Central bank dismisses news private banks going bankrupt

News about the possible bankruptcy of private banks in Myanmar is just a rumour, a central bank official clarified. 

Win Thaw, deputy director-general at the Yangon branch of the Central Bank of Myanmar, said that the rumour was spread by those who wanted to smear private banks.

Private banks are operating in line with banking procedures and rules and regulations under the systematic management of the Central Bank of Myanmar, he added.

He affirmed that the public could continue to put its trust in private banks.

The news about the possible “collapse” of Kanbawza Bank was also just a rumour, and the state-owned bank will take all responsibilities regarding the country’s banks, he pointed out

Customers were reportedly withdrawing their money from the private-owned Kanbawza Bank. 

Amid reports of mass cash withdrawals by customers of Kanbawza Bank recently due to doubts about its financial health, general manager Ye Tun Oo said the bank had clarified to its customers that the news was just a rumour.

He said, “Among the banks in Yangon, Kanbawza has the most number of branches and they are all functioning well. The bank’s branches were crowded with customers because in the last few days, there were three bank holidays and that period also coincided with the payment of bank interest and the pay day of employees. That is the reason why there was such a crowd of people. Rumour-mongers spread this news to mislead the public”.

The news was spread among the public through the Internet since October 4, misleading people into believing that many customers were withdrawing huge amounts of cash.

A person who has opened an account at the bank said: “The news has spread that people are coming to withdraw their money from Kanbawza Bank. Now, that news has filled Web pages.”

Reports said such news were groundless but frequent, invented by malicious business people holding a negative attitude towards banking, a move that could lead to the collapse of banks and hurt the country’s economic growth.

Myanmar has 19 private banks with 405 branches. With 72 branches nationwide, Kanbawza is the biggest bank in the country.

There are also more than 20 foreign bank representative offices in Myanmar, including those from Singapore, Bangladesh, China, France, Japan, Malaysia, Netherlands, Thailand, Cambodia, Brunei, Vietnam, South Korea, the US and the United Kingdom.

“The Central Bank of Myanmar inspects the financial situations of proposed banking services, including whether the possible bankers were involved in bankruptcy cases, and whether their investments come from legal sources of income. We gave permits only to those who meet the norms and principles,” Win Thaw said.

He added that the central bank is always “monitoring the processes of private banks” to ensure stability in the country’s banking system, and until now these financial institutions are observing the regulations.

Regarding the collapse of local banks Myanmar Mayflower and Asia Wealth Bank in 2003, an officer of the central bank explained, “These two banks collapsed not due to financial complications, but because they did not observe monetary regulations at a time when real estate agencies and monetary agencies were not operating their businesses systematically.

However, the officials did not give clear answers on how the central bank would bear the responsibilities if there was a collapse of private banks.