8 February, 2019
On 29 January 2019, the Central Bank of Myanmar ("CBM") issued a letter (addressed to local private banks in Myanmar) confirming that foreign banks and foreign financial institutions may hold up to 35% equity investment in local private banks in Myanmar.
In order to seek the requisite approval from the CBM, the letter states that the local private bank must furnish the CBM with a copy of its agreement with the foreign bank or foreign lending institution together with details of the proposed local-foreign equity ratio following the investment, and any other documents as may be requested by CBM from time to time.
Where such equity investment into a local private bank is from a local branch or subsidiary of a foreign bank already permitted to undertake banking activities in Myanmar, the local private bank is obliged to comply with the cross holding provisions as contained in the Financial Institution Law 2016.
The CBM letter represents significant and much-awaited further progress in the path to liberalise the financial services industry in Myanmar, following shortly after the Ministry of Planning and Finance's announcement that Myanmar's insurance market is now opening up to foreign insurers, both in the life and non-life sectors. The liberalisation in the banking sector is expected to generate considerable interest from foreign lenders looking to deploy much needed foreign capital into Myanmar's developing banking industry.
For further information, please contact:
Tom Platts, Partner, Stephenson Harwood
tom.platts@shlegal.com
