OCBC plans to up capital in 3 years

OCBC is the second to open a branch in the country, after the Bank of Tokyo-Mitsubishi UFJ which opened its door a day earlier. Their opening marked the new history in the country’s banking industry where no foreign bank branch existed in the past decades.
Linus Goh, OCBC’s executive vice president and head of global commercial banking, told Myanmar Eleven shortly after the launch of its Yangon branch on Thursday that the bank would raise its capital of Yangon branch upon demand over the next three years.
“We are impressed that we have the registered capital of US$75 million at the initial stage. We have capacity to increase the capital as required, based on the engagement with customers and the various requirements of the variety of the projects and industries. It is likely that sooner rather than later we will have to increase the capital. We will take it as soon as possible in line with the demand from our customers,” he said.
The bank’s optimism about Myanmar emerged as more investors in the Asia Pacific region become interested in the newly-opened market. The lenders expectations become higher thanks to the implementation of three special economic zones (SEZs) namely Thilawa, Dawei, and Kyaukphyu, the upcoming launch of the Asean Economic Community (AEC), and the possible establishment of Yangon Stock Exchange (YSX) and the capital market by the end of this year.
Goh said the bank’s customers had shown immense interest in the SEZs, while the YSX would be a significant milestone for Myanmar’s financial sector. Several companies can then test a new form of financing.
“Obviously it will be a very positive development in the financial sector here and we see it as a complimentary to foreign banks. Requirements of financing in Myanmar are, at this stage of development, very significant. We will all be working together to offer the compliments of bank financing as well as the equity-based financing on the exchange,” he said.
Goh believed the opening up of Myanmar’s economy and financial sector is a perfect timing for accelerating the reforms momentum with an aim for sustainable development. Given the start of the AEC, growth prospect in the region is high.
“There is a sense of urgency in Myanmar. I can see that the people of the business community have a strong desire to catch up [with developed countries]. This will leapfrog the country,” he said.
“We need to look forward, not look behind. We will take every single step as much as we can to offer more capabilities… Our role as a bank is to try to see how we can help give advise to finance the right projects so that you can move in the right direction.”
The branch is equipped with staff from Singapore, Malaysia, Thailand, and Myanmar returnees, according to Tan Chor Sen, OCBC’s head international of global commercial banking. Myanmar nationals make up for over half of the 20 staff. Together with colleagues from outside network, they are set to serve customers, who not only come from Singapore but also other Asean countries and the Greater China.
Foreign bank branches can open current accounts and deposit accounts in kyat, euro, US and Singapore dollar. Customers can apply for loans, trade finance, and foreign exchange service. Other services include cash management, project financing, working capital financing, as well as treasury and capital markets advisory for foreign firms, joint ventures and domestic banks.
 
Positive start
“On the first day of our operation, we have several corporate customers who are ready to open accounts. This is definitely a good start for our Myanmar branch,” said Daniel Tan, general manager of OCBC’s Yangon branch.
“Our mandate is very clear -- to be able to serve foreign corporates and joint ventures so as to be a catalyst for foreign direct investments coming into the country. There is plenty to do. Initial products we have launched will be quite similar to the basic requirements of companies in the short term. We hope to offer more project-related financing that are structured on the longer-term basis. We will facilitate the developments of infrastructure required in many industries such as power, real estate, hospitality, and offices,” he said.
He added that OCBC and other banks also aim to help customers develop better tools for forex and interest rate management, as well as other forms of financing.
Goh said investing in human resources is crucial for sustainable development.
“So many foreign banks are coming in and the ambitions of local banks are also getting strengthened. They need to develop talent in Myanmar. It is very critical. We still need to do a lot more to invest in the local infrastructure to boost our talents for the future,” he said.
Another area is cooperation with local banks, as foreign banks are permitted to open only one branch. Domestic banks’ networks can support foreign banks’ clients.
In the past years, OCBC has forged cooperation some domestic banks CB, KBZ, and Ayeyarwaddy as well as some of the State-owned banks. It jointly extended a project financing loan with a local bank, for example. Some transactions in kyat will also be passed to the local banks.
 “The cooperation will allow us to share each other the different aspects of the project financing so we may have expertise in structuring the projects but domestic banks may also have certain expertise in terms of how to take and organise the securities in the country in compliance with the local laws.”
A successful financial market needs strong domestic banks, Goh said. Foreign banks’ presence will materialise the much-needed interbank market, where all can participate.
 “Some players stand to be more active in the interbank market, of course. Yet, we will see the leading banks come together to help make it happen under the guidance of the central bank.”