian government that took over from a military junta in March 2011.
The approval is preliminary for 12 months during which the banks will need to comply with central bank requirements before it becomes final. A minimum paid-in capital of US$75 million will be required. - Reuters