The Central Bank of Myanmar on April 9 approved the Thai bank’s acquisition of a 35 percent stake in Ayeyarwaddy Farmers Development Bank (A Bank), making it the first foreign commercial bank to take a stake in a local lender. A Bank is the second Myanmar bank to welcome foreign shareholders.

Kasikornbank said in a statement it would acquire its stake in A Bank through its Kasikorn Vision subsidiary, which has a budget of K690 billion ($428 million) for overseas commercial opportunities. That stake has been reported to be worth $40 million. 

Pattarapong Kanhasuwan, Kasikornbank executive vice president, said that the Thai bank is keen to expand into a digital bank in Myanmar and the region through an “asset-light and digital expansion strategy”.

“This equity participation with A bank is a form of business that requires a relatively small investment, and in this case it is more effective than establishment of a foreign bank branch or a locally incorporated institution,” Kasikornbank said.

Myanmar’s digital banking market has attracted foreign interest in recent years, following the surge in smartphone penetration in the Southeast Asian country. The coronavirus outbreak has further boosted the prospects of e-commerce and digital banking as more are forced to stay at home. 

Thailand’s second largest lender by market capitalisation said it will leverage its expertise in digital banking and financial services for both big and small businesses and build upon A Bank’s network of 18 branches in major cities including Yangon, Mandalay, Myawaddy and Mawlamyine to expand its reach. 

“The two banks have a strategic plan of expanding digital banking services to both existing customers and a large number of presently unbanked people…” the bank said. The acquisition would expand digital banking services, develop electronic payment systems, including mobile banking applications to reach out to retail customers and corporate clients.

 Ko Aung Thaw Zin, a Shanghai-based Myanmar analyst, pointed out that Kasikornbank’s digital wallet is among the top three in Thailand and expects such digital expertise and platforms to be of help in the Myanmar market. 

But he added that although digital banking is an increasingly attractive commercial proposition to financial entities, online services need to be simple and user-friendly enough to get the public on board.

A Bank is chaired by U Zaw Win Shein, founder of Ayeyar Hinthar Holdings Co, a local conglomerate associated with a proposed industrial park and port in Pathein, Ayeyarwady Region. 

Established in 2014, A Bank has assets of K314 billion and 18 branch offices located in major cities, with registered capital of K40 billion.

But the first local lender to have a foreign bank as shareholder is also among Myanmar’s least transparent business enterprises.

As a public non-listed entity, A Bank is ranked equal last of 248 companies in the 2019 Pwint Thit Sa report by the Myanmar Centre for Responsible Business. It scored 7pc in corporate profile, and zero in the three categories of governance, sustainability management and reporting.

The Central Bank’s consent to Kasikornbank was granted as seven Asian banks, including Thai Siam Commercial Bank, were given branch and subsidiary licences to carry out wholesale and onshore retail banking services directly.

The other banks that received licences include Bank of China (Hong Kong), Taiwan’s Cathay United Bank and Mega International Commercial Bank, Industrial Bank of Korea, Seoul-based KB Koomin Bank and Korea Development Bank. The move brings the number of foreign banks allowed to do business in Myanmar to 20.

Source: https://www.mmtimes.com/news/thailands-kasikornbank-expand-digital-presence-myanmar.html