YANGON (Reuters) - Japan’s Bank of Tokyo Mitsubishi UFJ Ltd (BTMU) has invested $100 million to become the first foreign lender in decades to open a branch in Myanmar on Wednesday, said Chief Executive Officer Go Watanabe.
Crippled by mismanagement during 49 years of military regimes and cut off from much of the world due to Western sanctions, the domestic banking sector is ill-equipped to provide services to local citizens, let alone global companies.
A semi-civilian government took power in 2011 and has initiated sweeping economic reforms. In October, it granted nine foreign banks licenses to operate on a limited basis, its biggest move to date to bring in much-needed foreign capital to a fast-growing economy.
The banks were required to put up minimum paid-in capital of $75 million, but BTMU - a subsidiary of Mitsubishi UFJ Financial Group Inc (8306.T) - put in $100 million, Watanabe said.
“We decided that we would show a strong commitment to this country,” he told reporters at the branch in Yangon, Myanmar’s commercial capital.
He said BTMU will aim to gain 150 accounts from foreign companies with deposits of $100 million within its first year of operating in the country.
Japan’s Sumitomo Mitsui Banking Corp - a subsidiary of Sumitomo Mitsui Financial Group Inc (8316.T) - and Singapore’s Oversea-Chinese Banking Corp Ltd (OCBC.SI) said they plan to open branches on Thursday.
Licenses are limited to one branch that can provide loans to foreign companies and only in foreign currency. Licensees are also expected to lend to domestic banks.
Myanmar’s Central Bank said on April 2 that it expected six more foreign banks to submit applications for their final licenses in the coming months.
The six are Japan’s Mizuho Bank Ltd - a subsidiary of Mizuho Financial Group Inc (8411.T) - and Singapore’s United Overseas Bank Ltd (UOBH.SI), as well as Australia and New Zealand Banking Group Ltd (ANZ.AX), Bangkok Bank PCL (BBL.BK), Industrial and Commercial Bank of China Ltd (601398.SS) (1398.HK) and Malayan Banking Bhd (MBBM.KL).
Editing by Christopher Cushing