Taking stock of StanChart’s absence

Some local bankers are linking Standard Chartered’s decision not to proceed in the race for a Myanmar banking licence to reports of a possible management shakeup at its United Kingdom headquarters.

Industry observers said the United Kingdom-based bank has the most international reach of the 42 banks with a Myanmar representative office. However, Standard Chartered did not appear on a July 15 list by the Central Bank of Myanmar (CBM) revealing the names of 25 banks participating in the second phase of attempts to get a licence.

Myanmar plans to allow between five and 10 foreign banks to open representative offices this year, though they will face restricted licences partly in a bid to foster growth in local banks.

While its moves locally have been closely watched, the firm is also drawing international headlines over a rumoured change in


“The board of Standard Chartered notes rumours in some media outlets on succession planning for the group chief executive, and chairman,” said a statement issued to the London stock market on July 31.

“The board wants to be absolutely clear that it is united in its support of both [chief executive] Peter Sands and [chair] Sir John Peace, and the management team, in delivering the refreshed strategy, restoring the bank to profitable growth and delivering returns for our shareholders.”

The Financial Times had reported that Mr Peace himself is weighing a succession plan under which long-serving Mr Sands would be replaced, and may himself resign once a new chief executive joins.

Joe Barker-Bennett, a consultant at Myanmar’s Tun Foundation bank, said Standard Chartered’s decision to withdraw from the Myanmar licensing race is a reflection of the concerns over leadership at its London headquarters.

“[Myanmar] is totally unimportant to the decision making [at Standard Chartered] and the two guys at the top of the tree. Why [Standard Chartered has] ducked out of here is they need to put in US$75 million worth of capital for which they will get very little return for the foreseeable future,” he said.

Mr Barker-Bennett said rather than allowing in foreign banks – who would be inclined to push at the bounds of their restricted licences – it would be better to relax restrictions on local banks in areas such as interest rates and what constitutes acceptable collateral.

“Do you want your banking industry controlled, and the decisions made by activist shareholders and analysts in London, or by people who are actually on the ground, understand the economy and are working on it on a day-to-day basis?” he said.

Other local bankers claimed it will be difficult to postpone the introduction of foreign banks.

U Phyo Aung, managing director at Ayeyarwady bank, said that while some local bankers oppose foreign banks, Ayeyarwady has taken the view that they are coming and so it is best to prepare.

He added that it would have been useful to learn from Standard Chartered, as it has lots of global experience – including in Myanmar many years ago, when its predecessor Chartered Bank of India, Australia and China was active in Yangon.

Standard Chartered’s head of corporate affairs for Thailand and Greater Mekong, Raymond Francis, said that the bank has decided not to apply for an onshore branch licence at present due to commercial reasons.

“We will seek to establish a branch in Myanmar when and where appropriate and when it makes commercial sense to do so,” he said.

Central Bank of Myanmar director Daw May Toe Win declined to comment on Standard Chartered’s absence, other than pointing to the July 15 press release listing banks through to the next part of the process.

Meanwhile, UK ambassador to Myanmar Andrew Patrick said the decision by Standard Chartered to withdraw was their own, not the result of any UK policy or request.

“They are an independent commercial entity, and entitled to make their own decision,” he said, adding the introduction of foreign banks will increase foreign investment in the country.


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