Myanmar’s notional leader Aung San Suu Kyi like to calls her troubled land the last frontier of capitalism.
It’s a catchy line, and Christopher Loh, chief executive of United Amara Bank (UAB), lives the reality of that remark each day in his painstaking efforts to build a modern, functioning bank despite the mayhem of Myanmar’s emerging financial sector.
Every day, Loh commutes to UAB’s decrepit headquarters, a rabbit warren rented in Yangon’s teeming suburbs next to one of the city’s noisiest and most polluted flyovers. To get to his office, he negotiates a single rickety lift that looks as if it dates from the 1970s, and that may or may not arrive when summoned. The stairs are often a better option.
To make himself heard in meetings with staff, he has to compete with the clatter of a rowdy noodle house downstairs and the warbling from a nearby karaoke den.
Office life was never like this for Loh in his native Singapore, where he was managing director of consultancy group Accenture for several years before heading to Kuala Lumpur to run RHB’s international business division.
“Being here has certainly had its moments,” says the stoic Loh, as an office assistant coaxes a temperamental air conditioner into action.
It has been like this for Loh for 18 months now, ever since the military-connected Aung family persuaded him to run their medium-sized bank. Launched in 2010, UAB struggled to keep up with local sprinters such as KBZ, CB Bank and Aya Bank, and was in need of an overhaul.
Christopher Loh, chief executive of United Amara Bank
Loh’s office travails may soon be over. In May, he expects to lead 500 of his 2,000 staff in a high-profile procession some five kilometres across Yangon to UAB’s new head office – a gleaming glass tower at Times City, a Singapore-style commercial complex in the capital’s west that is being developed by a UAB client. It was one of the conditions that Loh demanded when he agreed to sign on at UAB in 2017.
“I told them this bank needs five years to be cleaned up,” he recalls. “I said either you trust me to fix this for you or you find somebody else.”
Loh got his way and UAB is set to be relaunched with a dynamic new image, a new logo and signage, an overhaul of its 78 branches, funky staff uniforms and a new online presence.
“We are reforming,” says Loh.
Another innovation for UAB is a private banking service for wealthy locals. “We are only looking at (banking) 30 customers, purely by invitation,” adds Loh.
To have made such changes in just 18 months is fast work – at least by Myanmar’s dawdling standards. Loh only visited Myanmar for the first time in April 2017, when he arrived for a business trip with RHB. During his rounds of the budding banking scene in Yangon, he met UAB chairman Ne Aung, one of Myanmar’s richest and best-connected businessmen.
“One conversation led to another,” Loh recalls, “and then he was like: ‘Hey, why don’t you come in and take a look, we need a CEO’.”
Loh initially had his doubts.
“At first I was ‘thanks but no thanks’,” he says. “I was aware of all the scepticism and all the things that you hear.” But he was also intrigued: fixing UAB was certainly an interesting prospect, and so he agreed to keep talking.
“So, I did my background check, everything came out pretty OK, including with the individual himself, and I say: ‘OK, I can do this, but I’ve got conditions’.”
I’m very particular, we don’t fudge numbers. The books are clean. I’ve been very busy- Christopher Loh
A former Singapore national serviceman for 19 years, rising to the rank of major, Loh laid down his joining terms. His salary, he adds, “was beside the point.” A key condition was to insist that Ne Aung, who has a declared 90% stake in UAB, step down from his position as executive chairman of UAB.
This was a big hurdle. As Myanmar emerged from half a century of military-backed torpor to embrace democratic and market reforms in 2011, the race was on for cronies and warlords to reinvent themselves as civilian industrialists. Most of Myanmar’s new banks, UAB included, were licensed when the military was in power, and when owning and running a bank was considered a prized badge of respectability – as well as a potential source of funds.
Under Loh’s terms, Ne Aung could continue as chairman, but all executive authority would be with Loh. Ne Aung agreed and the board, including Ne Aung’s influential wife Khin Moe Nyunt, who owns a declared 10% of the bank, became non-executive.
Management was also overhauled.
“The old guard, I shoved them out,” Loh says. “This was pretty serious stuff.”
Loh also split UAB off from the Aung family’s IGE Group, one of Myanmar’s biggest conglomerates and involved in rice trading, oil and gas, timber and construction.
It might be a cosmetic division – given that UAB is still owned by the family – but it provides some plausible separation from one of Myanmar’s legacy corporate dynasties.
Like many privately owned banks in Myanmar, UAB has what might charitably be described as a colourful history. According to those who follow Myanmar affairs closely, Ne Aung owes his wealth to the fact that his late, ex-soldier father, Aung Thaung, had close connections to a military that has ruled Myanmar since 1962 – and which many argue still does.
