Banking Regulatory Update Briefing

Transcription

Banking Regulatory Update Briefing
Banking Regulatory Update
Briefing
Yangon, 29 July 2014
1
VDB Loi offices
29 July 2014 | Page 2
Name partners
Jean Loi
Managing Partner
Jean@vdb-loi.com
Jean Loi is widely recognized as one of
the
region’s
most
experienced
professional advisors with a CPA
background. She was formerly a
partner with PricewaterhouseCoopers
in Southeast Asia. As the managing
partner of VDB Loi, Jean has extensive
experience with licensing energy,
power, property and consumer
product projects. Her Myanmar tax
experience is unsurpassed. She lives in
Yangon.
Edwin Vanderbruggen
Partner
Edwin@vdb-loi.com
Edwin was formerly with Loyens &
Loeff and a partner at DFDL. He has 21
years of experience as a lawyer and
government advisor, including five
years of experience on Myanmar legal
and investment issues. Edwin advises
three of the oil and gas supermajors in
the offshore tender, the Japanese and
Korean governments on major
infrastructure and power projects and
is local counsel to one of the foreign
licensed
telecom
operators
in
Myanmar. He lives in Yangon.
29 July 2014 | Page 3
Quick overview of our Myanmar practice
Offices in Myanmar
Legal team in Myanmar
Other offices in the
region
Cambodia
2 Partners
Level 6 Phnom Penh Tower,
445 Monivong Boulevard, Phnom Penh
(full time Myanmar residents)
40 Fee earners (includes 18
expats)
Indonesia
(full time Myanmar residents only)
Equity Tower, 35th Floor,
SCBD, Jl. Jend.
Sudirman Kav. 52-53, Jakarta 12190
60 Staff in total in Myanmar
Core expertise
•
•
•
•
•
•
Foreign investment, Corporate
M&A
Real estate law
Licensing and regulatory
International trade
Secured lending
Taxation
Yangon
Level 8, Centrepoint Towers, No. 65, Sule
Pagoda Road & Merchant Street, Kyauktada
Township
TMT
Oil and gas
Real estate and infrastructure
Power
Consumer
5th Floor, Alounmai Tower,
23 Singha Road, Saysettha District,
Vientiane
Singapore
16 Collyer Quay ,
#21-00 Hitachi Tower,
Singapore, 049318
Sectors with outstanding experience
•
•
•
•
•
Lao
Vietnam
Level 20, Unit 4,
Bitexco Financial Tower,
2 Hai Trieu Street, District 1,
Ho Chi Minh City
Nay Pyi Taw
No. S-204, Tha Pyay Kone Ward,
Zabu Thiri Township
edwin@VDB-Loi.com
jean@VDB-Loi.com
www.VDB-Loi.com
29 July 2014 | Page 4
Contents
 Update on foreign banking licenses in Myanmar
 Registering security for a foreign loan on onshore assets
 Update on Central Bank of Myanmar directives
 Mobile banking and “Dedicated E-Money Issuers”
29 July 2014 | Page 5
Update on foreign bank licensing
29 July 2014 | Page 6
Sr No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Name of Bank
ANZ Bank
First Overseas Bank Ltd.
AB Bank Limited
National Bank Ltd.
Eastern Bank Limited
Brunei Investment Bank (BIB)
Industrial and Commercial Bank of China Ltd
Bred Banque Populaire
Bank of India (BOI)
Export-Import Bank of India
United Bank of India
State Bank of India
AEON Credit Service Company
MARUHAN Japan Bank PLC
Mizuho Corporate Bank Ltd
The Bank of Tokyo -Mitsubishi UFJ,Ltd
Sumitomo Mitsui Banking Corporation
Export-Import Bank of Korea
Hana Bank
Industrial Bank of Korea
Kookmin Bank
Korea Development Bank
Shinhan Bank
Woori Bank
Malayan Banking Berhad (MAYBANK), Malaysia
CIMB Bank Berhad
RHB Bank Berhad
State Bank of Mauritius
DBS Bank Ltd
Oversea-Chinese Banking Corporation Ltd.
United Overseas Bank Ltd.
Commercial Bank of Ceylon PLC
E.SUN Commercial Bank
First Commercial Bank
Cathay United Bank
Bangkok Bank Public Company Ltd.
KASIKORNBANK Public Company Ltd
Krung Thai Bank Public Company Ltd
Siam Commercial Bank Public Company Ltd
Bank of Ayudhya Public Company Limited
Standard Chartered Bank
Bank for Investment and Development of Vietnam
Vietin Bank
Country of
origin
Australia
Bahamas
Bangladesh
Bangladesh
Bangladesh
Brunei
China
France
India
India
India
India
Japan
Japan
Japan
Japan
Japan
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Malaysia
Malaysia
Malaysia
Mauritius
Singapore
Singapore
Singapore
Sri Lanka
Taiwan
Taiwan
Taiwan
Thailand
Thailand
Thailand
Thailand
Thailand
UK
Vietnam
Vietnam
Date of Opening
RO
Date of License
Issued
6.12.2012
30.4.1996
10.12.2010
6.7.1995
18.9.1995
16.9.2011
7.5.2013
14.6.2013
19.6.2012
20.7.2012
7.5.2012
19.1.2012
17.3.2006
18.4.2001
16.12.2013
20.9.2012
14.3.2013
4.6.2013
27.12.2012
13.3.2013
25.10.2012
12.8.1994
19.2.2008
10.11.1992
8.2.1994
10.11.1993
1.4.2013
18.3.2013
24.10.1994
18.7.2012
14.6.2012
23.4.2012
27.12.2012
1.3.2010
12.12.2012
Date of Commencement
5.4.2013
15.5.1996
6.6.2010
16.7.1996
1.7.1996
2.12.2011
9.9.2013
5.12.2012
21.9.2012
28.7.2012
6.4.2012
17.3.2006
18.4.2001
20.1.2014
7.11.2012
23.4.2013
12.6.2013
9.4.2013
11.4.1995
19.2.2008
29.3.1994
15.11.1994
2.8.1994
17.7.2013
30.4.2013
18.8.1995
9.1.2013
20.12.2012
23.12.2012
5.2.2013
3.4.2010
-
7
Sr No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Name of Bank
ANZ Bank
First Overseas Bank Ltd.
AB Bank Limited
National Bank Ltd.
Eastern Bank Limited
Brunei Investment Bank (BIB)
