The Central Bank of Myanmar (CBM) continues to take steps towards liberalising the banking and finance sector.

Foreign equity allowed in Myanmar domestic private banks

Pursuant to Circular Letter 1/2019 dated 29 January 2019, local private banks are now able to accept up to 35% equity investments from foreign banks and financial institutions. Local private banks that wish to accept foreign investments under the Circular must submit the requisite documents (including the agreement describing the equity investment ratio and the terms and conditions of the investment) to the CBM for CBM's review and approval.

Any such foreign equity investment arrangement between a local private bank and the local branch or subsidiary of a foreign bank (which has been allowed to carry out business in Myanmar's banking sector) will have to comply with the Financial Institutions Law of Myanmar (in particular, the cross-holding restrictions under section 61).

Top local private banks include: Kanbawza Bank, United Amara Bank, Co-operative Bank, Ayeyarwady Bank, Yoma Bank and Asia Green Development Bank.

Central Bank of Myanmar (CBM) allows foreign banks to carry out more services, including providing retail services

Following CBM Directive 6/2018 (which allows foreign bank branches to provide financing and other banking services to local companies, in cooperation with foreign companies and local or foreign financial institutions, but did not allow foreign bank branches to offer retail banking services), the CBM has announced that foreign bank subsidiaries will be permitted to provide retail banking services and products.

Foreign bank subsidiaries, which are set up pursuant to Circular 1/2019, are distinguished from foreign bank branches. U Soe Thein reportedly commented that the CBM is working towards granting foreign subsidiaries full permission to function as local banks, and that foreign subsidiaries will be given more opportunities than foreign bank branches.

The move to allow foreign bank subsidiaries (with up to 35% foreign equity) to operate as local banks is in line with the new Myanmar Companies Law that allows a company with up to 35% foreign shareholding to be considered a local company.

The prospects and potential for foreign investment in the banking sector appears to be positive. Deputy Governor U Soe Thein said during a press conference on 17 May 2019 that the CBM "will allow more foreign banks to open up" in Myanmar to improve local businesses' access to financing.

The CBM has in recent months allowed 13 foreign banks currently operating in Myanmar to open new branches and also removed restrictions prohibiting them from lending to local businesses. The restrictions were lifted to enable local businesses to gain better access to loans for expansion and to improve their financial conditions.

The 13 foreign banks with approval and license to operate branches in Myanmar are:

  1. MUFG Bank Ltd
  2. Overseas-Chinese Banking Corporation Ltd
  3. Sumitomo Mitsui Banking Corporation
  4. United Overseas Bank Limited
  5. Bangkok Bank Public Company Limited
  6. Industrial and Commercial Bank of China
  7. Malayan Banking Berhad (Maybank)
  8. Mizuho Bank Limited
  9. Australia and New Zealand Banking Group Limited
  10. The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)
  11. Shinhan Bank
  12. E.Sun Commercial Bank Limited
  13. State Bank of India

Branches are distinguished from representative offices. Foreign banks without license / approval to operate branches in Myanmar typically set up representative offices in Myanmar (e.g. Standard Chartered Bank, Development Bank of Singapore, Bank of China).

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