The central bank has said more foreign lenders are likely to be licensed next year, and is asking international banks to submit requests for the services they would like to be allowed to offer.
Vice governors U Soe Thein and U Bo Bo Nge held a press conference in Yangon on 14 November. This followed a directive a week earlier that stated foreign lenders with branch licenses could provide the same financing and "other banking services" to local business as offered by local banks.
Financing was understood to mean wholesale financing, while "other banking services" were not defined.
The Myanmar Times reported on 15 November, based on the press conference, that "Foreign banks will also be allowed to expand their branch networks in Myanmar next year [2019]".
However, MFSM believes this statement is incorrect or at best misleading. The deputy governors said there were no plans to allow existing foreign banks with branch licenses to open new branches.
At present, each of the 13 foreign banks has a single branch, although Japanese lenders have partnered with local lenders to create a presence in the Thilawa SEZ. However, the regulator said there are no plans to allow lenders to open branches in cities other than Yangon.
Several lenders have requested permission to open branches in the manufacturing and economic hub of Mandalay, but the deputy governors said there is no plan to accede to the request.
What the deputy governors did say is that new foreign lenders are likely to be given licenses in 2019. MFSM understands there is a tentative plan to provide licenses to around three new banks in 2019.
The Myanmar Times also quoted deputy governor U Soe Thein as saying that "foreign banks are not allowed to accept fixed deposits but they can if the funds are in foreign currency". Again, this statement needs clarification.
Before the latest directive, foreign firms in Myanmar were able to open foreign currency fixed deposit accounts on which they receive interest. U Soe Thein said that following the recent directive, local companies will also be allowed to open foreign currency fixed deposit accounts, though the regulator has yet to decide whether it will allow foreign banks to pay interest on these accounts.
The central bank has also asked foreign lenders to list the "other banking services" they would like to be able to offer and submit formal requests. The central bank will then issue regulations permitting the services it believes are suitable for foreign banks to offer.
Retail services remain totally off limits. The deputy governors said this would remain the case for at least two more years.