Industrial and Commercial Bank of China Ltd
Bred Banque Populaire
Bank of India (BOI)
Export-Import Bank of India
United Bank of India
State Bank of India
AEON Credit Service Company
MARUHAN Japan Bank PLC
Mizuho Corporate Bank Ltd
The Bank of Tokyo -Mitsubishi UFJ,Ltd
Sumitomo Mitsui Banking Corporation
Export-Import Bank of Korea
Hana Bank
Industrial Bank of Korea
Kookmin Bank
Korea Development Bank
Shinhan Bank
Woori Bank
Malayan Banking Berhad (MAYBANK), Malaysia
CIMB Bank Berhad
RHB Bank Berhad
State Bank of Mauritius
DBS Bank Ltd
Oversea-Chinese Banking Corporation Ltd.
United Overseas Bank Ltd.
Commercial Bank of Ceylon PLC
E.SUN Commercial Bank
First Commercial Bank
Cathay United Bank
Bangkok Bank Public Company Ltd.
KASIKORNBANK Public Company Ltd
Krung Thai Bank Public Company Ltd
Siam Commercial Bank Public Company Ltd
Bank of Ayudhya Public Company Limited
Standard Chartered Bank
Bank for Investment and Development of Vietnam
Vietin Bank
Country of
origin
Australia
Bahamas
Bangladesh
Bangladesh
Bangladesh
Brunei
China
France
India
India
India
India
Japan
Japan
Japan
Japan
Japan
Korea
Korea
Korea
Korea
Korea
Korea
Korea
Malaysia
Malaysia
Malaysia
Mauritius
Singapore
Singapore
Singapore
Sri Lanka
Taiwan
Taiwan
Taiwan
Thailand
Thailand
Thailand
Thailand
Thailand
UK
Vietnam
Vietnam
Date of Opening
RO
Date of License
Issued
6.12.2012
30.4.1996
10.12.2010
6.7.1995
18.9.1995
16.9.2011
7.5.2013
14.6.2013
19.6.2012
20.7.2012
7.5.2012
19.1.2012
17.3.2006
18.4.2001
16.12.2013
20.9.2012
14.3.2013
4.6.2013
27.12.2012
13.3.2013
25.10.2012
12.8.1994
19.2.2008
10.11.1992
8.2.1994
10.11.1993
1.4.2013
18.3.2013
24.10.1994
18.7.2012
14.6.2012
23.4.2012
27.12.2012
1.3.2010
12.12.2012
Date of Commencement
5.4.2013
15.5.1996
6.6.2010
16.7.1996
1.7.1996
2.12.2011
9.9.2013
5.12.2012
21.9.2012
28.7.2012
6.4.2012
17.3.2006
18.4.2001
20.1.2014
7.11.2012
23.4.2013
12.6.2013
9.4.2013
11.4.1995
19.2.2008
29.3.1994
15.11.1994
2.8.1994
17.7.2013
30.4.2013
18.8.1995
9.1.2013
20.12.2012
23.12.2012
5.2.2013
3.4.2010
-
8
9
Interbank market legal considerations
Foreign
Bank
(overseas)
Legal considerations
Partnership
Agreement
Branch
Foreign
Bank
What is the legal nature of the relationship between
Local Bank and Foreign Bank?
Local Bank
Inter-bank loans
(Myanmar)
(Myanmar)
Supervision
CBM
•
•
•
Lender-borrower?
Local Bank is trustee?
Local Bank is agent for Foreign Bank?
Local bank
loans
Myanmar-owned
Corporate
Borrowers
29 July 2014 | Page 10
Interbank market legal considerations
Foreign
Bank
(overseas)
Legal considerations
Partnership
Agreement
Branch
Foreign
Bank
What is the legal nature of the relationship between
Local Bank and Foreign Bank?
Local Bank
Inter-bank loans
(Myanmar)
(Myanmar)
•
•
•
Lender-borrower?
Local Bank is trustee?
Local Bank is agent for Foreign Bank?
CBM directive on Interbank borrowing
Supervision
CBM
Local bank
loans
Myanmar-owned
Corporate
Borrowers
•
•
•
Shortfall of minimum reserve and liquidity
requirements
Interest rate may not exceed rate of CBM
Short term loans, no more than 90 days
29 July 2014 | Page 11
Interbank market legal considerations
Foreign
Bank
(overseas)
Legal considerations
Partnership
Agreement
Branch
Foreign
Bank
What is the legal nature of the relationship between
Local Bank and Foreign Bank?
Local Bank
Inter-bank loans
(Myanmar)
(Myanmar)
• Fixed charge over
the loans to
Corporate
Borrowers
• Floating charge
over receipts paid
by Corporate
Borrowers
• Assignment of the
loans in case of
default to another
local bank as
security agent
•
•
•
Lender-borrower?
Local Bank is trustee?
Local Bank is agent for Foreign Bank?
CBM directive on Interbank borrowing
Local bank
loans
Myanmar-owned
Corporate
Borrowers
•
•
•
Shortfall of minimum reserve and liquidity
requirements
Interest rate may not exceed rate of CBM
Short term loans, no more than 90 days
Security in case of default by Local Bank
•
•
No specific CBM guidance except “priority as per
the contract”
General Myanmar law with respect to secured
interests and creditors, fixed and floating charge,
possibly trust.
29 July 2014 | Page 12
Market access issues for other financial services
 Finance companies
• Local companies to be allowed?
• DICA allowed company setup
• 11 locally owned finance companies licensed by the CBM
• Foreign owned?
 Foreign insurance companies
29 July 2014 | Page 13
Registering security on onshore assets
for foreign loans
29 July 2014 | Page 14
Foreign Investment Law on security
 2012 Foreign Investment Law (FIL) states the right of the foreign investor to
provide security over land and buildings. A similar provision exists for Myanmar
citizen investors.
 Notification 11/2013:
1. Whether or not the reason for wishing to [...] mortgage is true;
2. Whether or not the […] mortgage will be detrimental to the interests of the
state and its citizens; and
3. Whether or not the receiver of the mortgage is in a position to proceed with
the activity successfully or not.
 The MIC has the authority to make a case-by-case evaluation.
