Myanmar says to grant foreign banks licences by end-Sept

By Jared Ferrie

YANGON, May 30 (Reuters) - Myanmar will grant foreign banks
limited operating licences by the third quarter of this year, in
a bid by the country's semi-civilian government to attract
foreign investment into an economy just emerging from decades of
military rule.

An official document sent to more than 30 foreign banks with
representative offices in Myanmar, and seen by Reuters, shows
that as many as 10 foreign banks will be allowed to set up one
branch each to provide restricted services, including granting
loans to foreign corporates.

Lending to local companies will require the foreign banks to
cooperate with local institutions, the document shows.

Foreign banks with representative offices in Myanmar include
Standard Chartered (HKSE: 2888.HK - news) , Thailand's Siam Commercial Bank
, Singapore's Oversea-Chinese Banking Corp.,
the Australia and New Zealand Banking Group, the Korea
Exchange Bank (Other OTC: EXSR - news) , and Japan's Sumitomo Mitsui Banking
Group.

"Licensees are expected to contribute to the development of
the domestic banking sector, notably but not exclusively by
participating in the interbank market, by lending to domestic
banks to support their financing activities of domestic
corporates," the document added.

A licensing panel will review applications by July 6 and
award five to 10 licences by the end of September, the document
says. Consulting firm Roland Berger will oversee the process.

Based on a recommendation from the World Bank, a minimum
paid-in capital of $75 million will be required by selected
foreign banks, the document showed.

DOMESTIC CONCERNS

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.

A senior government official, who declined to be named due
to the sensitivity of the subject, said foreign banks would help
spur economic development as well as modernise the domestic
banking system.

"It's definitely going to require foreign banks to give
capacity building to local banks," the official said.

The tender has triggered concerns among domestic banks and
lawmakers, who say the domestic financial sector is too immature
to deal with foreign competition.

The government official said a "strong parliamentary
committee" had already said it was opposed to allowing foreign
banks to operate in Myanmar, but added that the process was
unlikely to be derailed.

"Local (Frankfurt: OTQ.F - news) banks are not to be marginalised," he said.

Last year, a group of parliamentarians tried unsuccessfully
to intervene at the last moment to prevent telecommunication
licences from being awarded to Norway's Telenor (Other OTC: TELNF - news) and
Qatar's Ooredoo.

(Editing by Miral Fahmy)

Source: http://www.news.myanmaronlinecentre.com/2014/05/31/myanmar-says-to-grant-foreign-banks-licences-by-end-sept/