Aya Bank plans to open representative offices overseas, while competitor KBZ Bank says it has applied to move into countries such as Japan and South Korea, in a sign that Myanmar’s banks are growing bolder in exploring overseas markets.
If successful, AYA would become the second Myanmar lender to expand beyond national borders – KBZ became the first in May when it received permission from Thailand to open a representative office in Bangkok.
AYA is part of the Max Myanmar Group, owned by tycoon U Zaw Zaw – the group and its owner are both blacklisted by the US Treasury, which may prove problematic for overseas business; although a special licence issued by Washington in 2013 allows the bank to form direct correspondent relationships with US companies.
Deputy managing director David Wang Soe Lin said AYA Bank has been building strong relationships with its counterparts across the region and that overseas expansion will be the next step.
“As of this moment, we are working with our foreign bank counterparts in countries such as Singapore, Malaysia, Thailand and Japan to help facilitate cross-border transactions and advisory,” he said. “We have intentions to move beyond Myanmar and increase our presence in ASEAN in the near future.”
He said local banks need to start building a presence beyond Myanmar to support client needs overseas, though at first AYA Bank, like KBZ, will open representative offices.
“One must understand the difference between a rep office and a branch set-up,” he said. “There is a huge limitation to a rep office whereby it can only function as an information collection point, while a branch licence allows the bank to perform banking transaction and services.”
While dozens of foreign banks have representative offices in Myanmar, the government only started to issue branch licences to international lenders in 2014, initially to nine banks, then to another four at the start of this year.
Meanwhile KBZ, Myanmar’s largest commercial bank, which benefits from being free from US sanctions, will begin to operate its first foreign offices in Bangkok and Singapore within the next month, said senior managing director U Than Cho.
He said KBZ Bank already has permission from all relevant authorities to open representative offices in Bangkok and Singapore and has found office space in both countries.
“We will start to operate both representative offices within this month and we will apply to open a branch after we have six months’ or one year’s experience running an office,” he said, adding that the bank is also applying to open a representative office in Malaysia and hopes to do the same in Japan and Korea.
“With a representative office we will not be able to offer banking services; it will just make it easier for us to make connections with foreign banks. To open a branch overseas is not difficult, we just need detailed documents, and I believe we can do this soon,” he said.
Source : Myanmar Times
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