 What if your company is non-MIC? The same securities are available but without
the support of the FIL or the MIC.
29 July 2014 | Page 15
Which are the main types of secured interests in Myanmar?
 Mortgages
‐
6 types of mortgages, hardly ever used in practice in Myanmar
‐
Approval: Foreigners are not allowed to “acquire immovable property by way of purchase, gift,
mortgage, exchange or transfer”.
‐
Special Government permission is needed, from MIC and/or Government land owner
 Fixed and floating charge
‐
Under the Myanmar Companies Act, a fixed charge can be created on (at least)
immovable property, uncalled share capital, book debts, movable property and stock in
trade.
‐
Under Myanmar law can be created on “the undertaking or property of the company”.
 Guarantee
 Pledge, pawn, or charge on movable goods
 Assignment by way of security (legal and equitable)
29 July 2014 | Page 16
Example: Required approvals and registrations for a security
package (power sector)
 MIC: Security package, foreign exchange flows, assignment of shares (if any)
 Ministry of Electric Power (MOEP): Likely MIC will need approval from MOEP on the
security insofar it concerns the BOT and PPA
 Central Bank of Myanmar/Ministry of Finance: Foreign exchange flows
 Company Registration Office: Mortgage, fixed and floating charge (note: the register does
not yet exist)
 Land owner (likely a Government agency, state or region): Approval of the mortgage
 Attorney General Office: Will likely be asked to opine on security documents
 Deed Registration Office: Mortgage, fixed charge on the leased land and buildings
 Myanma Electricity Producing Enterprise (MEPE): Assignment of payment rights under
the PPA and other project documents.
 Internal Revenue Department (state and region offices): Payment of stamp duty
29 July 2014 | Page 17
Commercial
Bank A
(overseas)
Facility
Commercial
Bank B
(overseas)
Borrower
Parent
(overseas)
Consortium
of foreign
banks
Onshore
Security Agent
agreement
Bank Myanmar
acting as security Agent
100% shares
Contracts &
Payments
(overseas)
Borrower
(Myanmar)
Borrower’s
assets
(Myanmar)
Contracts &
Payments
(Myanmar)
29 July 2014 | Page 18
Security 1
Share pledges
Commercial
Bank A
(overseas)
Commercial
Bank B
(overseas)
Borrower
Parent
(overseas)
Facility
shares
Consortium
of foreign
banks
Onshore
Security Agent
agreement
Bank Myanmar
acting as security Agent
Borrower
SPV
(overseas)
shares
Borrower
(Myanmar)
Contracts &
Payments
(overseas)
Borrower’s
assets
(Myanmar)
Contracts &
Payments
(Myanmar)
29 July 2014 | Page 19
Security 2
Fixed and floating
charge
Mortgage?
Commercial
Bank A
(overseas)
Commercial
Bank B
(overseas)
Borrower
Parent
(overseas)
Facility
shares
Consortium
of foreign
banks
Onshore
Security Agent
agreement
Bank Myanmar
acting as security Agent
Borrower
SPV
(overseas)
shares
Borrower
(Myanmar)
Contracts &
Payments
(overseas)
Borrower’s
assets
(Myanmar)
Contracts &
Payments
(Myanmar)
20
Update on Central Bank Directives
29 July 2014 | Page 21
Foreign exchange
Trading
Service fee
Profit
Interest
“Current Account”
•
Loan repayment
Other payments
“Capital Account”
Documentation requirements
• differ per type of payment
Bank is responsible for collecting
• Bank takes the decision
Bank may remit*
Bank may NOT remit
* Exception:
“Unusual or Substantial” payments
29 July 2014 | Page 22
New CBM Directive on foreign loans
Elements that banks need to take into account when evaluating foreign loans:
 Size of loan and tenure, and loan contract
 Whether the interest rate is market-based interest rate
 Whether the business plan of the resident borrower is appropriate
 Type of the collateral and whether it is capable of being performed in accordance
with the law
 Whether the repayment schedule is appropriate
 Certain other elements prescribed in the Directive
“Licensed banks trading foreign exchange shall review the points contained in the
above paragraph (1) on the basis of the local business situation, the situation of the
project to be executed with foreign loan and its expected income, capability to repay
loan and profitability to the country and its people”.
29 July 2014 | Page 23
New CBM directive on settlement on foreign exchange market
 Nostro accounts held by Myanmar banks with foreign banks
 US$ nostro accounts with UOB and OCBC are designated as forex settlement
accounts
 Value date T+2
 Banks must give payment on same value date, subject to penalty
 Selling bank bears the cost of the settlement
 Daily net open position advised by CBM
29 July 2014 | Page 24
Mobile banking
29 July 2014 | Page 25
Setting the stage
 Central Bank’s Directive 4-2013 of 3 December 2013 (the Mobile Banking
Directive)
 When is an MNO deemed to perform “financial services” in the sense of
Myanmar law?
 Where are the boundaries of the Directive? Can MNOs offer semi-closed?
 The forthcoming Directive on Dedicated E-Money Issuers
29 July 2014 | Page 26
Permitted activities under the MB Directive
 Domestic remittance and remittance from other







