Senior junta officials berated the country’s top bankers at a much anticipated meeting late Wednesday, accusing them of inflicting inflation on Myanmar and causing the country’s currency to plunge as the country’s financial crisis enters a new, likely irreversible, stage.
Sources described the meeting in Naypyitaw as “one-sided,” saying only junta officials spoke and that the bankers summoned to the capital were forced to listen.
After the meeting, the national currency, the kyat, continued its agonizing plunge, shedding another 6 percent of its value, while the price of gold shot up.
At the meeting, junta officials warned the country’s top bankers that action would be taken against them if they violate regulations and damage Myanmar’s financial stability or lessen the value of the state’s assets and resources. They also blamed the economic catastrophe that has enveloped Myanmar since the Feb. 1, 2021 coup on the bankers they had summoned to Naypyitaw for the lecture.
As previously reported, chairpersons and senior executives of private banks were summoned to the administrative capital to discuss banking issues with members of the regime’s governing body, the State Administration Council. Lieutenant General Aung Lin Dwe, the council’s secretary, and Lt-Gen Ye Win Oo led the meeting. They were joined by at least two other lieutenant generals: Yar Pyae, minister for Home Affairs Nyo Saw, chair of the Foreign Exchange Supervisory Committee. Than Than Swe, governor of the Central Bank of Myanmar, led officials from the once respected institution.
Wednesday’s meeting occurred as the country’s banks looked increasingly fragile. Not only have they taken massive hits from the junta’s ineptness, they’re also being held generally responsible for it.
When the regime’s attempt to control foreign exchange rates by fiat backfired spectacularly, consumers put their cash into property. On July 2, however, six private banks were threatened with administrative action for exceeding the central bank’s cap on housing loans.
Top bankers attending Wednesday’s meeting included KBZ’s U Aung Ko Win, AYA’s U Zaw Zaw, A Bank’s U Zaw Win Shein, and Shwe Bank’s U Kyaw Win.
The executive chair of Yoma Bank – Serge Pun (also known as U Theim Wai) – was absent. That’s because he is being detained by the junta for his bank’s alleged violations of financial regulations.
Following Wednesday’s meeting the junta used its mouthpieces to tell the country that Lt-Gen Aung Lin Dwe has their back. He told the summoned bankers that they are responsible for protecting the interests of their customers, and ensuring financial stability as well as solidarity, junta media said.
The general also used junta media to warn bankers that unspecified action would be taken against them if government property or its budget suffered losses that could be blamed on banks breaking laws, regulations or procedures. The junta supervises banks for possible violations because these can harm the entire country, Lt-Gen Aung Lin Dwe explained.
Two sources with knowledge of what was said at Wednesday’s meeting told The Irrawaddy that the bankers were scolded by the generals. It was a court martial not a discussion.
An associate of the directors of one bank who were summoned described the meeting as one-sided because they were not given permission to talk.
Bankers were also scolded for the economic crisis, the source said.
“Bankers at the meeting were scolded for offenses like granting excess housing loans … they were also blamed for not containing inflation, the devaluation of kyat, higher prices and so on,” the source said.
These problems worsened after Wednesday’s meeting. The kyat lost another 6 percent of its value, hitting 4,800 against the US dollar. (It traded at about 1,300 to the greenback before the coup.) The price of gold also jumped, rising above 5.8 million kyats per tical (16.33 grams).
Trust in private banks fell after the regime announced it was punishing major private banks for exceeding its cap on home mortgages. Since then, customers have been lining up to withdraw their life savings. This resulted in a lower limit on the amount of money they can withdraw each day: between 1,000,000 and 2,000,000 kyats.
On Thursday, Dr. Lin Aung, the deputy governor of the central bank, found a novel response to the deepening crisis. Customers who talk about banks tightening limits on withdrawals are spreading “rumors,” he told junta media.
On Friday, Myanmar’s banking crisis deepened.
Customers of three separate banks said the daily withdrawal limit is now as little as 25 percent of what it was on Wednesday. The most they can withdraw now is 500,000 kyats per day.
