Myanmar to grant new foreign banking licences in 2016

The entrance of a UOB branch in Yangon, Myanmar.
The entrance of a UOB branch in Yangon, Myanmar.PHOTO: UOB

YANGON (Reuters) - Myanmar will open a second round of foreign bank licensing early next year, its central bank said, in the hopes of attracting further foreign investment into an economy emerging from five decades of military rule and isolation.

Banks from countries that have already been granted licences - Australia, Japan, Malaysia, China, Singapore, and Thailand - will not be eligible for the new licences.

New licences will instead be given to "additional neighbouring and important trading-partner economies," the central bank said.

The move to raise the number of foreign players in Myanmar's nascent banking sector follows the successful granting of nine licences last year, although restrictions remain on what services foreign banks can offer to the nation of 51 million.

Banking services are still limited, and the domestic industry is dominated by financial institutions with ties to the former military regime.

Foreign direct investment in Myanmar reached US$3.58 billion (S$5.05 billion) in the first seven months of the fiscal year, according to data from the Directorate of Investment and Company Administration.

There are hopes a government led by Aung San Suu Kyi's National League for Democracy, which won a landslide in the country's Nov 8 election and will take power next year, will attract more investment to the country.

"Encouraged by this success, the Central Bank of Myanmar will initiate a second round of foreign bank licensing early 2016 aiming at welcoming new foreign banks from additional neighbouring and important trading partner economies," the central bank said in a statement on its website on Monday.

The central bank did not specify how many licences would be granted. It did say banks would be able to provide wholesale onshore banking through a branch office.

Among the winners of licences last year were Singapore's OCBC and UOB, ANZ Banking Group, Australia's fourth-largest lender by assets, Thailand's Bangkok Bank and the banking units of Japan's Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group.

Banks looking to obtain licences next year will need to have a representative office in Myanmar or be in the process of establishing one.