Myanmar grants first licences to foreign banks in decades

Myanmar's central bank on Wednesday announced it had granted "preliminary approval" for nine foreign lenders to operate in the country for the first time in decades, the latest tentative opening of the long-isolated economy.

The nine overseas banks -- all from the Asia-Pacific region -- include Australia and New Zealand Banking Group (ANZ), banking giant Industrial and Commercial Bank of China (ICBC), and Japan's Bank of Tokyo-Mitsubishi UFJ.

A statement from the central bank said a licencing committee "has decided to grant preliminary approval to prepare for commencement of banking operations in Myanmar to nine Foreign Banks".

It added that it anticipated the banks' "continuous involvement in the financial sector and economic development" in the country.

Myanmar's quasi-civilian government, which replaced a military regime in 2011, is trying to modernise the country's creaking banking system and boost capital flows to local businesses after decades of economically-ruinous junta rule.

Authorities have implemented sweeping political and economic changes that have seen most international sanctions lifted and created a surge of interest from foreign businesses eager to stake a claim in the new frontier market.

Three of the banks given licences were Japanese, with Sumitomo Mitsui Banking Corporation (SMBC) and Mizuho Bank also granted permission to operate.

Other lenders given approval for licences on Wednesday were Thailand's Bangkok Bank, Malayan Banking Berhad (Maybank) and Singapore's Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB).

They will be able to operate for an initial 12-month period before being given a final licence to do business in the country, according to the Central Bank of Myanmar statement.

Central bank vice-governor Set Aung told parliament in June that foreign banks would be subject to a range of restrictions to protect the interests of local lenders.

Foreign banks will be required to hold at least $75 million, restricted to opening only one branch each and will not be allowed into the retail banking sector, he said.

It was not clear if these same conditions applied to the licences granted Wednesday as officials were not immediately available for comment.

The International Monetary Fund has praised Myanmar's economic reforms, including giving autonomy to the central bank and adopting a floating rate for the kyat.

But local people remain deeply suspicious of the banking system after decades of junta rule, and large swathes of the population deal only in cash.

Banks in what was then Burma were nationalised by the military regime that came to power in 1962. They disintegrated with the economy during the bungled implementation of socialist-style policies, which were laced with superstition -- the kyat currency was at one point issued in denominations of nine, an auspicious number.