In 2008, the US State Department described Ne Aung and his brother Pyi Aung, an army major, as “two of Burma’s rising cronies”. According to a State Department cable published by WikiLeaks, the US embassy in Yangon had recommended automatically adding the two brothers to a US sanctions list (along with several other business owners who were connected to the military and supported the regime). Both brothers had been on the sanctions lists of the European Union and Australia since 2007. (They were taken off those lists as Myanmar began its political reform process).
Another leaked State Department cable described the brothers as being close to Than Shwe, Myanmar’s former military strongman, “who allegedly regards them as family”.
Pyi Aung is married to Nanda Aye, the daughter of vice-senior general Maung Aye, Than Shwe’s deputy.
“Like other cronies, Ne Aung and Pyi Aung allegedly garner favor with regime leaders by donating heavily to government projects,” the leaked cable said.
Asiamoney approached Ne Aung to be interviewed for this article but he referred us to Loh instead.
I sent a message out that we are a bank and rule number one is that nobody takes a single kyat out of the bank- Christopher Loh
The Aung family’s international pariah status was always problematic for UAB, but in 2014 it threatened the bank’s very survival.
In October of that year, the US Treasury announced sanctions against Aung Thaung, who was the military junta’s industry minister from 1997 to 2011, prompting a run on the bank. The US claimed Aung Thaung was “perpetuating violence, oppression, and corruption” and “intentionally undermining the positive political and economic transition in Burma.”
The US Treasury went on to say: “Aung Thaung is actively attempting to undermine recent economic and political reforms in Burma and has been implicated in previous attacks on Burma’s democratic opposition.”
The US Treasury’s mention of Aung Thaung’s implication in previous attacks was taken to be a reference to the notorious Depayin massacre of 2003. That was when 70 pro-democracy activists were killed during an assault on a motorcade, which included the Nobel laureate Suu Kyi, who had been released briefly from house arrest by the military junta.
The opposition at the time accused Aung Thaung of masterminding the attack as he was the leader of a pro-military party at that time. Aung Thaung always publicly denied the charge until his death in July 2015 at the age of 75.
At UAB, officials were so alarmed that they tried to quell the run by insisting Aung Thaung had no relation to the bank, and that his son Ne Aung had never been sanctioned by the US, despite reported recommendations to do so some years earlier.
Myanmar’s central bank also said it would back UAB under its general protocol to support the country’s banking system. UAB eventually stabilized, but the whole drama shows just how fraught business in Myanmar can be.
For Loh, cleaning up basic office procedure at UAB proved a bigger headache than first imagined. At one point he unearthed – and dismantled – a petrol and car-washing racket among the bank’s drivers, who threatened to go on strike when their scam was rumbled.
“I sent a message out that we are a bank and rule number one is that nobody takes a single kyat out of the bank,” Loh says. “The first six months was cleaning up, but it was an interesting journey, the complaints, the protests… having to educate a lot of people.”
His house-cleaning didn’t make him particularly popular around the bank, and there was some pushback.
“The first six months were terrible,” he recalls. “I had the former CEO and some senior staff stage a protest; they all went to the board to complain about me, all kinds of stuff,” he adds. “I was told many times by many people: ‘Hey Chris, slow down, relax, this is Myanmar.’ I said: ‘No, I didn’t come here to slow down, I came here to get things fired up’.”
Loh stared down the grumbles and, a year on, feels things are now under control.
“When I took over the bank, it was on a negative RoE [return on equity] of -0.34,” he says. “Now, it’s 17.7%.”
One problem he had to address at the outset was the low interest margins.
“Our net interest margin was less than 2%. In countries like this you need to have net interest margins of 5% to 7%.”
When Loh joined, UAB reported non-performing loans of 3.6% to the central bank. A banking insider says they were “actually about 13%.”
“Right now, it’s about 4.8%,” Loh says. “I’m very particular, we don’t fudge numbers. The books are clean. I’ve been very busy.”
UAB annual report 2018
Another reform, commonplace elsewhere but rare in Myanmar, has been to make public its results and annual report.
“We have annual audited financial statements that were submitted to the central bank in the past, but these were not made public,” Loh says. “This is the first time we are publishing a proper annual report with corporate disclosure that is in line with Asean [Association of southeast Asian nations] corporate governance requirements.”
UAB reported profit after tax of K5.8 billion ($3.8 million) in the six months to September 30, 2018, against a loss of K34 million in the same period a year earlier. Operating income has climbed 66% in the same period, and both loans and deposits are increasing.
After 18 months of hard slog, Loh says the job isn’t finished, but he believes he has the confidence of his board and the staff.
“It’s been amazing. I honestly love coming to work. Nobody imagined this happening to UAB.”