Tuesday, July 22, 2014

Standard Chartered Bank [withdraws] from Myanmar license race

July 18, The Myanmar Times

Standard Chartered’s decision to not move forward with the licensing process is “a missed opportunity for Myanmar”, according to experts.
The United Kingdom-based bank is perhaps the most notable firm absent from the list of foreign banks that are moving forward with the second part of the licensing process, that ultimately aims to see between five and 10 foreign banks licensed to operate in Myanmar this year.

Large South Korean banks Hana and Woori, as well as several Indian and Bangladesh institutions, are also not on the Central Bank of Myanmar’s list of 25 banks that was released on July 15.

“Standard Chartered has an unrivalled global network amongst the interested banks, and experience-centred methodologies that would have served Myanmar well in accessing global production chains and commodity markets,” said Sean Turnell, a Myanmar-focused economist at Macquarie University.

The restrictions that are to come with the licence proved too onerous for the firm, he said, adding Standard Chartered's absence is “bad for the banks, bad for foreign investors wanting to hedge their kyat exposures, worst for Myanmar.”

“The protectionist backlash [is] just too strong for the reformers to parry.”

The Central Bank of Myanmar received 25 Requests for Proposal (RFP) applications from international banks with Myanmar representative offices by its deadline on July 14. It is part of the second stage of the licensing process, with preliminary winners of the licences expected to be announced by the end of the third quarter 2014.

Foreign banks which receive licences will be restricted to foreign currency trading on a wholesale level at first, government officials have said.

“We have decided that we will not apply for an onshore branch license at this time for commercial reasons,” said the firm’s head of corporate affairs for Thailand and Greater Mekong Raymond Francis.

Standard Chartered first opened its representative office in 2013 to manage trade and investment flows between its international clients and Myanmar, he said. Mr Francis added the firm will remain focused on growing its presence through its representative office.

Several large regional banks also were not on the list. Large South Korea banks Hana and Woori as well as two Indian banks are not proceeding.

There are 42 foreign banks with Myanmar representative offices, though several of them are state-run export-import and development banks, and thought unlikely to be interested in licences. The Central Bank of Myanmar had 30 pre-qualified institutions, though received 25 Requests for Proposals.

Woori Bank chief representative in Myanmar DJ Park told The Myanmar Times that the bank – South Korea’s largest – may get involved in future opportunities to enter the market.

“We did not submit [an application for] a licence at this time,” he said.

A senior Myanmar-based Hana Bank official declined to comment, claiming the Central Bank of Myanmar told him not to speak to media. However, the firm is also thought to have not submitted a RFP application.

None of the Bangladesh banks with Yangon representative offices appeared on the latest list. An official from AB Bank, a Bangladeshi bank with an active Yangon office, did not return request for comment.

An official with another bank that is not on the list said he was not authorised to speak to the press, but his bank had not been able to secure permission from its home central bank in time to meet the Central Bank of Myanmar’s deadline.

The full list of banks not moving forward:

Bangladesh, National Bank, AB Bank, Eastern Bank Brunei, Brunei Investment Bank,

United Bank of India, Bank of India, Ex-Im Bank of India

Maruhan, First Overseas Bank

Hana, Woori, Ex-Im Bank of Korea

Commercial Bank of Ceylon

Bank of Ayudhya

Standard Chartered