Myanmar could let foreign banks buy stakes in local lenders

(Reuters) - Myanmar's government has signalled it could let foreign banks buy stakes in local lenders as it worries that resistance by domestic banks to joint ventures could hamper plans to attract investment and rebuild the financial system.

The government is finalising regulations to allow foreign banks to begin operations through joint ventures, Deputy Finance Minister Maung Maung Thein said, although he noted some local banks did not want to do this.



The government was also considering permitting foreign banks to buy stakes in local banks, he said in an interview at a banking conference held in Yangon this week, although he gave no timeline for either scenario.

"Our country needs financing, so by letting foreign banks come in, or by letting them buy our equity, then foreign financial input will come in," Maung Maung Thein said.

Foreign involvement would help reform the antiquated banking system in Myanmar, Asia's second-poorest country after Afghanistan, which has been looking to attract foreign investment since a quasi-civilian government took office in 2011 after half a century of military rule.

More than 30 foreign banks have representative offices in Myanmar, including Standard Chartered (STAN.L), Bangkok Bank BBL.BK, Siam Commercial Bank SCB.BK and the Australia and New Zealand Banking Group (ANZ) (ANZ.AX).

Rajesh Ahuja, ANZ's chief representative in Myanmar, said his bank would only consider a joint venture if it had a majority stake.

"International banks like ANZ prefer to have a full banking licence compared to a joint-venture structure," he said.

Four leading Myanmar banks -- Kanbawza Bank, Cooperative Bank, Asia Green Development Bank and Ayeyarwady Bank -- told Reuters they were not in talks about a joint venture.

Another, Myawaddy Bank Ltd, would only consider one if it had a majority stake, Deputy Managing Director Yu Lwin said. "If we do not get the majority, how do we go forward?" he asked.

Yu Lwin noted another challenge to the government plans: Myawaddy Bank is under United States sanctions because shareholders are current or former members of the military. He said the bank hoped eventually to go public and no longer have some of its shares owned by the military.

Only four of Myanmar's banks are allowed to do business with U.S. companies. In February, the Treasury Department issued a general licence to the Myanma Economic Bank, Myanma Investment and Commercial Bank, Asia Green Development Bank and Ayeyarwady Bank.

source: Reuters
http://uk.reuters.com/article/2013/07/18/uk-myanmar-banking-idUKBRE96H0H820130718