Industrial Bank Obtains Preliminary Approval to Establish Yangon Branch for Myanmar Expansion

Successful Re-entry into the Indochina Peninsula After 22 Years Since the 1998 Foreign Exchange Crisis

[Asia Economy Reporter Jo Gang-wook] The Korea Development Bank (KDB) announced on the 10th that it has obtained preliminary approval from the Central Bank of Myanmar to establish a branch in Yangon.

With this, KDB will be able to reopen a branch in the Indochina Peninsula for the first time in 22 years since withdrawing its Bangkok branch during the 1998 foreign exchange crisis.

The Central Bank of Myanmar granted preliminary approval to 7 banks out of a total of 13 banks from 5 countries that submitted applications in the third round of preliminary approvals for foreign banks. Among domestic banks, KDB (branch), Industrial Bank of Korea (corporate), and Kookmin Bank (corporate) received preliminary approval.

KDB explained that it was able to overturn an initial disadvantage and receive preliminary approval for the branch on its first attempt by persuading the Myanmar government with a differentiated strategy from other banks.

KDB was a latecomer compared to other banks, having not participated in the first and second rounds of competition in 2014 and 2016, respectively, making the acquisition of preliminary approval initially uncertain. However, it was evaluated to have surpassed competing banks in terms of business capabilities operating on par with advanced banks in the global financial market and high international credibility. Additionally, the cooperation efforts to transfer the accumulated development finance know-how of KDB to Myanmar were highly appreciated by Myanmar’s government economic departments, enabling the successful acquisition of the final preliminary approval.

Based on its accumulated know-how in development finance, KDB achieved results through entrusted management of the Mongolian Development Bank from August 2011 to July 2015. Recently, it has also been promoting the transfer of development finance models to government banks in new southern countries such as Vietnam and Myanmar.

KDB expects that by entering Yangon through its branch, it will support the government’s New Southern Policy and play a pioneering role in mutual growth between the two countries in the Myanmar market, which has high growth potential, by sharing development finance experience with the Myanmar government bank. Myanmar possesses abundant natural resources and is evaluated as a strategic hub with rich growth potential, serving as the next global production base connecting the huge consumer markets (China and India) and emerging economic zones (ASEAN).

A KDB official said, "Taking this preliminary approval as an opportunity, we plan to transfer development finance know-how through cooperation in establishing the Myanmar Development Bank with the Myanmar government, and provide various comprehensive corporate financial services to Korean companies entering the local market through the future establishment of the Yangon branch."