United Amara Bank joins ADB trade fi­nance pro­gram

The Myanmar Times - - Business - MYAT NYEIN AYE my­at­nyeinaye@mm­times.com

UNITED Amara Bank be­came the sec­ond lo­cal lender to sign with the Asian De­vel­op­ment Bank un­der its Trade Fi­nance Pro­gram (TFP) yes­ter­day, and will re­ceive guar­an­tees for in­ter­na­tional let­ters of credit worth up to US$4 mil­lion each year.

It joins the TFP pro­gram al­most a year af­ter Co­op­er­a­tive (CB) Bank signed to re­ceive up to $12 mil­lion in an­nual guar­an­tees last Oc­to­ber.

The deal marks the first step in a long-term part­ner­ship to as­sist trade fi­nanc­ing for lo­cal busi­nesses in Myan­mar and ul­ti­mately to help boost Myan­mar’s econ­omy, United Amara Bank said in a state­ment yes­ter­day.

Trade fi­nanc­ing is still new in Myan­mar – most ex­porters and im­porters pay for ship­ments on the spot. A let­ter of credit sys­tem, on the other hand, al­lows a bank or de­vel­op­ment in­sti­tu­tion to guar­an­tee that the seller will re­ceive a timely pay­ment from the buyer – if they fail to pay, the sponsor steps in.

With a let­ter of credit agree­ment in place, ex­porters are able to ship prod­ucts be­fore re­ceiv­ing pay­ment. How­ever, many for­eign banks do not yet ac­cept let­ters of credit from Myan­mar banks.

Lo­cal lenders such as CB Bank and United Amara Bank al­ready have some trade lines with in­ter­na­tional lenders, but their credit ratings are low, which lim­its the amount of busi­ness they can do.

The ADB, on the other hand, has an “AAA” credit rat­ing – the high­est avail­able. If it guar­an­tees the trade lines of lo­cal banks, they will be able to fi­nance much larger transactions.

United Amara Bank’s CEO U Thein Lwin said yes­ter­day that his bank first con­ceived of the part­ner­ship back in 2013.

“It has taken many dis­cus­sions, re­views and agree­ments for the line of credit to be re­alised,” he said, thank­ing everyone in­volved for their “stamina”.

The bank has grown fast since it was set up in 2010 – as of March 31, it had a de­posit size of K596 bil­lion, as­sets worth K662 bil­lion and a net­work of 52 branches and 250,000 cus­tomer ac­counts, he said.

“In the fu­ture, UAB will con­tinue to grow. We al­ready have a plan to ex­pand our net­work to 75 branches by the end of this fis­cal year.”

Myan­mar’s to­tal trade vol­umes have grown by an aver­age of 14 per­cent an­nu­ally dur­ing the past five years, the ADB said, while im­ports have grown 19pc per year since 2012, spurred by strong eco­nomic growth of around 7pc.

Janet Hyde, an ADB re­la­tion­ship man­ager for Myan­mar, noted that other lo­cal banks are be­ing con­sid­ered for the pro­gram.

“The TFP is an open-ended pro­gram and we are con­tin­u­ally as­sess­ing new banks for mem­ber­ship, not least in Myan­mar,” she said.

The value of the fa­cil­i­ties ap­proved can vary ac­cord­ing to the due dili­gence process and the size of the trade fi­nance needs of each bank, she said.

Photo: Nyein Su Wai Kyaw Soe

U Thein Lwin, CEO of United Amara Bank, shakes hands with Win­fried Wick­lein, Myan­mar coun­try di­rec­tor for the Asian De­vel­op­ment Bank.

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