Siam Commercial Bank plans to open its first branch in Myanmar this year if the Central Bank of Myanmar (CBM) grants a bank subsidiary licence, says a SCB senior official.
If approved, SCB will upgrade the existing representative office to a branch, said first executive vice-president Kamalkant Agarwal.
The bank needs time to develop infrastructure in Myanmar before deciding on a new branch opening, he said, though the country has high growth potential.
According to CBM regulations, those holding foreign bank subsidiary licences are allowed to operate wholesale and retail banking business and have up to 10 branches or off-site ATMs. They are required to have minimum paid-in capital of US$100 million.
To become eligible to upgrade their business, foreign bank subsidiaries must operate in Myanmar for at least three years.
A foreign bank subsidiary is one of three licence types permitted by the CBM to operate in Myanmar. The others are foreign bank branches and equity holding in a local bank.
A foreign bank branch licence enables holders to offer wholesale banking products and services, but the premises are limited to one location. Minimum paid-in capital of $75 million is required for a foreign bank branch.
Three Thai banks -- SCB, Kasikornbank (KBank) and Krungthai Bank -- are applying for new banking licences in Myanmar. Bangkok Bank is the sole Thai bank with a foreign bank branch licence in Myanmar after winning the authority's approval in 2015.
Mr Agarwal said that if SCB is granted a bank subsidiary licence in Myanmar, its partnership with a local bank, Ayeyarwady Bank (AYA Bank), for cross-border payment and fund transfer will remain in place.
SCB has signed a memorandum of understanding on a collaboration with AYA Bank, Myanmar's second-largest bank, to develop cross-border payment and fund transfer services between the two countries. The service targets workers and SMEs with cross-border transactions to encourage the use of formal channels.
KBank executive vice-president Pattarapong Kanhasuwan said the bank has applied for two banking licences, for a subsidiary and for equity holdings in a local bank in Myanmar.
The bank plans to upgrade its existing representative office in Myanmar to a subsidiary and has no plan to open additional brick-and-mortar branches after being awarded the subsidiary licence, Mr Pattarapong said.
Cross-border trading and digital banking services are KBank's focus in the neighbouring country, so a large physical network is unnecessary, he said.
Under the partnership model, the bank would collaborate with a local bank, Ayeyarwaddy Farmers Development Bank (A Bank).
KBank, Thailand's largest lender by assets and the biggest mobile banking service provider, is seeking the CBM's approval to acquire 35% of A Bank under equity holding in a local bank licence. KBank has already cooperated with the Myanmar bank in several digital banking areas.
"We plan to adopt mobile banking app K Plus in Myanmar if we receive approval," Mr Pattarapong said.
Ronadol Numnonda, the Bank of Thailand's deputy governor for financial institution stability, said technological development is enabling local banks to search for new business opportunities in Asean.
Thai banks are moving to become regional retail banks by using the digital platform, but the central bank is unconcerned because of the banks' strong risk management, Mr Ronadol said.
Digital banking opens up new business opportunities for local commercial banks, he said, and some are making strides on the issue.
SCB shares closed yesterday on the Stock Exchange of Thailand at 89 baht, up 2.50 baht, in trade worth 1.46 billion baht. KBANK shares closed at 122.50 baht, up seven baht, in trade worth 2.98 billion baht.