Australian bank ANZ pulls out of Myanmar amid post-coup unrest – The Diplomat

Bit ASEAN | Economy | Southeast Asia

The bank, which received a banking license in Myanmar in 2014, said it was waiving the license due to “the growing complexity of operations in the country.”

Australian bank ANZ has announced that it will cease operations in Myanmar by early 2023. It is the latest international company to go out of business due to the economic and political turmoil that followed last February’s coup d’état.

AT brief statement on tuesdayThe bank said it has experienced “increasing transaction complexity” in Myanmar over the past few months and is “working with its institutional clients to transition to alternative banking arrangements.”

“The decision follows careful consideration of local operating conditions,” ANZ International Managing Director Simon Ireland said in a statement. “Our international network and support for our clients’ trade and capital flows across the region is an important part of our strategy and will remain so for the long term.”

“Increased operational complexity” is certainly one way of describing how the situation in Myanmar has evolved in the nearly two years since the military seized power, toppling the elected government of the National League for Democracy (NLD). The coup provoked instant resistance and ignited many of the country’s existing civil strife into a nationwide conflagration.

This hurt Myanmar’s economy, lowered the value of the kyat, swelled the shadow economy, and caused the country’s gross domestic product to plummet. Fitch Solutions’ latest forecast released this week projects the country’s economic growth rate to pick up from 0.5% this year to 2.5% next year, but “that would still leave output 15% lower than it was before the civil war.

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For these reasons, as well as serious public concerns about continuing business with the junta or its auxiliaries, a number of international companies have left. Among the most significant were major oil companies TotalEnergies and Chevron Corp, as well as the Norwegian telecommunications provider Telenor.

In 2014, ANZ became one of the first international banks to receive a banking license from the Central Bank of Myanmar, one of many foreign firms that symbolized the opening of Myanmar to the world under a quasi-civilian government led by former General Thein Sein.

The bank’s surprisingly belated decision to pull out of Myanmar came about three weeks after local rights group Justice for Myanmar (JFM) exposed bank operations with Innwa Bank, a military-owned subsidiary of Myanmar Economic Corporation (MEC), which it called “the key financial institution of Myanmar’s military cartel” subject to U.S., European Union, and United Kingdom sanctions, and said it facilitated customer payments to the military junta . It stated that ANZ was able to do so because of the Australian government’s refusal to impose sanctions on the military administration.

This also follows a decision taken last month by the Financial Action Task Force (FATF). add Myanmar on its blacklist for money laundering and terrorist financing, along with North Korea and Iran. With this move, the FATF effectively took Myanmar’s banks and financial institutions out of the mainstream of the international financial system for the first time and forced firms dealing with Myanmar citizens or companies, including ANZ, to comply with onerous reporting requirements.

Earlier this week, JFM spokesman Yadanar Maung stated that the group welcomed the ANZ decision, but urged the bank to ensure that his departure did not benefit the ruling military caste of the country. “This should include mitigation and remediation for their employees and ensuring that they repatriate all funds so that they do not leave windfall profits for the terrorist military junta,” Yadanar Maung said.

While ANZ’s operations in Myanmar have been relatively modest, its withdrawal may be the first sign of the economic impact that a FATF listing could have on the country. Like the alphabet reported this week“The decision means that by early next year there won’t be a single big Western bank left in the country.”