Run on Bank Owned by Son of Blacklisted MP

By Thit Nay Moe 5 November 2014

RANGOON — The US blacklisting of senior ruling party member Aung Thaung has caused concerns among clients of United Amara Bank, which is owned by his son Nay Aung, and on Tuesday an unusually large amount of money was withdrawn, a bank representative said.

The bank’s CEO Than Win Swe said that after the US Treasury Department announced on Friday that Aung Thaung’s personal assets were being targeted for sanctions, a rumor began to spread that United Amara Bank (UAB) would also be affected.

On Monday, bank transactions still followed a normal pattern, with the bank receiving 44 billion kyats (about US$44 million) in deposits while some 41 billion kyats ($41 million) was withdrawn by clients, he said.

“But today [Tuesday], following a rumor, we received 16 billion kyats [$16 million] and 26 billion kyats [$26 million] was withdrawn,” Than Win Swe said at a press conference.

“We guarantee that we can give back all savings. For the moment, people are withdrawing money from us because they are over-concerned,” he said, adding that, “The Central Bank of Myanmar has prepared to help us.”

Than Win Swe said clients should not be worried as Aung Thaung has no relation with the bank, neither as a shareholder nor as a board of directors’ member. On Wednesday afternoon, the bank’s CEO said money was still being withdrawn by clients, although on a smaller scale than the day before.

The Central Bank said it would not issue a specific statement about the case, but would protect United Amara Bank in line with Central Bank laws and rules and regulations.

Central Bank Acting Managing Director Win Thaw said, “If there is something wrong with that bank we will announce it. We will not issue a particular statement about it, but we’ll assist them in line with the laws for solving problems resulting from rumors.

“UAB has money deposited in the Central Bank and in case the deposits and withdrawals are not balanced at UAB, we have already prepared to provide money immediately in Rangoon, Mandalay and Naypyidaw [UAB branches].”

The Central Bank also confirmed that Aung Thaung has no involvement withUnited Amara Bank.

UAB is not on a US sanctions list and neither is Aung Thaung’s son Nay Aung, who owns 90 percent of shares in UAB.

Currently, the bank has deposits of over 440 billion kyats ($440 million) and loaned over 230 billion kyats ($230 million). Over the four years since the bank was established, the deposits at the bank have increased. At present, the bank is conducting transactions with 71 international banks in 23 countries, including European countries, according to an UAB press release.

UAB got a banking license in 2010 and was permitted to conduct transactions with foreign banks in 2011.

Dozens of Burmese companies, including a number of banks, owned by tycoons linked to the drug trade or who have been categorized as ‘cronies’ for supporting the previous military regime remain on a US Treasury blacklist.

Unlike Japanese banks, US and European banks have been reluctant to do business with Burma’s financial sector, out of fear of running afoul of sanctions.

Aung Thaung was minister of industry in the previous junta and together with his son, Pyi Aung and Nay Aung, he has used his connections to former dictator Snr-Gen Than Shwe to amass wealth and build a business empire through a series of interconnected firms that includes United Amara Bank and IGE Co Ltd.

Aung Thaung, a senior Union Solidarity and Development Party MP, is seen as a hardliner and as possibly obstructing the reform process by supporting elements fostering anti-Muslim violence in Burma in recent years. The US Embassy recommended in 2008 that he and his sons be listed for sanctions targeting their companies, assets and travel options, but these recommendations were not implemented.