The Central Bank has not yet granted any foreign banks permission to operate or trade within the country, state media reported last week, following apparent confusion over the establishment of a Myanmar-focused investment bank.
“Some journals reported recently that an investment bank is established in Myanmar firstly,” the state-run New Light of Myanmar newspaper reported on October 13. “At present, the Central Bank of Myanmar hasn’t granted permits to any foreign banking services yet. And the Directorate of Investment and Companies Administration had yet to allow company registration, announced the Ministry of Finance and Revenue.”
A Central Bank official told The Myanmar Times on October 18 that no permission had yet been granted for foreign banks to operate in Myanmar.
The New Light of Myanmar article states that those wishing to run monetary and banking services must have permission from the Central Bank of Myanmar in line with the existing laws.
“We accepted many phone calls from people asking about Mandalay Capital investment bank opening up because they had seen the news online,” said U Win Thaw, deputy director general of the Central Bank.
“We have absolutely denied that this is true and explained that the Central Bank has not permitted any foreign banks to operate in Myanmar,” he said.
“That’s why the Ministry of Finance and Revenue put a notice to explain the situation in state-owned media,” he added.
Bagan Capital also markets itself as “Myanmar’s Investment Bank” on its website. Bagan Capital did not respond to questions regarding this story before deadline.
Mizzima News wrote an article quoting a story in Businessweek in October that Mandalay Capital had established the country’s first investment bank.
The report said Mandalay Capital had been set up by St Kitts businessman Alisher Ali through his Silk Road Finance company, and that it had already raised an investment fund of US$25 million.
Mr Ali, who also chairs Silk Road Finance told The Myanmar Times on October 18 that there has been some “confusion related to a basic understanding of what [an] investment bank is”.
“Please be clear that investment banking is not a commercial bank,” he said by email. “It is a firm that offers advisory or consulting services in the area of corporate finance, capital raising and research.
Mr Ali said Silk Road Finance had never engaged in any negotiations with the Central Bank of Myanmar to open a commercial bank.
“We are clearly aware that the Central Bank has not given any licence for foreign investors to date [and does not have] such plans in the near future.
“Advisory companies around the world engaged in providing investment banking services are regulated by a national regulator equivalent to the US’ Securities Exchange Commission or the UK’s Financial Services Authority. … Please note that such a regulatory agency does not exist in Myanmar yet. When such an agency is established, we will seek approval for obtaining a relevant licence, along with other applicants,” Mr Ali said.
He added that any service company could offer consultancy or advisory services in Myanmar.
Mandalay Capital uses a Yangon-based team that has compiled and published the Myanmar Outlook 2012: A New Dawn for the Golden Land investment guide in recent months. The company has a “focus on sourcing, structuring and closing Myanmar-related deals and investment projects”, says Silk Road Finance’s website.
Silk Road Finance operates in Mongolia, Myanmar and other resource-rich frontier markets, where it offers services that include merchant banking, investment banking and asset management.
There are about 22 representative offices of banks from Japan, Vietnam, Malaysia, China, Thailand and Singapore, and the Ministry of Finance and Revenue allowed joint-ventures in late-June, a banker said last week. He said those banks would probably not be allowed to offer full services until 2014 at the earliest.
The ministry allows representative bank offices before full branch offices are permitted. But even representative offices must first be registered with the Directorate of Investment and Company Administration [DICA].
They must then get Ministry of Finance and Revenue approval before a proposal is forwarded to the Central Bank’s Financial Institution Supervision Department, which makes the final decision, he said.
“If a bank actually opened and we find they are not registered yet, we will take action soon,” he said.
Section 80 of the monetary organisation law says that nobody can run any monetary organisation without the Central Bank’s licence.
Section 82 of that law also states that if he/she is found guilty of breaking the prescriptions of Section 80, he/she will face the fines of K50,000 (or), a five-year prison term (or) both, the New Light of Myanmar said.