Home News Myanmar revokes local bank license over suspicious sources of its capital funds

Myanmar revokes local bank license over suspicious sources of its capital funds

The Central Bank of Myanmar (CBM) says it withdrew the licence of Asia Yangon Bank Ltd (AYB) due to uncertainty over its source of capital funding.

Last Tuesday, the central bank announced the revocation of AYB’s banking licence without elaborating on the reasons for the move.

On Sunday, the central bank held a press conference with state-owned newpapers to explain the revocation of a local banking licence for the first time in 15 years.

In the interview, CBM deputy governors U Bo Bo Nge and U Soe Min explained that the central bank first received a complaint about irregularities in the trading of AYB’s shares in 2017.

At the same time, it was learnt that AYB did not meet its paid-up capital requirements, U Bo Bo Nge, said.

In 2016, AYB proposed raising its paid-up capital. Under banking regulations, the CBM was required to investigate the source of the funds that would have been used for the exercise by AYB to determine its legality.

According to U Bo Bo Nge, the investigation determined that there was no evidence to show the legality of the funds that would have been used by AYB..

According to Myanmar’s  Financial Institutions Law 2016, banks incorporated in Myanmar must have paid-up capital of not less than K20 billion and the funds for the capital must be shown to be legal and taxable.

According to the central bank, AYB was also the only local bank that did not meet the minimum requirements for its paid-up capital.

Earlier this year, the Bureau of Special Investigation submitted its findings from its investigation started in 2017 to the CBM. The findings concluded that there irregularities with the funding of AYB’s paid-up capital, U Bo Bo Nge, said.

He added that the central bank, with guidance from the President’s Office and the Office of the Attorney General, then took the decision to revoke AYB’s banking licence.

“To be clear, the revocation of AYB’s licence had nothing to do with it being in financial difficulty. The licence was revoked, because allowing the use of money that cannot be shown to be fully legitimate for the AYB’s paid-up capital would damage the image of the country’s banking sector,” U Bo Bo Nge said.

“There will be no difficulty for depositors withdrawing money from AYB, as it has more than sufficient funds to meet the needs of customers,”| he added.

Asia Yangon Bank was founded some 20 years ago and is headquartered in Botahtaung, Yangon. It has branches in Bayintnaung, Lewe, Mandalay, Taungoo, Monywa, Magwe, Pathein, Pyay, and Minbu.

This only the third time the license of a local bank has been revoked. In 2005, CBM revoked the licenses of Asia Wealth Bank, owned by U Aik Htun, and May Flower Bank, owned by U Kyaw Myint, for allegedly being involved in money laundering.

Original article on mmtimes.com

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