Burmese banking officials sought on Saturday to stem a panic after depositors withdrew nine billion kyat (US $10.5 million) the day before from a leading local bank on rumors that its owner had been arrested for money laundering.
“It’s not true. All private banks are run under the careful management of the Central Bank. These are mere rumors, but they can harm the image of the bank and can lead to a bank crisis like that of 1997,” said a spokesperson for Burma’s Central Bank at a press conference on Oct. 6.
Aung Ko Win, the owner of Kanbawza Bank, did not appear at the press conference, but the bank’s deputy chairman Than Lwin denied that his boss had been arrested, and blamed local journalists for fueling speculation about the apparent run on deposits.
“This rumor came from you,” he told the assembled reporters. “October is the start of the third quarter of the financial year, so many people were withdrawing interest on fixed deposits. Some people misunderstood the situation and started questioning the stability of the bank.
“Our boss, Aung Ko Win, is not in jail. He’s in Naypyidaw on business,” he added.
Kanbawza Bank is one of 19 privately owned banks in Burma, and one of the country’s top 10 taxpayers. Aung Ko Win is widely regarded as a crony of the generals who ruled Burma until they handed over power to a quasi-civilian government last year.
Although Burma was relatively untouched by the financial crisis that hit much of Southeast Asia in 1997, the country saw the collapse of three banks in 2003, and has struggled to restore confidence in its banking sector.
Burma’s new government, led by ex-general President Thein Sein, has made financial reforms a cornerstone of his efforts to rebuild the country’s economy after decades of neglect.