countries;
Cash-in and cash-out in MMK through agents, bank
branches, ATMs, or branches of a mobile operator;
Payments made to a business by individuals (e.g.,
payments of bills and payments for goods and
services);
Payments made by a business to individuals (e.g.
salary, dividend)
Payments made to individuals by the Government
(e.g., salaries and wages, pensions and other
allowances);
Payments made to the Government by individuals
(e.g., taxes);
Payments between individuals (e.g., payments and
transfers of money between bank accounts);
Microfinance, overdraft and other small payments
like insurance premium.
 Limit of 500,000 MMK
(about 500US$)
 No more than 3
payments may be made
per day.
 Maximum amount per
day is 1,000,000 MMK
(about 1,000 US$).
Mobile accounts which
are savings accounts are
interest bearing.
29 July 2014 | Page 27
Key licensing issues under the MB Directive
 Value Added Service (VAS) - Application Service License?
 CBM “safeguards”?
 Can a bank-partner in mobile banking receive an MIC Permit?
 Who owns which part of the mobile banking business?
29 July 2014 | Page 28
Key licensing issues under the DEMI Directive
 E-money means electronically, including magnetically, stored monetary value which
is a claim on the issuer issued on receipt of funds, redeemable against cash and
accepted by a person other that the issuer
 Licensing requirement by CBM
 DEMI’s must, among other conditions, be exclusively engaged in this business, and
sponsors have a track record of relevant experience in Myanmar or elsewhere








