Yangon Weather Forecast, Burma

New banks to lead growth: analysts

FOUR new banks that are expected to open soon are set to play key roles in the economic growth of th e country, several industry sources said last week.

The government recently granted licences to four of the country’s biggest commercial groups, via the Central Bank of Myanmar, to open their own banks.

Max Myanmar is one of the companies preparing to start banking operations and a company spokesperson told The Myanmar Times on June 23 that the four companies were requested by the Central Bank to open their banks on August 1.

Asia Green Development Bank, which is owned by Htoo Group of Companies, held its grand opening ceremony at its headquarters in Nay Pyi Taw on August 6.

The other two new banks, which will be started by IGE and Eden Group, are expected to open soon, according to a number of influential people within Yangon’s banking and business community.

An official from one of the banks said achieving commercial success would depend on earning consumer trust.
“The most important thing in banking is to secure the trust of your clients. It’s essential but it does take time. Without trust and confidence in the bank, people will not come and deposit their money. Without those deposits, we will be unable to offer loans that will help other businesses to grow, which in turn helps the country to develop,” the official said last week.
He added that the bank would remain a private operation and there were no plans to offer public shares.

A retired rector from the Central Bank of Myanmar said banking, along with insurance and shipping, would play an important role in the future development of the country.

U Than Lwin, vice president of the privately owned Kanbawza Bank, said he was pleased to see the new banks open.
“We welcome the emergence of new private banks and deeply appreciate it. There are only about 200 bank branches in total across the country, while other countries have tens of thousands,” he said.

“Banks are vital financial institutions. For example, when a company collapses, it may only affect a small community that relies on it but when a bank fails it often impacts the whole country,” he said.

And it’s for that reason that banks must be established with firm foundations and must religiously follow the rules, he said.
“We are going to provide loans to customers in accordance with rules and regulations set by the Central Bank of Myanmar. None of our sister companies will be eligible to apply for loans from us,” the bank official said.

However, with four new banks opening up at the same time, there is the possibility that there will be competition to recruit experienced staff.

“For the time being, we have recruited senior experts and technicians who have retired from the Central Bank and Myanmar Foreign Trade Bank (MFTB),” the bank official said.

Another director from one of the commercial groups that is to begin banking operations soon said that his company is trying to set up 10 branches by the end 2010 and is scheduled to extend 52 branches across the country eventually.
“For the time being, we are going to open three branches in Yangon once we get a green light,” he said.

Each branch requires about 40 staff members and the company is actively recruiting qualified staff, he added.
“Priority will be given to those who have previous experience in the banking industry,” he said, adding that the company is also recruiting staff with no previous experience but who will be provided extensive training.

He added that the new banks would probably offer on the same services as existing banks, such as current accounts, saving accounts and fixed deposit accounts.

“We are going to operate normal banking services for now – there will be no credit card service yet.”

He added that the bank will be able to accept deposits up to 10 times its paid-up capital, as per Central Bank instructions.
Myanmar Central Bank permitted 20 private banks to form between 1992 and 1997 according to its website. Of those 20, six have now closed – Yoma, Myanmar May Flower, Myanmar Universal, Asia Wealth, Co-operative Promoters and Co-operative Farmers.

 

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