Myanmar Bank Urges Calm after Huge Cash Withdrawal

Myanmar banking officials on Saturday sought to reassure nervous savers after rumors over the fate of the boss of the country's biggest private bank saw account holders dash to withdraw their cash.

Customers of Kanbawza Bank in Yangon pulled out around nine billion kyat ($10.5 million) net on Friday -- more than four times the maximum amount that would normally be expected -- according to the bank's vice chairman Than Lwin.

Rumors had spread across Myanmar's main commercial city that the apparent disappearance of Kanbawza boss Aung Ko Win -- who is believed to have connections to the country's former junta -- was because he had been arrested.

"I don't want people to believe such rumors because we have full backing from the central bank," Than Lwin told a specially-convened press conference aimed at dampening the impact of the speculation.

He said Aung Ko Win himself intended to attend the meeting but had been called away to the capital Naypyidaw by the country's reformist president, former general Thein Sein.

Kanbawza has total capital of nearly 100 billion kyat ($117.6 million), according to Than Lwin.

Win Thaw, deputy director general of the Central Bank of Myanmar, said his organization conducted daily checks to ensure the stability of the country's banks.

"There is no reason to worry at all," he said, adding that the rumor was likely aimed at damaging Kanbawza, which with 79 branches holds a third of the market share.

Trust in Myanmar's banking system has never really recovered from a major crisis in 2003 that saw three banks completely collapse, exacerbated by the policies of the Central Bank such as recalling loans from borrowers.

People have also been hit hard in the past when authorities scrapped certain currency units as legal tender.

A mass uprising against the military in 1988, which was brutally crushed, escalated from protests over a major episode of demonetisation by the regime.

Thein Sein has vowed to put the economy at the center of his next wave of reforms, following a series of dramatic political changes since decades of military rule ended last year.

In April, the country began a managed flotation of its currency, overhauling a complex foreign exchange system in a bid to facilitate trade. A much-anticipated foreign investment law is set to be debated in parliament in the coming weeks, while independence for the central bank is also expected.