Knowledge Highlights 20 November 2019

On 7 November 2019, the Central Bank of Myanmar (“CBM”) announced a new round of foreign bank licensing will be opened to foreign banks with representative offices in Myanmar. The CBM states that a request for the submission of Expression of Interest in relation to the upcoming licensing exercise will be shared with eligible banks.

This will be the third foreign bank licensing exercise conducted by the CBM, with a view to opening the domestic Myanmar banking market to foreign banks. The previous two rounds were conducted in 2014 and 2016 and resulted in a total of 13 financial institutions being granted permission to open a branch and conduct onshore wholesale banking business.

Two types of licenses will be issued in the upcoming round of licensing. Foreign banks may apply for either a Branch Licence or a Subsidiary Licence.

Criteria for Branch Licence

The criteria relating to wholesale banking permissible products and services remains unchanged from the criteria for existing foreign bank branch licences. Licensees will be allowed to establish a single place of business and must have a minimum paid-up capital of US$75 million in order to operate. Of the US$75 million, US$40 million will be “locked-up” for two years with the CBM.

Criteria for Subsidiary Licence

Subsidiary Licence holders will be allowed to conduct wholesale banking activities from the start of operations and must hold a minimum paid-up capital of US$100 million. A foreign bank’s subsidiary will be allowed to establish up to 10 places of business being branches or off-site ATMs. In addition, onshore retail banking activities will be permitted under the Subsidiary Licence from 1 January 2021.

An existing foreign bank branch will be allowed to convert into a subsidiary from June 2020. However, three full years of activities as a branch in Myanmar is required before a request for conversion may be submitted to the CBM. More information on the conversion process will be issued by the CBM in due course.

Shares in Myanmar domestic banks

From 1 January 2020, the CBM may permit, on a case by case basis, foreign bank ownership in a Myanmar domestic bank of more than 35% of the domestic bank’s capital.

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