Burma’s Private Banking Crisis - a Chronology

Feb 01, 2003—Burma’s Finance and Revenue Minister Khin Maung Thein is permitted to retire, but no further explanations are offered by the military regime.

In the first week of February, rumors of demonetizations of certain numbered currencies began to circulate in cities and towns.

Private service companies, which are independent investment houses, begin to look increasingly unstable as more than dozen have collapsed since late last year. Rumors that the major banks are also o­n the verge of collapse force depositors to rush to bank branches to withdraw their savings.

Living Color, a Rangoon-based Business magazine, runs a report in February alleging that Burma’s three largest private banks have been dispensing loans well beyond their capital. The article charges that Asia Wealth Bank has outstanding loans 50 times greater than its capital, while Yoma Bank has loans out 30 times greater than its reserves. Kanbawza Bank also reportedly has loans out totaling eight times more than its available reserves.

Feb 10—The governor of Burma’s Central Bank, the country’s primary monetary authority, holds a press conference in Rangoon in hopes of quelling consumer unrest. Kyaw Kyaw Maung guarantees that the 20 private banks have solid financial standing as well as the backing of the Central Bank. He urges investors to avoid private service companies, who do not have the support of the Central Bank, and ignore rumors and speculation regarding the private banks. Details from the press conference are carried in the state-run press, including the New Light of Myanmar.

After a huge run o­n the banks by depositors, banks begin denying withdrawal requests, and advise account holders to return after Feb 18.

Feb 12—Asia Wealth Bank, Burma’s largest financial institution, asks the Central Bank for a security bond of 30 billion kyat (US $30 million) to boost its dwindling reserves.

Feb 14—Editors in Rangoon say the junta has become extra sensitive concerning business reporting, and ordered the country’s Press Scrutiny Board to impose a news blackout o­n the crisis in an effort to ease public concerns.

Feb 15—Yoma Bank, o­ne of Burma’s largest commercial banks, suspends its credit card services. Yoma Bank is o­ne of o­nly three banks in Burma to offer credit card services.

Feb 16—The state-run Kyemon newspaper says Secretary-One Gen Khin Nyunt blames dissidents in exile for the bank crisis. He says "destructive elements" have spread false rumors, which caused depositors to withdraw their money. He said the country would suffer losses because of the rumors.

Feb 17—Banks impose limits o­n withdrawals and ban account transfers. Individual customers are o­nly allowed to withdraw 500,000 kyat (US $500) per week. Asia Wealth Bank suspends its credit card services, while Kanbawza Bank says it plans to issue a similar announcement.

Feb 18—As financial panic increases, crowds begin gathering in front of banks demanding withdrawals. Traffic police are called in to disperse huge crowds outside Asia Wealth Bank’s Olympic Tower branch in Rangoon, while security forces, including riot police, are beefed up to guard banks in both Rangoon and Mandalay after a bank in Rangoon’s Thingangyun suburb was stoned by angry account holders.

In addition, some businesses report that they do not have the cash to pay daily wages to staff, as significant withdrawals still remain restricted. Some banks tighten withdrawal limits further to 200,000 kyat.

Feb 19—Wint Kyaw, managing director of Universal Bank, tells The Irrawaddy: "I can’t say anything for now, because the situation is very perplexing."

Meanwhile, Asia Wealth Bank posts signs at their branches saying the bank is working under normal operating procedures, despite the maintaining of restrictions o­n withdrawals.

Feb 20—With a shortage of kyat in circulation, the currency strengthens against the dollar. Rates fall from 1,000 kyat at the end of last week to today’s black market rate of 900 kyat. Some banks drop the weekly limit o­n withdrawals even further to 100,000 kyat per account.

Several banks order investors with outstanding loans to repay between 20 and 25 percent of their debts within a few days.

Feb 21—The Central Bank pledges to assist private banks with a 25 billion kyat (US $25 million) bailout. The money is shared between Asia Wealth Bank, Kanbawza Bank and Yoma Bank. Other banks, including Universal Bank, drop the cap o­n withdrawals to just 50,000 kyat (US $50) per customer per week.

Gen Khin Nyunt addresses an annual meeting of the Ministry of Commerce and says Burma’s banks are safe.