Thursday, July 27, 2017

Outside investors sought for Citizens Bank

The Ministry of Commerce will further reduce its stake in Myanmar Citizens Bank to allow the public to boost ownership, according to senior officials at the bank.

Myanmar Citizens Bank senior general manager U Myo Myint Aung. Photo: Naing Wynn Htoon / The Myanmar TimesMyanmar Citizens Bank senior general manager U Myo Myint Aung. Photo: Naing Wynn Htoon / The Myanmar Times

The ministry has already reduced its share in the bank from 55 percent in 2012 to 30pc, with further reductions planned, said senior general manager U Myo Myint Aung.

Founded in 1992 by the Ministry of Commerce, its initial role was to process foreign exchange for exporters, at a time when two state banks were the only ones that offered the service. Since 2011, the Central Bank of Myanmar has eased rules on what banks are allowed to handle foreign exchange, meaning the industry has become much more competitive.

The ministry has decided not to add more capital to the bank than the existing K5.1 billion (US$4 million) it has put in and is seeking further outside investors.

“The ministry set it up as a public bank for traders, but its assets have gradually decreased according to the [bank’s] central controlling policy,” said U Myo Myint Aung.

While the Ministry of Commerce is gradually reducing its ownership, it is still the single-largest shareholder. Efforts to increase public ownership have not been too easy, however.

Customers often would rather place deposits than buy shares, and the bank also has a responsibility to ensure its would-be shareholders’ money is clean.

“It’s businesspeople who pay tax regularly who become our shareholders,” he said.

The bank’s current shareholders, apart from the ministry, are small business owners in areas such as manufacturing and the service industry, as well as pensioners. Myanmar Citizens Bank spends plenty of time complying with the law’s anti-money laundering requirements, working on monitoring, reporting and training of staff to get them up to international standards.

The ministry told us this year they will stop adding more shares said U Myo Mint Aung.

Their current stake is K5 billion, and they will favour more shares from the private sector, which means their future stake will be reduced.

Myanmar Citizens Bank intends to have K50 billion in capital to add four more branches this fiscal year, representing significant expansion plans. The bank had only two branches with total capital of K4.7 billion in 2009, which it raised to K37 billion by last financial year, with 16 branches.

The bank aims to invite in a number of investors rather than regularly selling small amounts of shares, he said.

The bank is also looking at internal upgrades. It already provides domestic and international payment services, as well as reformed its ICT infrastructure to put in a core banking system.

U Myo Myint Aung said there are also plans to offer more banking products and add trade services. It is working to upgrade services, improve staff training and hire foreign experts. The bank has already discussed plans with Singaporean banks which have local branches to cooperate.

“We will not stand as an individual. We will cooperate with a foreign bank in the future,” he said.

“But if we can’t do that individually, we will help each other with what we can in the industry.”