Username
Password
Forget Password?
  1. Indices
  2. Commodities
  3. Currencies
Straits Times 3,115.03 -11.06 -0.35%
Hang Seng 25,734.22 +238.76 +0.94%
Dow Jones 25,886.01 +306.61 +1.20%
Shanghai Composite 2,823.82 +8.03 +0.29%
UOB and OCBC Granted Myanmar License. So What?
Econowatch, Tradeable | 01 October 2014
Related stocks:
O39
U11
D05
By: Tradeable
Articles (256)

According to The Straits Times, local banks, United Overseas Bank (UOB) and Oversea-Chinese Banking Corp (OCBC) have been granted limited banking licenses to operate in Myanmar. This development comes after decades in which foreign lenders have been barred from operating within the country.

With the issuance of 9 limited banking licenses, Myanmar finally starts to open up its banking system to the world

Here’s what we know…

  • The limited license allows entitled banks to open one branch within the country and will only be allowed to provide banking services for foreign corporations and foreign-exchange services.
  • Foreign banks will NOT be allowed to operate a retail banking business and will only be allowed to lend in a foreign currency instead of Myanmar’s currency, the kyat. However, this condition may be waived if the foreign bank partners with one of 21 local banks.

So What Now For OCBC and UOB?

  • UOB and OCBC will have 12 months to prepare for the opening of their first branch in Myanmar. There will no doubt be a race to secure premises and more notably, human capital for their first branch. We understand that human resources and skill are in shortage in Myanmar as quoted by Pe Myint, managing director of one of Myanmar’s local banks, Co-operative Bank Ltd.
  • Ultimately, the initial restrictions placed on foreign banks mean that both UOB and OCBC’s financial report card will not stand to benefit tremendously from this license. Start up costs may outweigh any incremental revenue during the development phase of a real presence in Myanmar. The true benefits of this license lie in the ability to grab the first-mover advantage and brand presence in a country that is eager to open up to the rest of the world.
  • In that sense, this piece of development is mildly positive for UOB and OCBC.

What About The Notable Absentee, DBS?

  • Like OCBC and UOB, DBS has had a representative branch in Myanmar for sometime now and was widely anticipated to be awarded the license together with other banks who have a representative branch there.
  • DBS recently opened its revamped office in Yangon. However, this does not seem to have earned it any favours...

  • We note that DBS is strikingly missing from the list. What is the reason behind this? Surely in terms of corporate brand and banking safety, DBS does not lag behind OCBC or UOB. So why was it left out?
  • While we can speculate about why, or more importantly, why not, the reasons could be very varied. We will just have to wait and see what happens from DBS’s end.
  • Join us and get fresh and free content delivered to you automatically each week!

    We hate spam too! Your information is safe with us!

Oversea-Chinese Banking Corp  10.630 -0.07 -0.65%   
Business: [FY18 Turnover] Global corporate/investment banking (35%), global consumer/private banking (34.8%), OCBC Wing Hang (11.5%), insurance (11%), global treasury & mkts (7.7%).

Insight: May-19, 1Q19 total income rose 14.7% driven by str... Read More
United Overseas Bank  25.040 -0.11 -0.44%   
Business: [FY18 Turnover] Group retail (43.3%), group wholesale (43.2%), global markets & investment management (5.1%), others (8.4%).

Insight: May-19, 1Q19 total income rose 7.8% to $2.4b due t... Read More
DBS Group Hldgs  24.700 -- --   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More


Join The Conversation
The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

All Rights Reserved. Pioneers & Leaders (Publishers) Pte Ltd. Best viewed with Mozilla Firefox 3.5 and above.