Network of agents, subject to approval
Required systems and controls
Capital requirements
Cash requirements
Accounting and reconciliation
Security and consumer protection with respect to the “float”
Transaction limits are imposed per individual and per agent
Other issues
29 July 2014 | Page 29
Bank Side
Mobile banking licensing process
CBM and MCIT work together
to set up safeguard measures
before MNOs granted
permission to perform mobile
payment
Bank
receives
CBM
permission
MCIT must recommend and
approve technical service
providers, financial services and
MNOs
Bank chooses cashpoints, agents
and partners prepares a list of those
selected to provide to Financial
Institutions Inspectorate and CBM
Bank prepares and
submits plan to
implement mobile
banking to CBM for
approval
Bank enters into agreements
with cashpoints, agents and
partners
When rules are published, MNOs apply for Application Service License from the MCIT
(assuming mobile payment services are considered a VAS in the sense of the Draft
Rules)
29 July 2014 | Page 30
Questions on liability
 Division of liability between the bank and the MNO?
 Liability of agents
 Mitigation of liability in the contractual documentation?
 Effect on any partnerships?
 Insurance
29 July 2014 | Page 31
Other legal issues
Competition law

Telecom Law (“boycotting”) and Draft Competition Rules under the Telecommunications
Law

Myanmar Financial Institutions Law (“position of dominance”)

Contract Act (restraint of trade)
Consumer Protection and data privacy

Terms of use need to be approved by CBM, risks, fees, security

Dispute settlement, grievance, compensation (under Consumer Protection Act and under
Directive)
Trade-name, Advertising rules

Own trade-name and trade-mark?

Is co-branding allowed?
29 July 2014 | Page 32
Structuring Considerations
Mobile
Network
Operator
Financial
Investor
x%
x%
Vendors
JV Co
Myanmar
Software, hardware,
payment processing
services





Structure implications of the bank-led model?
Shareholding, foreign ownership restrictions
Licensing
Capitalization
Financing
Partnership
Agreement
“platform”
hardware
software





Bank
Myanmar
Mobile Banking
License
Central
Bank of
Myanmar
Importation of equipment
Foreign currency approvals
Employment
Profit extraction
Divestment
29 July 2014 | Page 33
Structuring Considerations
Mobile
Network
Operator
Financial
Investor
x%
x%
Vendors
Software, hardware,
payment processing
services
JV Co
Myanmar
Partnership
Agreement
Bank
Myanmar
“platform”
hardware
software
Agents
Network
29 July 2014 | Page 34
Structuring Considerations
Mobile
Network
Operator
Financial
Investor
x%
x%
Vendors
JV Co
Myanmar
Software, hardware,
payment processing
services
Partnership
Agreement
Bank
Myanmar
“platform”
hardware
software
Sub-Agents
Network
Agents
Network
29 July 2014 | Page 35
29 July 2014 | Page 36
More Information:
Jean Loi
Managing Partner
Jean@vdb-loi.com
Jean Loi is widely recognized as one of
the
region’s
most
experienced
professional advisors with a CPA
background. She was formerly a
partner with PricewaterhouseCoopers
in Southeast Asia. As the managing
partner of VDB Loi, Jean has extensive
experience with licensing energy,
power, property and consumer
product projects. Her Myanmar tax
experience is unsurpassed. She lives in
Yangon.
Edwin Vanderbruggen
Partner
Edwin@vdb-loi.com
Edwin was formerly with Loyens &
Loeff and a partner at DFDL. He has 21
years of experience as a lawyer and
government advisor, including five
years of experience on Myanmar legal
and investment issues. Edwin advises
three of the oil and gas supermajors in
the offshore tender, the Japanese and
Korean governments on major
infrastructure and power projects and
is local counsel to one of the foreign
licensed
telecom
operators
in
Myanmar. He lives in Yangon.
29 July 2014 | Page 37